December Update

We’re already half-way through January and I’m just now posting my “December” financial update. I have been trying (unsuccessfully, it turns out) to get Personal Capital (the financial tracker I’m using) to accurately update the numbers from my rental properties. So…take this as an imperfect work in progress. (See? I haven’t forgotten my 2019 goal…though it did cause me to procrastinate posting the numbers).

For 2019, I’m building up my savings for a down payment on rental property #3. To that end, I moved some of my investments (NOT 401K funds) to my savings account now, since the volatile market continues its crazy rollercoaster ride. I’m on track to purchase before June.

net worth jan 15

Embracing Failure

I love the start of a new year because it provides an opportunity to reflect and reset. Every year I write down what my goals are  and the specific steps I am going to take to achieve them. This is a good practice; for the most part, it’s been successful for me. I encourage others to write down their goals as well. There’s something about putting it down in writing that is very powerful. It also helps to clarify what you want (and don’t want) so that you know what to focus on. Then, in order to get the most out of the process of goal setting, it’s important to review the goals periodically and assess if you are still on course (or not).

I also keep a bullet journal, which I write in daily. I’ve made a habit of reviewing my daily goals and writing down tomorrow’s goals before going to bed. They can be simple ones like “clean the bathroom” or they can be more complex, like “create a career plan and share with my manager”. I struggled earlier in the year because my life is pretty satisfying and I wasn’t sure what my next big goals were going to be. That’s when I stumbled upon the FIRE movement. It galvanized my efforts and gave me something concrete to shoot for–something I really believe in and can break down into smaller pieces to gauge progress. Since then, I’ve been excited about adding to my real estate portfolio, cutting frivolous expenses, tracking spending and researching where Mr. B and I will move to once we hit our financial goals. All good.

What part does “embracing failure” have to do with all this?

I’m a thinker, a planner, a doer, and a perfectionist at heart. In August, I had a career setback that put me in a tailspin for several months. I blamed myself for everything, wasted valuable time wallowing in despair, and ended up in counseling for a short time. I saw how destructive perfectionism can be, and how it paralyzed me from being my best self and taking action for a better future. Learning how to accept the highs and lows, to take responsibility when appropriate, and hold others accountable for their part are all things I’m working on. This is an ongoing pursuit, not something that will end with a declaration of “Yay! I’m done!”.

For 2019, my challenge is to learn to live comfortably with “good enough”. Embracing failure is an opportunity to learn a new skill, improve an established skill, and celebrate the journey of becoming. It definitely doesn’t mean letting up on my goals to become financially independent so that I can retire in five years; it simply means that I can learn to live with the uncertainty, discomfort and messiness of imperfection while I’m trying to get there.

Building a well-lived life

A big driver for the FIRE movement is the freedom to choose how you spend your time. As I get older, I realize how very important this is. In my twenties, I was so busy working and raising my young family that it never occurred to me that time is the most valuable resource in the world. It’s the one thing you can’t buy more of, no matter how rich you are. (Ask Steve Jobs and Paul Allen). You can always buy more “stuff”, but you can’t buy more time.

Given that our time in this world is finite, the most important goal is making the most of the time we have. That means different things to different people. For me, it means having the freedom to spend time with my family, to read, learn, cook, go out with friends, travel , and enjoy the beauty of the world around me. And, yes, I’m simultaneously  working on becoming the best version of myself that I can be, though I’m still working out exactly what that means. (And, I don’t have to be retired to do that).

There has been an explosion of books written on happiness over the past 10 years or so. I think happiness is an extremely personal pursuit, and I agree with the literature that it is unlikely to be found in more money, more “stuff” (which often just becomes clutter), or even in more experiences. Once you’re past the first couple levels of Maslow’s Hierarchy of Needs, you can focus on the things that truly make you happy. As far as FIRE is concerned, I think it’s important to have that worked out before you’re retired. If you are unhappy working a 9-to-5 job, especially if your unhappiness is broader than employment, having more time will only result in more time to focus on your unhappiness.

Start building a well-lived life now, regardless of where you are in your FIRE journey. None of us has the luxury of waiting. “Some day” might be too late.

November update

In spite of the craziness in the market, my portfolio did increase in November. I still have to add the accounts for my two rental properties, but otherwise, things are looking pretty good.

I’m interested in taking advantage of travel rewards with the Chase Sapphire Reserve credit card, so I opened a new credit card account in November. I have three months to make the minimum spend ($4000), and I’m only going to charge purchases that I was planning to make anyway. I will also pay off the balance in full each month. Once I’ve made the minimum spend, I get 50,000 points, which can be used for travel expenses.

Mr. B and I made the decision to forgo our anniversary trip to Hawaii this year so that we can save for rental #3. However, it’s possible that, if I use the travel rewards correctly, we might still be able to go (albeit, not by January).

