Adjusting Our Goals // Rolling With the Market Punches

happy monday, guys! we’re in the middle of a borderline epic stretch of work travel, and trying to juggle having contractors coming to our house while we’re away, to get work done before the mountain snows begin. that means that saturday, our one day at home together in two weeks, we spent a good chunk of it taking down exterior light fixtures and otherwise readying the house for staining. staining which is costing us an eye-watering sum. yet another reason to retire so that we can take on that type of project ourselves, instead of being forced to outsource regular maintenance of our home. but if you sense any despondence in our posts or tweets this week, that’s why. ;-)

thanks to everyone who gave such great feedback on our last post, exploring whether we should change any of our thinking around sharing our numbers. several of you suggested — and we agree — that we should find a way to share progress in the form of percentages, even if we’re not sharing numbers. so stay tuned for that soon.

it’s no secret that the markets have dropped a bit lately, and then dropped some more, and then dropped some more. we aren’t in the business of trying to time the markets, so we won’t pretend to offer any analysis or predictions, or talk about what impact the fed’s action or inaction may have. all we know is: our numbers are smaller than they were before. not a ton smaller in terms of percentages, but now that we’re a few years into our early retirement savings mission, our numbers are a lot smaller in terms of actual dollars. we’re down multiple years of future living expenses, which is enough to make me want to curl up into a little ball and whimper. (i’m the more conservative investor, between the two of us, after all. i’m not good at this whole “your investments can lose value” thing, even if i know all the rational reasons why long-term market investing is the right way to go.) and, since our retirement countdown ticker just ticked down from 2.3 to 2.2 years, we’re feeling just a smidge more pressure, which is the opposite of fun when all our investment accounts are trending in the wrong direction.

of course, as eager beavers on the early retirement front, we’ve been tracking our numbers for years now, and have always set annual goals for ourselves in terms of savings and mortgage paydown. but crazy as it may sound for us to say this, we’ve never defined those goals in terms of strictly what we would contribute. we’ve only defined our goals in terms of total balance, which is certainly highly dependent on what we kick in, but also accounts for market gains. so we’ve definitely had the wind at our backs in our savings efforts, with market growth bolstering every dollar we socked away into investment accounts — at least until august of this year. then, suddenly, we were facing a headwind, or running uphill, or swimming upstream, or whatever sports analogy you want to use. probably the same situation you feel like you’re in. except, without goals about our contributions, only about total balances, we now feel like we’re failing, when the truth is that we’re saving more than ever. we’re saving a sum each month that my younger self would never have thought possible, and yet our total numbers have declined month-over-month since july, through no fault of our own.

rather than let it bum us out, and force us to dwell on the fact that 2015 will be the first year when we don’t hit our goal numbers, we decided to reframe our goals. instead of expecting the market to play along, we’ve now shifted and adjusted our goals to focus only on our contributions — the part we can control.

old goals:

• achieve a certain amount in taxable and 401(k) accounts by end of year
• achieve a certain mortgage paydown, to make payoff by december 2017 achievable

new goals:

• sock away 90% of second monthly paychecks in vanguard account (we already do this)
• max out 401(k)s (we already do this)
• use leftover cash at the end of the month to pay down mortgage (we already do this)
• reduce grocery spending to under $600 a month (on track since july!), under $500 in winter
• save 100% of year-end bonuses, and allocate then roughly 60/40 to taxable vanguard account and mortgage payoff

where we felt like we were failing in the old goal framework, we now feel like we’re succeeding. (“we’re saving a ton! we’re reducing our spending! we’re maxing out our accounts! high fives!”) in corporate jargon, which we hope to be hopelessly out of touch with in under a decade, we’d say we’re shifting from an outcomes-based model to a input-based model, and the difference from a motivation perspective is huge. early retirement is not a sport for the short-winded, meaning that motivation is critical. feeling like we’re doing a good job is key to our staying focused and committed to our goals, so reframing how we see those goals was necessary to keep our eyes on the ball. (and that’s the last of the sports analogies for a while!)

we’re committed to peacing out of our careers at the end of 2017, come hell or high water, so on a certain level, the totals don’t even matter much. we’ll make our retirement work, no matter the circumstances. once our house is paid off, we can live on next to nothing, though we’re not actually worried about having to do that. but boy, we’d be happy if the market would start a slow, steady march into rosy territory again, maybe around mid 2016. can you work on that for us, janet yellin?

have you adjusted any of your goals lately? or changed how you define your goals? do the markets have you adjusting any of your timelines? or are you a champ at riding the rollercoaster, and you just sit back and think “discount!” whenever the market has a bad week? ;-)