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.
How are we currently doing?
The current market value of the hoard is $61,435. This is about 10.2% of our $600,000 goal.
Primary residence: The mortgage is $97,486, which means it’s about 0.5% paid off.
Hell yeah! We’ve got over 10% of our goal in liquid assets! That’s pretty exciting. Reaching $600,000 is going to take quite a bit of time, but at least at the beginning you basically hit new milestones all the time. The most important thing about these numbers is that they are both moving in the right direction.
The mortgage balance is still really high because we just took out the loan in March. We’ve been paying an extra $105 in principal every month, but right now our focus is on building the liquid assets.
In general, if you have a good mortgage rate (ie sub 4%), then I think it’s generally best to focus on your investments rather than aggressively pay off your mortgage. I’m planning a post soon where I talk about this decision and why I think it makes sense for us. But whatever keeps you motivated is the right choice for you. Just make sure your money is working for you either by paying off debt or investing.
I expect a big boost to The Hoard in July. Mrs. Dragon and I got an opportunity at work which basically boils down to working 1.5 times the number of hours for 2 times the pay for the month of July. The math on that works out very well and, since we don’t have any kids yet, we decided to jump on the opportunity.
This means our income in July is basically going to double and all that extra money is being diverted to our tax-advantaged accounts. We already filed the form with HR.