Hi guys, how you going? That’s how Australians say “how are you” and not poor grammar on my part. It’s time for the only post you really care about! I’m updating my chart for the first third of 2017! Whee! I check in with my financial avatar three times a year, making sure she hasn’t started taking drugs or dating an undesirable thug. She’s an angel, so I’m not sure why I worry.
Here’s where I stood at the end of 2016.
I add up all my expenses for the last four months and divide it by four and then plot that number as a red dot on the chart. Then I look at all my checking and investment accounts and add up all those numbers, calculating my net worth. I take that number and multiply it by my theoretical withdrawal rate (4%) and divide by twelve to get my theoretical monthly projected passive income. Finally, I mark that number on my chart as a green data point.
If the green line is higher than the red line, I smile evilly. My diabolical plan is working! I have enough money to be happy. I can continue to live my life on my own terms and shrug at the naysayers. The audacity!
If the green line is lower than the red line, well, we’re in a bull market so I haven’t encountered that scenario since retiring. It’s easy to be calm and collected when the market is up. We’ll see how well I smile when the pendulum swings back and the bear is in control. I try not to think about it much.
But when I do, I remind myself that they are just numbers on a screen. I would take out such a small percentage, it should be okay. Also, I can always alter my extravagant lifestyle. Or start working again. Maybe my book will sell a few copies. I’m not worried. That’s easy to say when things are happy.
Ok, here’s the updated chart.
The red line is lower than the green line so far in 2017, so the evil smile remains. I spent time wandering around the Middle East, Guatemala and the United States. But that’s not the reason my expenses dot is so high-ish. I’ve spent some money on my book. I should take that amount out and put it under a different “business” chart or something. Maybe I’ll do that the next time I update.
The green line kept its head held high. My net worth increased by more than $40k in the past four months. Which is ridiculous. Most of that, of course, came from investments. I’m still living on cash and haven’t touched my VTSAX yet. I predict I’ll need to tap into it by the end of the year though.
$219.70 came from my blog. That’s a disheartening low number, but I’m not surprised. I’m a terrible blogger. I never check my stats. My website is ugly. I do zero networking and do a poor job connecting with you, my reader, when you email me. I’m sorry. I hate emailing. I don’t post regularly*. What I do post is often narcissistic drivel.
It’s all good.
I have enough money to be happy and everything else is just gravy. Vegetarian gravy. Spicy vegetarian gravy. I love my life. Not a day goes by that I don’t feel so very lucky to be living it. When I was working, weeks would pass where I wouldn’t experience that feeling of joy. I keep a daily journal, so I know. The difference in tone is stark. Now a permanent evil smile adorns my face. I feel like I’m getting away with something. Am I allowed to be this happy?
It’s working!
Yes.
*P.S. Sorry about my lack of posting recently. I’m busy with a couple of different operations right now. Operation Enjoy the Crap Out of Life takes up most of my time. I try to go out and interact with the world every day. Operation Finish Your Stupid Book, Gosh Darn It takes up the rest of my time. That one is pretty self-explanatory, I think. I’ll tell you more about it in a bit in another post that’s sure to be narcissistic drivel.
WaWaWeeWa! Look at that green line go! I like!
Me too! It’s so preeeety.
Aren’t they the same charts?
The very last two data points on the bottom chart are new. Waaay to the right.
Worry not about the quality or quantity of your posts here. They all express the same thing — being frugal works. One CAN trim life to basics, save the excess money, and become financially independent. You have done it, and the freedom it gives you allows your boundless joy. Congrats.
Very eloquently said!
Thank you for the update! I’m curious; when you were working at the firm and saving, did you just max out your 401(k) every year, and then put the rest of the money you saved from your paycheck each month in taxable Vanguard mutual find accounts?
Yes, I maxed out my 401(k) in every job I’ve been able to. Rest in VTSAX.
No bonds? Did your 401k offer VTSAX?
I have a teeny teeny tiny amount of bonds. My 401(k) is in a target retirement fund in Vanguard. But yeah, that might change the percentage when I claimed “85% to VTSAX” in another comment.
If a large portion of your money is in 401k, what are you living on now, since you’re too young to make withdrawals?
I’m starting to realize that with so much of my assets in 401k, that won’t help me at all for early retirement. Right? I’m around your age.
I would withdraw from the non 401(k) portion…
It’s all a big pot of money. Just because I can’t use the coins at the bottom doesn’t mean I can’t use the coins on the top. There are also roth conversion ladders and other complicated stuff you can do to withdraw from your 401(k) early. I haven’t actually researched that part yet, but I think other people have.
I love your posts whenever they arrive. You have been inspirational and instructional; I’ve learned a lot from you. Continue writing when and how you want. I’ll be here to receive what you send. Now I’m going to start my chart like yours above. Thank you.
You’re my favorite internet stranger.
Do you have any advice when choosing a financial advisor? When to get one, what to look for?
I would never hire a financial advisor. You’re paying someone to guess the future. Nobody can guess the future and they take money out of your investments in good years and bad.
The current chart with business+ppi will always be relevant, as long as green is above red it does not matter where it comes from. Once business starts generating income then it would be interesting to split it into two.
Yeah, I agree with this.
With several months of bum-dom under my belt, I also enjoy life way more than before. From the moment I put my alarm clock away in the attic, I knew it was “my” time from there on in . It is not mean you always experience “highs” , but even in the valleys , I feel free, and a moral agent, and more in control. Autonomy is tough, and instead of living a completely deliberative life, which would be very exhausting, I rely on routines and habits, and yes, ideology, which is not a bad word on my books. I have started projects like watching Carl Sagan’s The Cosmos, taking online course on Death, and currently, the course on Justice., which has been hugely popular in emerging countries such as China. Thriftygal, you have been an oasis of ideological thought, and unlike the other bloggers, you are not formulaic or trying to commercialize the experience. You are a moral agent, and one of the reasons I keep checking in here because there is always a pleasant surprise or kick in the butt when I visit.
