101 in 1001, Finances, FIRE, Goals

7 Current Financial Goals // Update #3 {+ a BIG Change}

Considering that the last update on our current financial goals showed very little change in our numbers, it was exciting to see some definite forward momentum happening again in this last quarter that just ended! Granted, much of the progress has been due to the monthly Child Tax Credit payments coming in, but we’ve also been able to use some of the money from our first year flower farming to go towards some of these goals, which was one of the main financial focuses we wanted with this particular business venture.

We still have a long, LONG way to go before we’re on track for Matt to be able to retire by 50 as is our current plan, but each baby step completed gets us that much closer.

Related Post: Our Plan to Retire By 50

I’ll be interested to see where these numbers are at by the end of 2021 because I actually recently started a new part-time job (just 5 or 10 hours a week) working as the senior copy editor of our local newspaper, which will obviously increase our income a little bit. Since we don’t really “need” me to work, we’re planning on just using that money almost exclusively towards our financial goals and towards some family traveling we want to do, so hopefully we see even more progress by the end of the year!

Note: There are affiliate links below to products and services mentioned, which means I may get a commission on any sale, at no extra cost to you.

Note on How We Track Our Financial Progress

For basic budgeting and household account maintenance, I use Mint, which I’ve used and loved for years. Recently, I’ve started using Personal Capital as well, which has many of the same features as Mint, but I like using it instead of Mint for tracking our debt reduction and investments, as I find their tools are a bit better for that. Both are free. (And if you sign up for a free Personal Capital account, we can both earn a $20 Amazon credit if you go through my referral link!)

For a clearer snapshot of our financial picture over time, I started tracking our net worth via Google Spreadsheet in August 2018. It’s been a total game changer, and I highly recommend you read the post I did on the why and how of that process here.

Our 7 Big Financial Goals

Just for a quick recap, these 7 financial goals were all taken from the “Finance” section of my 101 in 1001 list, which is a list of 101 goals I want to complete over a 1,001-day period. I’m currently working on my second 101 in 1001 list, but if you’re interested, you can see the (different) financial goals I worked on for my first 101 in 1001 list HERE.

1. Open up a brokerage account + invest $2,500

Our brokerage account is through Fidelity and is in their Total Market Index Fund (FSKAX). We decided to go with this option after reading The Simple Path to Wealth and from me doing extensive research about the FIRE movement (Financial Independence / Retire Early) over the years. I talk more extensively about FSKAX and our investment strategy below, but for now, it’s sufficient to say that we opened up this taxable brokerage account in order to give us more options for drawing money in early retirement (aka, before we reach typical retirement age).

The tricky thing we’re running into now is the question of how much of our money we want to go towards investing for retirement and how much money we want to go towards paying down our mortgage early. We really need to work on both simultaneously in order for our early retirement plan to work, so it’s been tricky to find a balance. We also are trying to decide how much to put in this brokerage account vs. how much to put in our traditional retirement IRAs. Obviously the IRAs make way more sense tax-wise and benefit-wise, but we know that we’ll need some investments that we can draw from at any point for our early retirement (without penalty), so I’ve been trying to research out our best options. For now, we’ve just been putting in a little bit here and there, especially when we receive a windfall (like a tax return or the stimulus checks).

  • Goal Amount: $2,500
    • Initial Amount Invested: $500
    • Amount Invested at Checkpoint #1: $1,600
    • Amount Invested at Checkpoint #2: $1,600
    • Amount Invested at Checkpoint #3: $1,700
  • Progress Made This Quarter: $100
  • Percent of Goal Reached: 68%

2. Buy and pay off a new vehicle to replace the Buick

In case you missed it, we were able to make this happen much earlier than planned thanks to the second stimulus check and thanks to Matt’s parents selling their old car to us for a steal. I’ve sure appreciated the fact that we haven’t had to take on another car payment the last few months on top of all the expenses we’ve put out for the flower farm business!

  • Initial Amount Saved: $500
  • Goal Amount: We planned to go for something in the $8K-$10K range, but we ended up buying one from my in-laws for $3,000
  • Amount Paid Off: $3,000 (GOAL COMPLETED)

3. Get each kids’ savings account to $500 (1/3)

Both Matt and I served missions for our church, and we want to be able to give our kids the same opportunity. (Note: All missionaries that serve for our church do so on a volunteer basis and pay for it out of their own pocket.) We will encourage them to save some of their own money for this as well, but we want to provide a good chunk of it, too. If they don’t want to serve missions, this money will be used towards their higher education.

