29 (now 38) - Long Way to Go, But Digging In

[Standard Staples]

Thanks for update , Staples ! Looks like very strong Q1 for you, especially in net worth growth. Do I read it correctly that you are currently at $705k, up about $48k just in Q1 ? If yes, your goal of $750k by end of 2017 seems very low, playing safe here? Or is it suppose to include impact of going to one income?

You're right. I think I went very conservative and certainly underestimated the "Trump bump." I checked against today's numbers, and the investment net gain was a little over $48K/6.5% ($21K contributions, $5K employer matches and $22K organic growth/dividends). Q1 is a bit unique for us, as I receive my annual bonus and my wife receives her previous year 401k match as a lump sum, but I think an adjustment is needed. I see ~$26K left of contributions this year, so a 0% return would still bump me over $730K. I'm going to go big and raise the number to $800K.

Thanks for giving me that push, Exit 2024.

 

[Exit 2024]

$800k sounds like a solid target, go for it, Staples!

 

[Standard Staples]

Well, I missed a Q2 update, so I'll just jump right to where we stand as of the end of Q3. There have been a lot of changes the past 6 months, so I'll explain in detail after the numbers.

INCOME & SPENDING
Annual Combined Income: $180,000
End Q1 Tracking at $185,000
End Q3 Tracking at $209,000

Annual Expenses: $66,000
End Q1 Tracking at $69,300
End Q3 Tracking at $74,600

Annual Savings: $63,900
End Q1 Tracking at $76,000
End Q3 Tracking at $90,900

Annual Savings Rate: 49%
End Q1 Tracking at 52%
End Q3 Tracking at 54%

Net Worth: $750,000
End Q1 $705,000
End Q3 $811,300

GOALS
$44,000 401k (including Company Matches)
ON TRACK

$6,200 House Principal Payoff
OFF TRACK - $5,200

$12,000 Reinvested Dividends
End Q1 Tracking at $12,800
End Q2 Tracking at $13,300

$11,000 Roth (Combined)
DONE

$6,800 HSA
ON TRACK
__________________________________________________ __
$80,000 TOTAL
ON TRACK - $88,000

The biggest news coming out of Q3 is that my wife has opted to continue working until next July. This represents the increase in our projected income, and it also represents the increase in projected expenses. Daycare will continue a big longer, and I may have had to sweeten the pot for her with an extra vacation .

My son is turning 5 in December, and it feels like a big milestone, so we're surprising him with a trip to Disney World around Thanksgiving. He gets the whole week off from Pre-K, so we're heading down the Friday before, returning on Thanksgiving Day. We aren't going to tell him until the morning of, and he's going to flip.

The other part here that won't necessarily add to "expenses," (as it's captured in the modified mortgage), is that we're adding on to our home. Our back deck has always been useless, and it doesn't have stairs down to the backyard. We've opted to add a covered screened in porch and stairs, along with a poured concrete patio below, with construction set to begin in about 2 weeks. After running some numbers, we opted to refinance our home to access some of the equity. We maintained a 75% LTV on the property, and we actually took out a good bit more than we needed. I figured if I'm going to pay the (pretty reasonable) fees to refinance, I might as well capture a good amount of liquid equity while I'm at it. With this money, I sent in a final balloon payment for our SUV, just to get it off the books, and I started a thread last week regarding the possible payoff of our rental property. I'm still on the fence about how to proceed with that, but I do like the idea of improving cash flow when my wife leaves her job.

The craziest part here is that we achieved the end of Q1 modified NW target of $800K 3 months ahead of schedule. I'm not sure how long we'll see this kind of run in the market, but I feel compelled to push the new target to $825K, and I'll hope for the best.

Looking forward to a strong end to 2017!

 

[Legally_dead]

29 (now 32) - Long Way to Go, But Digging In

Congrats on the progress and reaching your NW goal ahead of schedule.

Other than the vacation, what keeps your DW working rather than pulling the trigger to be a SAHM?

 

[Standard Staples]

Congrats on the progress and reaching your NW goal ahead of schedule.

Other than the vacation, what keeps your DW working rather than pulling the trigger to be a SAHM?

