I made it at the last minute! This update is almost a month late. Not because I’ve been lazy. And it’s not even because I had to take a pause for a few weeks before relaunching the site.
We’ve taken such a significant step in downsizing our home that things had to settle a bit before we could really determine where we’re at. Some of our goals just don’t make sense anymore and we had to set new ones.
These are good reasons for a delay, but no way was I skipping entirely. Reviewing goals is important, as is being transparent. So, I still got it out in the month it was due. Just at the VERY end of the month!
Oh, unrelated to our interim goals: We hit seven figures in net worth if you missed it!
Before we dive in, a few reminder recommendations:
- Set short term financial goals that help you take action
- Track your net worth. I recommend getting started with Personal Capital.
I try to follow a consistent format in these posts.
Each header will list the goal. Here are our 2019 Goals if you want the full context.
I’ll rate the goals like this:
ON TRACK +
ON TRACK / DONE
We’ve either already met the yearly goal or are on track to do so and have added something.
Exactly as it sounds. We’ve taken the necessary action to get there by year-end. Or, it’s already done.
Actions that we haven’t yet taken, or need to adjust to reach the goal.
We won’t make it without significant changes
Goal 1: Max out Pre-tax retirement accounts
We set up automatic contributions to make this happen. In our Q1 update I also shared that TFI discovered she was eligible for an extra provision in her 403b.
We both max out our 403b and 457b retirement accounts. That’s a lot of pre-tax money going straight into accounts. Even better, the 457 is accessible should we decide to leave our jobs.
We’re well on track here and it’s all taken care of by automation. The only way we’d derail would be by losing our jobs. Thankfully, we’ve got emergency funds for that!
Goal 2: Make Roth IRA Contributions – $12000
When we downsized our house, we freed up some equity. We had planned to make our contributions in the second half of the year. Instead, we made these contributions immediately.
Not a lot more to go into here. Our ROTH are both in VTSAX.
Goal 3: Additional Mortage Paydown of $21,500
NO LONGER APPLICABLE
We were paying down our mortgage and on pace to meet this goal. Instead, we decided to downsize our home and eliminated our mortgage completely!
Read more about our downsizing process here. (I’m working on a full results post soon!)
Goal 4: Taxable Investments – $9800
In order to bring a bit more balance to our portfolio, we contribute $400 a month to Fidelity’s zero fee international index. Our 403b and 457b are in VTSAX, a target date fund, and a bond fund, so we are underweight on typical international exposure. This is set up as an automatic contribution and we are on pace here.
Our original goal included adding an additional $5000 to our taxable investments. As a result of downsizing, we have cut our housing costs in half. During our goal review, we agreed to get aggressive here and plan to put an additional $20k in taxable investments in our Vanguard brokerage.
One could argue that we met this (and blew it out of the water) by freeing up equity from our house to put into other investments. However, this goal is about carving out investment from our monthly income. Therefore, we haven’t made it yet and aren’t clearly on track. I’m labelling it NOT YET and hope to change that rating in our Q3 update.
The new goal is $24000 in taxable investments for 2019.
Goal 5: Increase % Going to Charity by 1% Each Year
We’ve already met this goal for 2019. We are on track to exceed it. Our final rounds of giving happen during annual giving campaigns in the second half of the year. Our goal was only 4% this year, but that felt too light for us. Instead, we’ll finish higher.
Our financial independence plan includes giving 10% a year within 5 years and every year after even in retirement.
Goal 6: Meal Planning / Prepping
I’ve rated this at risk because the downsizing process disrupted most of our routines. Prepping and staging for sale, packing for a move, and moving into a new space made this difficult. We had started to implement meal prepping and planning successfully, so I believe we’ll get back on track.
I think we’ll be meeting this goal by the next goal update. For now though, we aren’t doing it at all. At Risk!
