Retirement Tracker

Best_Budgeting_Advice_Millennials

Yes, I’m 30. Yes, I’m talking about retirement. Call me crazy, but this girl just can’t help that I like to plan! 😉 I went into our frugal philosophies and goals before, but since it’s officially been 1-year since we became retirement saving ninjas – I wanted to give everyone an update on our progress. Our goal has always been to live a simple, meaningful life. Especially now that we have this kiddo (soon kiddos) romping around, I’ve found a stronger and stronger desire to work toward a goal of financial independence. I know for us that will never mean not working cause this girl has got to keep busy (and frankly I LOVE my job!), it will just mean the flexibility to choose the life paths that present themselves to us, vs. feeling locked chain and anchor to the 9-5. Because let’s face it, feeling forced into anything is just not a recipe for a happy life, and yolo y’all!

I’ve referenced Mr. Money Mustache before, who’s principles have always been a guiding beacon for us. One of his big tenants is the 4% rule – essentially, in order to retire off your nest egg, you need a sum that allows you to meet your living expenses by drawing down 4% at a time. He actually breaks it down here into the multiplier you need for that which is Monthly Living Expenses x 12 x 25. So the multiplier here is 25 times your annual living expenses (for others that may be interested in following a similar formula). We will personally aim for a number slightly higher than this, but it’s a good baseline to reference for starting.

Our general game plan for retirement savings and income stability has been two fold. Although we’re trying our best to invest heavily in conventional retirement accounts in this season of life, we’re also super focused on paying off our home and our condo. I personally feel tied to both of us working full-time until our mortgage is paid off in full. Many frugal living advocates advise holding on to your mortgage (you keep tax deductions, many loans these days are low interest) but again, I guess it’s the risk adversity in me that really doesn’t like the idea of having TWO mortgages hanging over our head – it’s just a lot of capital that is no longer needed – not to mention, once paid off, the condo we own becomes part of our income generation as well (since our monthly living costs are so low, this income stream (albeit nominal) will help get us much of the way toward monthly expenditures.

To date, we’re 37% paid off on our mortgages (so 63% more to go until we hit financial independence here). If we continue to have similar income streams over the next few years we’re between 6-7 years from having these paid off. So still a while, but certainly shorter than a conventional 30 year loan. To pay these off as quickly as possible, we’ve increased the principle dollar amount by supplementing it with any rental income we have coming in. When H starts K in 2-years, we will also funnel his monthly daycare payment into this pot, and we will do the same with our daughter when she starts up at elementary.

For our retirement assets, we’re about 14% of the way toward this goal. I stated initially that we’d like to be financially independent within 10 years (so 9 years, now). The market is also bound to fluctuate – a lot – which is not something I stress too much about y’all. We don’t change our investment strategy during ups and downs in the market, we just keep plugging at the max contribution rate we can afford. Much of our retirement income will not be available to us without a penalty before we’re old geezers so if we get to our goal retirement amount by 40, for instance, and then let it sit for 25 more years, even assuming 5% growth (which is my conservative figure year over year), that’s actually much more than we’ll ever need. Because we’re limited in what assets we can pull down from when we’re younger (40-60ish) we’re focused on paying off our house, etc, so that we can have very minimal monthly expenditures sans mortgage and can use our rental income for our monthly needs like groceries, etc.

Y’all – my one word of encouragement on this would be to just *start* saving. Like $5 a week start saving. If you have an employer contribution, max it out guys! That’s wasted $ on the table! And if you think that there is no money to save, I’d *really* encourage you to look at your spending and see where you can eliminate something that you’ve come to take for granted. For me – y’all – it was Target runs. Cliche, I know. But cutting this down and just asking myself – do I need this (?) has been a critical (small) way I can move toward better spending habits. And don’t get be wrong, I still lurve me some target, but I’ve found it’s much more fulfilling to buy our clothing, etc second hand much cheaper, and I don’t have the guilt or the burden of the excess spending.

