Monthly Net Worth Update – November 2016 – $1,229,861

 

November proved to be an interesting month. I think many of us were surprised by the Trump win in the election. Since that time the market has been doing fairly well. I guess Wall Street likes the idea of lower corporate taxes? In addition, bond markets have seen big swings and mortgage rates are climbing quickly. Boy are we happy we locked in our two new mortgages at under 4% earlier this year!

Thanksgiving was a nice opportunity to see some family and to reflect on all the wonderful things we have in our lives. Truly, we are very blessed.

Our net worth continues to climb thanks to aggressive saving and primarily market returns. We’ve been up 9 out of 11 months so far this year, and with any luck we’ll actually hit our growth goal of 25% increase in Net Worth by the end of the year.


My primary goal is to have the freedom to “retire”, or reach financial independence (FI) at age 40. As of this month, that is now just 15 months away!

I’m a big believer in completing monthly net worth updates as a way to stay on top of your financial situation and work towards your goals. Therefore – I share my monthly net worth updates here.


Here’s the latest net worth breakdown.

Total Net Worth this month came in at $1,229,861 – this is $23,936 more than last month. Here are the details…

November 2016 –

2016-11-net-worth


Net Worth Notes:

Assets:

Cash – This shows a pretty significant dip in the chart above, but this is mainly due to the timing of when I pulled these numbers together. Because it was a bit later in the month (not on the 1st), my mortgages had paid out already, thus depleting some of my checking account. Note the liabilities section, especially the mortgages show a big change. I’m continuing to try to save cash so that I will be able to deploy it during a market downturn or take advantage of other opportunities, but sometimes I just want to invest it! I have to keep reminding myself that at least part of the goal now is to build cash. Soon I’ll be working on my plan for 2017, and specific goals, so that might help keep me focused.

Taxed Stock Account –  A while back I reduced my monthly contribution here from $2k to $1.5K – believing that a little extra cash might be a good move right at this moment. It’s all set up as part of an automatic investment plan where the money is spread across 5 or 6 different index funds. Occasionally I change the mix based on performance of the various ETFs in the portfolio. Specifically, these are ETF Index funds with iShares and some Vanguard. I intend to continue funding this at this level (or more) for as long as possible. Also in this bucket is a small amount invested recently in a LendingClub account. (Read more about my experience with LendingClub so far here)

Retirement Accounts – This consists of my 401k, Trad IRA, Roth IRA, and HSA account, as well as Mrs. Freedom 40’s 403b, new TSP, and two Roth IRAs. We maxed out the 401k/403b the last three years and will do so again this year. We make too much to directly contribute to a Roth.

Rental Property – This is a 2BD/1BA across the street. We used to live there and rent it out now. Since refinancing we’re starting to see some positive cash flow here! We were at almost $0, but now this little rental creates about $240 in monthly cash flow. That’s if there are no maintenance costs though. If no major repairs are needed between now and the end of 2106, we should net about $845 for the year. It’s not a ton of money, but in my mind the more important thing is that the tenants pay the mortgage every month and so over time my mortgage will be paid off and I can either sell the place or continue to rent it while growing the cash flow it generates. As for what I’m doing with the $240 cash flow each month, I’m actually just putting it towards additional mortgage principal pay down. The whole landlord thing can be a headache from time to time, but for now, we keep it. Ref 1. Ref 2. Ref 3.

Home Value – During the Refi process we had to get appraisals done for both of our properties. Our main home appraised $7k higher than I had, while the rental condo appraised for $10k less. I’ll continue to use these estimates for the next several months. We have no plans of moving or selling either property in the near future, so in many ways, these values have limited meaning.

Other – This consists of two cars and some gold and silver coins.

Liabilities:

Home Mortgage – With our refi we are now at 3.5%, which still strikes me as an amazingly great deal! Money is so cheap right now!  Auto payments are all set up for this now and we’re paying the same as we did for our old mortgage. I ran the numbers and this means we’ll have it all paid off in 17 years if we stay as is. (30 yr note) I plan to write more on our recent refi experience soon.

Rental Mortgage –  We completed or refi here too and are at 3.75% for a 30 year. As with our primary residence, we’re continuing to pay what we paid before so that we pay the loan down sooner.