This last quarter saw some solid progress here because the older two started selling some of the eggs from our chickens at the local farmer’s market, as well as some to family and friends. My oldest helps the most so her “cut” is bigger, but her brother has now started helping with gathering the eggs and putting them in the cartons, so we’re starting to give him a portion too. Each child pays 10% of his/her earnings to tithing (just like we pay 10% of all of our income to tithing), and then we put roughly half of the rest into savings. That leaves them around 40% of what they make to spend as they will (which so far has translated to yet more stuffed animals and a gigantic bag of Swedish Fish from Sam’s Club).

We also have been putting small amounts into each child’s fund from the Child Tax Credit payment we’ve been getting every month.

Note: Now that we’re starting to reach the $500 goal for some of the kids, I won’t do any further reporting on that child’s fund. In other words, I’ll just keep recording each fund until it reaches our minimum goal of $500 and then I’ll just count the goal as complete and stop recording any further amounts here.

  • Initial Amount (Kid #1): $222
    • Amount at Checkpoint #1: $392
    • Amount at Checkpoint #2: $417
    • Amount at Checkpoint #3: GOAL REACHED ($500+)
      • Progress Made This Quarter: $83+
    • Percentage of Goal Reached: 100%
  • Initial Amount (Kid #2): $203
    • Amount at Checkpoint #1: $363
    • Amount at Checkpoint #2: $363
    • Amount at Checkpoint #3: $430
      • Progress Made This Quarter: $67
    • Percentage of Goal Reached: 86%
  • Initial Amount (Kid #3): $204
    • Amount at Checkpoint #1: $350
    • Amount at Checkpoint #2: $350
    • Amount at Checkpoint #3: $405
      • Progress Made This Quarter: $55
    • Percentage of Goal Reached: 81%

4. Make an extra mortgage payment (not necessarily all at once)

It’s actually quite exciting to me how much progress we’ve made towards paying off the mortgage, but I won’t be detailing any of our recent progress here as I plan to do a separate post all about our mortgage payoff goal in the next month or two. For now, I’m just leaving the previous numbers from past reports here so you can see when we reached the original goal of just making one extra mortgage payment.

Note: I don’t know how anyone else calculates making an extra payment towards the mortgage annually (since I know it’s a common goal), but this goal was the amount of a full monthly payment (including Escrow and interest). Obviously a regular payment wouldn’t all go towards principal, but I wanted to do a goal based on the whole monthly payment as a stretch goal.

  • Initial Extra Amount Paid: $134
    • Extra Amount Paid at Checkpoint #1: $1,034
    • Extra Amount Paid at Checkpoint #2: $1,456
  • Goal Amount: $1,415 extra paid toward principal
  • Percentage of Goal Reached: 103% as of last quarter — the current percentage is much higher but will be reported in its own separate post in a month or two

5. Start contributing to my IRA again

I should have been more specific with this original goal. I actually HAVE put money towards my own Roth IRA in this last quarter ($200, if I remember correctly), but as I haven’t set up a recurring withdrawal amount yet, I guess I’m counting this one unfinished for now.

However, with me recently having started a (very) part-time job, this will hopefully be crossed off for sure by the end of next quarter.

  • Initial Monthly Amount: $0
  • Current Monthly Amount: $0 (though I did put in $200 during Q3)

6. Max out Matt’s Roth one year

Hmmm…here’s another goal that’s kind of tricky to say whether or not I can cross it off. We finally increased our IRA contributions this last quarter so that over 12 months, we will have put in the maximum allowable amount for a Roth ($6,000 per year). However, we still haven’t technically maxed it out yet for a tax year because we just increased the contributions.

