Took Monday Off But Now I’m Back

So, there was no post yesterday, not because I’m lazy but because there was a lot going on. Not that I’m not lazy, but I just wasn’t yesterday. You understand.

As most of you know, I’m going through a rough patch in my life and having to sort of take a step back to examine where I’m headed. That means I had a big decision to make between two job offers, both of which were a cut in terms of pay but one allowed me to keep working from home. Unfortunately, that’s the job that came with the biggest cut.

That being said, I went with it.

Just the facts, ma'am.After comparing each point of both jobs in an Excel spreadsheet and weighing the pros and cons, trying to ignore the ease of just working from home as a factor and paying more attention to the pure facts, the answer became clear.

Clear, that is, assuming I work steadily to create a decent side business. As that’s been my intention for a long time coming anyway, it really made sense and is just the fire I need to get going with it. Even if that means starting small.

And actually, the offer isn’t as bad as it was previously. After some more back-and-forth, I was able to decrease the damage from around 38% down to about 35%. That means I’ll be able to take more advantage of my upcoming 401(k). It also means there’s less of a gap to bridge in terms of side income earnings. The amount isn’t laughable, but every bit I can shave off the distance helps.

Good Listening

In other news, Mad Fientist released his new podcast recently, which I listened to almost immediately. I’m listening to it again right now, in fact. So good. In this episode, he rapped about financial independence, early retirement and geographic arbitrage with Ed Mills from The Millionaire Educator. I don’t know if it was the fact that I was just out of Fientist podcasts for a while or if it was just a particularly interesting episode, but I found this episode the most inspiring by far. Ed Mills apparently started out 40k in the hole after going to grad school, then got to zero net worth at 35.

In other words, he started on his FI journey at 35. It took him a few years after that — I think when he was 37 or 38 — to hit the $100k mark, and then it just kept going up from there. The kicker, though, is that he and his wife did this as teachers.

Did you hear that? Teachers.

So many of us are ahead of the game in this respect. I know a couple of people in our community who are in their early 20s who have hit $100k net worth. To think that someone in their late 30s could hit that number, but then just consistently hit goal after goal is such a great example to the rest of us. One, that someone could do that in such a short time (I think he and his wife achieved FI within 15 years), and two, that he and his wife were on the same page for so long to the point where they achieved what we’re all after. And they did it all as teachers.

Just … wow.

The Library

Don't Touch My CakeAnother thing I’m excited about is learning about my local library’s collection of audio books. For a long while before I cut back on some unnecessary expenses in my life, I was paying $14.95/month or about $180/year for Audible. It’s a great service, but just unnecessary for me. So I put it on pause to make it easier to use up the credits that are just sitting there without accruing more in the meantime. Then I come to find out that my local library has a very similar service and it’s all free!

So now I can have my cake and eat it too.

Oh, and did you know that there’s this other service the library offers? It’s sort of like Netflix but offline. Apparently you can borrow actual books from this place, and as long as you don’t keep them too long, you don’t have to pay anything. I know, I know. I was blown away by it too.

Just keep that between me and you. We don’t want everyone to find out.

Wealthometer – How This Monkey Measures Up

So I was checking on my Twitter feed and noticed this post from @BudgetsAreSexy (J. Money):

Naturally, I had to go and check this ‘Wealthometer’ out. So I did. And here are the results:


And to my surprise, I actually over-estimated where I fall in my wealth comparison. I wagered I was in the 75th percentile where I actually fall into the 70th percentile.

On the other hand, not too bummed. I definitely consider myself well on the side of fortunate.

After playing with the numbers a bit as I often do, I could magically be on the upside of the 80th percentile if my mortgage were paid off. No big deal, right?

Enough about me. How do you measure up?

Early Retirement – Playing With Numbers

Ever find yourself playing with numbers when you should be sleeping?

Running the Numbers

I sure do.

I was looking at my Ally account and happened to click on the “More Details” button/link which then showed me what my daily accrued interest looks like. I mean, it’s a simple calculation they’re using, but for some reason I find it exciting anyway.

