2018 Goals and Quarterly Updates

Last Update on: 1/6/2019….2018 4th quarter update

My FIRE journey started in 2014…07/21/2014 to be exact is when I write the About section of this blog. It has been almost 4 years now on the FIRE journey and it does feel good to reach almost $1000 per month in passive income in 2017.

But, the bigger feeling is that FI is still a long way to go. The days of big capital infusions are over…there is only so many times I can steal from the home down payment fund ūüôā Waiting for the dividend snowball to get bigger is it for now. I read often Dividend Mantra’s snowball post¬†because it motivates me to stay patient and wait for the snowball to build up. Hope it is useful for readers of this blog also.

For those readers who think that FI takes a long time, I do agree….but here is my timeline which should give some hope. I went from accidentally learning about FI to earning the following Passive Income per month from 2014 to 2011. So, FI is possible….keep plodding…I will be with ya!!

  • 2014:¬† ¬† ¬†¬†$171.02
  • 2015:¬† ¬† ¬†¬†$705.80 …..dumped most of my home down payment here ūüôā
  • 2016:¬† ¬† ¬†¬†$840.80
  • 2017:¬† ¬† ¬†$1040.13
  • 2018:¬† ¬† ¬†$1380.78

FIRE Target: The end-goal Financial Independence criterion for me are:

Financial Independence Criterion
Emergency Fund $60k
College Fund $80K $100K
Passive Income Streams $4000 per month
Retirement Fund $900k
Roof for our Family $750k…HCOL area
Medical Fund $100k….via HSA
Life Insurance To protect my earning years…..done

2018: For 2018, I have thought about the following goals to get me closer to the financial independence targets listed in the previous table.

Financial Goals for 2018

  1. Keep scouting for a possible home/multi-family residence/rental real estate
    1. 03/31/2018¬† ¬† ¬† Visited 7 open houses…not worth the years of slavery …
    2. 06/30/2018 ¬† ¬† ¬†Visited 3 open houses…how can people afford the money ūüė¶
    3. 09/30/2018¬† ¬† ¬† Not looking…stole a chunk of down payment for investing
    4. 12/31/2018¬† ¬† ¬† Put offers on 6 homes…..got overbid on all big time!!¬†¬†
  2. Contribute $30000 towards Home Down payment Fund
    1. 03/31/2018¬† ¬† ¬† ¬† -$1281….took some money out for investments ūüėČ
    2. 06/30/2018¬† ¬† ¬† ¬†¬†-$48K….disgusted with high prices and invested instead ‚ÄĘ`_¬ī‚ÄĘ
    3. 09/30/2018¬† ¬† ¬† ¬†¬†-$19K….stole money and invested instead.¬†
    4. 12/31/2018¬† ¬† ¬† ¬† Cheated…stole money from investments…so does not count.
  3. Contribute $4800 to 529 College Fund 1
    1. 03/31/2018¬† ¬† ¬† ¬† $1,811.00……amount remaining is $2989
    2. 06/30/2018¬† ¬† ¬† ¬† $1000.00……amount remaining is $1989
    3. 09/30/2018        Done
    4. 09/30/2018 
  4. Contribute $2400 to 529 College Fund 2
    1. 03/31/2018¬† ¬† ¬† ¬† $850.00…….amount remaining is $1550
    2. 06/30/2018¬† ¬† ¬† ¬† $500.00…….amount remaining is $1050
    3. 09/30/2018        Done 
    4. 12/31/2018 
  5. Contribute $12k to Passive Income Streams(stretch goal of $24k) 
    1. 03/31/2018¬† ¬† ¬† ¬† $8,722.07…..amount remaining is $3277.93 (stretch $15277.93)¬†¬† ¬†
    2. 06/30/2018        Done
    3. 09/30/2018 
    4. 12/31/2018 
  6. Max out 401k contributions ($37K total for me and wife)
    1. 03/31/2018¬† ¬† ¬† ¬† $12,399….amount remaining is $24,601¬†¬†
    2. 06/30/2018¬† ¬† ¬† ¬† $21,876….amount remaining is $15,124¬†
    3. 09/30/2018¬† ¬† ¬† ¬† $33,467….amount remaining is $3,533
    4. 12/31/2018        Done 
  7. Max out HSA contributions ($6900)
    1. 03/31/2018¬† ¬† ¬† ¬† $3549……amount remaining is $3351¬†¬†
    2. 06/30/2018¬† ¬† ¬† ¬† $4245……amount remaining is $2655¬† ¬†¬†
    3. 09/30/2018¬† ¬† ¬† ¬† $6670……amount remaining is $230
    4. 12/31/2018        Done
  8. Keep eating out expenses under $200 pm
    1. 03/31/2018¬† ¬† ¬† ¬† Not yet….
    2. 06/30/2018¬† ¬† ¬† ¬† Not yet….¬†¬†
    3. 09/30/2018¬† ¬† ¬† ¬† Not yet….unfortunately ūüė¶¬†¬†¬†
    4. 12/22/2018¬† ¬† ¬† ¬† Nope ūüėź
  9. Estate Planning (Will, POD beneficiaries, Caretaker for children)
    1. 03/31/2018        Not yet  
    2. 06/30/2018        Not yet  
    3. 09/30/2018¬† ¬† ¬† ¬†¬†Not yet…¬†¬†¬†
    4. 12/31/2018¬† ¬† ¬† ¬† Not yet..but did sign up for legal services…2019 it is.

