September Wrap Up

leafIts my favorite time of the month! The time when I get to check in with our investments and see how much we’ve made over the month. It is the time when I also calculate all of our expenditures to see exactly where our money went so we can make any changes if needed.

The market has definitely slowed down, but I will leave it up to those who delight in analyzing market trends to explain why. The part that I care about is how it affected us. Over the course of September, our investments grew 1.39%. That is nothing to shake your hat at (is that really a saying? I feel like I’ve used it before but as I write it, it just looks ridiculous). To put it in perspective: if we were to always have that kind of growth, we’d be making 16.68% interest for the year. Considering our retirement calculations are based on making 7% per year, that kind of growth is amazingballs (wow – I am full of the totally dated sayings today. I can just feel Tiny Eivy rolling her eyes at me).

Unfortunately, not all of our accounts realized that kind of growth. Oh, this is going to hurt to talk about but I preach celebrating mistakes so here goes.

Before I knew anything about investing or savings or the difference between a 401k and a regular taxable investment account, I knew that I wanted to reach financial independence early. So, I did what everyone else does and met with a financial advisor. Now, I wasn’t totally clueless. I did my research on this woman and she was good. Not only did she know her stuff but she was kind and fun – the kind of person I wanted to hang out with and still do! I love this woman. Which is part of the problem.

Overall, it is almost impossible to beat simple passive investing in the total stock market through Vanguard. I’m going to say this one more time because it is super important: Overall, it is almost impossible to beat simple passive investing in the total stock market through Vanguard. My expense ratio for the total stock market is .05%. That is amazing. That is essentially the fee that I pay to Vanguard so that I can invest. Any financial advisor is going to have to charge quite a bit more than that. Usually in the realm of 2% which means that my investments with an advisor need to make 1.95% more than my investments in the total stock market just so that I could make the same return. On top of that challenge, studies have found that most investors (the financial advisors who create mutual funds and invest your money for you) fail to get a return higher than simply investing in the total stock market. Ouch.

Which brings me back to this amazing investment advisor who I have been working with for the past 5 years. Partly because she is my friend and partly because I was curious if all of these statistics were true, I’ve kept my initial investments with her. I started tracking the return I was getting on my investments in the total stock market vs her investments.

Over the course of 10 months, my return has beat her return every month. September was the most striking. While my investments returned 1.3%, hers returned -0.1%. Ack!

Now, believe me, I understand that the market is based on general trends and even looking at the data on a monthly basis is such a small slice of information that it is almost meaningless. But, ouch! I think I’m going to have to get my money out and invest it myself, but it is so hard for me to do this!

So, how did we do in September? We did alright. We had several large medical expenses – including a bill for a service that happened over a year ago. Gotta love that medical system! We also booked a trip to Disneyland which sounds much more extravagant than it actually was. A couple of times a year, Adam’s work (Disney) pays for his airfare and hotel to travel to Disneyland to talk about all that tech stuff he does here with the team there. Couple that with super cheap flights ($250 for BOTH Tiny Eivy and me to fly round trip) and free passes to the park (thank you Disney benefits), and you have a recipe for a super fun super frugal vacation.

We also didn’t have to pay a mortgage this month for the first time ever! Hooray! So, overall, we managed a savings rate of 70%. Not too shabby.

I’m really looking forward to seeing how we do next month. Our biggest spending category is always groceries. For the month of October we are trying something new: cook for a month. I went grocery shopping yesterday and spent about $100 on food which I then used to prepare 12 meals that we put in our freezer. I’m hoping that with leftovers and just buying veggies to go with the meals, our food budget will be drastically reduced. Although, we will be spending a week in Disneyland so who knows how it will all turn out. I’ll keep you posted.

How did you do in September?

Ack! Is it September already?

africa-3So, its September…not quite sure how that happened.

I left for Africa on August 21st in the middle of the summer and when I got back September 1st it was solidly fall – with crisp air and turning leaves. I am not one of those people who lives for fall. Don’t get me wrong. I like it – pumpkins, apple cider and cooler air. What’s not to like? But its no summer. Fall is like the consolation prize you get when you have to say good bye to summer.