Other Loans – This includes 2 Student loans Mrs. Freedom 40 has. Both are at 2.125%. It also includes Mrs. Freedom 40’s car loan at 0.9% and my car loan at a whopping 0.0%. We could pay all of these loans completely off  if we wanted too, but the rates are so low, I don’t think it makes any sense to do so. Update: Mrs. Freedom 40 recently decided she wants to just completely pay off and get rid of her student loans. It’s been years since she graduated, and I guess she’s just tired of looking at them. I have mixed feelings about this, but it’s her decision and it’ll be good to erase some debt and a monthly expense from our lives. We’re planning to completely pay all student loans off by the end of 2016 so we don’t have to deal with any tax implications in 2017. 

Finally, here’s what our Net Worth looks like over the past 12 months. The line is climbing again and I’ll take it for now!.

2016-11-net-worth-graph

Some other interesting notes about our net worth to share

YTD Gain/Loss = +$194,852

YTD Percentage Gain/Loss = +18.8%

12 Month Gain/Loss = +$191,874

12 Month Percentage Gain/Loss = +18.5%

Three things this Thanksgiving showed me about Americans

I hope everyone had a great Thanksgiving! Hopefully you were able to spend some time with family, friends, and loved ones. Personally, I’ve always enjoyed the idea of Thanksgiving. It’s pretty cool that as a country we all take a day to stop and think about what we’re thankful for. Well – in theory anyway. This Thanksgiving I spent at home with several relatives from Mrs. Freedom 40s family joining us. We had tons of great food, and some good company too. Of course, there are always a few awkward moments and a few wierdo relatives, but for the most part it was really very nice.

After a weekend of family and the holiday still fresh in my mind, I thought I’d share a few observations and stories. I might be wrong, but for the most part I think my family is pretty representative of the “average” American family in a lot of ways. They may be better off than some, and worse off than some, but in general they share the same beliefs and habits as what I’ve also observed in other Americans.

Setting the stage – My wife and I cooked most everything for our Thanksgiving meal while some others contributed with some sides and deserts. While the main dishes were still being finished up, everyone enjoyed appetizers and someone turned the football game on. People were enjoying themselves and before long ready to dig into the main meal. Fortunately, we were ready to serve around 2pm and so we called everyone to the table. This is when my first observation smacked me right in the face.

As Americans we love our screen time and we’re increasingly bad at actual in person social engagement.

At this point I turned off the television and promptly heard complaints from one of the cousins about needing to watch the game. Now, I like football as much as anyone, but I’m sorry, as an entire family we only see each other a couple times a year and it seems to me that we can all sit down and enjoy the food and each other’s company without the distraction of the TV. Since it was my house, I refused to turn it back on. It was then that I heard some line about having a $100 dollar bet on the game and needing to know what was going on. Sorry, still no dice. Besides, there will soon be plenty of time left on the game when we finish eating.

A main discussion topic at the table (as always) revolved around what TV shows people are currently watching and how great they are. Based on the conversations around our table, it seems like most of the group does little more than watch television. They all mentioned so many shows I could hardly keep track. With the exception of a few, most weren’t even on my radar. When they learned this, I was seen as (again verified as) the family freak who never knows anything about all the awesome stuff on TV. Don’t get me wrong, I like TV too, but sometimes I wonder if these people do anything but watch TV.

Throughout our conversations I also noticed that nearly everyone at the table spent a considerable amount of time looking at their iPhones or Androids. Sometimes at natural lulls in the conversation, but often right in the middle of a conversation. I really wanted to tell everyone to put their phones away or even walk around and take them from everyone, but I figured I was already walking on thin ice with the TV thing. Am I just an old curmudgeon? Is it crazy that I think people should keep their phones in their pockets during meals? Is there really something that urgent you have to look at? Are you really so rude that you need to actively show your relatives and friends that they bore you to the point of needing to pull out your instant entertainment machine from your pocket?