Goal 7: Credit Card – Select A New Travel Rewards Card
We are primarily using our Discover It card thanks to the 2x cash back for the first year. On special categories this is 10% (5% x 2) so we make sure to use that card when those apply.
Knowing we would have several large moving expenses, and two vacations over the summer we decided to start another travel card. We chose the Chase Sapphire Reserve with the 50k point sign-up bonus.
The Reserve comes with a high annual fee ($450) but includes a $300 travel credit and a few other benefits. One of those benefits is $100 toward global entry. Since we knew we’d be applying for global entry in preparation for a future trip, we decided to get this card now. Effectively, this reduces the annual fee to $50 after the travel and global entry credits are applied.
As expected, we met the minimum spend with moving costs and summer travel.
Our next card will likely be the Chase Sapphire Preferred. We’ll finish the year making sure to take full advantage of the Discover IT first year bonus. We want to make good use of credit cards but balance out our attempts to squeeze out every bonus. We can get obsessive.
Reminder: Only use credit cards if you pay the full balance every month.
Did I mention that we downsized? Only 30 or 40 times? Okay, I’ll stop – but that’s a pretty big financial win!
It freed up some significant equity. We are trying out a rental for a year to see a) if we like the area and would consider purchasing and b) if we just want to remain renters for awhile. So, we’re keeping that equity a bit more liquid for now. It was used to:
- Replenish our emergency fund (we’d tapped into it for a few of the house prep expenses)
- A small amount was applied to our rental mortgage to sync paydown up with possible retirement dates
- Placed $50,000 into a new Marcus account to capture the 1% bonus on top of the (currently) 2.15% rate.
- Purchased a 1-year CD with the amount we’d potentially use for a down payment after renting. The rates aren’t fantastic right now, but this will keep us from losing value to inflation and stop me from impulsively putting it at risk in the market. Money you may use soon shouldn’t be in your risky investments.
- The remainder is in a Vanguard money market for now while we decide on our next investment steps.
Even more important than the equity, we now have almost $2000 more a month to invest. This will be used to accelerate investment in our brokerage accounts. (See Goal 4)
For the remainder of the year, we will sweep our checking account at the end of the month and buy VTSAX. This will enable us to get a feel for our new financial reality.
During our annual goal setting in December, we’ll make a long term plan and add this to our automation.
Net Worth Update
Again, you can read in more detail about our most recent net worth calculation.
I normally don’t share actual numbers, but this was a big milestone. Even here, I’m not specific other than to say we’ve hit seven figures. This is partly because net worth fluctuates daily (market) and for security reasons.
Our net worth is now just over 62% of our FI goal.
It was an incredibly successful quarter for us! This is the most tangible progress we’ve made in a short period since starting our pursuit of FI.
It’s amazing how the knowledge, actions, and habits build on each other and progress accelerates.
Contrary to feeling constrained or like we’re sacrificing, we feel more free and balanced than we ever have before.
We are also now trying to balance that panic instinct that kicks in when it seems like things are almost too good. You start looking around to try to determine what will go wrong and wreck it all! When we fight off that instinct though, I hink we’ve got a good plan and are ready for the inevitable shock to the system. There will be a market downturn, I could potentially lose my job at anytime, but it’s all going to be okay.
We’re a little over halfway through 2019 and life is better than ever. We’re very lucky.
Progress – not perfection.
Summary of Goal Progress
|Goal 1||Max out pre-tax retirement accounts||$76,000||On Track+|
|Goal 2||Roth IRA contributions||$12,000||DONE|
|Goal 3||Additional Mortage Paydown (Goal cut)||Mortage||Eliminated|
|Goal 4||Taxable Investments (Changed)||$24000||Not Yet|
|Goal 5||Increase charitable giving by 1% each year||4%||On Track+|
|Goal 6||Implement Meal Planning/Prep||N/A||At Risk|
|Goal 7||Travel Rewards Credit Card||N/A||DONE|
Here’s to an even better second half of 2019 for all of you!