Daily Accrued Interest = (Available Balance X 0.0099) / 365

For me, that works out to $1.22 per day. And soon, that will be $1.36/day!

Yeah, not exactly Bill Gates numbers here. In terms of money earned per second, it’s .000014 cents per second or in terms of minutes, it’s .00085 cents per minute.

So that made me wonder what it would take to reach different retirement numbers at 0.99%. Easy enough, just take the amount you want to earn per year and divide it by the APY you’re getting.

Playing With Numbers

$60,000 / 0.0099 = $6,060,606.06 (Yikes)

In order to earn $5,000 per month with a high interest savings account from Ally, you would need over $6 million in the bank. What a waste!

Now let’s say we find an amazing CD with a 3% interest rate. Then what does it take?

$60,000 / 0.03 = $2,000,000.00

Now we’re getting somewhere. That number is still really high but not impossible to reach. However, I’m not a Rockefeller. I’m going to need a higher interest rate. What happens if I invest in index funds that average just 5%?

$60,000 / 0.05  = $1,200,000.00

Okay, now we’re really talking. That’s just $1.2 million. Not only would I get to join the double comma (dos comas) club, but at just 5% I’d have enough money to live comfortably on in most places in the world.

Of course, it’s not outside the realm of possibility to beat 5%. For example, over the past 10 years, VTSAX has averaged around 8%. Plugging that number in should get us some interesting results.

$60,000 / 0.08 = $750,000.00

No double comma club there, but now I’m at least financially independent. And this assumes no diversification, which would obviously bring the average interest rate down but we’re playing with numbers here. (The total bond market index fund — VBFMX — has earned around 4.5% over the past 10 years). Assuming a weighted average for those two for an 80 / 20 portfolio, it would only bring the total interest rate down to 7.3.

( 80 X 8 + 20 X 4.5 ) / ( 80 + 20 ) = 7.3

$60,000 / 0.073 = $821,917.80

Not as clean a number, but perhaps leaning towards realistic. What if I want a little more money to play with? Say $100k.

$100,000 / 0.073 = $1,369,863.01 (or roughly $1.4 million)

So How Much Should I Save?

Assuming I want to reach this number before I turn 65, and assuming I’m starting from $0 at a salary of $100,000 saving just 20%, 30% or 40%, how long would it take me to get there?

20% annual savings ($20,000) invested at an average of 7.3% APY would take 25 years to get to $1.4 million. Retirement age? 57.

30% annual savings ($30,000) invested at an average of 7.3% APY would take 20.5 years to get to $1.4 million. Retirement age? 52.

40% annual savings ($40,000) invested at an average of 7.3% APY would take 17.5 years to get to $1.4 million. Retirement age? 49.5.

While we’re at it, let’s try the same thing while aiming for the lower number of $60,000.

20% annual savings ($20,000) invested at an average of 7.3% APY would take 19 years to get to $822k. Retirement age? 51.

30% annual savings ($30,000) invested at an average of 7.3% APY would take 15 years to get to $822k. Retirement age? 47.

40% annual savings ($40,000) invested at an average of 7.3% APY would take 12.5 years to get to $822k. Retirement age? 44.5.

Sure, I could have used one of the many calculators online for this stuff. Mr. Money Mustache has an excellent one! But sometimes it’s good just to figure the math out for yourself and go through some of the scenarios.

Another thing is that all of these scenarios suppose that I’m living purely off of interest from index funds. It says nothing about dividend payouts from individual stocks or investment property income. Both are avenues I intend on pursuing just to bring that year number down to just 10 years, which is the goal I’ve given myself on my about page. Oh, and also — I’m not starting from $0. I’m starting from about $100,000. If I decide to sell my house, I’ll be in even better shape.

This year has been an excellent year for savings … so far. As you know if you’ve been reading, a rough patch is coming. But that doesn’t mean I can’t maximize before then!

I should probably sleep now.

Until tomorrow!