Nevertheless, I’m still counting this goal as complete because I don’t plan on changing the contributions back to a lower amount anytime soon . . . or ever 🙂

  • Initial Monthly Amount: $150 ($1,800 a year)
  • Current Monthly Amount: $500 ($6,000 a year – GOAL REACHED)
    • Progress Made This Quarter: $350/month
  • Goal Monthly Amount: $500

7. Save up $2,000 for home improvements

This category is now the only one showing no progress for the year so far. And while I still want to keep this line item on here because I’d like to save up some money to start tackling our bathrooms (either the process of adding one to our basement or renovating the one everyone uses on the main floor), I know that we still have to cash flow some of the current projects we’re trying to finish up first, like the baseboards throughout the main floor. All that is to say that I don’t think we’ll make progress on this one this year, but I do want to keep it on the list since I still have a year and a half left in my 101 in 1001 challenge.

  • Initial Amount: $20
  • Current Amount: $20 (no change)

So What’s the Big Change?

For many years I’ve known that financial advisors are not the best way to manage your investments because of the amount you lose on paying their fees. However, for the past nearly 10 years that I’ve had investments, I’ve still paid out between 1.5% to over 2% in fees every year because I felt uncomfortable managing the accounts myself. The final kick in the pants I needed to ditch the financial advisor came in two forms: 1) I ran the free retirement fee analyzer tool on Personal Capital and found out that we were losing around 25% of our future earnings because of having to pay such high advisor fees (and ours aren’t even as high as many, as they were *only* around 1.6% total or so), and 2) When I looked back at the fees that had come out this last year, I saw that they were about the exact same amount as what we’d been investing IN to the accounts. Thus, while we’d been patting ourselves on the back for making sure we prioritized putting some money every month into our retirement funds, we didn’t realize that that money was literally almost all just going into our financial advisor’s pocket.

As mentioned above, I’ve been reading The Simple Path to Wealth slowly over the past several months, and I finally finished it up in September. In it, J. L. Collins (the author) has an extremely simple investment strategy, which is basically that you put 100% of your investments in VTSAX (Vanguard’s Total Stock Market Index Fund) while you’re in you’re “Wealth Accumulation Stage” and that you take that down to about 75% in VTSAX and about 25% in bonds when you’re in the “Wealth Preservation Stage” (aka, usually after retirement). Now, it gets a little more complicated than that, but that’s basically the investment strategy in a nutshell, and it’s one I’ve heard many, many FIRE bloggers stand by.

So we’re trying it.

(Note: In case you’re wondering if we’re off our rocker by seemingly putting all of our eggs into one basket, so to speak, it’s worth noting that the VTSAX (or Fidelity’s equivalent FSKAX, which is what we’re in) is basically a portfolio of ALL the publicly-traded companies there are in the U.S. (something like 6,000+). There are higher percentages invested in some companies, such as the ones in the S & P 500 (especially the ones in the Top 10 such as Google and Amazon), and other sectors such as the healthcare industry. If you are curious about this strategy and this particular fund, I highly recommend you check out The Simple Path to Wealth, which lays it all out pretty succinctly.)

To put it into perspective for you, we were paying around 1.6% of our investments each year to our financial advisor, and now we’ll only be paying 0.02%. To understand the difference and why it’s important, let’s say that you had $100K in your retirement portfolio. If you had an advisor who charged 1.6% (as ours did, although the majority actually charge more), you would pay $1,600 over the course of the year. If you choose to self-manage your accounts like we are, you’ll just have to pay the small fee associated with owning shares in whatever particular fund you invest in, which in this case is 0.02%. That means that per year, you’d be paying just $20.

Now, the following won’t be a perfect model because there are tons of different variables in investing and nothing is static from year to year (and the amount you’d have to pay each year to your advisor would increase as your investments increased), but it will get my point across. If you invested the $1,580 that would have gone towards paying the financial advisor on top of your $100K that you already had for 30 years in the stock market with, say, an average 8% return over time, you would have nearly $1.29 million in 30 years. If you end up just paying the advisor fees (without calculating any other investments you make from year to year), that same amount would come to $1.09 million. In others words, you’ve just lost $200,000 off your retirement from paying advisor fees. It really does add up!

Anyway, I know there are a lot of other options besides self-management that don’t cost as much as traditional advisors (such as going with a roboadvisor), but doing it yourself is still the cheapest way to go about it. Our plan now is to try it out for a couple of years and if we still feel like we’re not seeing the growth we’d expect with market trends, we can reconsider. But more likely than not, we’ll probably just let it be.

And that’s it for our quarterly financial update! Do you have any questions for me? I’m always happy to help out in whatever way I can!

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