Financial Independence Progress Report for December 2016

Hope everyone had a wonderful holiday season! Here is wishing you a happy and prosperous 2017. May all your dreams and aspirations come true!!

December is a happy month for all dividend investors and so it was for me too! Passive income coming into my account is validation for the FI path and also motivation to continue the FI journey with even more vigor! Lets look at the numbers for Dec 2016.

Emergency Fund $60K 100.0%
College Fund (80K) 47.95% 47.95%
Passive Income (2015 vs 2016) $1281.58 (12/2015) $1983.06 (12/2016)
Retirement Fund ($900K) 63.44% 64.27%
Roof for our Family($750K) 00.00%
Medical Fund 00.00%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • Passive Income for December¬†2016 ($1983) is appx 54% higher¬†than December¬†2015¬†($1281.58).¬†This is a big increase and a totally unexpected one.
    • The positive surprise was due to more than expected capital gains distribution from VDIGX and VWELX. I will take it…however they come ūüôā
  • Additional Investments
    • VEIEX(Vanguard Emerging Markets Stock Index Fund))
      • Just like prior¬†months, I continued to increase my exposure outside the US. Stocks in United States are way to overvalued and frothy in my opinion. So, I have continued to increase my exposure to countries outside the US. I want my passive income stream to come from many countries all over the world as a good means of diversification.
      • ¬†This time, I invested in a new fund:¬†an Emerging markets fund called VEIEX. This fund invests in many emerging market countries like¬†Brazil, India, Russia, China, Taiwan and 20 more countries around the world.
      • If you want more details on VEIEX, please get it directly from the horse’s mouth: VEIEX.
  • Passive Income Goal
    • My 2016 goal was¬†to reach $750 pm in passive income by year end.¬†December¬†is done…and my per-month dividend stands at $801.99. Hurrah!
    • 2016¬†had lots of ups and downs…including a phase of unemployment¬†and no salary for a month at least, a¬†nasty health issue and what not. So, achieving this goal and exceeding it by a small amount of $50 makes me very¬†happy.
    • Sometime back, I wrote an article called How much freedom did I buy today?¬†I read that article again today and decided to compute the number of hours of freedom I have bought with $801 of passive income per month.
      • My Passive Income goal is
        • $4000 per month (Why $4000 pm?)
        • $48000 per year
        • $131.5 per day ($48K/365)
      • It is the end of 2016 and my passive income is $801 per month.
        • How much freedom will $801 pm buy me?
          • $801/$131.5 ¬†=> ¬†6.09 days per month => 146 hours per month => 4.7 hrs a day (31 day month)
        • To put this in perspective, here is the amount of freedom¬†$801 of passive income will buy me:
          • 4.7 hours ¬† ¬† ¬†of absolute freedom every day!
          • 6.09 days ¬† ¬† of absolute freedom every month!
          • 73.08 days ¬† ¬†of absolute freedom every year!
          • 2.35 months of absolute freedom every year!
    • For 2017, I will aim for a challenging¬†monthly¬†passive income target of $850 pm. Wish me luck!

How much freedom did I buy today?

I was having a very tiring day today…a few tiring days actually and I was totally spent when I came home. I¬†checked my blog emails and found some uplifting comments from readers of one of my blog posts. My spirits got recharged due to those comments. Thanks to Tristan (Dividends Down Under), Ambertreeleaves (ambertreeleaves) and¬†Mister SLM.¬†I decided to put my recharged spirits to good use and write¬†a blog post that I have been thinking about sharing¬†for quite a while. This is my way of paying my dues for the good karma that came my way today from the three wonderful people mentioned above.