Ah well – I digress (or rather, I didn’t mean to start talking about the changing seasons when what i really want to talk about is…): our financial update!

August was, without a doubt, the busiest month financially for us. We sold two of our rental houses (woo hoo!!!!) and used that money to pay off the mortgage on our current house (again, I say, woo hoo!!!). As of tomorrow, we will officially be debt free…unless you are counting our vacation rental property…which I don’t count because it is like its own self contained business. I leave that property alone – let the vacation rental managers take care of everything – and collect a check every month. Easy peasy. Eventually, we will pay off the mortgage on that account too and then the checks we collect each month will be bigger 🙂

We changed our spending habits a bit in August as well. Rather than keep ourselves on a strict “no eating out” plan, we ate out four of five times and surprisingly, our food spending actually went down! I think the reason was that when I know we are not eating out, I plan these elaborate meals every night and we end up spending quite a bit on groceries. When we kinda play it by ear, we end up eating a lot of leftovers mixed with a few meals out. It works for us.

I also signed up for one of those meal delivery in a box things again. While definitely NOT a frugal option, it keeps us in the habit of eating at home which ultimately does save us money – especially if I bulk up the recipes so we have leftovers. Plus, it removes the worst part of my day: 4pm when I am trying to wrangle my child and I suddenly realize that I have no idea what is for dinner and all we have in the house is peanut butter crackers. Come one, we’ve all been there…right?…right?….

In other news, I went to Africa. NBD. Africa! I stepped up my photography skills, learned a ton, cried a lot (don’t feel sorry for me – I cry at everything), made some amazing friends and changed my life. Like I said, NBD.

August Financial Recap:

(Everything got very messy because we were putting money into selling the houses and then getting money back from selling the houses so I’ve only got one number for you):

Percentage of the way towards our goal of financial independence: 46%

I’m going to try to update this blog more regularly for you three people who actually read my ramblings (hi mom!). You’re welcome.

July Wrap-Up

beach-3July is a month for going to the beach. A month for eating Slurpees and swimming. It is not a month that I want to spend in front of my computer counting pennies. Add to that the stress of selling not one but two houses and all of the time, energy, and money that goes into that particular endeavor, and you get the perfect storm of, “I just don’t care about anything anymore! I’m eating out!”

First, we’ll start with the challenges:

While our first house was happily pending a sale (woo hoo), we began July with the arduous task of fixing up our second house to get it on the market. This included a day of fix-up, hiring a painter, hiring carpet cleaners and freaking out when the first day on the market, the house reeked from the smell of the still wet carpets! Despite this setback, we got an offer and are happily pending the sale of the second house. Gotta love the Seattle housing market.

Maybe it was because of the stress of selling two houses, or maybe it was the sun and the call of the beach, but whatever the reason, we found it hard to be in our home at dinnertime and consequentially ate out a lot. What a luxury! A very expensive luxury.

To get back on track, I decided to restart a meal delivery service. Not the most frugal option – especially since the one we chose uses only organic ingredients and caters to our GF/DF lifestyle – but it reminded me how much I love cooking with fresh beautiful ingredients in the kitchen. It was like a jump start to my home cooking skills. After two weeks, I cancelled the delivery – ready to tackle cooking once again.

Now, onto the successes!

While I sat calculating my end of the month expenses, I realized that even though I felt like we went crazy with our spending, we actually didn’t do that bad. If you eliminate the spending on the houses, our savings rate was 64%.

64%

That is an amazing savings rate. Our goal is 72%, but 64% is noting to scoff at. That means that we saved 64% of our income this month!

Along with this amazing savings rate, the market did exceptionally well this month which puts us at 50% of the way towards our goal of financial independence. Keep in mind, the 50% does not take into account the money we will get from selling our houses. I am so so so excited to pay off our current mortgage with the money we make from the sales, and I’m even more excited to see what that does to our goal of financial independence. How should we celebrate? I need ideas people!

