This reminder popped up for me recently: Check your net worth, my darling! Oh. Right. It’s September. Another four months of living and not working and it’s time to write another post updating my progress on this early retirement experiment. This is normally my best shot at evangelizing. Look, it’s working!
Truth be told, I knew the time was coming and I was dreading it. The saccharine nature of my past-self’s reminder did more to irritate me than invigorate me. I still kind of expect to wake up with the world deciding it’s recession time. There are a lot of people making decisions who maybe shouldn’t be trusted to make those decisions. What happens when the cycle dips? Can I preach about this path after my net worth shrivels? It’s a matter of when and not if. Tomorrow? Three years from now?
My worry is moot for now. The stock market is still having fun. My net worth increased almost $20k in the past four months. I’m okay for now. The angst is a problem for Future-Me.
Hypnotic campfire
I was also dreading this update because I know I’m running out of cash. When I retired, I held about 18 months worth of living expenses in my bank account. My Australian tax return a year later bought me another six months or so. I’m now one month shy of my two-year retirement date. I need to start peeling off some of my VTSAX for sustenance.
So, I played around on vanguard.com until I figured out how to direct any future dividends directly into my bank account. This money will no longer be reinvested while I stand to the side, laughing maniacally. I know my dividends aren’t enough to completely fund my current expenses, but it should last me through the end of the year. I’ll reassess then. Another problem for Future-Me.
The final reason I was dreading this update was because calculating my net worth is becoming more complicated since opening my LLC. I have one more bank account and one more credit card to log into now which adds at least five minutes to the process. And the decisions on logistics elude me. Should I make a separate net worth, income and expenses chart for The Power of Publishing? I have not recouped the initial expenses, so I’m not really inclined to. At least not yet.
This writing thing is still firmly in the hobby category. The $189.66 I made my from my stupid blog in the last four months assures me of that. Hopefully, by the time my reminder to check my net worth comes up again at the end of December, I can reassess. Surely, my book will be out by then.
Wow, that was a lot of introduction and a lot of kicking-the-can down the road. I promise I’ll pick up the can and place it in a trash receptacle the next time we talk about this subject.
Here’s what my chart looked like after my last update. The last data point shown is the first third of 2017.
September 2010 through April 2017
A lot of people complained that they couldn’t see anything. That’s fair. It does cover seven years. Here is the chart with just the last two years.
October 2015 through April 2017
That’s not satisfying to look at.
How about the last four years?
October 2013 through April 2017
Wow, that’s really not satisfying to look at. I don’t have enough money to live the life I lived in Australia without any income. Sydney is expensive and I lived lavishly. I rented a two-bedroom apartment for just me! What insanity.
The last five years?
October 2012 through April 2017
Meh. I still prefer the chart for the entire seven years. I’ve come so far! I like the reminder.
Now to update it. First, I logged into my bank accounts. I used a calculator to do a wee bit of math. I added up all my credit card balances over the last four months and all the cash I took out over that same period. Then, I divided that number by four and proclaimed this my expenses data point, the red line.
Next, I logged into my investment accounts and added up those, along with the balances in my bank accounts, to get my net worth. Finally, I multiplied that number by my theoretical withdrawal rate (.04) and divided by twelve to get my monthly projected passive income, the green line. I plotted that number on the chart as well.
Here’s the updated chart using just the last five years of data. The last data point is for the second-third of 2017.
October 2013 through August 2017
Still too much data? Here’s the updated chart over just the last two years.
October 2015 through August 2017
My projected passive income is higher than my expenses, so the experiment is still theoretically working. When can I stop saying theoretically?
What you did is really impressive – wish I would stand where you are now :-D. Working my way there … greetings from Germany.
I heart Germany!
Updated charts, whohoo!! Why are you so worried about switching from the cash savings to the VSTAX?? It may be unchartered territory for you, I get that and can totally understand. However, hasn’t Mr Money Mustache’s and the Mad Fientist properly carved out a path for all us to follow and feel confident in?
I like standing to the side and laughing maniacally while my dividends reinvest. Having a bunch of cash just feels safer. When I’m not using my VTSAX, it still feels like play money so I’m not as bothered on a down day. I don’t know. It’s all psychological nonsense on my part.
I totally get this. I’ve been cruising along on my existing cash and some infusions of wedding presents, but I’m nervous about actually dipping into the investments, which will happen someday soon. Part of it for me is uncertainty about the tax implications and how it will affect my ACA insurance, even though I know realistically it’s not going to be that bad!