Back in mid 2014, I defined what Financial Independence means to me in one of my very early blog posts (link). The plan definitely has changed a bit over the last two years. But, I have been executing this plan with all the motivation and money that I can muster

Along the way, I realized one profound motivational idea that I will share via this blog post. I have spreadsheets that track my monthly dividends going all the way back  a few years and in there, I track which of my monthly needs are funded fully by my current passive income.

One day, while updating that, I realized this profound¬†motivational question.¬†Every now and then, I have a rough day at work or at home and sometimes both ūüôā I keep myself motivated by asking myself this question: How much freedom did I buy today?

Here is my answer.

  • My Passive Income goal is
    • $4000 per month (Why $4000 pm?)
    • $48000 per year
    • $131.5 per day ($48K/365)
  • By end of this year, if all goes well, my monthly passive income will be $750 per month.¬†This has come through a lot of sacrifices…both by me and my family.
  • How much freedom will $750 pm buy me?
    • $750/$131.5 ¬†=> ¬†5.7 days per month => 136 hours per month => 4.38 hrs a day (31 day month)
  • To put this in perspective, here is the amount of freedom¬†$750 pm of passive income will buy me:
    • 4.38 hours ¬† ¬† of absolute freedom every day!
    • 5.7 days ¬† ¬† ¬† ¬† of absolute freedom every month!
    • 68.4 days ¬† ¬† ¬†of absolute freedom every year!
    • 2 months ¬† ¬† ¬†of absolute freedom every year!

When I started working many many years ago, saving was defined as money that¬†I did not spend. I was very aimless and had no idea of Financial Independence. Obviously, money vaporized like water. It took a nasty and depressing curve ball in life to start me on a search to something different and I ended up discovering Financial Independence by accident (my first blog post). Thanks to the wonderful world of FIRE bloggers, I found my “something different” i.e. Financial Independence and Early Retirement. Though, it is not going to be as early for me…but better late than never hey !!

The question that keeps me motivated and fills me with enormous drive is the question:

  • How much freedom did I buy today?
    • My answer is 4 hours a day.¬†
    • What is yours?¬†

Hope this question motivates you to keep striving for FIRE!

Live now vs Save for FIRE….

I read a wonderful article today written by my fellow Belgian FI blogger AmberTreeLeaves. The article of his title was “endless doubt on¬†FIRE“. I was behind on my FI blogger reads and read it a week too late. But, the article was very thought provoking and I would really recommend a read.

Since there were already quite a few posts, commenting there was probably not going to be too helpful…hence this new post ūüôā Hope AmberTreeLeaves does not mind stealing an idea for a post from his blog!

That post by AmberTreeLeaves raised a conflict that I often had and continue to have within myself. One sentence from the post captures this conflict very well: The conflict is mainly between travel /live now and prepare FIRE.

I go through the same conflict in my mind….not just with travel, but also things like buying a car, etc. My parents sacrificed a lot in their present¬†and postponed all their enjoyment to the future. And it did not end well. I went through some¬†years where I did the opposite…living for the now..I guess I was running away from my parent’s philosophy. And when I discovered Financial Independence, I swung the other way….live for the future only and my family was none to happy about it ūüôā

But, I have now come to a fair medium. I have come up with a decision framework that helps me rationalize live now OR live for the future vs the benefit I am getting. This has helped making sacrifices easier. Let me state two example cases.

  1. Lets assume a family vacation costs $5000 on average and hypothetically our family’s post tax take home salary is $60000. My requirement is that I want to have one vacation each for the next 10 years before my kids head out to college. So, I need roughly $50000 to fund all the vacations. $50000 adds one additional year to my family’s expected FI target. Considering that we will never get that many chances to spend time together as a family after kids head out to college, this addition is worth it to me.
  2. Now consider purchasing a new luxury car like some of my friends have. The car costs $80000 and after financing and maintenance costs, it can rise up to $90000 at least…yes, I could not believe it ūüôā With the same post-tax family salary of $50000 per year, it would add almost 2 years to my expected FI target. For me, getting freedom 2 years earlier is more important than driving a luxury car. Don’t get me wrong…I like the cars…I have sat in them and I think they are awesome….but not awesome enough compared to achieving freedom 2 years earlier…for me.

I am trying to apply this framework for every major decision…it had helped me¬†rationalize family vacations and buying a new car. Next is applying this for buying a home.¬†I am curious how do others deal with this conflict. Lemme know your thoughts please.

And once again, thanks to AmberTreeLeaves for a wonderful and thought provoking post. It took me back in time to a period when I learnt some important lessons.