Spending Money Like We Just Don’t Care

downloadJuly 1st was a day on our calendar that we had circled in big red sharpie…Or, at least we would have if we still used a physical calendar. On our Google Calendar it looked like a giant list of meetings and to do items. It was a day when all the chaos of our lives converged into one 24 hour period.

I mentioned that we were selling both of our rental houses (the housing market in Seattle is on fire and while we think that it will continue to go up, we are quite happy with where it is now and plan on jumping ship while buyers compete for the privilege of buying from us) and it just so happened that both tenants gave notice at the same time.

In order to reduce vacancy loss, we needed to get the houses fixed up as quickly as possible and ready for the market.

Have you seen a rental house after the tenants move out? Everyone is messy, but there is something about living in a rental property that gives people the freedom to be just a little bit more messy. I really wish I had taken a before picture of our houses. One of them was piled high with stuff everywhere and puddles of dog pee all over the ground. The other was a patch work of miss matched painted walls and childhood graffiti. This is not a dis on our tenants at all! We had amazing tenants who were kind and always paid the rent on time, but people are messy.

So, we had one day to meet the contractors and fix up all the little things to get the houses ready for the market….and of course I was working all day that day.

I have the best job in the world in that most of the time, I get to choose my hours and make my job fit with the rest of my life, but there are times when that just isn’t possible and Friday the 1st was one of those times. I was shooting an 11 hour wedding. I thought about asking the couple to reschedule but figured they would probably say no.

This left Adam and Ilya to take care of all that house stuff while I was taking care of my work stuff.

We were dishing out money right and left: new floors, new paint, wall repair, tile repair, cleaning and staging. I felt like that person in movies with a giant wad of cash who haphazardly peals $100 bills from the top and tosses them around. Except I don’t carry cash. And it actually looked more like handing over a credit card every five minutes, but you get the idea.

A ton of time and energy went into the preparation of July 1st. I had to call flooring people, call painters, call contractors, call the stager, and coordinate with them and the renters to set aside times for them to come give me a quote. Then I had to drive all the way up to the properties. Not a big deal, you might think, but then you obviously don’t live in Seattle. It was at least an hour drive each way and that was if I was lucky! Then, most of the contractors never even got back to me or if they did, they charged way too much so I had to do it all again. It took a solid month of coordinating people to get everyone lined up and ready to go.

We even ate out several times this month because we were both working so much. All of this meant that I was dreading actually looking at our finances.

Could we have done things even cheaper than we did? Absolutely. Would it have been worth the utter exhaustion and misery it would have put us through. Nope. Being frugal is a balance. Your health and well being are valuable. I hired a contractor to repair a wall and tile entry way for $250. It took him all day and he used all sorts of fancy equipment that I don’t have. When he was finished it looked like new (something that would NOT have been the case had I attempted this project myself). Worth. Every. Cent. Same goes for the new floors and the painting of our incredibly high ceilings and the staging.

I sat down to look at our finances for June with a heavy heart and was floored when I got the results. For all the thousands and thousands of dollars we spent on rental properties for the month we only had to dip into our savings to cover $1500. Our regular monthly income covered the rest of it. I can’t even image what this would have done to us if we lived paycheck to paycheck. We would have gone into huge amounts of debt and spent years paying it off, but because of how we live, we were able to cover the entire cost of fixing up both houses using just our monthly income (and $1500 which we will pay ourselves back next month).

If there was any doubt in my mind that living simply and focusing on our saving rate was the way for us, they have been obliterated. Once we sell these two rental properties, we will hopefully be able to pay off our mortgage and be debt free! One step closer to financial independence!

May Wrap-Up

downloadIts my favorite time of the month! The time when I get to sit down and calculate how much progress we made towards our goal of financial independence!

May was the first month this year where we have not had some major appliance fail on us which meant that our savings rate was finally where we wanted it to be. That along with some particularly low utility payments (we are in that perfect zone of not needing heat or cool in the house) has left us with a savings rate of….wait for it….80%!!!

