Focus On the Wins

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Day 2866…134 days in.

It is a GOOD thing to look back and find your wins.  Especially if you have been knocked on your butt a few times.  We’ve been thrown a few lumps recently as described in my last post.  Because of that, I thought it would be a good idea to look back and examine a few of our accomplishments since starting this journey back in July.

Now, when we started we took a very good look at our budget and we cut several things.  Cable. The gym. Reduced our cell phone bill.  Paid off a few accounts.  And that was a great start.  We reduced our discretionary spending significantly as well.  At the time, we were like, “wow, that’s pretty stinkin’ good.”  and it was, TOTALLY!  (I am 46-year-old California girl through and through; “Like” “totally” and “awesome” are part of my permanent vernacular. And sometimes they all get thrown together even.) 

Then, we started gaining some momentum.  Started talking to more people about what we are doing.  Talked with and listened to others that are on this same journey, some behind us and some way ahead.   It’s inspiring.  It’s motivating.  Even so, this BIG goal we have does not seem real.  It still seems like a dream.  Because when it happens – it WILL be a dream.  It will be something that most people never reach because they are afraid.  Or stuck.  Or because they just can’t envision a life of MORE than what they already have.  We want more than that.  We want to be able to choose.  Choose whether or not we continue to work in some fashion after we “retire” from our current careers.  To choose to pursue passion projects or volunteer.  Choose to pick up and go wherever we want to go, whenever we want.  All because we have laid the groundwork for it now.

Have you ever taken a moment to watch construction? It is hard, labor intensive, exhausting work.  Not many people choose to do it.  Having previously lived in Phoenix for fifteen years – I especially felt for them in the Summer months.  Its not a job you can do forever.  But their job is so important. A structure built on a crappy foundation is ultimately worthless or at best will cost a lot of money to fix.

We are in the foundation building stages of FI (Financial Independence).  Its not fun a lot of the time.  It is work.  There is sacrifice. But it must be done in order for our plans to work.  Without our foundational work now – Financial Freedom and Early Retirement, will not happen.  We will be on the hamster wheel until we die.  No thanks.

So this morning, I took a step back to look at our work. And I was pleased with our progress.  (That is an understatement for sure.) Here is a summary of the monthly costs we have cut and/or paid off since we started a few months ago:

July: 

Cell 25.00

Cable 120.00

Gym 110.00

Care Credit 49.00

Aug/Sept:

Tuition Wendy 400.00

Dentist 215.00

Department Store 27.00

Tuition Maddie 781.00

Oct: 

Nov: 

State Taxes: 250.00

Karate 375.00

Water Delivery 125.00

Gym (again) 159.00

TOTAL MONTHLY SAVINGS:  $2636.00

But wait….now times that by 12….That is $31,623.00….$31,623.00!!!!

Whaaaaat?  That is a pretty freakin’ awesome number, right?  And this does not include our reduced discretionary spending for things like groceries and fuel.  Cool fact? If you look at most of them, individually, they are fairly small amounts.  The lesson?  Small wins add up to BIG ONES.  When I see what we have been able to decrease from our budget, I get excited.  It makes me want to go back through it and look for more costs we can reduce. It makes me jump up from my desk, run into the other room and, excitedly, tell my husband, “Babe look at what we have done!”  Really, I did do that.

Now you may look at our numbers and be thinking, “I can’t do that.  You make waaaaaay more money that I do.  Of course YOU can do that.”  But I challenge you.  Listen up! Becoming debt free and saving money can be done, and IS done, by people who make significantly less that what our family is fortunate enough to make.

Have you looked at your monthly spending lately?  What are you spending money on that you can cut or reduce?  Make a goal.  Start small.  Cut $100.00 from your monthly spending and put it in an investment account.  (I put ours into a Vangaurd VTSAX account.  Unsure of why you should or where you should put your money, go to JL Collins site and read his stock series, or buy his book The Simple Path to Wealth.) Then the next month cut your spending by another $100.00 (or 1% – whatever is achievable for you and will not cause you to freak out. And invest that amount in the same way.)  Then wash, rinse and repeat.  Its MAGIC.

