Browse Tag: FIRE

FIRE

Q2 22 Financial Scorecard: Adapting to a Harsh Environment

Just when we thought things couldn’t get any worse… the second quarter of 2022 happened.

After poor returns from the stock market during the first quarter of 2022, things got even more challenging during the second quarter of the year. From April through June, the S&P 500 fell more than 16%, marking its worst quarterly performance since the COVID-19 pandemic started in Q1 2020.

For the first half of the year, the S&P 500 was down around 21%, its worst performance since the global financial crisis in 2008.

Add in the highest inflation experienced in the United States in forty years, declining consumer confidence, and a highly politicized and ineffective response to the pandemic, and its no shock that President Biden’s approval ratings continue to plunge to historically low levels.

Unfortunately for our family, the challenging economic environment had a significant impact on our finances over the past three months… and early retirement remains an aspiration, rather than an achievment!

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Q1 22 Financial Scorecard: One Step Closer

The first quarter of 2022 was another turbulent period for our world.

While the COVID-19 pandemic may finally be waning, it appears we could be living with endemic conditions for the foreseeable future. A year ago, the recent rollback of many pandemic restrictions we have experienced would probably have been greeted enthusiastically by the financial markets. Alas, times have changed.

Russia’s attack on Ukraine is the most significant military action in Europe since World War II, and has led to unimaginable suffering for the innocent victims of an increasingly unhinged Vladimir Putin. The Russian offensive also contributed to volatile financial and commodity markets around the world, despite generally favorable pandemic trends.

Closer to home in the United States, inflation remains at the highest levels we’ve experienced in decades. Thus far, Federal Reserve Chairman Jerome Powell and President Joe Biden have proven themselves much better at empty rhetoric than substantive action that attempts to improve the lives of the average American.

The end result from a financial perspective was a broad U.S. stock market that fell as much as 13% from the end of 2021 through early March, before rallying to finish the first quarter of 2022 down nearly 5%. That decline had a material impact on our finances as we get closer to potential early retirement. Fortunately, we received our annual bonus for 2021 in early March, which helped offset the paper losses we experienced.

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The first quarter of 2022 was another turbulent period for our world.

While the COVID-19 pandemic may finally be waning, it appears we could be living with endemic conditions for the foreseeable future. A year ago, the recent rollback of many pandemic restrictions we have experienced would probably have been greeted enthusiastically by the financial markets. Alas, times have changed.

Russia’s attack on Ukraine is the most significant military action in Europe since World War II, and has led to unimaginable suffering for the innocent victims of an increasingly unhinged Vladimir Putin. The Russian offensive also contributed to volatile financial and commodity markets around the world, despite generally favorable pandemic trends.

Closer to home in the United States, inflation remains at the highest levels we’ve experienced in decades. Thus far, Federal Reserve Chairman Jerome Powell and President Joe Biden have proven themselves much better at empty rhetoric than substantive action that attempts to improve the lives of the average American.

The end result from a financial perspective was a broad U.S. stock market that fell as much as 13% from the end of 2021 through early March, before rallying to finish the first quarter of 2022 down nearly 5%. That decline had a material impact on our finances as we get closer to potential early retirement. Fortunately, we received our annual bonus for 2021 in early March, which helped offset the paper losses we experienced.

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Q3 21 Financial Scorecard: The Path Forward Slows

After five consecutive quarters making material progress on two of our primary FIRE goals, we were probably well overdue for some difficulties in the third quarter. While total returns for the S&P 500 were slightly positive in Q3 21, the Dow Jones Industrial Average and Nasdaq were both down for the quarter. Moreover, things got more challenging as the cooler weather arrived in September, which delivered the worst monthly stock market returns since the COVID-19 pandemic kicked into high gear around the world in March 2020.

The more challenging financial markets had a negative impact on our portfolio, and our expenses were also higher than normal. Some of those expenses were under our control, as we took our first family vacation in two years in August, enjoying several days in Maine while COVID cases were much lower than they are today. Unfortunately, the rampaging inflation the Biden administration has only reluctantly started to acknowledge took a big bite out of our wallet, as the townhouse we have rented several times over the years cost 60% more a night than it did in 2019! We also completed the HVAC project I mentioned last quarter, which was a much larger expense than our trip, but it will be nice to have reliable heating for the entire house as we head into what will almost certainly be another cold winter.

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Q2 21 Financial Scorecard: Nearing the Finish Line!