Oh, I love this idea. I’ll get married and request cash as a present. 🙂
And yes! Uncertainty about ACA insurance. It’s annoying and complicated and I hate thinking about it.
When you live overseas you do not need ACA insurance. There is no longer a penalty of $695.
Can you go back to work for a year or so while you still have marketable skills (lawyering) ? You don’t want to lose those creds. it might just be practicle.
I believe in myself enough to keep going with the experiment. I love my life too much to go back to the “practical” route. I’ve never had trouble finding a job when I looked and I do have a nest egg large enough that should theoretically be fine. Sometimes I stress out when I let my anxiety talk to me. This is why I have my chart! I have enough. I have enough.
Theoretically.
Or take less risk with a portion of you investments,( only risk what you need to) .
As I’ve mentioned before, I love your charts!
MMM definitely showed me the path and softened me up, but your charts made me sort out my own charts which then made me realise I could quit work, which then made me quit work!
I’m in a similar conundrum regarding whether theory can work in practice! I’ve told myself I’ve quit work only temporarily because although I can theoretically support myself indefinitely, after 5 months out, I’m not sure if theoretically means I actually can. Also, I’ve probably end up going FI on a relatively low amount of theoretical passive income. Not Early Retirement Extreme levels, but nowhere near my most recently salary. Probably not as much as I would like, to be honest, but I must say giving up spending money is so worth it when you don’t have to go to work to earn the money.
Thanks again for updating us and the inspiration!
I love this comment! One of my beta readers suggested I elaborate on when to pull the trigger. It’s super scary when your net worth drops and I think that’s why most people work longer than they need to. I’ve had no trouble keeping my expenses low, so I’m not sure where this general anxiety is coming from. Probably just human nature.
I have two thoughts. First, as a fellow FI person, I keep about 2-3 years of cash (well, Vanguard Municipal Money Market so I earn some tax free interest of course) in my taxable account. That way I can spend cash and maybe bonds to ride out the impending recession without having to sell any VTSAX when the value is way down. My Plan B is to get a J. O. B. and/or move to Thailand, Ecuador, Arkansas? or some other super cheap place to ride it out. That one is complicated by my desire to not die alone but hey, maybe I’ll meet a Digital Nomad? Second, I fully agree that money is boring so I highly recommend Personal Capital to instantly sync and track all your accounts. You just put in your logon information information once for each account then it instantly calculates your net worth when you open it. No more tedium to get the number. All info in Personal Capital is encrypted and you can’t change anything from that site or app so it’s totally safe. You probably have heard all this before but I felt like using my words this morning. -Lance
I’ve used Mint, which sounds similar to Personal Capital. But honestly, most of the time I really do enjoy the process of opening up my accounts and adding everything up. I wish I had written this article on a day when I wasn’t feeling anxious because I hate how complainy I sound.
I thought the tone was off because of your intense? extreme? maniacal? (not sure about the adjective) affection for spreadsheets. 🙂 Have you heard of Tony Robbins Vital Breathing or Priming? It really helps me get my head straight when I’m off. Here’s a short video: https://youtu.be/3OybpwfIq9I -Lance
I can’t watch videos. I don’t have the attention span.
I laughed out loud at this =)
I’m just happy that you never said, “literally” or “absolutely” or god forbid: “impacted”. Thanks! Oh, and check out cryptocurrency as an investment.
It’s funny to hear what words trigger people. I have a friend who despises the word “awesome.”
Don’t call it a stupid blog. That’s inaccurate and perhaps even insulting. I’ve learned all kinds of things .
Yes, you’re right. I do love my blog most days. I love my blog, but I’m not good at making any money off my blogging and I don’t like the reminder. I don’t need the money and it’s certainly not why I do it, but it’s still a little annoying to realize that every dollar I’ve earned has been through working FOR someone and my attempt at entrepreneurship have, so far, been rather laughable. Especially since I get the impression that my blog readers are so smart and capable and entrepreneurial.
Ha, I think entrepreneurial types just tend to talk about it more. Every dollar I’ve earned is from working for someone too, and I don’t talk about that a whole lot, because…it’s normal and not that interesting. (Well, not interesting in a “road less travelled” sense, anyway. I don’t personally find my work boring.)
