smashing FIRE goals

Hey reader, we achieved big FIRE goals this week!

Al and I both found out what our salaries are going to be for the new biennium at the GovJobs, and we maxed out our 457b deferred compensation contributions! We had been talking about doing slower increases for the contributions, but ultimately we decided to do it now. Short term pain, long term gain, right?

When we started with the GovJobs, neither of us knew the details of the 457’s and what they could do for us in the long-run. Let’s look at some numbers about the contributions:

  • We are contributing $791/paycheck, which is $3,166 (pre-tax) for our household.
  • Although we won’t hit the limit for 2019, we will hit the $38k limit for the following year and plan to continue those contributions.
  • The software application says that I am contributing 215% toward my goal and would make $105k/year in retirement if I retire at 65. Little does it know…
  • It also says that for my age range (30-39), gender (female), and salary range ($75-$100k), my average peer is contributing 6%, the “Top Peers” (whatever that means) are at 15%, and I am at 28%.

It’s going to be a little painful this summer, because we have some big expenses coming up. Since our whole HVAC system needed to be replaced, we’ll be financing the replacement with a 0% 12-month loan, which I’m estimating will cost us over $1k/month (estimating around $15k for total replacement).

And now our paychecks will be smaller. But I’m pretty sure we can swing it because we don’t have any other major plans in the works for things like major trips/vacations, large expenses, etc. Honestly, we just need to start living within our (new) means.

What FIRE goals are you working on, reader?

Cheers!
Mel

personal finance structuring

Hi again reader,

Before Al and I got married, our accounts were totally separate. We had a number of conversations about whether or not to combine our finances, and to what extent. At the time, we ultimately decided to keep one or more accounts in our individual names, and then open joint accounts from which we would pay bills.

Since we’ve recently started digging into our finances, I’ve become increasingly frustrated with the way that we’ve been managing our accounts, so we decided to make some changes, and things are now structured like this (some of this has changed, and other parts have remained the same over a long period of time):

  • Joint credit card: This is the card we use the most, where we get our cash back, etc. We pay off all of our credit cards every month. We also have a Lowe’s card (only ever used at Lowe’s) and will soon be closing another credit card.
  • Joint checking: This is where we pay our bills from, including the joint credit card. Auto-payments for recurring expenses come out of this account. We both contribute to it from our personal checking/savings (see below).
  • Joint emergency savings: This is for true emergencies. We are establishing a goal that’ll allow us to pay at least 3 months of our mortgage plus a bit more. We may up it in the future to include more expenses, but for the short term (and because we have the next account), we’re not going to include all monthly expenses.
  • Joint house savings: This account allows us to save for house projects. In the past, we’ve just waited to do larger projects until our joint checking filled up enough, but we wanted to be much more intentional about the way that we do these projects. We will contribute to this account regularly, and when we have a project that we want to tackle, we’ll deplete it (by using our joint credit card and paying it off with this account so that we get the cash back) and then rebuild it.
  • Personal/individual checking and savings accounts: My paycheck gets deposited into my personal checking account, and then I divvy up the money for the above-listed accounts. After each paycheck, I keep a few hundred dollars in both my personal checking account and also my savings. If I use my Target debit card to save 5%, it comes out of my checking, and I use my personal savings for things like buying gifts for my husband. I honestly don’t keep track of the intention of his personal accounts, because he’s very diligent about transferring the money and never misses paying bills; however, I can see these on Mint if I need to.

We can see everything on Mint.com, with the exception of Bo’s 529, since that’s not money for us. All of our accounts (checking, savings, credit cards), debts (just our mortgage right now), investments (our 457b deferred compensation), property/assets, etc. can be seen by both of us. I think it works really well for us.

Do you manage your own finances, share responsibilities, or split the responsibilities? I am always curious as to how others manage their personal finances! Do you have questions or suggestions for us? Drop a comment below, reader!

Cheers,
Mel

the non-FIRE-friendly car

Hi reader,

This has proven to be a painful post to write, because it’s very authentic to the internal struggles I’ve had about a recent purchase. Until recently, Al and I each had a compact car (two of basically the same car in different brands). My husband had his car since 2009, and I had mine since early 2011. They were both paid off in or before 2012. We also inherited a somewhat unreliable work truck from Al’s dad when he passed away.

Initially, I wanted to buy a new car before Bo was born. We had Bear dog already, and our cars were so small. We started the conversations, but held off. Then Al’s mom moved in with her own compact car. We then had 3 compact cars and a truck. Al is 6’6″ and his mom is 6’1″. I am 5’8″, the car seat is… huge, and the dog is a chunk.