One more life hack – I swear y’all – one of the biggest drains I think on families nationally is our expectation of owning new (and excessive amounts of) cars. When Jay and I got married we sold both our crappola cars and bought a 2007 Toyota Prius, which we drive sparingly. Not having a monthly car payment, or an expectation of a fancy/new car, has been critical for us. Cars are the biggest depreciating asset around, they’re nice to have from a utility standpoint but unless I’m feeling like Tevye after he hit it big and became a rich man, don’t expect me to be driving around in no Lexus 😉 (BTW – all time fav dance move is the rich man shoulder shake – go watch Fiddler on the Roof if you don’t know what I’m talking about – it’s a hit at parties)

Ultimately – $$$ is all about finding what works for you and your family. If you like eating out every week – go for it! If you prefer a new dolce purse, that’s awesome. But if you find that you regret some of those expenditures at the end of the month, I’d encourage you to take a hard look at your monthly bills and see if there are ways you can funnel funds toward more productive long term goals. For us, we’ve found the equation to happiness is simplicity – and ultimately – what makes both Jay and I happiest these days is spending time with our little humans, so the sooner we can optimize that, the better!

Psst – I also loved this very simple, straight forward analysis by MMM shows how (2) teachers can reach financial independence in 10 years or less. 🙂 Hint, I make about as much as a High School teacher (aka NOT a lot) – so early retirement is definitely something that’s attainable for many!

When I Feel Like Spending Money I Do This Instead

Frugal_Living

So I thought this would be a fitting follow up to the post last week on our financial goals because y’all, the biggest secret to staying on track with our money goals is hands down not spending money. I know – it’s not super exciting and it’s rather straight forward, but that’s the long and the short of it.

I mentioned in the last post that I’m a firm believer that there are seasons in your life and I think we all know – some are more expensive than others. Not going to lie, the day when my first born starts kindergarten will be a bittersweet day. I mean, my child will be five – he will be more than a quarter done with his days living under my roof – but he will also be out of daycare, and yo, that place is expensive. Seasons where we’ve spent more money than others include: renovating our houses, moving across the country, birthing and raising our children – but I’ve looked to all of these as investments – one way or another, they all paid off in spades.

I’ve learned that there are a few ways to set yourself up for success with money and there are ways to bite it. I’ve actually turned the challenge of not buying things into a bit of a game. Sure – I could go to Chuckie Cheese and make the kid go coocoo for coco puffs or I could go to the park and play basketball with Henry! Sure, I could go out and buy a special dessert for tonight since the weather is so beautiful and it feels like the best idea EVER, or I could look around our cabinets for ingredients to make chocolate chip cookies. Or, I feel like my house needs something, I want to go out and buy throw pillows – but instead I’ll wash the floor (lol – does this just make you judge me? Legit, y’all I KNOW if you read this blog that you know that I sometimes go out and buy those throw pillows) 😉

In all seriousness though – it’s truly about finding ways to be happy with what you’ve already got, and challenge yourself and ask – Do I really need X. Or even, do I really WANT X – and the answer to each is totally fine if it’s yes, because truth be told, y’all – I enjoy shopping. I like get a little buzz like the rest of America when I go out and get things. It’s fun! But saving money is super fun too, and there are ways to stretch out your dollar as far as possible by being critical of every purchase you make. Give yourself 24 hours to wait it out for anything that falls into the category of non essentials. And if throw pillows fall into the category of essentials any given day – y’all – I do not judge. 😀

Here is a list of 40 things you can do, without spending ANY money. Get it girrrrlll (as my best frugal friend, would say xoxo)

  1. Go outside! Walk/run/stroll/skip – enjoy your surroundings
  2. Clean your house
  3. Call your mother. (just do it)
  4. Find something fun to eat/make with ingredients in your house
  5. Explore a new part of your city
  6. Go to the library
  7. Learn how to make something new
  8. Talk to your kids
  9. Write down goals
  10. Do yoga (youtube has free yoga!)
  11. Organize your closets
  12. Weed your yard
  13. Read a book
  14. Find a frugal blog and get inspired
  15. Change the oil on your car
  16. Go window shopping (but don’t buy)
  17. Ride your bike
  18. Purge items you don’t need
  19. Call your dad! (just do it)
  20. Scan pinterest for DIY ideas
  21. Play with your child (get down on their level and PLAY!)
  22. Go through/clean your coat closet (check pockets for goodies)
  23. Organize your garage
  24. Think of ways to make money – write down 5 ideas
  25. Walk the dog
  26. Build something
  27. Do a family plank challenge
  28. Dust the furniture
  29. Organize your junk drawer (you never know what you might find!)
  30. Look around your house for things to sell
  31. Volunteer
  32. Sip Wine on the Porch (does this count as spending money – probs – I cheat when it comes to wine)
  33. Do 20 squats (werk off that wine, y’all!)
  34. Meet your Neighbors
  35. Build Something
  36. Try a New Hairstyle
  37. Clean your fridge
  38. Plan a Frugal Vacation
  39. Write in a journal
  40. Meditate