The Hoard: August 2016

The Dragon's Hoard

Every good dragon has a hoard.  You know.  The collection of gold, jewels, and other valuables that the dragon guards in his or her cave.  For me, The Hoard is what I call my assets.  The collection of stocks, bonds, and other income producing assets that Mrs. Dragon and I have collected thus far.

Mythological fire breathers have to protect their hoard from knights seeking glory, wizards wanting power, etc.  Real-world FIRE breathers have more mundane, but very real dangers to their own hoards: the tax man, the cable company, lifestyle inflation, high-fee brokers, and many more.

This is one post in a series that documents my progress towards financial independence.

You might recall that I don’t include our primary residence in the assets (it doesn’t produce income) and I don’t include our primary mortgage against the assets.  If we had a rental house, I would include it in both parts of the equation, but I’ll address the primary residence in a separate category.

I do not differentiate between tax-advantaged accounts and taxable ones in the number for The Hoard.  Assets are assets.

We use the excellent (and free!) service Personal Capital to keep track of how The Hoard is coming along.  It lets you view all your accounts on a single homepage for a convenient snapshot of your financial life.  It is a top-notch service.  Highly recommended.

Mrs. Dragon and I want $600,000 in liquid assets and a paid-off house to consider ourselves financially independent. We’re hoping to accomplish this by February of 2025.

How are we currently doing?

The current market value of the hoard is $197,338 (vs $183,376 last month).  This is about 32.9% of our $600,000 goal.

Primary residence: The mortgage is $93,891 (vs $94,143 last month), which means it’s about 4.19% paid off.

Score! Another huge increase this month. The market has been steadily climbing for a while now, and that’s definitely reflected in the most recent increases in The Hoard.

Unless the market takes a nose dive we should clear $200k by next month! That would be awesome as we are currently ahead of schedule for meeting our goals.

Honestly, we’ve been so busy getting used to taking care of Baby Dragon we haven’t thought very much about either our spending or The Hoard.  Luckily, all our investments are automated so while we are busy living our lives, the numbers just keep climbing higher and higher.

As you can see, we are still focused on investing vs paying off the mortgage right now. I expect this to continue for at least another year and quite possibly for several more.

How has your portfolio been faring in the recent run-up? With markets at all-time highs are you sticking to your plan, or being more conservative with your investments?

Expenses: July 2016

ExpensesExpense report!  Since I’m a total voyeur for finance, these types of details are exactly the kind that I love to read on other people’s blogs.

Don’t get me wrong though, these numbers are primarily written for me and Mrs. Dragon.  Every good FIRE breather knows that to be successful, you have to track your expenses. You have to track them like an Olympian tracks the conditions in Rio.

How else will you know when your Hoard is big enough?

Without further ado, here are the numbers for July (rounded to the nearest dollar):

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The Hoard: July 2016

The Dragon's Hoard

Every good dragon has a hoard.  You know.  The collection of gold, jewels, and other valuables that the dragon guards in his or her cave.  For me, The Hoard is what I call my assets.  The collection of stocks, bonds, and other income producing assets that Mrs. Dragon and I have collected thus far.

Mythological fire breathers have to protect their hoard from knights seeking glory, wizards wanting power, etc.  Real-world FIRE breathers have more mundane, but very real dangers to their own hoards: the tax man, the cable company, lifestyle inflation, high-fee brokers, and many more.

This is one post in a series that documents my progress towards financial independence.

You might recall that I don’t include our primary residence in the assets (it doesn’t produce income) and I don’t include our primary mortgage against the assets.  If we had a rental house, I would include it in both parts of the equation, but I’ll address the primary residence in a separate category.

I do not differentiate between tax-advantaged accounts and taxable ones in the number for The Hoard.  Assets are assets.

We use the excellent (and free!) service Personal Capital to keep track of how The Hoard is coming along.  It lets you view all your accounts on a single homepage for a convenient snapshot of your financial life.  It is a top-notch service.  Highly recommended.

Mrs. Dragon and I want $600,000 in liquid assets and a paid-off house to consider ourselves financially independent. We’re hoping to accomplish this by February of 2025.

How are we currently doing?

The current market value of the hoard is $183,376 (vs $161,997 last month).  This is about 30.6% of our $600,000 goal.

Primary residence: The mortgage is $94,143 (vs $94,396 last month), which means it’s about 3.91% paid off.

I can’t help but laugh at the huge increase in The Hoard this month.  We had a couple thousand extra dollars in income last month because I’m teaching an online summer class, but the VAST majority of the increase is because of an uptick in the market.

This is why you don’t time the market, people. There was a lot of doom and gloom about Brexit last month, and the markets took a little dive. If you were silly enough to sell anything then you missed a substantial rebound for both US stocks and foreign stocks.

Of course, we’re just chugging along. Our investments are automatically deducted from our paychecks so the wheels keep turning without any help from us.

The huge jump means that it’s possible that we will break $200,000 this year! That would be incredible!