Americans love to buy crap we don’t need but that we think will make us happy. The second topic of conversation at our Thanksgiving table revolved around a maddening swirl of consumer items people are craving. There was conversation about people wanting new jackets, new clothes from fancy and/or trendy stores, new SUVs, new hand bags, new cooking equipment, fitness classes that cost more than a week of lunches for me, and even a new motorcycle. Of course, there was also lots of talk about Black Friday shopping and the question “When are we going shopping!” As if there was little other point behind this whole holiday.

For most Americans, the notion of retirement is still reserved for those over 65. The third topic of conversation that got some air time was the topic of retirement. In our family several people are right around 65 and have either recently retired or will be soon. At this point one of the younger cousins made a joke about retiring now and I somehow let it slip that I was planning actually planning to retire in about a year. I’d never really shared this with anyone in the family and the reaction was interesting. First off – I don’t think half of them actually believed I was serious. Even the ones who did were skeptical. The next reaction was along the lines of, “how is that possible?!?!” Of course – these are the same people that were just talking about buying all kinds of new clothes and superfluous SUVs. The irony was not lost on me, but I fear it was for nearly everyone else.  You could really see the total bewilderment in their eyes as they looked at me and tried to make sense of the comment. I was hoping I’d get some good questions about it, but I’m not sure they even knew how to respond or if they even believed what I said. And so, we didn’t dwell on it for long, but it will be interesting to see if it comes up again in future months and how people will react.

A final observation…Finally, one of the best parts of the whole weekend was playing board games and cards with the family and laughing hysterically at points along the way. The cost of these activities was negligible, but yet the fun and bonding provided was way better than going out to the movies or shopping. It just helps to remind me that happiness doesn’t need to be expensive. In fact, most times, it costs very little, or even nothing at all.

Thanksgiving 2016 – What I’m Thankful For

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Sometimes in the daily course of things I find myself complaining about things around me or my situation and wishing that things were somehow different, somehow better. I think this is a natural thing for all of us to do – we’re always convincing ourselves that things could be better somehow.

I love how Thanksgiving forces us to all think for just one minute about all that we have to be thankful for.

I have so much to be thankful for this year. Here are a few things that come to mind.

  • I’m healthy and (reasonably) fit.
  • I have a beautiful, loving, caring wife whom I love very much and who loves me back.
  • I have a great family and group of friends around me.
  • I’m fortunate to say that in the last year I’ve traveled to the Philippines, Switzerland, Italy, and a number of places here in the U.S.
  • I took close to 8 weeks vacation this year!
  • I got a raise at work.
  • I make a very generous salary.
  • I live in a safe home and have few materials wants.
  • While travelling in Switzerland – I was able to spend a lot of time with some great friends whom I hadn’t seen in a long time.
  • I was able to travel with my Mom for a week in Switzerland and have a great opportunity to spend more quality time with her over an extended period of time than I have had in years. We got to see and experience some great things together and will remember the trip for a long time.
  • While travelling in the Philippines I was able to get to know some of the locals and experience true Filipino life.
  • I got to do a lot of hiking and spend a good deal of time in the mountains.
  • I learned a bit about gardening and grew some great tomatoes, mint, basil, peppers, oregano, and rosemary.
  • I’m thankful that I don’t have to drive in terrible traffic this year because everyone is coming to our house!

There’s more for sure, but I’ll leave the list here for now and look forward to enjoying some time with family this Thanksgiving.

Best wishes to you all as well and I hope everyone has a great Thanksgiving!

Holiday Budgeting

With the holidays upon us many are probably feeling the stress that comes with so much spending. As I wrote about in an article last week, even despite our efforts to keep spending down, we don’t always succeed.

Here’s a few thoughts on how to approach things this holiday season.

