It’s that time again — when we share our quarterly stats and progress on the road to early retirement (since we hit financial independence around the end of last year). Also in this update, something that’s got us so flipping excited — like party confetti emoji excited, you guys.
But first, the progress report. Because we don’t share our numbers (read this if you want to know why), our updates come in the form of lots of percentages and graphs. We’ve added a few new ones this go-round to try to better represent our progress and show what’s doable.
Related posts: 2015 Q3 Update (All the Charts // Our Progress Toward Early Retirement) and 2015 End-of-Year Update (Of Mice and Money // 2015 Wrap-Up and 2016 Rundown)
Overall Net Worth
Like it was for most people, March was a great month for our numbers. The declines of January and February reversed, and we got back above where we started the year in our overall net worth:
Hooray for that little tick up. Breaking that down a little more, we see that all of our numbers went in the right direction overall for the quarter, despite the January/February slump:
401(k)s were back up, taxable investments went up from both market increases and focused saving on our part, and the mortgage ticked down as scheduled.
Traditional Retirement Funds
The part of our portfolio that’s been in good shape for a few years now — our 401(k) accounts — continues to be in good shape. We crossed above the amount that we think we need once we hit “traditional retirement age” (age 59 1/2 onward, when we can access these funds without penalty) some time last year. We’re still adding to reduce our tax liability now, but it’s all gravy at this point.
We paid our last big chunk against our primary mortgage at the end of last year, and since then have been paying the regular monthly amounts. We’re currently prioritizing investing in our taxable investments over extra payments against the mortgage, though we’ll plan to make another giant payment at the end of the year. [Update: We ARE planning to pay off the house before we retire. Adding this because it was not clear in this post, though we’ve talked about it before.] So not huge progress since year-end, but big progress since last fall:
And the rental property mortgage is all about slow and steady. Our tenant is currently paying the mortgage for us, and we’re not paying a penny extra. We’re currently planning to keep the rental mortgage for its entire 15-year term, and we’re two years into it so far.
Just for fun, we updated our skewed scale chart to show the seemingly-wild fluctuations in our entire portfolio since last spring. Of course, when you zoom in close and chop off the whole bottom of the scale, it’s easy for things to look quite dramatic. If you want to scare someone out of investing in the markets, show them this chart. :-)
Taxable Savings FTW
Besides numbers generally going in the right direction on the year now, this is the part of the quarterly report that we’re most excited about:
We’ve been looking for a way to better represent how quickly it’s possible to save for early retirement if you make more than you need and you make saving your primary focus. Between 2014 and 2015, we accumulated almost half of the taxable funds total that we’ll need to sustain us in Phase One of early retirement (before Mr. ONL turns 59 1/2). That’s in addition to nearly maxing our 401(k)s during those years and paying on an extremely accelerated mortgage payoff schedule. And we know the 2016 progress looks small, but that’s reflecting how skewed toward year-end deferred compensation (“bonuses”) our paychecks are.
But here’s the even better news, looking at the numbers a different way:
All that we have left to save is only slightly more than we saved last year (25% last year vs. 29% left to save). Our 401(k)s already have as much in them as we’ll ever need, and our mortgage payoff is happening on schedule. By upping our game and saving more per month in 2016 than we did in 2015, we’re now more ahead of schedule than we were at the end of last year.
Which gets us to the best part of the post…
Why We’re So Excited
It’s starting to dawn on us that we may not need to wait until the end of 2017 to retire. The deferred-compensation models that we’re both in give us both a huge incentive to stay through the end of the calendar year. We’ve always assumed that we’d find out our year-end bonus in December of next year, and then give notice. But we’ve recently heard rumors that senior-level people who left our companies mid-year got prorated bonuses.
!!! This is gamechanging news. Let’s throw in a few more exclamation points for good measure. !!!!!!!
As good as this news is, it would be meaningless if we weren’t ahead of schedule on our investing and mortgage payoff. But we are. And we’re getting more ahead of schedule every month, with early indications that year-end bonuses should be good ones this year. That’s a big if, but if those bonuses are good, and if the markets don’t take a nosedive before year-end, then we could be looking at a significant timeline revision this coming December.
In the Meantime…
We’re going to do our best not to get too excited. There’s still plenty that can happen to slow things back down, and we have learned the lesson that when you invest as you’re supposed to, and build up a sizeable portfolio, you lose a lot of control over what the balance sheet says. The markets get that say instead. And we all know the markets don’t always behave rationally.
So we’re not holding our breath over here. We’re going to keep on keeping on, saving aggressively throughout the year and planning for a big mortgage payment and a big Vanguard investment at the end of the year. We’ll consider ourselves lucky if we get any market tailwind at all, and certainly won’t expect it.
But I’m not gonna lie — knowing that we might be able to shave months off our timeline next year has sure put a little more spring in my step. The first three months of this year have felt like six, and if we could shave three months off our timeline next year, it could just feel like getting six more months of freedom! :-)
How was your first quarter? Any surprises? Anyone out there upping your game to try to get to your end goal faster? Tell us all about it!