this is our only post this week. we’ll be back next monday with one more before the new year. happy holidays, friends!
last friday was a pretty hilarious day. within an hour, we got word that mr. onl got a year-end bonus that exceeded our expectations, allowing us to meet our quite aggressive targets for the year, and… found out that we have mice. i am the worst person to give mice to, because i’m super anti-poison (i don’t even allow chlorine bleach in the house, let alone rat poison), and because i don’t want to kill anything. so what, exactly, do i plan to do? invite the mice to tea, and hope that we can have a philosophical discourse about why they’d be better off moving on to another home? even if i got those humane traps, i’m not sure i could stomach dumping mice out in the snow — it’s full-on winter here, after all. and let’s face it: mice are cute. who doesn’t have more sympathy for cute animals? but that was definitely an hour of the universe handing us something awesome, and then knocking us back down a peg for good measure. here, have some abundance! and some vermin! you’re welcome!
we’re just a little over a week away from the end of the year, and now that we know how our bonuses shook out (mine: better than my low expectations. mr. onl’s: better than our fairly high expectations. wohoo!), it’s a good time to look at how we did this year, and look ahead to our goals for 2016.
a word on our bonuses: several folks commented about how nice it is to receive bonuses, especially for those in public sector jobs, where “bonus” isn’t a thing. and it’s true, but there’s a little more to the story. in reality, only a small portion of our bonuses are true “extra money.” really, they are deferred compensation, and we’re both in a model in which we take a smaller salary throughout the year in exchange for a chunk at the end of each year. this allows our employers to hedge against a bad year by allowing our full compensation to be variable (and yes, we have had years where our pay has decreased compared to the previous year, or was pretty out of whack with our contributions at work), and allows us to save quickly because we don’t budget for the money we get at the end of the year, except for hitting savings targets. but, in good years, we do get more, which is the “bonus” part. but we’ll just keep calling these year-end lump sum payments “bonuses,” because that’s easier than explaining it all every time. ;-)
at the end of 2014, we decided to move up our timeline for quitting our jobs to the end of 2017, instead of waiting for our previous date of 2020ish. that meant moving to much more aggressive targets for this year in terms of two main numbers: 1.) our taxable savings balance, which will sustain us for the first ~20 years of retirement, and 2.) our mortgage paydown balance, since we want to have our house paid off when we quit working. (our 401(k) balances are already in good shape, and we could stop contributing altogether and still have enough, we think, when we hit age 59 1/2 to sustain us for life. but we’re in a high tax bracket now, so want those tax deferrals! so we still max out.)
we also decided a year ago that we would quit at the end of 2017, no matter what — even if we didn’t hit these targets — but we also redoubled our commitment to hitting the numbers we think we need to retire the way we want to.
as we talked about in our post about revising our goals, we’ve always had year-end total goals, outlining where we want our balances to be in different categories by year’s end, and we’ve always hit those goals, and then subsequently gotten more aggressive for future years. but, given that we both get paid in a deferred compensation model, we never actually know throughout the year how we’re doing in terms of progress, other than the amounts we sock away automatically each month, because so much depends on how much we get at the end of the year. and this year was no exception. especially during the market roller coaster over the summer, we were pretty convinced that 2015 would be the first year when we didn’t hit our targets. and yet, we did, thanks mostly to mr. onl’s good “bonus,” and my expense report “oops.”
we don’t share our numbers, but here are some charts to reflect where we’re ending up this year…
looking ahead to 2016
the goals we originally mapped out for 2015, 2016 and 2017, our last three working years, assumed level contributions to our investments and mortgage all three years, but having hit our goals this year, we think we can do better in 2016, especially since we both got small raises. so goal number one is to increase our monthly auto-contribution to our vanguard index fund account to “hide” our raises. we decided we’re going to raise our investment by almost the total amount of our raises, even though taxes will shave down the amount we actually take home, and we’re committed to making up the difference by spending less.
goal two, then, is to continue reducing our spending. we’ve made huge strides in reducing our spending since our baller years, but have also never wanted to make changes to the way we live that feel drastic. we knew that would stoke our natural rebelliousness and make us snap back to high spending. so gradual cuts and trims have been where it’s at for us, and we will continue that trend into 2016. last summer, we posted about our high grocery spending, and while a full post on this is forthcoming, we’ve been doing well at consistently spending less each month than we were spending. and we think we can trim further.
goal three is to figure out the terms for a personal loan we’re most likely going to make to a family member. this is touchy stuff, and we’ve been thinking about it for a long time, and we want to be sure we have every conversation (and put everything in writing, of course) before any money changes hands. look for a post about this once we get all of this squared away. big picture: we’re thinking of this loan as replacing our allocations for bond fund investments, because it’s a hedge against equities, and as we get our monthly payments, we’ll invest those payments into bond funds. or at least that’s how we’re thinking about it right now.
goal four, of course, is to exceed our year-end targets, so that in 2017, our last working year, we have options. maybe we can build up a bigger stash than we originally thought we could, which would give us a little wiggle room in our retirement budgets. maybe we could work four days a week for the last six months. maybe we could retire early. if we can beat our target amounts in 2016, we’ll be stoked either way, and upping our vanguard contributions right off the bat will certainly get us started on the year with some great momentum.
finally, goal five is to think less about money! kind of an odd goal for a couple of personal finance bloggers in the fast lane to early retirement, we know. but now, two years away from retirement, the last two out of nearly a decade of focusing on saving, we think we have things mostly down. our spending keeps getting closer and closer to full optimization, our saving is highly automated so we don’t even think about the huge percentage of our incomes that go straight into investments, and… we both find it super easy to get overwhelmed by our jobs if we let that happen. so our goal instead is to stay present, enjoying these last two years of work as much as we can, focusing on the journey more and the account balances less.
there you have it, our 2015 wrap-up and 2016 goal rundown! did you hit your goals in 2015? what goals are you setting for 2016? anyone else actually planning to focus less on money, like we are? enjoy your holidays! have fun, stay safe, be well. :-)