  1. Set a maximum spend figure now and don’t change it. Also, and this is critical, make sure that this number represents money that you actually have! Holiday spending should not put you into debt, even for a short period of time. Don’t get caught up in thinking you need to keep up with the neighbors because they are buying tons of tons of holiday gifts. Figure out what you can afford with the money that you have and work with that. Maybe you’ll need to get creative about what to buy, or perhaps you can make something instead? These types of presents are almost always better anyway.
  2. Track the money you spend on holiday gifts and other items closely. Keep a running tally going and keep comparing it to that original maximum spend figure that you set. This will help you keep things in check especially as you get close to your limit.
  3. Give yourself an incentive. In order to protect yourself from your future self saying, “oh, it’ll be OK if I go a little over the budget”, set a reward incentive for if you come in under budget.
  4. Consider unique gift ideas that don’t cost a lot and are really cool. There are lots of ideas here, but when I was growing up we used to always bake cookies or pies and give them to people. It’s pretty hard to not find a gift of home made baked goods to be pretty fantastic. Plus, its more meaningful because it involves you putting some of your own time and energy into it. Other ideas might include olive oil infusions, home made jam or jelly, or woodworking crafts.Another great one I’ve found is finding a fun picture that you’ve taken (perhaps of the recipient) and putting it into a cool frame. This isn’t too costly, but is a nice present.

Hopefully these few ideas are useful as you approach this holiday season!

Book Review – Sapiens

Happy Friday! Getting away from the financial stuff for a moment.

I recently finished the book Sapiens: A Brief History of Humankind” by Yuval Noah Harari. 

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The book explores how Homo sapiens became the dominant force on the planet and how we evolved to become what we are today. For me the early parts of the book were especially enlightening as it discussed the fact that other hominoid specious (such as Homo neanderthalensis) were actually around at the same time. For some reason I never realized this. Other parts of the book provide some eye opening and fascinating perspectives as well. Some topics are certainly controversial, but I don’t mind thinking about things differently – even if ultimately I decide I don’t agree. At any rate, I enjoyed it a lot and thought I’d share a few excerpts that I found particularly interesting. (My bolding added.) 

  • “The pursuit of an easier life resulted in much hardship, and not for the last time. It happens to us today. How many young college graduates have taken demanding jobs in high-powered firms, vowing that they will work hard to earn money that will enable them to retire and pursue their real interests when they are thirty-five? But by the time they reach that age, they have large mortgages, children to school, houses in the suburbs that necessitate at least two cars per family, and a sense that life is not worth living without really good wine and expensive holidays abroad. What are they supposed to do, go back to digging up roots? No, they double their efforts and keep slaving away.
  • One of history’s few iron laws is that luxuries tend to become necessities and to spawn new obligations.
  • Evolution has made Homo sapiens, like other social mammals, a xenophobic creature. Sapiens instinctively divide humanity into two parts, ‘we’ and ‘they’. We are people like you and me, who share our language, religion and customs. We are all responsible for each other, but not responsible for them. We were always distinct from them, and owe them nothing. We don’t want to see any of them in our territory, and we don’t care an iota what happens in their territory.
  • Family and community seem to have more impact on our happiness than money and health. People with strong families who live in tight-knit and supportive communities are significantly happier than people whose families are dysfunctional and who have never found (or never sought) a community to be part of.
  • As Nietzsche put it, if you have a why to live, you can bear almost any how. A meaningful life can be extremely satisfying even in the midst of hardship, whereas a meaningless life is a terrible ordeal no matter how comfortable it is.

Christmas is Coming – Cue Crazy Holiday Spending

grinch2

At the risk of being called a Grinch (wouldn’t be the first time anyway)…I’m not a huge fan of Christmas.

Perhaps more accurately, I just can’t stand how the Christmas holiday in the United States is little more than a massive grotesque spending orgy. Last I checked, this wasn’t really the point of the holiday.  I’m reasonably sure that Jesus wouldn’t be to excited about what things have become, but then again, who knows – maybe he’d just be stoked about all the good deals on robes and sandals.

This year it all started after Halloween. Apparently that’s the new date at which it is acceptable to start pushing people to start buying gifts, and food, and all the other crap that goes with the holiday.

Even before Halloween, several members of Mrs. Freedom 40’s family were getting all excited about things and asking questions like – “where are we going to all spend the holiday”, and “what do you want for x-mas”, and “how much money should we spend!?!?!”

Since the family is a reasonable size, there is a tendency for things to get out of control quickly, especially with the gifts — read –senseless wanton spending on crap nobody needs, and probably doesn’t even want.