It’s just one more number on the way up, but it would be awesome to hit 200k in 2016.

In other news, we are adjusting to our new life with Baby Dragon.  There are already a few ways that our monthly spending will increase with the new addition to the family.  Most notably: increased health insurance costs and childcare costs.

Naturally I’ll be giving you the full rundown on these in the expense reports.

I hope your summer is going well, and you didn’t sell during the Brexit downturn!

Expenses: June 2016

ExpensesExpense report!  Since I’m a total voyeur for finance, these types of details are exactly the kind that I love to read on other people’s blogs.

Don’t get me wrong though, these numbers are primarily written for me and Mrs. Dragon.  Every good FIRE breather knows that to be successful, you have to track your expenses. You have to track them like Mrs. Dragon tracks US gymnastics.

How else will you know when your Hoard is big enough?

Without further ado, here are the numbers for June (rounded to the nearest dollar):

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The Hoard: June 2016

The Dragon's Hoard

Every good dragon has a hoard.  You know.  The collection of gold, jewels, and other valuables that the dragon guards in his or her cave.  For me, The Hoard is what I call my assets.  The collection of stocks, bonds, and other income producing assets that Mrs. Dragon and I have collected thus far.

Mythological fire breathers have to protect their hoard from knights seeking glory, wizards wanting power, etc.  Real-world FIRE breathers have more mundane, but very real dangers to their own hoards: the tax man, the cable company, lifestyle inflation, high-fee brokers, and many more.

This is one post in a series that documents my progress towards financial independence.

You might recall that I don’t include our primary residence in the assets (it doesn’t produce income) and I don’t include our primary mortgage against the assets.  If we had a rental house, I would include it in both parts of the equation, but I’ll address the primary residence in a separate category.

I do not differentiate between tax-advantaged accounts and taxable ones in the number for The Hoard.  Assets are assets.

We use the excellent (and free!) service Personal Capital to keep track of how The Hoard is coming along.  It lets you view all your accounts on a single homepage for a convenient snapshot of your financial life.  It is a top-notch service.  Highly recommended.

Mrs. Dragon and I want $600,000 in liquid assets and a paid-off house to consider ourselves financially independent. We’re hoping to accomplish this by February of 2025.

How are we currently doing?

The current market value of the hoard is $161,997 (vs $161,935 last month).  This is about 27.0% of our $600,000 goal.

Primary residence: The mortgage is $94,396  (vs $94,647 last month), which means it’s about 3.68% paid off.

Not much progress since last month, mostly due to a large down-swing in the markets because of the UK’s decision to leave the EU (#Brexit).  The Hoard was above $172k at one point, but has since tumbled quite a bit.

That’s life in the markets! Some months are up and some months are down.  We just continue to invest every month. I’m hoping things don’t rebound this week since we get paid on the first of each month.  That way our automatic purchases will be at the new discounted prices!

We have family in town so I’m going to keep this short and sweet.  We’re expecting Baby Dragon any day now, so I haven’t really been thinking too much about our investments.

Hopefully you’re enjoying the warm weather and making time for friends and family this summer!

What are your thoughts on Brexit? Is it affecting how you view your investments?

Expenses: May 2016

ExpensesExpense report!  Since I’m a total voyeur for finance, these types of details are exactly the kind that I love to read on other people’s blogs.

Don’t get me wrong though, these numbers are primarily written for me and Mrs. Dragon.  Every good FIRE breather knows that to be successful, you have to track your expenses. You have to track them like a democrat tracks superdelegates.

How else will you know when your Hoard is big enough?

Without further ado, here are the numbers for May (rounded to the nearest dollar):

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The Hoard: May 2016

The Dragon's Hoard

Every good dragon has a hoard.  You know.  The collection of gold, jewels, and other valuables that the dragon guards in his or her cave.  For me, The Hoard is what I call my assets.  The collection of stocks, bonds, and other income producing assets that Mrs. Dragon and I have collected thus far.

Mythological fire breathers have to protect their hoard from knights seeking glory, wizards wanting power, etc.  Real-world FIRE breathers have more mundane, but very real dangers to their own hoards: the tax man, the cable company, lifestyle inflation, high-fee brokers, and many more.

This is one post in a series that documents my progress towards financial independence.

You might recall that I don’t include our primary residence in the assets (it doesn’t produce income) and I don’t include our primary mortgage against the assets.  If we had a rental house, I would include it in both parts of the equation, but I’ll address the primary residence in a separate category.

I do not differentiate between tax-advantaged accounts and taxable ones in the number for The Hoard.  Assets are assets.

We use the excellent (and free!) service Personal Capital to keep track of how The Hoard is coming along.  It lets you view all your accounts on a single homepage for a convenient snapshot of your financial life.  It is a top-notch service.  Highly recommended.

Mrs. Dragon and I want $600,000 in liquid assets and a paid-off house to consider ourselves financially independent. We’re hoping to accomplish this by February of 2025.