Thanks for the reply.

Admittedly, my comment was a little bit tongue in cheek. I'm fortunate enough to have a partner that agrees with our goals of early retirement, so she appreciates her ability to contribute to the pot a little longer. However, family comes first, and when we first discussed her staying home, it was significantly driven by that fact that she felt that she was starting to slip in being the best mom possible.

At that time, she was under a different management structure in a relatively toxic office environment, and her flexibility was limited. I travel every other week, so when I was away, she had to rush in the morning, get ready for work, get the kids ready for school, drop them off, rush to the office, work X hours, then rush to school to get them, prepare dinner, bathe them, get them to bed, etc. It was stressful on her, and it was stressful on the kids.

Now, she works almost exclusively from home. That alone has created a tremendous change in her attitude and ability to be the mom she wants to be, especially when I'm on the road every other week. She's able to focus on getting them fed and on their way in the morning, returns home and knocks out her work, usually gets to the gym at lunch and often prepares dinner before going to get the kids. Equally important, she's spared from most of the negativity and drama associated with the office.

We still see Kindergarten as a big jump in terms of how our days and weeks will be structured, so that's the new target. Things are going very well, for now, so we'll see what happens over the next few months.

 

[Exit 2024]

Great progress , Staples!!! can you believe that your original target for 2017 was $750k in NW? I think $825k is doable if market will sustain. Looking forward to your end of the year report and targets for 2018

 

[Standard Staples]

Another year in the books, with a wild finish. Let's hit the numbers first, and then get on to a range of personal and career news.

Here's how the end of 2017 looked, when compared with the end of 2016:

==============================================================

$205,000 Annual Combined Income - $218,600

$80,000 Roth - $90,100
$77,000 Taxable Brokerage - $83,500
$46,000 Rollover IRA - $52,900
$169,500 401k (Combined) - $255,700
$31,200 IRA/Roth IRA (College Savings) - $43,500
$21,000 Cash/HSA - $182,300

Primary Residence: $201,600 Debt ($218,400 Equity) - SOLD - $23,000 Equity in New Home
Rental Property: $135,600 Debt ($14,000 Equity) - $99,000 Debt ($51,000 Equity)

NET WORTH END 2014: ~$354,100
NET WORTH END 2015: ~$489,300
NET WORTH END 2016: ~$657,100
NET WORTH END 2017: ~$805,000

2014 Annual Expenses: $57,600
2015 Annual Expenses: $57,300
2016 Annual Expenses: $71,715
2017 Annual Expenses: $76,690

2014 Annual Savings: $71,850
2015 Annual Savings: $90,120
2016 Annual Savings: $81,560
2017 Annual Savings: $98,830

2014 Annual Savings Rate: ~55%
2015 Annual Savings Rate: ~61%
2016 Annual Savings Rate: ~53%
2017 Annual Savings Rate: ~56%

==============================================================

2017 Goals & Results

Annual Combined Income: $180,000 - Beat by $38,000
Annual Expenses: $66,000 - Missed by $10,690
Annual Savings: $63,900 - Beat by $34,930
Annual Savings Rate: 49% - Beat by 7%
Net Worth: $750,000 (Modified to $825,000) - Missed modified by $20,000

$44,000 401k (including Company Matches) - DONE - $44,362.12
$6,400 House Principal Payoff - DONE - SOLD + $6,287.77 Rental Principal
$12,000 Reinvested Dividends - DONE - $20,158.50
$11,000 Roth (Combined) - DONE - $11,000
$6,800 HSA - DONE - $6,850
$80,000 TOTAL - DONE - $88,658.39 (Excluding Sold Home)

I feel great about these goals, having only missed two, both for very good personal and financial reasons.

==============================================================

2017 Recap & Notes
So, as you can see in the numbers section, we sold our primary home. It feels pretty weird to type that, as in my Q3 update, I was waxing poetic about how we recently refinanced and were adding a major patio/deck extension. Thankfully, we had NOT ripped out the old deck when my wife was re-approached by a company she interviewed with earlier this year. They offered her a position that effectively amounts to her dream job, along with a nearly 50% raise, with one caveat: relocation. Fortunately, the location is part of the dream, and we accepted the position.