I tried to get out in front of things by suggesting that we do a Yankee swap (white elephant exchange) or a Secret Santa. (I’m always the one advocating for this approach). On my side of the family we did this just about every year and I always thought it worked well. Everyone got a small present, and then we all got to spend time enjoying each-other’s company. You see – we tried to make it less about the gifts, and more about the gesture. This was especially important when some in the family were quite well off, while others were always financially struggling a bit.

The idea of a secret Santa was accepted, but then things quickly got away from me. While in my mind I was thinking $50 would be a very nice, generous, heck – downright affluent amount to devote to this gift giving fiasco – I was apparently delusional. Instead, the figure of $300 was quickly thrown out by brother-in-law #1 and, next thing you know – there we are. $300 is the target.

Now let me explain a bit more about the current make up of the family. All are between the ages of 21 and 65. There are no kids.  All are employed in white collar jobs that require college education and generally involve IT, Medicine, or some other professional service. That is to say – everyone here is making plenty of money. I’m reasonably confident that if anyone in the group desires something that is within reason for an affluent upper middle class person or family – they go buy it. This includes such ridiculous purchases as multi-thousand dollar road bicycles, expensive skateboards, lots of new brand label clothing that is constantly upgraded with more new brand label clothing, motorcycles, fancy gym memberships, exotic food form swanky and hip restaurants, and more.

So what does this mean? Well – it means that nobody really needs or wants anything. So, everyone now has to sit down and think hard about – “If I had $300 to spend, what would I buy?” Then, they go and compile a wish list include a bunch of links to websites and send it out to everyone – so the secret Santa knows what to buy. From past experience here, I can pretty much guarantee that anyone buying anything “off-menu” will be putting their family standing in quite some jeopardy. I guess people don’t like to be surprised by something they hadn’t thought of, and that represents some careful thought and consideration about what the other person might like. Nope – just give me what’s on my list!

So there it is. We’re all fretting about coming up with lists of random things for others to buy for us. Things that in many cases we don’t even really want. And those people, are going to go buy exactly what we could have otherwise just bought ourselves. It’d be so much easier if we all just showed up with $300 in cash and said, here Joe – I got you this cash for X-mas. And Joe says, “Aww thanks Freedom 40, I got you the same!”

Maybe I’m the only one that feels this way. Maybe the other members of my family are really fired up about this and are excited to see what great goodies they’ll get this year. For me though – I just find it a bit discouraging.

Do other people feel this way? How do you deal with relatives who want to spend a fortune at X-mas when you’re trying to promote more frugality and rationality in this world?

 

 

 

 

Refinancing Saves Us $280 per Month!

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Way back in February I wrote about possibly refinancing the mortgage on my primary home due to decreasing mortgage rates. I kept dragging and dragging my feet on this though, primarily because I just didn’t want to deal with the big hassle of all the required paperwork. In one of those rare moments in life – this procrastination actually worked out for me. After Brexit at the end of July, mortgage rates dropped even lower as investors flooded the U.S. Bond market in a flight to safety. When this happened, I finally made the move.

Well, actually I was brought to action because I happen to be friends with a mortgage broker who called me up and said – “Hey, I think I can save you a couple hundred bucks a month if you do a refi!” (It’s nice when you get calls like that. Of course, it puts money in his pocket too, but as you’ll see, I think it worked out for everyone involved.

For those who may not be familiar with the process, refinancing a home loan essentially just means that you’re taking out a new loan with a different bank at a lower interest rate. By having a lower rate, you’ll save some money on your monthly payments. Simple right?

It can quickly get complicated though. The first thing to look out for is all the fees associated with taking out a new loan. This includes financing fees, title fees, property assessment fees, and taxes. There is a definite cost associated with getting a new mortgage, so when doing this, you want to make sure that these costs will be recovered over time due to the savings you’re getting from the interest rate reduction.

The other thing to remember is that when you get a new loan, it is often for the standard loan term offered by most banks. For most in the U.S. this is usually a 30 year term. If you’re three years into your current loan, you only have 27 more years to go. But if you refinance, you’ll start all over again, and it’ll be 30 years before you own your home free and clear.

That said, if you put your monthly savings into paying down extra on the loan, you can pretty quickly reduce the time needed to pay and the total amount you’ll pay to the bank in interest payments.

