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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Expenses: March 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 Villanova player tracks the game winning shot.

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

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

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