Browse Category: Our Path to FIRE

Our Path To Fire

Q1 2018 Financial Scorecard: Volatile Equity Market Takes Its Toll

Early RetirementWhen I think back on our finances for the first quarter of 2018, I have to quote Charles Dickens.

“It was the best of times, it was the worst of times.”

The good times included getting paid my annual bonus for 2017, going on a great family trip to Walt Disney World, and, ultimately, making some modest progress on our Net Worth, 529 Account Funding, and Passive Income goals.

The bad times included paying for that vacation in Florida, missing on some of our short-term financial goals, and a volatile stock market that finally reminded us equity prices don’t always go up!

Although the S&P 500 Index was down only about 1% for the entire first quarter, the market had fallen nearly 10% from its January peak by the end of March.

Market volatility was at elevated levels during the first three months of the year. To put that volatility into perspective, consider this:

The Dow Jones Industrial Average (DJIA) has been calculated since the late 19th century.

Two of the five largest daily point gains in the DJIA’s history occurred over the past three months.

And three of the five largest daily point losses in the DJIA’s history occurred during the first quarter of this year.

Fears of an all-out trade war with China have continued to spook investors in April, and it seems like we are always just one tweet away from a 500 point move in the market!

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ROMT’s Updated FIRE Prowess Scores for 2001-2017

Early RetirementLast year, The Green Swan introduced a new FIRE metric that received a lot of attention, the Swan FIRE Prowess Gauge.

I, and many other personal finance bloggers and readers, calculated and publicly reported on our FIRE Prowess scores on our own blogs and in the comments section of The Green Swan’s original post explaining the concept of FIRE Prowess.

Since I recently completed my income taxes for 2017, I now have all the data needed to update my own FIRE Prowess score for last year. I’ve been keeping track of my finances for a long time, and we discovered last year that my FIRE Prowess history was one of the longest ones reported.

Last year was another good year for the ROMT family’s pursuit of financial independence and early retirement, and our FIRE Prowess score for 2017 confirms we’re continuing to move in the right direction!

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ROMT’s Financial Resolutions for 2018

Financial Independence2017 was a good year for the ROMT family’s finances.

We paid off our mortgage!

We had solar panels installed on our roof, which over the second half of 2017 cut our electric bill by over 90% from what we paid during the same period in 2016!

We learned about financial independence and early retirement (FIRE), and developed a plan we hope can lead us down the path to FIRE before Mrs. ROMT or I turn 50. As of January 1, 2018, we were almost 78% of the way to our net worth goal!

2017 wasn’t without some missteps. My commute is still too long and too expensive, I’ve done a poor job taking care of myself, and our participation in the neighborhood garage sale was an abject failure!

But all in all, it was still a good year for our bottom line.

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Q4 2017 Financial Scorecard: Slow And Steady Wins The Race!

Personal FinanceWith the calendar finally turning to 2018, it’s time to report on the ROMT family’s financial status as of year-end 2017!

We made progress on each of our financial independence and early retirement goals during the fourth quarter, increasing our Net Worth, 529 Account Funding, and Passive Income.

Measuring our progress on a regular basis certainly helps keep our eyes on the prize, but we’ve found there are really no secrets to continuing to move in the right direction.

For those of us who aren’t founders of tech startups, first round NFL draft picks, or lottery winners, slow and steady progress is the surest way to build wealth over time.

Keeping our personal finances in order is largely a matter of doing the basic blocking and tackling on a daily basis.  Trying to save a larger portion of our income, making sure our money is working as hard for us as we are, avoiding unnecessary expenditures, and taking full advantage of any free money that is available, such as 401(k) matches and credit card rewards, may sound boring, but are all tried and true ways to continue moving towards financial independence and early retirement.

And we used all of those methods to move a little closer to our goals during the fourth quarter.

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When Is Enough, Enough?

Financial IndependenceBased on its title, you may be surprised to learn this post isn’t going to be about figuring out how much money you might need to achieve financial independence.

We’ve already written about the 4% rule, and we’ve also outlined our financial goals as we track our progress towards FIRE.

Looking solely at the numbers, I know our family is over 75% of the way to our definition of financial independence, and that if nothing significant changes in our lives, we are likely to reach our target in less than four years.

Today, when I ask when is enough, enough, I am being more philosophical.

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Q3 2017 Financial Scorecard: 75% Of The Way To FIRE!

Financial IndependenceAs we head into autumn, the leaves are changing colors, the baseball playoffs are underway, and football season is heating up as the weather is cooling off.

Which can mean only one thing for the ROMT family: it’s time to report on our financial progress during the third quarter!

Publicly tracking our progress towards financial independence and early retirement has really focused our attention on the topic. I’m pleased with the progress we made over the past three months on our Net Worth, 529 Account Funding, and Passive Income goals. We still have a lot of work ahead of us, but during the third quarter we were heading down our path to FIRE with all cylinders firing!

Without further ado, let’s take a look at our progress as of September 30, 2017:

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ROMT’s FIRE Prowess Score

FIRE Prowess ScoreLast month, The Green Swan introduced a new FIRE metric that has received a lot of attention, the Swan FIRE Prowess Gauge.

FIRE Prowess is easy to calculate. It’s simply the change in your net worth, divided by your gross income, for any time period.

FIRE Prowess = Change In Net Worth / Gross Income

Most of us will have FIRE Prowess scores between 0.0x and 1.0x. The higher your FIRE Prowess number is, the better you are doing at increasing your net worth.

Numbers above 1.0x mean your net worth is growing faster than your income, which is an incredible result, presumably driven by both a relatively frugal lifestyle in the context of your income, and strong investment results.

A negative number means your net worth is headed in the wrong direction, which could be caused by spending more than you earn, a job loss, borrowing money to purchase depreciating assets, poor investment performance, or many other factors.

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Quarterly Financial Scorecard: Q2 2017

Early Retirement
Could early retirement really be just four years away? We still have a lot of work to do!

Last week, I outlined how I plan to measure our progress during our quest for financial independence and early retirement.

Today, we’ll open the curtain into our finances for the first time, and share where we stand in relation to our Net Worth, 529 Account Funding, and Passive Income goals as of June 30, 2017 – just four years before our target FIRE date of Friday, July 2, 2021.

I. Net Worth: 73.1% of Goal

Our net worth declined by 1.0% during Q2 2017. On the surface, this was a poor performance, as the S&P 500 was up 2.6% during the quarter. Not all of our assets are in the stock market, so the comparison is a bit unfair, but we’d still normally expect our net worth to rise with a strong stock market bolstered by additional savings and investments.

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How I’m Measuring Our Progress Towards FIRE

Early RetirementWhile there are many ways to measure progress towards financial independence and early retirement, I tend to focus on the numbers more than the less tangible aspects of the journey.

As we continue down our path to FIRE, I will post a Quarterly Financial Scorecard every three months, documenting our progress along the four dimensions I am measuring.

But before posting our Quarterly Financial Scorecard for Q2 2017, I want to outline what we are measuring during our quest for financial independence:

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If Nobody Reads What I Write, Am I Still Blogging?

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Over the past couple weeks, I have written several posts about our family’s decision to purchase a home solar energy system.

Although I have less than two months of blogging history to base things on, my posts on solar energy have proven to be among the least popular topics I have written about, based upon the number of people reading them.

Amazingly, someone has actually found and looked at everything I have posted on this blog, which is focused on our quest for early retirement and financial independence. But as a newbie, I am still struggling to determine what people are most interested in reading about.

Do readers want cold, hard facts about personal finance, or more entertaining articles about my family’s financial escapades?

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