$100.00 in savings a month, equals $1200.00 a year.  $200 a month, equals $2400.00 a year.  $300 a month, equals $3600.00 a year.  Compound each of those over ten years at 8% interest and you get $17,383.87, $34,767.75 and $52,151.62 respectively.  How would it make you feel to have that much sitting in an investment account growing by simply making a few simple cuts to your budget NOW.  Life-changing. Truly it is.  If you can grasp this one thing – you will have changed your life and that of your family’s.

Trust me…. you can do this.  It is just math.  Math and determination.  I believe you can do it. So get to it.

Love and Prosperity, 

Your GirlFIday 

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Mountains, Mistakes and Missteps

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2884 days…116 days in…

I expected there would be bumps in the road.  That at some point on this FI journey we would have some hiccups in our plan.  I did not think that it would come so quickly.  I naively, I suppose, put a plan together and thought all I had to do was execute.  It’s all just math, right?  It is.  And it isn’t.  Because we are humans.  With human problems.  Kids – that need STUFF.  And food.  You have to feed them. Fears. Impulses.  All of those things and more.

Since my last post, not much has changed.  In fact, due to a mistake I realized I made after speaking with our CPA, I had to halt my retirement contributions until the first of the year.  I discovered I misunderstood how much I could contribute as the employer into my individual SEP and due to that, I have until the end of the year to make up my “income” so I do not go over the percentages allowed by the IRS.  Ah yes, Uncle Sam, he seems to always show up and at JUST the right time.  So in a nutshell – I contributed too much money, too soon.  A good problem to have I suppose, but who wants to be in trouble with the IRS?  Not me.  Been there, done that and it stinks (still paying on that one after 8 years.  Seriously, trust me, a good CPA is CRUCIAL if you are self-employed.) Our CPA is wonderful and has really given us some of the most sound advice.  The problem is follow through.  Much like errant children, it has taken us some time to truly value his wisdom.

Ah taxes. What’s that saying? There are two things certain, death and taxes.…It will be a MOST wonderful day when we have finally put ourselves in a position to not pay so much of them.  Reducing them is part of our overall FI plan – but much like chess or a puzzle box, there are moves that must be made, in order, first.  But right now they are killing us. I am all for paying my fair share.  I like the things they provide – roads, schools, national parks, infrastructure – those things are all good things.  But if I can pay LESS – that would be super-duper awesome too.  As it is, the more we earn to pay our taxes, the more taxes we owe, so we must earn more, to pay the taxes…and so on and so on.  It’s the definition of the “hamster wheel” and we are dying to get off.  This year we have to pay more in estimated taxes for 2017 than we have ever before.  It made my heart leap out of my chest when I saw the number.  I was not prepared.  And therein – is the misstep.  2018 will be much better because we will be going into the year with one of our primary objectives being to reduce our taxable income.  We will do that by investing as much money as our budget will allow into pre-tax retirement accounts.  (Not sure what all of this means?  – Go check out some of the recommended blogs and podcasts mentioned in my last post).

My husband is incredibly fortunate in this regard.  He is a teacher and his school district allows him to not only contribute to a 403B but also a 457 plan…say whaaaat? (If you work in a service field; teacher, police officer, fire-fighter…you likely have the availability of a 457 plan as well and should consult your benefits department to learn more.  Seriously, this is like the most awesome thing ever for you.)  What this means is that we are not limited to contributing $18,000.00 a year into one account.  We can actually contribute double that amount, $36,000.00, $18,000.00 into each.  This was a new discovery for us and we were both floored when we learned of it.  The hurdle is to be able afford to max out both the 403b and the 457 as quickly as possible.  That will be extremely difficult with this mountain of debt we are carrying.  Sometimes I look at the numbers and I am overwhelmed.  Keeping positive and focused, which I usually succeed in doing, is sometimes difficult.  This plan of ours would be so much easier if we didn’t have the debt.  But there is no way around the mountain.  The only way is to painstakingly keep climbing.