I am planning on dipping my toes more into self-employed projects post-FIRE, when I have more free time, but one of the things that really appeals to me about doing it then is that I won’t have to care if I don’t make any money from it, and can divorce the idea of making money from the idea of work I enjoy. You could look at your blog income level as a happy reminder that you’re doing work you choose to purely because you want to do it. 🙂
I love this comment and I love you for writing it. This blog connects me with people like you and that’s worth more than I can say. There is so much joy in my email inbox and comments section. 🙂
🙂
I love your blog too, and I hope you keep on with it. This internet thingummy is the only way I get to talk to other people who think stuff like FIRE is both feasible and a good idea that can and should apply to their own lives. Such folk are surprisingly thin on the ground in RL.
(…You’d think, logically, that with all the people who dream of winning the lottery and retiring early on that, there’d be more interest in doing the work to get there the longer-but-surer way, but I really don’t think there is much. Not that I actively try to convert people. That would blow my cover! #stealthwealth)
(I admit I’ve sent a few people a link to MMM’s shockingly simple math, when they seemed receptive and like they might be interested. Only one has said she wants to make any changes, and even she hasn’t done anything yet, over a year later. Freedom isn’t an easy sell when it’s so non-mainstream.)
I think I live in a bit of a bubble because I meet FI people all the time. It’s a great community.
I do remember though, when I was working and telling people about my plans, they would look at me like I was a bit odd. And yeah, I sent many articles from MMM to people back then. And jlcollins. Interestingly enough, I converted a lot of people to the jlcollins investment strategy, but not many to the broader goals of FI.
FIers are odd ducks! But all the best ducks are odd. 😉
It’s about the circles one moves in, for sure. I imagine the kinds of people I tend to interact with will change a bit when I FIRE.
“I love my blog, but I’m not good at making any money off my blogging and I don’t like the reminder.”
Apologies in advance for the long comment….
This got me thinking. Perhaps making money isn’t necessarily the right metric for measuring the value of your blog? At this moment in time, at least. I mean, if you really wanted to make money you could make a whole number of changes to maximise your return – affiliate links (whatever they are?!), ads, product reviews, ramp up photos and trips to make people feel unhappy with their lives and want to live more like yours etc etc.
I wasn’t joking when I said your charts triggered the big lightbulb moment in my mind that a life without wage slaving was possible. I only started reading MMM in Sep 2015 and quit work in April 2017. So although I was living a relatively frugally life I was so trapped into the cycle of living to work and consuming that I didn’t know there were viable other lifestyle options. But your chart and your example made me realise it was actually doable, more so than the Venerable MMM. Because let’s face it, MMM’s self face punching, house building, water heater installing, roof changing, weight lifting, snow biking, uber mensch example can seem a little unattainable to us normal slobs.
Anyway, what I’m trying to say is that perhaps the fact that your blog has effected real change in the lives of others is of significantly more value than ad or affiliate revenue, revenue that you DON’T ACTUALLY NEED!!!
I can’t remember where I saw this aphorism…
“We count what we can measure, because we can’t measure what counts.”
I.e. It’s easy to focus on blog revenue and value the blog based on revenue. But this is only because there is no easy way to measure the amount of inspiration that you’ve given to others via the blog.
I’m hoping to start a website soon, soon as I get over my sense of burnout. Perhaps I’ll face similar issues to you when I get going as well. Writing this down here so it will be easier to eat my words if it comes to that
I had to look up the word venerable.
You’re 143.9% right! Thanks for taking the time to write this.
GREAT comment and this…”Because let’s face it, MMM’s self face punching, house building, water heater installing, roof changing, weight lifting, snow biking, uber mensch example can seem a little unattainable to us normal slobs” made me laugh out loud! So true!!
He does have a knack for making us all feel terribly inadequate, eh?
I don’t understand why you include your checking account or any money in the form of cash into the passive income formula?That money is not earning return right?
Yeah, that’s very true and an excellent point. I just include it in my net worth calculation because it’s part of my net worth and that’s the way I’ve always done it. And right now, the amount is pretty minuscule, only a few thousand dollars.
Press on Thriftygal!
The more I read about your story and MMMs, the more I feel embarrassed by my own timid or rather cowardly self who just doesn’t the courage to “pull the plug” and start the adventure of FI. Granted, I’ve only just crossed the basic level FI threshold, and a recession is coming sooner or later. Plus I have extra responsibilities besides myself. Still, I would be quite ok just having half of my current salary, or just do part time contract for 6 months a year and travel the other 6 months. Will work just a bit more to allow better margin of error, plus my current asset allocation is such that it requires large cash inflow anyway. Will try to break free one way or another and start enjoying, at least on the part time basis. Enjoying meeting you in Chicago in the past and hope to meet you in person again sometime!!
