Financial Freedom Blog Post #12

 Dear Reader, how do you feel?

Well, it has been a minute and a half over here!

Today's posting will be an update of our assets and liabilities.

Please note that again this doesn't Mr. ItF's assets, except for the co-op which we jointly own.

Without further ado, our/my assets:

	Bank Accounts		Investments		Real Estate		Valuables
	Description	Value	Description	Value	Description	Rough Value	Description	Rough Value
	Credit Union 1	$1,040.05	Roth IRA	$75,747.18	Co-op	$595,000.00	Jewelry	$4,359.00
	Credit Union 2	$52.03	403(b)	$116,431.84
	Checking 1	$4,832.93
	Checking 2	$1,789.56
	Checking 3	$4,408.41
	Checking 4	$135.00
	Business Checking 1	$1,013.52
	Online Payment System (Business)	$20.00
	Savings 1	$811.44
Totals		$14,102.94		$192,179.02		$595,000.00		$4,359.00
Total Assets	$805,640.96

And our/my liabilities:

Description	Amount Owed	Interest Rate
Credit Card 1	$1,846.59	N/A
Mortgage	$284,484.60	3.25%
Total	$286,331.19

Again, Mr. ItF's liabilities are not included, except for the co-op which we jointly own.

Let's figure out our savings rate!

Total Saved Per Year	$31,985.88
Income	$37,102.68
Savings Rate	86.21%

Now I know you are asking, how is it possible for your savings rate to be so high?

Dear reader, please let me explain.

I place my income directly from my W-2. Although my SS wages are higher, the actual wages as reported on my W-2 are $37,102.68. This is due to the large increase in my pre-tax contributions to my 403(b), which results in a lower income (but simultaneously higher savings rate).

Furthermore - I am counting the amount I save per year in my aforementioned pre-tax contributions, but also the 5% matching and 5% bonus contributions to my 403(b) from the non-profit I work for. Therefore, even though the savings rate says 86.21%, 10% of that (well, more than 10% of that post-tax income - in fact if I were rounding up it'd be closer to 20%, it's actually roughly 17.48%) doesn't actually come from money I am saving (but from the non-profit).

Furthermore, that income I am taking from my full-time job. I do have bits and drabs of income coming in (nothing substantial) from other income sources, such as taking surveys, opening bank accounts, gambling, etc. that I haven't counted in this income. So were I to hazard a guess at my actual savings rate, I would say it's probably somewhere between 50-60%.

Hope that makes sense.

Well, it has been quite a day so this is,

Signing off,

Yours truly,

Into the FIRE

Financial Freedom Blog Post #11

 Dear Reader!

I know, I know. Back so soon?

I just couldn't stay away.

So, let's revisit our dear friends Millennial Revolution. Remember to buy Kristy's new book, which is amazing!

So, again, we calculated how long it would take to reach our number ( $1,004,955.00 ).

(Note: I realized I calculated this wrong and I'm actually saving even more than this, so please see the updated chart below):

Year	Balance	Savings	ROI	Total	Age
1	$206,281.96	$31,985.88	$12,376.92	$250,644.76	34
2	$250,644.76	$31,985.88	$15,038.69	$297,669.32	35
3	$297,669.32	$31,985.88	$17,860.16	$347,515.36	36
4	$347,515.36	$31,985.88	$20,850.92	$400,352.16	37
5	$400,352.16	$31,985.88	$24,021.13	$456,359.17	38
6	$456,359.17	$31,985.88	$27,381.55	$515,726.60	39
7	$515,726.60	$31,985.88	$30,943.60	$578,656.08	40
8	$578,656.08	$31,985.88	$34,719.36	$645,361.33	41
9	$645,361.33	$31,985.88	$38,721.68	$716,068.89	42
10	$716,068.89	$31,985.88	$42,964.13	$791,018.90	43
11	$791,018.90	$31,985.88	$47,461.13	$870,465.91	44
12	$870,465.91	$31,985.88	$52,227.95	$954,679.75	45
13	$954,679.75	$31,985.88	$57,280.78	$1,043,946.41	46
14	$1,043,946.41	$31,985.88	$62,636.78	$1,138,569.08	47
15	$1,138,569.08	$31,985.88	$68,314.14	$1,238,869.10	48
16	$1,238,869.10	$31,985.88	$74,332.15	$1,345,187.13	49
17	$1,345,187.13	$31,985.88	$80,711.23	$1,457,884.23	50
18	$1,457,884.23	$31,985.88	$87,473.05	$1,577,343.17	51
19	$1,577,343.17	$31,985.88	$94,640.59	$1,703,969.64	52
20	$1,703,969.64	$31,985.88	$102,238.18	$1,838,193.70	53
21	$1,838,193.70	$31,985.88	$110,291.62	$1,980,471.20	54
22	$1,980,471.20	$31,985.88	$118,828.27	$2,131,285.35	55