Adding to the difficultly of the climb up the mountain, is that the debt service also requires a certain influx of income to also be maintained to keep up.  So not only are we climbing steep terrain, we are doing it with a 200-pound monkey on our backs.  It makes changing careers impossible without adequate replacement income. (and that, folks crushes my spirit and is a discussion for another day.)  It also delays how quickly we can achieve financial freedom.

So…the income is needed to pay the debt, thereby necessitating an increase in income – which increases the taxes, which requires more income to pay the taxes…and here we are right back on that hamster wheel.  Trapped.  That is often how I feel.  It can be so discouraging…

And then something happened….it was as if the clouds parted and a choir of angels began to sing….Well, no, but almost.  I went and looked at my Vanguard account…and there, sitting in my brand-new three-month old account, was quite a nice little chunk of free money.  Interest.  FREE MONEY.  And that was enough.  It was enough for me to catch my breath and look up ahead.  The top of the mountain in the distance, it is far, but I see it.  So we take a deep breath, we stick to the plan, and we keep on going.

Love and Prosperity,

 

Your Girl FI-day.

 

2934 DAYS…66 DAYS IN

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FI – FREEDOM.

I am sitting here looking at my “FI Life” to do list and so many of our boxes have been checked off already.  I suppose I will need to keep adding to the list, there’s always room for improvement, right? Curt and I have been working H-A-R-D.  Totally laser focused.  We are determined.  We WILL retire early.  On a beach somewhere – watching our children grow, experience new cultures and finding adventures.  Are you skeptical? Read on.

If you are tardy to the party and are wondering, “What is this FI-Life?  What is she talking about?”  There are people much more able than myself to tell you.  I would highly recommend you check out a few of the different sources listed below.

Mr. Money Mustache’s site is basically required reading,  I would start here with this classic, The Shockingly Simple Math Behind Early Retirement.  As is JL Collins’ site, The Simple Path to Wealth.  Mr. Collins has a book of the same name, mentioned in my previous posts. GET IT.  If you are into podcasts, like me, the gentlemen at Choose FI are top notch, as is the Mad FIentist (which is how I first learned about FI).  On Choose FI – I would specifically listen to episode 38, The Why of FI, and episode 21, The Pillars of FI – they have a great website too, you can check that out here. If after reading and absorbing all of this information you have not crossed over to our tribe, well…then, you enjoy working and would not mind doing so until you are one foot into the grave – me? No thanks. I’ve already wasted so much time.  There is no more time to waste.

You may also be wondering how we intend to do this.  How do we intend to go from a NEGATIVE net worth to between $500,000 and $750,000 in 8 years?  And how on earth can we survive the rest of our lives on that amount?  (You should know this by now – if you have not gone back and read the suggested posts above. Shame on you – do that now…really – DO IT.)

Here is a synopsis of how we intend to do it.  We are focusing on three (well maybe four) areas:

  • Paying down debt with a fervor – no new debt!
  • Saving aggressively – currently we are at 20% but the goal is to increase to 50% as debt is paid off  and expenses are reduced.  (We were at 10% just 66 days ago, so doubling our existing savings rate in 2 months is REAL progress)
  • Reducing expenses.
  • I would also consider the rehab of our home as part of our overall objective.  Every dollar we spend on the house must have a good rate of return.  Every repair or improvement must bring value.  We also save on repairs by  comparison shopping and doing much of the work ourselves.  (Since purchasing our home as a foreclosure in October, we have added more than $100,000.00 to its value.)

If we do these three (or four) things – there is no reason we cannot meet our goal.  Its called MATH.

When I sat down to update the numbers, check balances, and analyze our spending and savings, I was nervous to plug it all and compare.  I was worried that there would be no overall gain.  I don’t know why I worried – again – MATH.  Reducing spending + increasing savings – always equals more money in the bank.

So what are the gains?

3000 Days to FI Spreadsheet 9.17.17 snippet

We have an overall gain of $24,309.00 in 66 days – a 46 day gain of $18,989.00.  Keep in mind that some the gains are carry overs from June and July that did not make it into the July spread sheet.  What is the bulk of this? Its mostly retirement.  But we also paid off quite a bit of debt as we have reduced our spending significantly.