So, in a span of 6 weeks, we accepted a new job, researched housing and schools online, did a blitz of a local house search, signed a contract on a new house, listed our existing home, went on a week long vacation, sold our home while on vacation, sold the majority of our furniture, found a short term rental, packed up the rest of our stuff and moved. (Oh, and my car was hit and totaled two weeks before the move, but that managed to just be a blip on the overall radar, especially since no one was injured.)

The whole thing was a whirlwind, but we have already settled in nicely, my kids are very happy in their new daycare program and we really feel great about the change.

Our net worth definitely took a hit with some of the costs associated with selling the old house and unexpectedly purchasing a new (CPO) vehicle, and we'll have more of those costs with buying and setting up our new house. However, with my wife now planning to work for years to come, a major salary bump, and living in a place with no state income tax, the net worth should recover at a fairly brisk pace.

==============================================================

2018 Notes & Goals
2018 should be fun. We'll spend the majority of the year settling in to our new location, and we're expecting to move in to our new "forever home" in the June/July time frame. My son will start Kindergarten in August, and we have a cruise planned for November.

So, unless we have another dramatic shift somewhere in 2018, I'm expecting an increase across the board. Income is going up, expenses will increase with the new house and continued daycare, but the overall savings rate should still hover around 50%. For net worth, I'm still curious when we'll have a market correction, so I'm playing it safe but will reevaluate mid-year.

Annual Combined Income: $225,000
Annual Expenses: $90,400
Annual Savings: $91,400
Annual Savings Rate: 49%
Net Worth: $900,000

$39,700 401k (including Company Matches - No match at the new company, yet)
$2,300 House Principal Payoff
$4,300 Rental Principal Payoff
$13,500 Reinvested Dividends
$11,000 Roth (Combined)
$3,400 HSA__________________________
$74,200 TOTAL


Here's to 2018! Thanks for following along.

 

[NgineER]

nice progress!

 

[nerdyJON]

I love watching progress year over year! Thank you for the update. A couple of large jumps in the last couple of years and you're only going for $100K in 2018? Push yourself, I think you can hit $140K, depending on the market.

 

[Exit 2024]

Thanks for update, Staples!
Looks like you had blockbuster year - so many changes and you made it through with excellent results
I also think your target for 2018 of less than $100k is very conservative but understand that you are planning for some expenses to get settled in the new house.
Looking forward to your 2018 updates

 

[Standard Staples]

I love watching progress year over year! Thank you for the update. A couple of large jumps in the last couple of years and you're only going for $100K in 2018? Push yourself, I think you can hit $140K, depending on the market.

Thanks for update, Staples!
Looks like you had blockbuster year - so many changes and you made it through with excellent results
I also think your target for 2018 of less than $100k is very conservative but understand that you are planning for some expenses to get settled in the new house.
Looking forward to your 2018 updates

Thanks to both of you for the replies, and the NW probably is worth another look. With the minimum adders of $11K Roth, $40K 401k, paydown of existing mortgage debt, and deductions of the one time housing costs, I really would only need to realize about $50K in organic growth to hit $900K. The tax bill should prove helpful to the economy, but I'm still curious when we see our next correction.

I'm going to leave $900K as a number I'd be ecstatic to see come year end, but I'll make $950K my stretch goal.

 

[MDC86]

The two of you should be very proud of yourselves for sticking to your plan and growing your net worth. In almost every scenario I have encountered personally when one makes more money they buy more stuff. What do you attribute your maturity to live way below your means to at such a young age. This question is coming from someone who is about the same age as you and has earned a lot more annually but now at 31 years old I have far less net worth. I like most fell into the spending trap. My hat is off to you both but certainly would love to find out more of your day to day habits that compound to what you have amassed!

 

[Standard Staples]

The two of you should be very proud of yourselves for sticking to your plan and growing your net worth. In almost every scenario I have encountered personally when one makes more money they buy more stuff. What do you attribute your maturity to live way below your means to at such a young age. This question is coming from someone who is about the same age as you and has earned a lot more annually but now at 31 years old I have far less net worth. I like most fell into the spending trap. My hat is off to you both but certainly would love to find out more of your day to day habits that compound to what you have amassed!

