Browse Category: Our Path to FIRE

Our Path To Fire

Should I Coast to Early Retirement or Run Hard To The Finish Line?

sport-1201014_1920As I noted in our latest Quarterly Financial Scorecard, we’re getting close to making financial independence a reality.

We’re now two years away from my target early retirement date. And barring a major downturn in the stock market, we should hit our net worth goal early next year.

But even in a best case scenario, that means we still have another 24 months of long commutes, late nights, countless meetings, office politics, and stressful deadlines ahead.

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Q2 2019 Financial Scorecard: Halfway To Financial Independence?

IMG_4082After a setback late last year, 2019 has been good for the ROMT family’s finances.

During the second quarter, we continued to make progress on each of the three metrics we are tracking on our path towards early retirement and financial independence – net worth, 529 account funding, and passive income.

The resilient U.S. stock market was the primary driver of our good results. The S&P 500 rose by 3.8% in the second quarter, as strong performance in April and June offset a decline in May. During the first six months of 2019, the S&P 500 climbed 17% – its best first half performance in 22 years! As the second half of the year begins, the U.S. stock market is once again near all-time high levels.

It has been two years since we introduced our quarterly financial scorecard, and with our target early retirement date now just two years away, our recent progress has me believing we may really be halfway to financial independence!

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Q1 2019 Financial Scorecard: Back on Track!

When we last reported on our finances at the beginning of the year, the results were not good. The worst quarter for the stock market in almost seven years resulted in our net worth moving in the wrong direction for the first time since we started posting our Quarterly Financial Scorecards here at Retiring On My Terms.

Fast forward three months, however, and we seem to be back on track.

The S&P 500 Index returned more than 13% during Q1 2019 – it’s best quarter in nearly a decade! While the U.S. stock market is still a bit below the all-time high set last September, the strong returns so far this year have been great for the ROMT family. We made progress over the past quarter on all three of the metrics we are tracking on our path towards early retirement and financial independence – net worth, 529 account funding, and passive income.

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How Tax Reform Impacted Our Pursuit of Financial Independence

Image by Steve Buissinne from Pixabay

As we get closer to April 15th, there has been a lot of discussion around the impact of 2017’s Tax Cuts and Jobs Act (TCJA) on U.S. taxpayers.

Not surprisingly, much of that discussion has been politicized.

Rather than jumping into politics, we’re going to look at the facts. Specifically, we’ll examine how the new tax law impacted our family’s pursuit of financial independence in 2018.

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ROMT’s “FIRE Prowess” Scores for 2001 to 2018

Image by David Mark from Pixabay

Two years ago, blogger The Green Swan introduced a metric called the FIRE Prowess Score.

“FIRE Prowess” went viral among those seeking financial independence and early retirement in 2017. Many financial bloggers, including yours truly, wrote about our FIRE Prowess Scores back then.

Since I’m finishing up my taxes, I’ve pulled together the information needed to determine my score for last year. I’ve been keeping thorough financial records for years, and enjoy tracking how my “FIRE Prowess” has changed over time.

I’m disappointed The Green Swan blog is no longer active, but their work lives on with this update!

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ROMT’s 2019 Financial Resolutions

Financial Independence

Back on New Year’s Day, I reviewed our financial resolutions for 2018, and, more importantly, reported on how we did keeping them last year.

Overall, I think we earned a grade of a B on the nine financial resolutions we published a year ago, but the variation in our grades on each individual line item was pretty extreme. We earned three A+ grades (maxing out our 401(k) contribution, contributing enough to our children’s 529 plans to maximize state tax benefits, and choosing not to invest in Bitcoin last January), but I think I also earned a D on my goal to blog more consistently at Retiring On My Terms.

Hopefully a year from now our grades for these 2019 financial resolutions will be both higher, and more consistent, than what we achieved last year!

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Q4 2018 Financial Scorecard: Moving in the Wrong Direction

Early Retirement

The first six times we reported on our quarterly financial progress here at Retiring On My Terms, the news was always positive.

The three key metrics we’re tracking on our path towards early retirement and financial independence – net worth, 529 account funding, and passive income – all increased every single quarter.

Sometimes the growth was fast, and sometimes the growth was slow, but fairly consistent income, responsible spending, and a generally supportive stock market enabled us to make steady progress towards our goals ever since we started this blog.

Of course, that all changed during the fourth quarter of 2018, when the S&P 500 index plunged nearly 14%. As good as we try to be at saving and spending, a quarterly decline of that magnitude, the likes of which we hadn’t experienced in more than seven years, is bound to leave a mark on just about any investment portfolio.

And ours was no exception, even though, somewhat surprisingly, we still managed to make progress on one of our three key metrics despite the market rout over the past three months.

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So How Am I Doing? Reviewing Our 2018 Financial Resolutions

FIRE

Former New York City Mayor Ed Koch famously asked his constituents, “How am I doing?” on a regular basis. 

A year ago, I posted nine financial resolutions for the new year, that I believed if followed could keep the ROMT family moving forward on our path towards early retirement and financial independence.

With 2018 now complete, it seems like a good time to ask myself the same question Ed Koch asked New Yorkers decades ago. Without further delay, let’s take a look at how we did on our financial resolutions in 2018!

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Our Passive Income Takes a Punch to the Mouth

Passive IncomeFormer heavyweight boxing champion Mike Tyson was famously quoted as saying “everyone has a plan until they get punched in the mouth.”

While less than two months ago it seemed like we were in pretty good shape to hit our year-end passive income goal, recent events in the financial markets have negatively impacted our ability to generate passive income.

Fortunately, we’re doing our best to adapt to our changing circumstances. Turns out, it seems like we do have a plan for our passive income getting metaphorically punched in the face.

Even though he’s now in his fifties, I still don’t want any part of facing off against Iron Mike in the boxing ring, however!

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Q3 2018 Financial Scorecard: Another Milestone on the Path to Financial Independence

Financial ScorecardDuring the third quarter of 2018 we continued to make good progress in our pursuit of financial independence and early retirement!

Our efforts were helped by the strong stock market. The S&P 500 delivered its best quarterly returns in almost five years during Q3 18, climbing by more than 7% during July, August, and September! The Dow Jones Industrial Average rose by 9% during the quarter, while the Nasdaq 100 rose by over 8%.

Those great returns from the market gave our finances a boost, and we made progress on the Net Worth, 529 Account Funding, and Passive Income goals we are tracking to measure our progress. We even hit one of our short-term financial goals a quarter early!

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