(Your income may not be as high as ours – admittedly, we are high wage earners.  However, we also have a very high cost of living – living in San Diego is not cheap.  For your circumstances, focus not on the dollars, but the percentages. Many, many other FI-ER’s are not high wage earners and FI can be achieved by every income bracket.)

The following are some of the highlights of the “wins” since the last update:

  • Cut cable – savings of $200.00 a month.
  • Purchased 3 Fire-sticks.  We have not missed cable one bit.
  • Cut food spending by 50% (yes – 50%.  HUGE budget buster)
  • Paid off 3 consumer accounts and 3 other bills (consisting of tuition and dental work) – Total monthly savings of $1531.00
  • Cancelled Gym memberships – savings of $125.00
  • Put power on a peak savings plan and utilized the “super cool” method to cut A/C expenses. Not sure of the savings yet…July and August temperatures fluctuated greatly and I have not seen the new bill yet.  October should give us a better picture.
  • Opened a Vanguard VTSAX SEP IRA account and funded a total of $10,000.00.

Our plan for the coming months is to continue doing much of the same, but specifically:

  • Pay off Wendy’s car.
  • Pay off at least one credit card.
  • Call mortgage company to see if we can get PMI taken off with an appraisal.
  • Open an IRA for Curt to supplement his retirement from his employer.
  • Supplement Wendy’s income via Real Estate to speed up debt reduction and savings.

This train is chugging.  We are gaining speed.  There are hills up ahead, I am sure, and we cannot quite see what is around every corner – but we know our destination and we are undeterred.

I’d love it if you all would hop on, grab hold and join us.

Love and Prosperity,

Your Girl FI-day.

***The picture was taken by my friend Tara Ross (so please do not copy or share without permission).  It captures the spirit of the freedom financial independence brings.

 

 

2983 days…17 days in…

Has it really only been 17 days?  It feels like an eternity really. I am astonished at what we have been able to do in such a short time.  Intention is the word that comes to mind.   What a difference being intentional makes.

Here is just a quick update of what we have been able to do in a little over two weeks:

  • Opened up a Vanguard VTSMX retirement account and began funding it. (GAH!  How exciting is that!)
  • Paid off a credit account
  • Ordered the firestick and new remotes so we can cut cable THIS WEEK!
  • Did a three-month analysis of our spending on mint.com (Think you cannot afford to save or pay off debt, I will bet you there is a ton of waste happening.  If you eliminate the waste, you can do some BIG things.)
  • Reduced our cell phone bill by $25 – I know that’s not much, but we have a 3 month plan to reduce it even further.  Every dollar counts.
  • Cut out several unnecessary items in our budget for a total monthly savings of:  $200
  • We stuck to our weekly meal plan.  (which means money saved on food)
  • And the BIGGIE…We stuck to our budget and discretionary spending for the month of July!!!  – REALLY! This is HUGE.  I don’t know how many times I have to readjust the next months budget due to overspending in the previous month.

In the coming weeks our goal is to accomplish the following:

  • Fully cut cable
  • pay off several accounts for a total monthly savings of:  $1761.00, that savings will go directly into debt repayment
  • Pay off Wendy’s car
  • Continue funding retirement
  • Fund a “baby emergency fund” with at a minimum of $1000.00
  • Cut utility bills

The above is just a minimum.  If we keep this train chugging along, by our next update we should have far exceeded the above goals.

Love and Prosperity,

Your Girl FI-day.

 

P.S….This book is a MUST read if you are interested in retiring early.  Seriously.  A MUST.  File Jul 30, 3 19 53 PM

 

3000 days…Phase 1

So far during phase one, we have identified all of our debt and all of our income.  We have a budget – this our road map for our spending.  If you don’t have one – it is a must.  During this phase we will be tackling our debt with a fury.

We will also be searching for ways to save more on our monthly expenses.  I view this space as a space to not only document our progress and educate others on the “FI-life” but to also have some accountability.  So here are some of the action items we intend to execute during this phase:

  • cut cable
  • cut cell phone bill
  • cut food budget
  • no eating out, except once a month
  • free entertainment
  • start tracking our expenses on mint, track the last 3 months of spending to see where additional cuts can be made
  • pay off a few of our high monthly expenses that can be paid off in the next three months to free up monthly money
  • begin retirement fund
  • pay off Wendy’s car

What I hope you all will find by watching our journey is that we still live a very full life.  We are not misers.  We are simply choosing what matters most and doing a cost/benefit analysis of where our money goes.