Pulling the trigger is tough. It’s easy to say “just a bit longer” and maintain the status quo. I’m really glad I had a built-in end date with my secondment in Sydney. I could have returned to the Chicago office and worked a bit longer and built up more reserves, but that just felt so wrong to me.
I’ve been saying that too, just a bit longer ( for at least 5 years) Not good. Though I came up with a guaranteed income plan. But I need to be 4 years older to buy it. But I could use cash to bridge into it
Count me among your multiple chart enthusiasts! They are so encouraging and enlightening.
I think folks are right to believe that not all projects/blogs need to measured in terms of the money they bring in. You’ve created a community and a place where others can learn and be inspired. That’s unique and valuable.
Big hug!
I just found you, and I am so pleased to see a fellow VTSAXer, that is brave and willing to share all of your experiences. Keep writing, we need your voice!
Awesome!
Hi Anita! I just found your site via msn.com. I love what your doing – retired early in life and do what you want without crazy excess.
I am certainly no expert (I’m still working and am too scared to retire 30 yrs early), but I’d like to pass along something my dad told me the other day…
“It’s not what you make in retirement thats important, it’s your what you owe that counts. If you make 3k a month in a pension, but spend/owe 5k, your retirement is gone”.
I bring this up because you mention that you have credit card debt. And if there is anything I can offer, its get rid of those credit cards! I believe credit cards are the worst and most evil monetary instrument…ever. They are presented as this glamorous item that everyone needs, but they silently and methodically drain your current and future money – and do it with a smile (think Pennywise from IT)!
I have no credit card debt and the personal finance nerd in me added up what I’ve paid them from 2015-2017, its over 20k! So I divided that number by 33 months (2017 is not over) to get the average per year, then divded by 26 (pay checks in a year) to get an amount I will put away per check – $280. Thats money in my pocket, not the credit card’s, and thats a good thing!
I plan to keep up with your blogs as I am a sponge for financial knowledge. So, thank you!
-Ron
Sorry for the confusion! I’ve never carried a balance on my credit card. I do put pretty much everything I can on my card, but I pay it off in full automatically each month. Paying interest on a credit card goes against everything I believe in!
And super cool! I didn’t realize I was on msn.com I’ve heard of that one!!
That is where I found you 🙂
Welcome!
Well your story is getting sent around by interested friends and I’m so happy to find you! Love your blog! Here’s the article I just read: https://www.popsugar.com/smart-living/How-Become-Financially-Independent-44013476?utm_source=msn&utm_medium=partner&utm_campaign=feed Well done!
Welcome to my house!
Hi Anita,
Love your story and believing in yourself! I used to work at Goldman Sachs and now work for myself on my terms and financially free 😉 Anyway, if you want to learn how to make money with your blog, then listen to a few podcasts or read some books on that subject, cause you can make it happen. I’ve got two sons, 19 & 21 that have been doing that for 5 years now and started a non-profit organization to teach underprivileged kids, single moms and veterans to do the same. So much is possible these days that didn’t exist years ago. Anyway, you can follow/connect with Marc & Michael on Twitter/Facebook/Instagram and their blogs…MarcGuberti.com and MichaelGuberti.com BTW, yes you are so correct about the fees for any fund and you chose a good one with Vanguard!
That’s so amazing that they’re doing such good so young! I love stories like this!
If I’m honest, my charts are the best part of early retirement. They not only provide a handy guide for what’s possible, but they are also a written chronology of my financial adventures. My graphs look different than yours (I’ve itemized my various sources of passive income) buy the conclusions are the same.
Right now I’m faced with a quandary: realize a life-long dream now or shock away my savings into dividend equities that would cover my life expenses with ease. I imagine this was your conundrum with the book.
but* sock*
Ugh, silly autocorrect.
I know what you mean. I can see trips I’ve taken, my stint in Australia and when I had a roommate all in my chart. It’s a nice reminder of my life. 🙂
The rich get richer while the middle class suffer… (crosses arms and shakes head slowly as camera pans out to show Bennie Sanders bumper sticker on the back of his 10mpg SUV)
I’ve never really understood the Bernie love.
In July-August the stock market started going sideways, and so I sold off my index fund portfolio and got back into into trading stocks which I had been doing before when I was on sabbatical. I have less angst now and feel better about myself, and find that it is easier to tell people I trade stocks than to tel them I am ‘retired’, which they find incongruous because of my age. And I add a little wink, too. Your charts by the way will look fine even in a recession except that the ‘passive income’ line will be flatter.
Can I know why you have not bought or invested in house? In a country like India, that is the best investment
Check out this article.