In our case we actually went back and forth on getting a 15 year vs a 30 year loan. We eventually settled on 30 because it would give us a little more flexibility. If we want to pay more (even a lot more) we can – but we also don’t have to. If things get tight for some reason, we can just pay the minimum payment. With the 15 year, we’d be locked into a pretty high payment with no ability to pay less.

For all those curious people out there – here’s the nitty gritty details of our recent refi.

Our previous rate was 4.375% and we refinanced to a new rate that is at a paltry 3.5%!

Because of the way the timing worked out with our closing, we were able to skip both August and September mortgage payments – and the first payment of the new mortgage was due October 1.

We did need to bring $3,500 to closing though, but much of this was to pay for the escrow account (taxes) that we got back from the old lender. In fact, we got $2,021 back from them – so really we were only out $1,479 at closing.

After our July mortgage payment to our old lender we had $392,438 remaining on our loan. The new loan was for $395,000 so this is also something very important to note. Because the new loan is for a bit more money, we end up losing a bit of money here – specifically $2,562.

So, if you’re keeping track, it’s now cost us $1,479 + $2,562 or $4,041 to pull off this little refi. But wait, what about those missed mortgage payments in August and September? Since we didn’t pay those, we now have an extra $4,996 in our wallets. We can keep this in our savings, or we can use it to pay down our new loan more – either way, we’re up $955. 

In terms of monthly savings – our new monthly payment is $280 less than our old payment. So that means an extra $280 in our pockets each month! That’s a cool $3,360 in our pockets every year for the next 30 years! And all just for taking the action to pursue a Refi and to get through all the paperwork hassle. Note here people – if you haven’t looked into a refi lately, do yourself a favor and make a few call and see what kind of deal you might be able to get. This is by far the easiest way to earn thousands more per year than any other thing I can think of! 

So the next question is – what are we doing with this extra money? Well, in true FIRE community style, we’re not going out to buy a new BMW, or treating ourselves to a 7 course meal at a five star hotel, nope – we’re simply putting this amount (plus about $500 more) towards each monthly mortgage payment. I have mixed feelings about this strategy, as I often feel that investing the money would be a better use for it, but this plan sits well with Mrs. Freedom 40 Plan. It also gives us a balanced approach to investing and loan pay down. We had already been putting the extra $500 in, and with this extra amount we actually keep our mortgage payments exactly the same as they have been for the last several months – but we put a lot more toward the principal on the loan. By my math, this will turn our 30 year loan into a 17 year loan and save us a total of $114,000 in interest payments on the loan. Not too shabby at all…

Monthly Net Worth Update – October 2016 – $1,205,925

Some might have noticed that I missed providing a Net Worth update for the month of September. Well – that’s what a month long vacation will do! I pulled all the numbers together shortly after I got home in mid-October, but I decided to just wait until now to post the latest. So this is where things stand through October.

My one month vacation was awesome – but it was also a little expensive. That showed up in my cash flow, but less in my net worth. What did really hurt the net worth is some drops in the market. With over 40% of my total net worth aligned with stock holdings – the ups and downs of the market have an ever increasing effect, both for the good and the bad.

In general things are going well with the finances, but since coming home I’ve been trying to really reduce some spending to make up for some large outflows during my vacation. I’m also trying to hoard some cash right now in anticipation of some possible market downturns and just wanting to have the ability to take action on opportunities should they present themselves. Most traditional advisers would probably say I have too much cash, but for now, I’m good with it.

 


My primary goal is to have the freedom to “retire”, or reach financial independence (FI) at age 40. As of this month, that is now just 18 months away!

I’m a big believer in completing monthly net worth updates as a way to stay on top of your financial situation and work towards your goals. Therefore – I share my monthly net worth updates here.


Here’s the latest net worth breakdown.

Total Net Worth this month came in at $1,205,925 – this is $82 less than last month (September). That snaps my seven months in a row of gains. Man -if I had just spent a tiny bit less, or the market had done a tiny bit better I’d still be riding the streak! Oh well. The $82 figure is comical just because it is only two digits. Usually I’m seeing swings of 4 and 5 digits. At any rate, here are the details…

October 2016 –

2016-10-net-worth


Net Worth Notes:

Assets:

Cash – This is up a bit mostly from just directing some money to basic savings. As mentioned above, I’m currently in a mode of hoarding a bit of cash so that we can hopefully deploy it during a market downturn or to take advantage of other possible opportunities.