Thanks for the kind words. I think the desire to be financially free and at least have the option to retire early and spend more time with our kids is the biggest driving force behind our decisions. The funny thing is, if we were on one of the more "extreme" early retirement sites, we would be considered majorly wasteful spenders. Our new home will be more than we need, we both have more car than we need, and we spend thousands on vacation every year. I've never regretted a penny of any of these items, as they're components that really affect our day to day and year to year experiences, but the budget was always considered first.

I'll give you a few tips that have worked for me:

1) It's an old adage, but you have to pay yourself first. I'm not sure how everyone executes this, but my biggest component here is that I put the investing on auto-pilot and treat it like an expense. 401k comes out ahead of the paycheck, so you immediately adjust to the smaller paycheck, but individual contributions can be tough. This is why I demand of myself to treat it like a necessary expense. Mortgage, insurance, food, utilities, investing... all fall in to the same type of category.

For instance, on my Excel master sheet, we have Roth IRA contributions as an expense every month to the tune of ~$917. When looking at the month end totals, that ~$917 is never available to be spent on other things.

2) It's also cliche, but closely monitor your spending and find the leaks. Everyone harps on the big ones like rent/mortgage, auto payments, etc., but I think it's equally important (if not more so) to monitor the small stuff. You will always see and feel the $450 car payment or the $1,800 mortgage payment, but $15 at lunch, $40 at the bar, $25 at the movies will add up very fast if you don't keep a close eye on it.

3) When it comes to your budgeting categories, once you have a grip on what they *should* be every month, I like to over-budget and be happy when I come in under. Again, it creates the mental game of not having tons of money left over each month for frivolous spending. If you expect to spend $300 on groceries, bump it to $375-400. Mint.com gives you an option to rollover unused money from monthly budgets... I never do that. Start fresh every month.

4) Stick with it and don't get discouraged. 2008-2009 wasn't exactly a growth period for most people's net worth. I held on to all my investments and continued adding, and everything is way up as a result. We will absolutely have another correction in due time, and I once again will not sell. If anything, I hope to have sufficient cash flow to increase my purchases.

Good luck, and keep after it. If you have the income you mentioned, you can build your NW insanely fast, so don't feel like you're behind the 8-ball. Most people don't even consider investments until well after age 31.

 

[MDC86]

Thanks for the reply! I sent you a pm.

 

[Yarnstormer]

29 (now 33) - Long Way to Go, But Digging In

Looks like you have a good plan in place. Your wife should consider that if she leaves the workforce she reduces her future social security benefits.

I realize you are planning as a couple but its always smart to consider all options so I’m looking at it from a single person perspective. I was a stay at home mom from birth to age 8. However, If I had to choose a few years to stay home, I think I would pick age 10-teens. Younger if the kids are into sports.

I’m very impressed with your commitment to saving. Congrats on the milestone

 

[hilltide]

Wow. Nice work. You are laser focused! Great job.

 

[Standard Staples]

Q1-18 is complete, and we're doing very well in our new location. The weather has been tremendous, and there's so much to do in the area. It has really allowed to get outside every weekend and really soak up some quality family time. The kids are loving this lifestyle. Our new home is framed and roofed, with a scheduled completion of late June/early July.

We're currently in an inexpensive rental, so the savings have been tremendous. I budget for a minimal annual bonus, but we hit all our numbers in 2017, and this year's payout was triple last year's, so our income tracking has jumped. I'm feeling very good about all of our metrics, with the exception of the NW target. No big deal, as the down market creates good buying opportunities on a long horizon.