In the meantime, here’s the financial snapshot I promised, as of November 1:

Net worth Dec 1

Geoarbitrage

 

“Geoarbitrage”, a term popularized by Tim Ferris in his book, The Four Hour Workweek, simply means relocating in order to take advantage of a lower cost of living. Due to the fact that I got started late in my FIRE adventure, geoarbitrage will factor into the overall plan to retire in the next five years. It’s tricky, though. There are a lot of important things to consider, not the least of which is the question of “where”?

There’s plenty of data for determining where the low cost areas are. In the United States, for example, this article from 2017,  shows the lower cost areas (mostly in the Midwest and South) and the high cost areas (mostly the west coast and parts of the east coast).

I consider myself a fairly adventurous soul, but I’ve pretty much landed on geoarbitrage within the United States. (There are less expensive international options, but those options add quite a bit more risk and complexity). 

Cost aside, there are other important considerations to think about: proximity to family and friends, access to quality health care, weather, access to arts and culture, traffic, crime and taxes, to name a few. 

Recently I’ve been thinking a lot about weather. The Mr. and I are leaning toward the Atlanta area (though we are early in our research). I’ve never lived in the South before. The lure of warmer weather and cheaper housing is strong. Will I be able to manage the heat and humidity of the summers? Is Atlanta far enough inland to avoid major hurricane damage? Will our adult daughters ever visit us (or, better yet, decide to relocate as well)? These are important questions that we’ll need to find answers to before committing to this life-changing plan. Luckily, we have almost five years to find answers. If my “analysis paralysis” doesn’t set in, we should be fine. 

 

What gets measured gets done

I’ve been trying to figure out the best way to track my financial independence over time.  I don’t have the perfect answer, but for now, I’m going to use Personal Capital. I will report my results today, then the first day of the month thereafter. I have a couple additional accounts to add, including my two rental properties, but this is at least a place to start.

Nov 18

A Tough Couple Days for the Markets

Wow. Hold onto your hat, the markets are in for a rough ride these past few days! If this is the long-predicted “correction”, or even a recession, then it will mark the first time I’ve weathered this kind of a storm before….at least, since I’m now paying attention to my portfolio. Yes, I had stock in the 2008-2009 timeframe, but the balance was low and I was so ignorant about all things financial that I just didn’t pay any attention.

As much as possible, that’s the approach I’m going to take now. In fact, it may take more effort on my part to ignore the ups and downs as I’m waiting for the time to come before my husband and I start drawing down our portfolios. I am a follower of JL Collins’ great advice in his book, The Simple Path to Wealth. One thing that he helped me to understand is that the bear market doesn’t happen that often or last that long. This was new information to me, since the media seems to focus on only two things: being in a recession or preparing for the next recession. Fear sells, I guess.

In the long run, the last two days don’t really mean much. I hate to see my hard-earned gains go down the toilet, but since (as Collins points out), the market always goes up, and since I’m not counting on my 401K funds at this point anyway, it’s business as usual.

Getting Started

When I first started exploring the idea of FIRE, I consulted a couple of people I knew and trusted who had experience in this area. One friend, who is now in his 70s, retired at age 51. He was on FIRE before it was a thing. The second friend has a real estate business, a day job in technical sales and a side hustle. He is much younger than I am, but he has enough passive income set aside that he could retire tomorrow if he wanted.

Both of my mentors started by asking me how much I’m saving and how much my expenses are. I have an idea of my savings and expenses now, but I have no idea how to estimate what they will be in five years when I hit the target date. In addition, the plan is to move from a HCOL state to a lower cost state, and purchase a new (smaller, possibly fixer-upper) house with the proceeds from the sale of my current home.

Their question was a good one, though. The goal is to save 40% or more of our income before retirement and to have enough cash flow before age 65 that we don’t have to tap into retirement funds (401K and pensions) until regular retirement age. Spending less than we make (a lot less) is a huge challenge for us, especially since we are still paying college costs for one of our daughters and we haven’t historically been as disciplined as we need to be to make this work. That said, we feel like we are in a great place to meet this challenge head on. In a later post, I will share details of our current savings and expenses.

 

You say FIRE, I say FIR

I’ve noticed that “FIRE” (Financial Independence, Retire Early) means very different things to different people. As far as I’m concerned, that’s a good thing. There is no “one size fits all” when it comes to finding what works. Purists will say that if you have a side hustle, or if you work part-time, or if you take “mini retirements”, returning to the workforce on and off, then you aren’t truly embracing the FIRE movement. I’ll be 56 in five years, my target FIRE date. Does that still count, since it’s barely what you could call “Early”? (The “FIR” movement doesn’t have the same ring to it). I’d say “YES”!

You have to find the variation that works for you. I had never heard of early retirement, and was not a great saver in my 20s and 30s. My husband and I live in the Seattle area, where we raised our three daughters. Our priorities were different then, and we got a late start saving for retirement. Ideally, we would have started investing much earlier, but it’s never too late! Beginning retirement 9-11 years early, and learning to live happily on 40% of our income is enough to make the “BIG GOAL” worth it. It’s unlikely that I’ll be interviewed on CNN anytime soon but that’s ok. I’m happy to share my journey with others who are working to do something similar, but CNN was never part of the equation.

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