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Monthly Status: November 2017

 

You know what time it is?  Time to look at some green bars and figure out just how much longer we have until we can quit our Corporate jobs, become nomads and really go all in on the Value Cruising lifestyle we crave.

Spend Trend

So let’s jump right in and take a look at our spending over the last rolling 12 months:

It looks like we are still over our annual spending target of $39,000 but we did close the gap a bit by spending less overall this November than we did in November of last year.

Given I had a few trips to the Dr.’s office and the hospital recently, we know that we will be paying some big medical bills next month so we’ll have to figure out other ways to get below our annual target.  One option we have discussed is to do a staycation next year instead of taking our usual multi week cruise vacation. While this isn’t something we would typically volunteer to nix from our spend plan, we know in less than a year from April, we will be able to go on a permanent vacation so we should be able to forgo just one trip. Plus we have neglected our house and have loads of work that we need to do in order to get it sell-ready for our FIRE plans.

Monthly Spend by Category

Let’s take a closer look at the details of where our cash went in the month of November 2017:

Interestingly enough, the top 3 categories make up more than 75% of our spending. November was property tax month and as you can see that accounted for more than half of our spending. See why we can’t wait to sell our house and become nomads! There are so many other things I would prefer to spend that cash on. Other than taxes, the next two biggest categories of spending were restaurants / groceries and holiday gifts. Tis the season!

Projected Retirement

Now for my favorite set of green bars… the “when we can become cruising nomads chart”:

Ding, ding, ding!  The assets in our goal accounts went up by a whopping $37,716!

That’s  over $23,000 more than our monthly goal of $14,600.  In November, we more than doubled our wealth accumulation target for the month…again!  What is even more exciting is that, for the very first time since we started tracking our goals, the projected retirement algorithm says we can both retire before the end of 2018. (FI Girl is doing a happy dance right now) This is a full four months ahead of schedule.

So how much of this was us and how much of this was Mr. Market?

We have had a high savings rate over many years which has been the primary driver that got us to this point.  We used to have complete control over our progress but now the market drives everything given our exposure.  Our S&P index is up 2.84% in the month and our international index is up 1.55%.  These are pretty big numbers for a single month. And beyond actually investing in these funds, it’s performance was totally out of our hands.

Looking at the P/E Ratios of our investments, it looks like the yield % is going down which is a tad concerning.  I’ll admit that a correction after hitting these milestones ($2M and retire before 2019) will hurt… but we will have to have the willpower to stand our ground and keep to our plan rather than jump ship. As we stated in our Big Fat Bubble article, we know an event is coming but we don’t know when and we certainly know that we have no control over it. What we do know is, that when it does come we will have control over our response to it.

 

Net Worth:

Let’s see what happened to our Net Worth over the last month:

So what we are looking at in this chart is all of our cash, investment accounts and real estate (primary residence according to Zillow) slammed together in a consolidated view. Over the course of one month, our net worth increased by $27,762.  This is actually $10K less than our goal account net change.

Why is that?  Well, Zillow decided our house was worth $10K less this month.

I typically look at the Zillow valuation as a good ballpark number and it is super convenient that it feeds directly into our mint account automatically. Selling our house plays a big part in making our FIRE plan work and we will be selling within 2 years so we will have to watch the valuation closely and adjust our plan accordingly.

Final thoughts

The more wealth we accumulate in proportion to our income, the less direct control we have over growing that wealth further because we are at the mercy of the market which, for the most part, now determines just how much we gain…or lose.  If the market decides it wants to go up by 1% today then we made a bunch of money and had a good day. But if it decides to go down, well that’s a different story. Because we have no direct influence on the market we just let it do its thing and don’t stress over the day to day changes.

We always knew this would be the case; it’s just really strange to finally be at that point. 

The choices we made over the last several years are now becoming critical to the success and realization of our FIRE goals. Our investment decisions from years ago; the decision to buy our specific house and to invest in specific indexes…all locked in and loaded.

Civilization is now essentially determining our future which is completely outside our circle of control (unless we of course decide to cash out of the stock market).  The savings rate that we can control is really only determining a small fraction of the overall results we are now realizing.

This has always been the end goal so we better get used to it.  When we quit Corporate America, we will have zero earned income and will be completely dependent on Civilization feeding us dividends.

 

 

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