Disclaimer: Any errors in math are totally not my fault because it’s nearly 2AM where I live and will be corrected once someone inevitably points them out, at which point I will recoil in horror and existential dread because I will be so much further from my goal; meanwhile, I will sleep in blissful ignorance.

Setting Goals for the Long Road Ahead


In a few short days, I will complete my big primary goal to fill my Emergency Fund to 100%.

I will, of course, post when it happens but with the end of that goal approaching, it has occurred to me that even though this is only one of three major and ongoing goals, there’s something missing.

After much thinking, I believe that missing thing is the finite number attached to this goal. For some reason, without that number my mind starts to sort of go fuzzy. And knowing myself, that usually means a loss of interest which will mean the next goal goes up in smoke.

Maintaining That Hustle

This realization, along with a conversation I had with a friend of mine earlier today, got me to thinking about the reason why I have dropped the ball on some things in the past, despite promising starts.

Part of it definitely has to do with being too quick to share my early successes. It is easy for me to feel that sense of completion and fulfillment out of something without having actually seen the thing to completion. That’s a problem.

Another part of it is that I often start things for the thrill of just starting. Starting new things does feel good. Even finishing them feels great. It’s that boring middle ground where there are few successes to share and all the work to do in order to push a thing along.

That’s where things often fall out of order.

Don’t get me wrong — I do finish many of the things I start, but those things are typically important to other people. It’s the things I start on my own that get the least love. So I’ve spent some time contemplating why I’m putting other people before me when it hit me.

I put priority on completing things for other people because they demand progress. There’s no one demanding progress from me for the stuff I want to do.

So the way I see it, I’ve got to trick myself into the same kind of accountability.

Setting Mini Goals

A thing I’ve often read about tackling big tasks or projects is that you should break them into smaller tasks. The same can be said for big goals. My next goal, for instance, is to start investing in general.

Could that goal be any more scary and vague? Probably not.

So the logical next thing to do is to break the menacing goal into little ones. For general investing, that’s easier said than done. At least for me.

First of all, I have some questions to answer. Like where I’ll invest, whether it’s taxable and then how much in each.

Last month, I would have answered each of these questions differently. However, now that I have some rough seas ahead of me, things have changed. As a recap, my primary three goals are:

  • Fill my Emergency Fund to $50k
  • Fill my IRA to at least $5500 every year (diversified and rebalanced often)
  • Begin non tax-advantaged investing

So by July, goals one and two will have been completed actually. And for those of you who are paying close attention, you probably noticed I said “at least $5500,” and that’s because I have the current benefit of having a SEP IRA which allows me to contribute up to 25% of my income or $53,000, whichever is the lesser. However, not being an expert on tax law, I don’t know how much longer I’ll have the benefit of adding to that fund.

And there we have it. My first goal is to figure out when I have to stop contributing to my SEP IRA based on my transition from a self-employed freelancer into a salaried employee. And on top of that, I have to figure out whether I can even keep my SEP IRA or if I have to change it into some other investment vehicle.

Now, depending on the answer to that, I either have to stop putting money into my IRA immediately or I still have some time left to put up to about $45,000 into the account before I have to roll it into (most likely) a Roth IRA.

If I do have to stop, now I have the option to start a brokerage account or wait 90 days to begin investing in my 401k (with 5% matching, I might add).

At this point, my decision tree is getting a little bit complex. I could either plan for all of these scenarios or just get started on goal number one and, once I figure that out, establish the second mini goal.

I think I’ll do just that.

Keep On Keeping On

For me, the most important thing is to keep moving and stay positive. Every step on this long journey counts, no matter if they were at a racing pace like they’ve been for the past year or at light jog, like they’re about to be.

It’s that forward movement that matters.

After all, it could be worse, right? There are so many positives in my life that, even when the wind gets knocked out of me, it’s not hard for me to get back up knowing I have so much to be thankful for. I’ve got my family. We’ve all got our health. I’m still gainfully employed. I’ve got a new community of like-minded people that I love catching up with on a daily basis, who often do the same for me.

Life is good.