happy new year! we hope your 2016 is off to a fantastic start. we just had a lovely two weeks off — one week at home in the snow, and one week on the road for new year’s fun. and our year-end “bonuses” came through, so we pushed through all the transactions we planned. you know we don’t share numbers, but we’ll just say that making a $25,000 payment against the mortgage balance feels pretty flipping sweet. :-) also fun: giving more to charitable causes than we ever have before, though we hope to be able to do more in 2016. and now here we are, back to our regular monday, wednesday, sometimes friday posting schedule!
if you followed along with us in december, then you already got the play-by-play on our year-end finances, but just in case, here’s the 10-second version: both of our salaries are heavily skewed toward year-end deferred compensation with some element of profit sharing. so we never really know how we’re doing in a given year’s finances until december. as it turns out, we did well in 2015. (we did a 2015 rundown, complete with charts and graphs, here.)
after we had our year-end compensation in hand, and moved everything around where we wanted it, we realized something. something huge, actually.
we are ahead of schedule.
we’re determined to retire at the end of 2017 come hell or high water, and have always figured it would be a photo finish. we’d either barely squeak by with our target number or would come up a bit short, but would find a way to make it work anyway. since we decided to move our date up about a year ago, we have been okay knowing that we were setting a very aggressive goal for ourselves, and might have to work some in retirement to make up the difference. it would be worth it to get out of the rat race.
but then this crazy thing happened: we started this blog. we met a bunch of you online. we get inspiration and support from all directions, and the result was that we upped our game. and not just in a small way. it was more like we went straight from little league to division 1. in 2015, we saved 76 percent of our after-tax income. (granted, that is with incomes well above average, no children and non-mortgage debt long gone — though we do also live in a very high cost-of-living area, which is a bit of a mitigating factor.) our net worth went up by almost 100 percent of our after-tax income, even with markets flat on the year, meaning that almost everything we spent was “covered” by our 401(k) employer matches and the rent we collect on our income property. crazy.
that savings rate meant that we hit our target for mortgage paydown, and exceeded our taxable savings target by almost 20 percent for the year. we already know we got small raises for 2016, which we’ve mentioned we’re hiding from ourselves by increasing the amount we’ll auto-invest into our vanguard account each month. and we’re hopeful that 2016 will be a good year for both of us at work. which means:
we’re upping our game again. we’re ready to go pro this year.
we’ve written before about how saving for early retirement is like climbing a mountain, and we still think it’s a perfect metaphor. you decide to go the harder way (saving hard instead of spending / climbing upward instead of staying on flat land) in exchange for bigger thrills and better views. so this year, we have our sights set on a higher mountain. we don’t know that we can shave a whole year off our retirement timeline, but why not try? if we’re going to fail, we might as well fail upward, right? we’re still going to keep our official date as december 31, 2017 (and the ticker on the sidebar has now switched to counting it down in months — wohoo!), but we’re going to work like madmen to shave off as much time as we can, or at least to give us an extra cash buffer in retirement, or to give us the ability to give a lot more to charity even when we’re not generating much income.
how will we do that? cut out our last vestiges of mindless spending, keep optimizing the grocery budget, travel only on points and miles instead of cash (we have well over a million air miles between us, and are generating more all the time — we won’t miss a few), and be mindful of all the rest. this may sound harsh, but it’s not. we have a pretty low-rent lifestyle at this point (organic food is really our only major splurge, besides occasional airline tickets), and we don’t plan to live like paupers now or in retirement. we’re just looking to make some common sense decisions to cut out some wasteful spending that we know still happens. we think we can do it without feeling like we’re sacrificing, and this will just feel like a continuation of the gradual adjustments we’ve made over the course of several years as folks who are not frugal by nature.
oh, and climbing an actual mountain, too.
we are so happy we made the move from the big city where we used to live, to the small mountain town where we live now. the move has helped us save more money (mostly), but has also nourished our souls more than we could have anticipated. (seriously, just subtracting that deadly traffic from our lives has paid more spiritual dividends than we can count.) but, this other weird thing has happened that we never would have expected, either: we’ve had less drive to get out there and actually climb the big mountains. maybe it’s because we look at mountains every day and can get out in them whenever we want (that is, when we’re not traveling for work), which means we don’t feel that same hunger, or maybe it’s just coincidental that we happened to move right when our jobs got a lot more high-pressure and stressful, but we haven’t climbed any “real” mountains since we moved here. and we plan to change that this year, too.
so 2016 is our year to climb a new mountain in reality, and in our finances. we’ll keep you posted with quarterly financial updates (they won’t look that dramatic until end of year, barring any major market shifts), and with periodic mountain planning updates. we hope you’ll join us for the journey!
what mountains are you planning to climb this year, metaphorical, geological or otherwise? any ways you’ve upped your game recently, or plan to in the new year? we’re all ears! (or eyes, really. but who says “we’re all eyes?” that just sounds creepy.) ;-)