Here's an update of our 2018 goals:

INCOME & SPENDING
Annual Combined Income: $225,000
Tracking @ $240,000

Annual Expenses: $90,400
Tracking @ $87,000

Annual Savings: $91,400
Tracking @ $105,000

Annual Savings Rate: 49%
Tracking @ 56%

Net Worth: $900,000
Tracking @ $850,000 - Really depends how the market cycles throughout the remainder of 2018


GOALS
$39,700 401k (including Company Matches)
Tracking @ $41,000

$2,300 House Principal Payoff
Tracking @ $2,800

$4,300 Rental Principal Payoff
ON TRACK

$13,500 Reinvested Dividends
Tracking @ $14,200

$11,000 Roth (Combined)
ON TRACK - Will complete in Q2

$3,400 HSA
ON TRACK
________________________________________
$74,200 TOTAL
Tracking @ $76,700

On to Q2...

 

[knucklehead 61]

it looks like you are making additional principal payments on your house & rental.
personally, i wouldn't do that as it is cheap money. (if your interest rates are under 4.5%)
i would instead put any surplus cash into a taxable vanguard account, along with any cash.
if you have a fair amount of equity in the rental, consider putting a heloc on it. that way you will always have access to emergency cash if needed for a large purchase, while all your cash is building your wealth with compounding interest.

 

[Standard Staples]

The first of half 2018 has flown by, and we're in the final stretch on our home construction. We're set to close at the end of this month, and it will be a very welcome change. With the minimal furniture, no photos on the walls and relatively small size, we've never truly "settled" in to this temporary housing, so it'll be great to really feel at home.

Savings have continued to do well, with no major financial changes in that department since Q1.

The big change is that we recently sold our rental property. A little over a month ago, our tenants asked if we'd be interested in selling, and since we moved out of state, the thought of not being an out of state landlord had occasionally crossed my mind. We had the property appraised, agreed on a figure, and they closed a few days ago. Compared to the original purchase price, we made a small profit, but overall it was a nice cash out. I'll miss the income, but I think it's for the best. It eliminates one potential unknown in our day to day life, and I know they'll be happy there for years to come.

Here's an update of our 2018 goals:

INCOME & SPENDING
Annual Combined Income: $225,000
Tracking @ $240,000

Annual Expenses: $90,400
Tracking @ $87,000

Annual Savings: $91,400
Tracking @ $110,000

Annual Savings Rate: 49%
Tracking @ 56%

Net Worth: $900,000
Tracking @ $875,000 - Really depends how the market cycles throughout the remainder of 2018


GOALS
$39,700 401k (including Company Matches)
Tracking @ $41,000

$2,300 House Principal Payoff
Tracking @ $2,800

$4,300 Rental Principal Payoff
SOLD PROPERTY

$13,500 Reinvested Dividends
Tracking @ $15,600

$11,000 Roth (Combined)
ON TRACK - DONE

$3,400 HSA
ON TRACK
________________________________________
$74,200 TOTAL
Tracking @ $77,000

On to Q3...

 

[Exit 2024]

Awesome progress, Staples !!! only one red line and yes, markets are unpredictable, but keep pushing - 900k will show up sooner than later

 

[Standard Staples]

Another year in the books, with a less than stellar finish. My suspicions about a dip in the market were confirmed in Q4, but with a long horizon, I'm not worried. If anything, it just makes things cheaper in the short term, and I'll continue to make purchases every month.

Here's how the end of 2018 looked, when compared with the end of 2017

================================================== ============

$218,600 Annual Combined Income - $260,400

$90,100 Roth - $93,940
$83,500 Taxable Brokerage - $73,430
$52,900 Rollover IRA - $52,110
$255,700 401k (Combined) - $274,960
$43,500 IRA/Roth IRA (College Savings) - $48,450
$182,300 Cash/HSA - $76,920

Primary Residence: $350,000 Debt ($164,000 Equity)
Rental Property: SOLD

NET WORTH END 2014: ~$354,100
NET WORTH END 2015: ~$489,300
NET WORTH END 2016: ~$657,100
NET WORTH END 2017: ~$805,000
NET WORTH END 2018: ~$783,810

2014 Annual Expenses: $57,600
2015 Annual Expenses: $57,300
2016 Annual Expenses: $71,715
2017 Annual Expenses: $76,690
2018 Annual Expenses: $84,820

