It’s time again for what I decided will be a quarterly financial independence progress report.
Where We’re At
We’re still plodding along at our 9-5’s, waiting to be zapped. I’m a far cry from a “plan”, but I think some ideas about breaking away are coming into focus. I definitely want out of the cube farm. I don’t have to never work again to be happy, but I’m thinking extended breaks might be important. Hello teaching or part-time work 🙂
In the mean time I’m committed to milking the high-paying accounting field for as long as I can. I don’t dread coming in every day, but my current career isn’t making me into the person I want to be. Ideally I’ll be able to gut it out for another 2-3 years.
My wife on the other hand has a vitriolic hate for her job – I don’t see her lasting much longer. Ideally she would quit tomorrow. I’m realizing our plan isn’t going to be a super early conventional “retirement”. Instead, I’m starting to think of our 50% savings rate as facilitating a career change. By saving like crazy now we can create a portfolio large enough to pad our lifestyles. In this way we can do work without having to sell-out too hard for high pay.
So obviously I still don’t have a plan. And for that reason I’ll continue using the old chart format until a clearer picture emerges. Let’s see how close to financial independence we are.
Ack we went backwards! We currently stand at 28.5% financially independent – that’s how much of our expenses could be covered indefinitely by our savings.
There are basically two calculations involved. The blue line represents the safe-withdrawal rate of our investments. It’s 4% of our investments divided into 12 months. According to that we could withdraw $1,580/month without depleting our portfolio.
The red bars represent a 12-month rolling average of our expenses. As of the end of March, we spend an average of $5,540/month. 1,580/5,540 = 28.5%. Boom, math.
If we want to quit work forever we need to close the gap between our $5,540 in expenses and $1,580 in potential safe-withdrawals. Alternatively we could earn the $3,960 difference in some other way (different job) and quit our current careers right now. That’s the idea I’m leaning toward now, but not until we shrink the difference; $3,960/month requires a $48k/year after-taxes!
Why did we Regress?
We went from 33.7% at year-end to a piddly 28.5% now. The big swing was caused by a double whammy of an increase in expenses and a drop in portfolio balance.
We bought a new (to us) car in January which really bumped up our average spend. I considered (in a moment of weakness) removing it from our average expense calculation since we don’t plan on buying a car every 12 months. But then I realized that’s sort of the point of the rolling average, to make sure we catch all of our costs that are one-time or otherwise unevenly distributed. Actually, maybe I should use a 24 month average instead of 12…
2018 has not been as bullish on stocks as the past 2 years. Our investments actually dropped – I didn’t even know that was possible!
How I’ll Act on this Info
I’m just going to keep plugging away. I obviously don’t have things like dreams or ambitions to keep me motivated. Instead I have anti-motivators: corporate culture, long periods of forced immobility, commuting, meaningless work and tedium.
In the absence of a goal I think continuing to save oodles is the best approach. I want to give future me every opportunity to figure it out.
That’s all I got. Thanks for reading. As always, drive small used cars and live in a small house.