Well, I’m trying to commercialize it and failing very miserably. Ha! 🙂
That will come — but you are so funny trying. 🙂
I actually totally love your lack of successful commercialization. Your blog is intelligent and authentic, and you demonstrate that people actually CAN succeed with the 4% rule. So many other FI bloggers are actually making money from side gigs and monetized blogs that I often wonder whether the Trinity study’s findings are actually true, or if FIRE is actually dependent on an at least semi-lucrative side gig. Your blog is unique and authentic and I love its lack of commercialism.
Oh, and the recipes rock. I make them all the time.
Your words make me giddy. 🙂
I’m so happy you are enjoying life so much. As another commenter said, you are an inspiration. My spouse and I are on our own journey to financial independence and what we’ve encountered from many friends is the question “Won’t you be bored?” We know that wouldn’t happen for us. Nonetheless, it is such a joy to watch your experience from afar and see that you are so far from bored, you’re barely interested in blogging. For me, it’s like an affirmation from the future. Thank you for sharing your story, your adventures, and your mom’s recipes!
There is so much to do and see in the world. I honestly don’t know how anyone could get bored. 🙂
Since you’re writing finances (my favorite posts are your book reviews, happiness, and traveling), I’m curious about your opinion. Maybe this is a post idea in itself? Given the experiences you have had with freedom of time and location, what would your advice be for someone who is getting started later in life with FI or doesn’t have the income to reach FI in just a few years? A generic example, someone mid-late 30’s sees the light and is managing maybe a 50% savings rate with a medianish household income. Would you encourage this person to “stick it out” for 15+ years, maybe find ways earn a little more, spend a little less to shave a couple years off? Or would you tell this person to save a relatively safe amount of FU money, go live life and take serendipitous income opportunities as they come along to supplement?
I realize peoples risk tolerance differ, some have a gaggle of children to think about, ect. However, I am curious about your opinion, if you were in this situation, knowing what you know now after living both lives.
Thx!
Thanks for the feedback. I never have any idea if what I post is going to resonate.
I think sabbaticals are the answer. I took a “break” with my flight attendant job and my year off after law school. It can recharge you and reorient you to see what you really like doing.
That’s probably good advice. My personal situation is a bit different than the one above, being closer to FI, I find it difficult to stop. Mostly it’s just fear, fear of being able to pick up where I left off later, fear that if I wait too long Ill miss out on some important things my soul needs. I’m just finishing a month off and haven’t even gotten into a groove yet. Maybe a year or two would be a different story. OTOH, I’ve completely changed careers a few times in the past, maybe I’m just overdue.
Look forward to the book!
I’m at a place would love to retire and I can if it were not I love to travel so much. The 2,500 a month for travel or avg 24,000 a year, is this just travel? Does this amount include health insurance, cell phone etc? On the average how long do you stay in one place? I have a home that I can rent out as it is paid for but will have expenses like storage of personal items. Did you ever purchase a home, are you constantly traveling or a base you return to some of the year. My money is invested and find I am making more with an agent handling as my work schedule did not allow me to manage it myself. What I think I read was you manage it, buying and selling stocks which requires you keep an eye on it constantly, is this correct? Sorry so many questions, but I happened upon you during a time when I have so many as a single woman that just finished putting my son through college so he wouldn’t graduate owing the banks and I’m ready to make a move for my future. I love to travel, but at 57 I’m not as “jump in” as my younger years.
I include everything in my expenses. My cell phone bill is tiny. I’ve never bought a house. I use VTSAX and never buy and sell stocks.
Hi Anita! Which books about personal finance and investing would you recommend to read? Thanks!!!
Check out this post.
Thank you Anita! I really love reading your blog. It is such an inspiration.
Aww, shucks!
Please do a book review post soon. Thanks!
I can’t tell you how much I appreciate this kick-in-the-butt comment! I’ve read some books since my last book reviews, but haven’t made the time to write a post about them all. It’s now on my to-do list. Hugs!
New book review now up! You probably already know that.
Hey ThriftyGal!
Long time reader, first time commenter. I’m a junior biglaw associate, with similar ambitions to yours.
One question: I understand that you built up an impressive $700k in savings before leaving biglaw. Can you share with us how much of it came from your own contributions?
Obviously your success is owed primarily to your discipline, but the market also experienced significant gains between 2010-2016. As someone who is hoping to mirror your spending habits, I was wondering how much of your actual paycheck you were able to sock away in the holy VTSAX?
Thanks so much!!
Hi John, thanks for popping your comment cherry. I put between 75-85% of each paycheck to VTSAX the last four years I worked. The first year I worked, I put up to 85% of my paycheck to my student loans.
And yes, I was super lucky that I started in in a bear market. 🙂
Those appear to be the same graphs- I can’t see the update!
Eek. Someone else said that in the comments. It looks sooo different to me, but I’ve been staring at my graphs for so long, I know them pretty well. Maybe next time I’ll drop off a couple of years or figure out how to zoom. I know the y-axis looks the same, but if you look at the dots in the actual graph, the last data point on the right is new in the second graph.
When you said you multiply your total net worth by your theoretical withdrawal rate of 4% are you assuming your net investment ROR is also 4%? I don’t understand why you’re using withdrawal rate instead of ROR to determine where your green data point goes. Love the blog!
I prefer the consistency of 4%. It’s kind of like my bare minimum. My actual ROR is much higher.