Browse Tag: FIRE

FIRE

Q3 2019 Financial Scorecard: Slow But Steady Progress Towards Our Goals

amphibian-1850190_1920After a great first half of the year financially, the third quarter of 2019 was less eventful for the ROMT family.

The S&P 500 climbed 1.2% during Q3, which helped offset our spending being a bit higher than normal, as we took a few trips over the summer. Although our progress slowed from the pace we set earlier in the year, we continued to move closer to each of the three goals we are tracking on our path towards early retirement and financial independence Рnet worth, 529 account funding, and passive income.

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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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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 Long Does it Take for Dividend Income to Grow Exponentially?

I’ve been earning income for over 30 years, and maintaining copious financial records for close to two decades.

As a result, I’ve accumulated a lot of information on my finances.

Most of the time, that information sits in a filing cabinet or on my computer’s hard drive.

But every once in a while I actually use it.

As we get closer to financial independence and early retirement, I’ve spent more time thinking about passive income. Since this blog has literally generated less than a penny per hour in earnings, passive income for the ROMT family consists primarily of interest on our savings and dividends on our investments.

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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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Dumb Financial Decisions: The Wrong Way to “Pay Yourself First”

Image by Goumbik on Pixabay

Many personal finance experts stress the importance of “paying yourself first.”

According to Investopedia, paying yourself first means automatically saving a portion of each paycheck. Money is routed from your paycheck directly into a savings or investment account. Before you begin paying monthly living expenses or making other purchases, you’ve already put some money into savings.

One of the simplest ways to pay yourself first is routing a portion of your paycheck into your employer’s 401(k) plan. I’ve done this ever since I started working. The savings I have built up in my 401(k) are a major reason we may have a chance to pursue early retirement! As an added benefit, many employers match a portion of your 401(k) contributions.

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Solar Bank Pays Dividends as the Weather Gets Nasty

Financial Independence

The weather in our part of the country was particularly harsh during January.

We were hit by multiple major snowstorms during the month, and the temperature rarely got above freezing, and was often well below zero degrees (F).

One result of the wintry weather was a miniature glacier forming across our rooftop solar panels, which severely limited our energy production during January. Our home solar power system generated essentially no energy for a period more than two weeks during the middle of the month while the ROMT Glacier existed, and our monthly production barely topped 100 kWh – 40% worse than any other month since we went solar!

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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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