I also believe in visuals…So I have created a spreadsheet to track our progress.  Its a little frightening to put this out there, but I know that if WE can acheive this HUGE goal – so can you.

Total Equity Investments Curt’s Retirement Consumer Debt Student Loans W Student Loans C Overall Gains
5.1.17 -295809 106000 0 14427 69922 240601 105713
7.1.17 -290489 106000 0 14427 64602 240601 105713 -5320

Now the above numbers still FREAK ME OUT…however, its important to look at the positives – we reduced our debt, resulting in an overall gain of $5300.00.  That’s pretty significant.  Now lets see home much more we can do by our next update!

– Your Girl-FI-day

On the Brink…

The idea of financial freedom is not a new concept for our family. I have been a Dave Ramsey fan for years.  In fact, for several years, I taught Financial Peace University and later developed my own debt freedom courses.   At one point we had zero debt except for our student loans.  However, over the last few years, life got a little crazy.  We adopted 4 Littles; expanding our family of four to eight in eighteen months time.  We thought why not add a little more CRAZY to our lives and decided to move to another state in the middle of that.  During that year long process, I commuted between two states until we could finalize our adoptions.  That was a HARD year.  After our move to San Diego, we purchased a fixer upper home big enough to fill our newly expanded family.  And now, here we are exhaling – catching our breath, and let’s be honest, spending WAY too much money than we should be.

We are on the brink…we put everything we had into the house, including financing much of the rehab costs.  As it stands right now, this house IS OUR RETIREMENT, and that makes me uncomfortable.

I feel at any moment catastrophe could strike, and it terrifies me.

You might think it hard to dream in such a state, but it has only amplified it.

We have this CRAZY (there is that word again….) wild dream.  A dream of a life on the beach.  Of retiring early with no debt and enough money in the bank to fund that life comfortably forever. It is not impossible.  In fact, there are communities of people who have done it and ascribe to the “FI-life” – they call themselves “FI-ers”.  It really is a thing…don’t believe me? Google is your friend.  Google “financial independence” or “early retirement”. You’ll find them.  And if you can’t find your way to google, I have made it easy for you and have listed some of my favorite blogs below.  I stumbled upon several of the same websites a couple of years ago and have been soaking it all in since.  And now, its time.  Its time to step away from the cliff, the brink of disaster, and boldly and fiercely go after the “FI-life”.

Our number is 3000.  3000 days is roughly 8 years.  In eight years Curt and I will both be 55.  Why 55? At 55, Curtis will be fully vested in a pension. So it makes sense to hold out for eight years (if I had my hearts desire – we would leave sooner than that – but I am not going to turn away a lifetime pension.)  So we have eight years to pay off all of our debt (except our mortgage – but we will pay it down significantly) and save at a minimum, $500,000.00 maybe more.*  That along with the equity of our home by that time should give us between $500,000.00 and $750,000.00.  Using the 4% rule (if you don’t know what that is take a look at this article from Mr. Money Mustache), we should have enough income coming in from investments and Curt’s pension to live on for life.  At age 67 we will also get a significant bump when we begin drawing from Social Security (assuming it still exists).

So that is the experiment.  3000 days to FI.  I hope you will join us in this endeavor and maybe along the way – catch the FI bug. In my next post, I will list several of our actions steps so that we have some tangible measurement of our “wins”!

Love and prosperity – Your girl-FI-day. 

Suggested websites:  

http://www.mrmoneymustache.com

http://www.madfientist.com/

http://www.choosefi.com/

http://www.1500days.com/

http://www.frugalwoods.com/

https://caitflanders.com/

 

 

*Keep in mind that the dollar amount we could be saving could be significantly increased if we did not have to use it for debt service.  That’s why it is so important to pay off all of our debt as quickly as possible.