Taxed Stock Account –  A while back I reduced my monthly contribution here from $2k to $1.5K – believing that a little extra cash might be a good move right at this moment. It’s all set up as part of an automatic investment plan where the money is spread across 5 or 6 different index funds. Occasionally I change the mix based on performance of the various ETFs in the portfolio. Specifically, these are ETF Index funds with iShares and some Vanguard. I intend to continue funding this at this level (or more) for as long as possible. Also in this bucket is a small amount invested recently in a LendingClub account. (Read more about my experience with LendingClub so far here)

Retirement Accounts – This consists of my 401k, Trad IRA, Roth IRA, and HSA account, as well as Mrs. Freedom 40’s 403b, and two Roth IRAs. We maxed out the 401k/403b the last three years and will do so again this year. We make too much to directly contribute to a Roth. *** New this month – this now also includes Mrs. Freedom 40’s newly opened TSP account! *** She is in fact going to be working Active Duty Army for another year so it made a lot of sense to open this up. She’s complaining a bit because currently 75-85% of her paycheck is going into this as we try to max it between Sept and the end of the year.

Rental Property – This is a 2BD/1BA across the street. We used to live there and rent it out now. Currently, this creates nearly $0 cash flow, but the tenants do pay the mortgage every month so over time, it will presumably (hopefully?) pay off. It can be a headache from time to time, but for now, we keep it. Ref 1. Ref 2. Ref 3.

Home Value – During the Refi process we had to get appraisals done for both of our properties. Our main home appraised $7k higher than I had, while the rental condo appraised for $10k less. I’ll use these estimates for the next several months. We have no plans of moving or selling either property in the near future, so in many ways, these values have limited meaning.

Other – This consists of two cars and some gold and silver coins.

Liabilities:

Home Mortgage – With our refi we are now at 3.5%, which still strikes me as an amazingly great deal! Money is so cheap right now!  Auto payments are all set up for this now and we’re paying the same as we did for our old mortgage. I ran the numbers and this means we’ll have it all paid off in 17 years if we stay as is. (30 yr note) I plan to write more on our recent refi experience soon.

Rental Mortgage –  We completed or refi here too and are at 3.75% for a 30 year. As with our primary residence, we’re continuing to pay what we paid before so that we pay the loan down sooner.

Other Loans – This includes 2 Student loans Mrs. Freedom 40 has. Both are at 2.125%. It also includes Mrs. Freedom 40’s car loan at 0.9% and my car loan at a whopping 0.0%. We could pay all of these loans completely off  if we wanted too, but the rates are so low, I don’t think it makes any sense to do so. Instead, we’ll let our money do it’s work in the market and earn us more than what we’re paying for these.

Finally, here’s what our Net Worth looks like over the past 12 months. The line is flattening out, and who knows what will happen moving forward, but it’s been a good 12 months at any rate…

2016-10-net-worth-graph

Some other interesting notes about our net worth to share

YTD Gain/Loss = +$170,916

YTD Percentage Gain/Loss = +16.51%

12 Month Gain/Loss = +$175,244

12 Month Percentage Gain/Loss = +17%

Back to Life – Back to Reality

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My long vacation is now over, actually has been for about a week now. I got back home on Sunday, and slowly climbed back into work on Monday. It’s been a bit difficult for sure, but not as bad as I thought it might be. Part of this is that things are relatively calm at work right now. Nothing too big going on, so I didn’t come back to any major crises. That’s nice.

Still, it’s immediately become apparent in the few days that I’ve been back that I need to make a change. Just continuing on with the same projects and clients I’ve been supporting for the last few years is not a good option for me. I’m finding it nearly impossible to get motivated or interested in these things. I need a big change, something to reinvigorate me, challenge me, and maybe change my attitude.

As I’ve discussed here, I’ve considered accelerating the Freedom 40 Plan to punch out as early as now. I probably could do that, but I just feel like I need to continue on a bit longer.

