Aloha Jim’s household had been super busy in June with family visiting and Summer activities. Although it is super late, I still want to update the monthly progress to keep the consistencies. It helps us to stay on track on our goals and make necessary correction if we deviate from the goal.
Quick summary on what’s happening in May 2018:
- Getting ready to sell one of our rental property. House price had risen tremendously in that area, time to cash out and rebalance our portfolio.
- I added more money to PeerStreet and set automatic investment on $1,000 increment.
FI Progress: April 2018
My investment is mostly resolved around VTSAX, VXUS, and VBTLX (Vanguard’s low cost index fund). Equity is 100% real estate, currently spread across 2 rentals and 1 primary residence. We’re in the process of selling one of our rental property to cash out. We bought it for $485,000 in 2014. Recent valuation is hovering around $800k. Not a bad gain within 4 years. We lived in that house for over 2 years as a primary residence before turning it into a rental, so it should help alleviating the capital gain tax on sale.
Financial Independence Progress: May 2018
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While $1M is a lot of money and is considered as lean FIRE, it’s not as big of a pile as it used to be, especially in the coastal cities like Seattle. Since we have no immediate plan to move inland yet, we wouldn’t call it a FIRE yet. While it’s doable, it’ll still be challenging to retire with $1M in this city. Our goal is to fatFIRE, as PhysicianOnFire described it in this article. That is, passive income of $100k/year with 4% rule ($2.5M of capital). This way, we have more options on where we want to retire.
I added more money into PeerStreet. I set it to do automatic investment in $1,000 increment for properties that are 75% LTV and provide 8% returns or more. I’ll blog my experience through these investment vehicles. But if you’re interested, use my referral link above to get 1% yield bump on PeerStreet. Note that there’s an accredited investor requirement to invest on this platform. Fundrise is another option that doesn’t have that requirement.
I use Personal Capital (highly recommended free app / website) to keep track of my investment and cash. Once you link all of your online accounts to Personal Capital, your progress is tracked here automatically. Use my referral link here to get $20 from Personal Capital once you link a qualified investment account to your new account.
As for Real Estate Equity, Personal Capital gets the market value from Zillow, thus it tends to be off. It’s best to get the value from your local real estate professional based on comparable sold properties.
Saving Progress: May 2018
Our saving goal for 2018 is $90,000. Read this article on how I allocate these money in various tax-optimized investment vehicles. We are exceeding our target so far. I think I’m going to start set the goal to save $100,000 annually and have a stretch goal to put remaining / additional money to start paying off our mortgages. There will be temptations throughout the year to overspend on vacation and shopping, but posting this monthly helps us to be discipline.
We hit over 50% of our yearly goal, so this is good. Since we have our first baby, we don’t go out as often as before. The money that we used to spend eating out is allocated to investment instead. There’s more optimization that we can do, but missRandom is my checks and balances to ensure I don’t go to the extreme frugality and sacrifice our enjoyment during the journey 🙂
We live a simple, frugal live. But we’re still far from being minimalist. There are areas in our life that can still be optimized, but at the same time, keeping my family happy makes me happy! So there are checks and balances. You spend on things that matter to you. You don’t even spend a dime on things that matter to other people (but not to you).
Saving Progress: May 2018
Since we plan to retire on 2025, this is not a sprint. But it is not a marathon either. It’s super easy to be a consumer in America. But delay gratification is the key to early retirement. You get to pick and choose what you want to save now and spend later. It’s a good idea to measure your progress against your goal periodically and be flexible to make adjustment in order to stay on the course when life throws a curve ball.