The breaking point was when we all decided to go our favorite trail spot, about 10 minutes from our house, and my MIL’s knees were in the dash, my knees were digging into the back of the seat, and the dog was on my lap. It was officially time to car shop, so I sold my low-mileage 2008 car for a price I was happy with: $4,500. We also made the plan to sell the truck toward the end of the summer, when we’re done using it for some backyard projects.

The week that we went car shopping was the week that I first heard about FIRE.

But, sometimes these things take time to sink in, time to wrap my head around. We had saved enough to buy a 3rd row SUV, and that’s what we did. We purchased a brand new Subaru Ascent for the whopping total of around $45k (including registration and taxes), in cash.

Thar she is. Or he. The car’s gender is still up in the air.

I have such mixed feelings about this car. On one hand, we could clearly afford it, at least on some level. We had the money in cash! On the other, there’s so much else we could have done with the money. With three (tall) adults, a dog, and a massive car seat, the space is not taken for granted. This car is 100% not FIRE-approved, and I definitely have some buyer’s remorse about the price. Just kidding, it’s a lot of buyer’s remorse. But only about the price, the car is frickin’ awesome. I do realize that we could have gotten something a lot more modest, for a much lower price. There’s no justifying that price when you think about the path to FIRE.

Prior to the FIRE discovery, our motto was (more or less): Buy less stuff, but the stuff we buy and that’s important to us can be really nice. We usually hold out for a long time for new things, and then get really quality (and sometimes indulgent) items. This can be a good and bad philosophy: on one hand, we buy fewer items than our peers, and the items tend to last a long time. On the other hand, we tend to spend too much on the things we do buy. This car is case in point.

This car could (literally) last us 20 years, as we carpool to work and only had a combined total of ~130,000 miles on both of our old cars, prior to me selling mine. And we also know that this will likely be the most expensive car we ever own. It will be the car Bo grows up in, we go camping in, etc. When Al’s car dies, we intend to replace it with a moderately inexpensive electric car, and probably commute in that car. Hopefully we have a few more years before that happens. We’ve also talked about only sharing a single car between the two of us, since we carpool (and could use my MIL’s car in a pinch).

However, if this car no longer serves a solid purpose in our lives, we will sell it. I can’t fathom doing that right now, since we’ve fully utilized it multiple times per week since we’ve gotten it. However, my (new) FIRE mindset is starting to allow me to be open to alternatives in my life that I wouldn’t have considered before. And so, reader, I will be more open with this purchase, and future purchases, to make better decisions when the opportunity arises. And this has been a big, giant, expensive, luxurious lesson in life and on the path to FIRE.

What do you think about our future car plans? Go electric? Share a car? How have you handled a large purchase for which you have buyer’s remorse?

Cheers,
Mel

more about ‘retire’

Hi reader,

I want to talk more about the 4th ‘R’. I started at the GovJob in my 20’s, which was a startling experience. After my previous non-GovJob where the oldest person was in their 50’s, but most people (in the 20-something person company) were in their 20’s, fresh out of college. I was very aware that I was young and inexperienced, but also knew that I had climbed the ladder quickly at my old company. I intended to do the same at the GovJob.

A couple years after I started the GovJob I got a promotion into a different division. And this division’s average age was much, much older. It was a very noticeable change as I was the youngest person in my area by more than 10 years. It was during the time in that position that the GovJob sent out an article that gave some statistics about my agency: 55% of employees were eligible to retire in 5 or less years. Whoa, that’s more than half of the people I see around me every day! I started imagining a ton of opportunity ahead, due to vacant positions.

And then I started noticing the retirements… one, after another, after another. And I really started noticing the people retiring. They talked about their career and their friends, who felt like family, because they have spent so much time with them. One gentleman from my team retired at 72 with 47 years at his GovJobs. I started being bothered by the fact that, at that time, I would have to more than double my whole life to retire. And it was not uncommon for those who were retiring to be old, exhausted, and plagued with physical issues. Some people limping, people in chronic pain, and people who had taken long stretches of unpaid time off (delaying their retirement) to take care of their medical issues or their family’s medical issues.

And now I am 31. My goal to reach financial independence and to retire is between 45 and 55. Because if I were to retire when I was set to, I would retire in exactly twice my current age. And I already have some (minor, thankfully) chronic health issues. Issues that the doctor’s aren’t able to diagnose. And I think about where Bo will be in 15-20 years. Going to college? Starting a family? I want to be able to be there with her for these things! And our major retirement goal is to go to every major college football stadium and rivalry that we can. I want to do that in my 40’s or 50’s, not my mid-60’s.

So now, reader, you see how the retirement seed was planted. And why it sprouted when I found the FIRE community.

What is your motivation for making financial changes?

Cheers,
Mel