And you can see we are now between 12 and 13 years (not too shabby if I do say so myself!). Of course, if we have children, this number will only go up. 

To update on Mr. ItF, he has perhaps $1,035,000 now (I suppose he has done much better than I have. While I have increased about $50k, he's over doubled his money. How does he do it? I don't know. S&P 500 I guess).

So even with children I think we could still reach FI within 8 to 9 years. Though once we have children, we will have to decide if I should keep working until 55 or not (a whole 21 more years! The suspense!!).

So let's go back to #4: 

4) What is your annual, monthly, weekly and daily savings goal?

Again, using Grant's calculator, we can see here:

Year	Annual	Monthly	Weekly	Daily
1	$784,233	$63,345	$14,537	$2,076
2	$371,393	$29,999	$6,884	$983
3	$233,989	$18,900	$4,337	$619
4	$165,444	$13,363	$3,067	$438
5	$124,442	$10,052	$2,307	$329
6	$97,211	$7,852	$1,802	$257
7	$77,850	$6,288	$1,443	$206
8	$63,405	$5,121	$1,175	$168
9	$52,239	$4,219	$968	$138
10	$43,366	$3,503	$804	$115
11	$36,162	$2,921	$670	$96
12	$30,208	$2,440	$560	$80
13	$25,215	$2,037	$467	$67
14	$20,977	$1,694	$389	$56
15	$17,343	$1,401	$321	$46
16	$14,199	$1,147	$263	$38
17	$11,457	$925	$212	$30
18	$9,051	$731	$168	$24
19	$6,927	$560	$128	$18
20	$5,042	$407	$93	$13
21	$3,362	$272	$62	$9
22	$1,858	$150	$34	$5
23	$507	$41	$9	$1

(Note: I updated it so the correct year is highlighted - Year #12).

Interestingly enough, if we compare these two charts, they match up. If I save $31,985.88 (and invest it) every year, then I can retire in 12 years, which matches Grant's chart exactly.It is still pretty astonishing to see that if I save just $5 every day I can retire one year earlier.

However, there are other considerations at play which means it may very well be 21 years.

The good news is that if we have a child and I need to contribute less to my 403(b), that I only have to save and invest $3,362 a year to be on track for 21 years. Of course, it may be much nicer to retire early. 

There are actually quite a lot of items you can get for your child free (with swap meets, parents' Facebook groups, etc), so the main cost is really childcare at this point. We actually typed out a budget estimating how much a child would cost, and it comes out to about $3,118.75 a month on top of our existing expenses.

The most costly of these was childcare: roughly $1683 a month. However, if you think about it, quitting your job to raise a child (which somehow just feels different from retiring early to raise a child, though really, it's sort of the same thing), will lead you to lose out on prime years when you could be contributing to your 403(b) or 401(k) as your case may be.

Here is a great article on the topic:

https://money.usnews.com/money/personal-finance/family-finance/articles/2017-10-30/the-high-cost-of-being-a-stay-at-home-parent

One example, taken directly from the article, explains a woman becoming a stay at home mom for five years would lose a whopping $665,445 - this isn't even taking into account how hard it is for women to return to the workforce after they have children! So, if we take that into account, it could be much more than $665,445 - since we should keep in mind that is only for five years.

However, on the flip side, most FIRE'rs usually say that they don't want to miss out on the prime years of raising their children - it's true you will never get those years back, while money is just money, right? And you can always get SOME kind of job, right? Even if that means working at Starbucks or being a Wal-Mart greeter (just some of the jobs I hear getting thrown around for Barista-FI'ers).

Personally, I have a pretty good job right now. It has its ups and downs but I feel quite lucky to have a white-collar job. Once I get older, the chances of me getting this same white-collar job may not materialize.

Thanks for listening to my rambling.

I remain, your,

Into the FIRE