The ebullient financial markets continued to reach stratospheric levels during the second quarter of 2021. The S&P 500 returned 8.6% during Q2, pushing the market higher by more than 15% for the first half of the year. Those fantastic results boosted the ROMT family’s finances, moving us closer to our early retirement and financial independence goals!

As I noted last quarter, my mindset has shifted to “when” I’ll reach FIRE, from “if” I’ll reach FIRE, and strong stock market returns in recent weeks haven’t changed the way I’m feeling. That said, uncertainty in the U.S. remains elevated, with Coronavirus cases and deaths climbing again, a new administration that seems hell-bent on spending and taxing its way to higher inflation, and continued social unrest and increased polarization among our country’s citizens. While it seems like a strange time to potentially walk away from a steady paycheck, there’s always going to be something crazy happening somewhere, and the numbers suggest our financial position is sound. During Q2, I let my boss know I was unlikely to be around for the long term, so at this point, it’s just a matter of deciding when enough is enough!

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Preparing for the Tsunami: How Our Pursuit of FIRE has Helped Us During the Pandemic

We’ve spent a lot of time over the past several months preparing for the dreaded “second wave” of the COVID-19 coronavirus pandemic to hit, and it appears that time has arrived. New cases are at record levels in the U.S. and around the world, the number of deaths are climbing steadily, and shutdowns and restrictions are increasing. With the Northern Hemisphere just weeks away from winter, it’s looking like many of us are in store for a long, lonely and scary holiday season.

It has been a difficult year, spent mostly isolated from family, friends, colleagues and neighbors. We saw my family once over the summer, and we haven’t seen Mrs. ROMT’s family in almost a year. If anything, the next several months may be more challenging than the last eight months have been. Upcoming celebrations for Thanksgiving, Christmas, and New Year’s are going to be different. Our state has recently increased restrictions on out-of-state visitors and banned gatherings of more than one household. While enforcement of these measures doesn’t appear stringent right now, we have no interest in pushing the envelope. Hopefully by next summer we’ll be through the worst of the pandemic, and, God willing, will be healthy and able to catch up on lost time in person with family and friends.

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Q3 20 Financial Scorecard: Heading Towards the New Normal

Another quarter of pandemic life is behind us, but life’s certainly not back to normal. New cases of COVID-19 are climbing around the country, and it seems like the dreaded “second wave” could emerge over the coming months. We’re also just weeks away from the U.S. presidential election. Regardless of whether President Donald Trump or Joe Biden wins, the result will ultimately have an impact on our personal finances and pursuit of FIRE.

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Q2 2020 Financial Scorecard: Time For a Change in Plans

My employer recently went through a round of layoffs. While my job was safe, many of my colleagues, and millions of Americans, have lost their jobs over the past several months. COVID-19 cases continue climbing in many parts of the country, massive social changes are taking place, and what seems like one of the most important presidential elections of my lifetime is just four months away.

The world has changed a lot in 2020, which has caused us to rethink our plans around our pursuit of early retirement and financial independence.

Part of me has been tempted to use the massive uncertainty as the impetus to walk away and focus on what’s most important to us.

But the more rational part of me thinks it would be crazy to abandon a good paycheck until we have a much better idea what life in the United States might look like in 2021, 2022, and beyond.

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Our 2019 FIRE Prowess Score

Three years ago, The Green Swan blog 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 close to finishing up our taxes, I’ve pulled together the information needed to determine our score for 2019. I’ve been keeping thorough financial records for years, and enjoy tracking how our “FIRE Prowess” has changed over time. Thanks largely to last year’s great stock market returns, our FIRE Prowess improved significantly over the past twelve months!

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If You’re FI, Why Haven’t You RE?

question-mark-4785077_1920I recently wrote about how the strong U.S. stock market enabled the ROMT family to achieve our long-term net worth goal earlier than expected.

That achievement naturally could lead readers to wonder:

“So ROMT, if you think you’re financially independent, why haven’t you retired early?”

It’s a great question, and one I’ve been thinking about a lot lately!

There are several reasons why I haven’t pursued early retirement, even though our net worth says it might be possible:

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Q4 2019 Financial Scorecard: Kinda Sorta Financially Independent!

stock-market-2616931_1920The U.S. stock market finished the decade on a strong note, with returns of 8.5% for the S&P 500 during the fourth quarter of 2019. For the full year, the S&P 500 climbed 29%, its best performance since 2013!

Those great returns helped our financial situation improve more than expected over the last three months of the year. As a result, the ROMT family achieved one of the three financial goals we set on our path towards financial independence and early retirement!

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