2014 Annual Savings: $71,850
2015 Annual Savings: $90,120
2016 Annual Savings: $81,560
2017 Annual Savings: $98,830
2018 Annual Savings: $121,710

2014 Annual Savings Rate: ~55%
2015 Annual Savings Rate: ~61%
2016 Annual Savings Rate: ~53%
2017 Annual Savings Rate: ~56%
2018 Annual Savings Rate: ~59%

================================================== ============

2018 Goals & Results

Annual Combined Income: $225,000 - Beat by $35,400
Annual Expenses: $90,400 - Beat by $5,580
Annual Savings: $91,400 - Beat by $30,310
Annual Savings Rate: 49% - Beat by 10%
Net Worth: $900,000 - Missed by $116,190

$39,700 401k (including Company Matches - No match at the new company, yet) - DONE - $42,237.74
$2,300 House Principal Payoff - DONE - $58,000
$4,300 Rental Principal Payoff - SOLD
$13,500 Reinvested Dividends - DONE - $24,261.70
$11,000 Roth (Combined) - DONE
$3,400 HSA - DONE__________________________
$74,200 TOTAL - DONE - $138,899.44

I feel great about these goals, having achieved every single one. Of course, it hurts to miss the big one, but it'll recover quickly.

================================================== ============

2018 Recap & Notes
This was a really great year. We spent the first half adjusting to our new life and getting excited for our new home and for my son to start Kindergarten. Late Summer, we closed on the new house, and we've settled in nicely. School is going well, and both our jobs are humming along.

My wife received an unexpected $7,500 raise in November, and she's on track for another larger raise in February. The job is really testing her, but she's learning a lot and truly excelling in her role.

We took a couple vacations and generally spent a lot of time together as a family. Life is good.

================================================== ============

2019 Notes & Goals
2019 should be another great year. We've really locked in to this life, the kids are happy and we have a few vacations planned throughout the year, including a cruise for my little girl's birthday next month.

Since this will be our first full year in the new home, I'm expecting an increase in spending to cover the property taxes, insurance, utilities, etc. I haven't factored in a raise for my wife, but with the sale of the rental property and a slightly lower bonus for me this year, I expect income to dip a little bit. As usual, we'll work aggressively to ratchet up the savings rate, but I'd be very happy to land around 46%, as projected.

Annual Combined Income: $240,000
Annual Expenses: $100,000
Annual Savings: $86,800
Annual Savings Rate: 46%
Net Worth: $850,000

$42,000 401k (including Company Matches - No match at the new company, yet)
$5,200 House Principal Payoff
$15,000 Reinvested Dividends
$12,000 Roth (Combined)
$3,400 HSA__________________________
$77,600 TOTAL


Here's to 2019! Thanks for following along.

 

[kgtest]

$42,000 401k (including Company Matches - No match at the new company, yet)
$5,200 House Principal Payoff
$15,000 Reinvested Dividends
$12,000 Roth (Combined)
$3,400 HSA__________________________
$77,600 TOTAL


Here's to 2019! Thanks for following along.

Congrats, although I never discuss total net worth, we have similar saving goals for the year although add 529 and brokerage to that list for us *we are 37 and earn much less though. We are also laying low on vacations while a sick relative recovers.

 

[Exit 2024]

Standard Staples, you had a great year, very impressed by your results despite you missing NW target. We missed it too but on other hand - lower stock prices are always welcome while we are in accumulation phase.

 

[HI Bill]

Congrats! Looking at the posts back to 2015, it looks like your spending is creeping up from $55K, to $100K! This will of course, adversely affect your ability to retire earlier. I'm at the 28th year in my career, and am saving 48% of my income, spending only $50k/yr. Choices...spend now, or retire early, and spend later! Best wishes in the new year!

 

[Standard Staples]

Standard Staples, you had a great year, very impressed by your results despite you missing NW target. We missed it too but on other hand - lower stock prices are always welcome while we are in accumulation phase.

No doubt about it. It's not fun to see the numbers shift downward, but it doesn't truly affect our day to day existence at this stage, and realistically, long term it will dramatically help. As long as I can keep the monthly and annual savings chugging along, we're well on course.