And if I’m going to continue, I’ve got to change something. First I was thinking I would polish off the resume and look for employment elsewhere. I might still do this, just to test the waters, but it dawned on me that I’d be giving up a lot. By joining a new company, I most likely wouldn’t have as much time off, I wouldn’t be vested in my 401k, I wouldn’t have the relationships and network that I have now, and I would start with zero “political capital” in a new organization. If I’m going to keep working for a bit longer, there are a lot of pretty compelling reasons to stay with my current company.

The interesting thing about being so close to FI, is that suddenly I feel a lot more confident about asking for and making some big changes at work. I mean, even if the bosses tell me I’m being crazy and to shut up and go back to the coal mine, I can always walk away. I might as well at least ask for something different, something that I want and see where it goes. Worst thing that could happen is they say no. That’s not a big deal. In the apst I’m not sure I would have had the confidence to do this. Now, I’m really thinking why not.

So I think that’s where my head is now. I work for a very large company that does lots of different things. Why not move into another group, try out a new project, or take on a short term assignment? Why not start to do something that is very different than what I normally do? I might find that all of a sudden things get interesting again. Or, it might suck. But it’s probably worth a try right? If it doesn’t work out, I can move on to more “extreme” measures. If it does work out, great!

To keep myself accountable – I think I need to set a deadline of next Friday to have this conversation with the bosses and see where that goes. Wish me luck I guess…

 

 

Some thoughts after a 4 week vacation

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My long vacation is now over and this is sad. But I was very lucky to have such a long time off and the opportunity to do so many cool things. I know some people after being away from home for some time earn to get back “in their own bed”. While I certainly enjoy my home and while it is nice in some ways to be back – I can honestly say I wish I could have added on another several weeks or even months to my trip!

I barely thought about work the whole time. I tried to see lots of things, learn about the places we traveled to, and meet the people who live there. Didn’t even come close to getting bored once. Even on the “worst” day of my vacation when it rained all day long and every museum in town was closed due to a holiday. I just sat in a coffee shop and read my book, wrote a bit in my journal, watched the people walk by. It was wonderful.

For the first ten days of my time off I had no itinerary at all. I just woke up and decided what I wanted to do that day. For me, that ended up being a lot of hiking in the mountains and it was great. Sometimes though it was just walking around in town, or visiting a friend, or reading in the park. Perhaps this would get boring after a fashion, after the newness of a place and the novelty of the freedom wore off, but I’m not sure. I think I could get really good at this…

I thought having so much time off would help clarify for me what I want to be doing in the next several months or years. This didn’t really happen though. Not too much anyway. I went on day long hikes where my mind seemed to think only of the sights and sounds around me, and not bigger topics and challenges. Even when I actively tried to focus on these things, my mind was quickly distracted by some beautiful sight, or some random and simple thought. I suppose my subconscious may have been working away, but my active thoughts drifted and drifted.

I was lucky to be able to visit several old friends. Some of whom I hadn’t seen in twenty years. It was nice to reconnect with them, and it reminded me that good friends, true friendships, can endure in spite of extremely long distances and time. Reinvigorating these relationships and remembering shared experiences was extremely gratifying.

Trying to communicate in my non native tongue proved challenging. At one time I was quite fluent. Now, I can get along, and understand others reasonably well, but speaking is quite difficult. Others might say it is not that bad, but I’m a tough critic on myself. This makes me want to go back and live overseas for an extended period so I can again become proficient in another language.

The Europeans seem to do a much better job of living their lives. They don’t seem to work nearly as much or stress as badly as us in North America. They are much better at maintaining healthy lifestyle habits by biking or walking everywhere (although I was surprised by how many smokers there still are – young people especially). They still appreciate the importance of long breaks throughout the day.

Finally – because it is pertinent to a finance blog. Everyone seems to use cash a lot more. At least where I was. In the U.S. I pay for 95% of things with a credit card. Even a pack of gum. But where I was, it seemed like only large purchases warranted a credit card. Perhaps something to do with fees I guess?

Coming home is good, but will certainly it will be tough to get back into the swing of things at work. Back to the grind…