How are we currently doing?

The market value of the hoard in mid-May was $161,935 (vs $158,175 last month).  This is about 27.0% of our $600,000 goal.

Primary residence: The mortgage is $94,647  (vs $94,898 last month), which means it’s about 3.42% paid off.

This post is a little late, because we have been super busy lately, so I’ll keep it short and sweet.  Another solid month of progress here.  Our investments are pretty much on autopilot, so things just keep going smoothly.

But Mr. Market is a moody S.O.B. so you never know when a sudden spike or drop will come along.  However, we’re mentally prepared for when they inevitably do come.  For now, we’re just enjoying the relatively smooth sailing.

Expenses: April 2016

ExpensesExpense report!  Since I’m a total voyeur for finance, these types of details are exactly the kind that I love to read on other people’s blogs.

Don’t get me wrong though, these numbers are primarily written for me and Mrs. Dragon.  Every good FIRE breather knows that to be successful, you have to track your expenses. You have to track them like a Michael Phelps tracks his gold medals (the Olympics are this summer, woo!).

How else will you know when your Hoard is big enough?

Without further ado, here are the numbers for April (rounded to the nearest dollar):

Read more

The Hoard: April 2016

The Dragon's Hoard

Every good dragon has a hoard.  You know.  The collection of gold, jewels, and other valuables that the dragon guards in his or her cave.  For me, The Hoard is what I call my assets.  The collection of stocks, bonds, and other income producing assets that Mrs. Dragon and I have collected thus far.

Mythological fire breathers have to protect their hoard from knights seeking glory, wizards wanting power, etc.  Real-world FIRE breathers have more mundane, but very real dangers to their own hoards: the tax man, the cable company, lifestyle inflation, high-fee brokers, and many more.

This is one post in a series that documents my progress towards financial independence.

You might recall that I don’t include our primary residence in the assets (it doesn’t produce income) and I don’t include our primary mortgage against the assets.  If we had a rental house, I would include it in both parts of the equation, but I’ll address the primary residence in a separate category.

I do not differentiate between tax-advantaged accounts and taxable ones in the number for The Hoard.  Assets are assets.

We use the excellent (and free!) service Personal Capital to keep track of how The Hoard is coming along.  It lets you view all your accounts on a single homepage for a convenient snapshot of your financial life.  It is a top-notch service.  Highly recommended.

Mrs. Dragon and I want $600,000 in liquid assets and a paid-off house to consider ourselves financially independent. We’re hoping to accomplish this by February of 2025.

How are we currently doing?

The current market value of the hoard is $158,175 (vs $146,901 last month).  This is about 26.4% of our $600,000 goal.

Primary residence: The mortgage is $94,898  (vs $95,147 last month), which means it’s about 3.17% paid off.

Another spectacular month.  I continue to be amazed every time I write one of these posts. Our investments are automated so the money goes to work without any help from us.  That means I don’t see the bottom line very much throughout the month.

An increase of $11,000+ is certainly welcome any time!  Of course, we had a little help from Mr. Market.  According to Personal Capital, our investments earned 2.2% since the last update.  Because our nest egg keeps growing that 2.2% is actually a decent chunk of change now!

The breakdown on this increase is approximately as follows:

$6200 – payroll deduction straight to retirement accounts (including employer match)

$750 – side hustle income

$3200 – investment gains

The rest – take home pay sitting in checking/savings accounts

As you can see, we never even saw most of that money. I cannot overstate the importance of automating your finances as much as possible. It makes it so much easier to keep your spending in check if the money never hits your account.

Naturally, you can take months like this with a big fat grain of salt.  The market happens to be up right now, but there will be plenty of months when it is down. The important thing is that the general trajectory of your net worth is upward!

After recently realizing that we hit a 76% saving’s rate last year, I’m feeling pretty good about our finances right now.  Some months it certainly seems like we are being spendy, but the numbers here on the blog tell me we are doing just fine.

How was last month for you?  Do you think we are on track for our FI goals by Feb 2025?

 

 

 

 

2015 Taxes and Savings Rate

IRSI have completed our 2015 tax return so, armed with the exact amount of tax we paid for 2015, I’m now ready to calculate our savings rate for the year.

Let me just start by saying we did a damn good job being tax efficient this year.  Our effective income tax rate wasn’t even a mere 3% despite having a joint income of almost $150k (with employer retirement matching).

Here’s the breakdown on our taxes (most numbers rounded for security/anonymity):

Gross income: $140,800 + $8,600 employer matching

IRS income: $69,000

Adjustments: $11,000 (traditional IRA contributions)

AGI: $58,000

Standard deduction and two personal exemptions: $20,600

Taxable income: $37,400

Tax owed: $4,600

Saver’s credit: $400

Total income tax: $4,200

Using the rounded numbers above we had a 2.8% effective tax rate for federal income tax.  You might be asking yourself, “How in the unholy name of hell did they pull that off?!?”  Don’t worry, dear reader, the details are below.

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