You read that right, folks. 80%! This includes having to shell out $200 for a new vacuum after the one that I got for free from my neighborhood buy nothing group didn’t work….surprisingly…

I’m doing my little happy dance.

The truly surprising thing about an 80% savings rate is not that we were able to save so much of our income but rather how easy it is to do this. I never feel like I’m depriving myself. I’m not stuck at home every night afraid to go out. I’m living my life exactly as I want to, doing exactly what I want to do. Living a simple, frugal life is not something that only a few special people can accomplish. It is something that everyone can do. Its like a muscle. At first it is hard to live your life this way but after awhile you don’t even think about it.

I find I have more fun and connect more with my child when I am wandering through the woods than when I am shopping. Getting free plants for our garden has led us to make connections with our community. Doing things myself has improved my skill set and given me a sense of accomplishment that I wouldn’t get hiring the job out.

How was your month?

 

 

April Wrap Up

downloadApril was a good month. It wasn’t great. We have yet to have a great month this year, but honestly it wasn’t bad.

Our washer and dryer were hanging on by a thread and we knew that we wanted the space in the laundry closest to store food for our kitchen remodel, so, we bit the bullet and traded them in for a fancy new washer/dryer combo! I normally would never buy something like this new but we knew that we wanted the combo and it is impossible to find a combo unit used. They are just too new. Or too many people like them. Whatever the reason, buying a used machine wasn’t an option so good-bye $1500 – hello washer/dryer combo.

(For those of you keeping track, we have now replaced Every. Single. Appliance. in our house so we are good for a long while. Knock on lots of wood)

Despite this huge expense, we were still able to save quite a bit.

Our savings rate for April was…drum roll, please….

50% !!!!

Our goal is to save 65% of our income each month so saving 50% after making a huge purchase is pretty good.

Another fun thing that happened this last month: I discovered a math error and cut an entire year off of our retirement date! So that was awesome. Oh yes, and the real estate market is super hot here in Seattle which means that our net worth hit over a million this month! That’s right. We are millionaires….kinda…OK – not really at all. This makes us sound much further along than we actually are. Most of that million is tied up in the value of our rental properties which we plan to sell this summer to pay off our house giving Uncle Sam a very hefty chunk of change in the process. Sigh.

Here are the numbers for April:

Percent of income saved: 50%

Percent of the way towards our goal: 44%

Thanks so much for following along on this journey. Everyday I get at least one person reaching out to cheer me along. So, how was your April?

 

 

March Wrap-Up

greenbelt-11Tiny Eivy is determined to kick some April butt!

Its my favorite time of the month! The time when I get to tally up all of our numbers and see how well we did!!! Woo Hoo! And before you say anything, I am aware that I have a problem as I would vastly prefer this to going to a big party (introvert problems).

March is always a tough month for me. Its long, dark, cold and boring. No fun holidays to celebrate, no vacation days from school, just a long adult month in the middle of winter (I guess technically the end of winter but whatever).

First, our successes: We spent very little money on eating out. I took my mom out to lunch on her birthday and I splurged on a pizza (GF crust and totally not worth it) when Adam was out of town one night, but other than that we ate exclusively at home.

I’ve also started a new challenge for myself: remodel the kitchen for as little as possible! Ha! Never let it be said that I don’t love a challenge. As I write this, I am sitting in a demolished kitchen with all of my stuff scattered around the house like confused sailors after a hurricane. However, I’m going to chalk this one up as a success since to reach this point, I have spent a total of $100 (a crowbar – necessary for prying off cabinets, and an under the counter fridge – these things are like $2000 new so I totally scored when I found this on craigslist). Granted, at some point I’ll need things like walls and shelves, but for now I’m very satisfied.

This months challenges: property tax was due for one of our rental properties. For some reason when we bought that house, property tax was not included in escrow so we end up having to pay it ourselves every year. I don’t mind this at all since it means that we keep our money for longer (earning interest) and then just pay for the tax ourselves when it is due, but it does mean that we end up with quite a bill once a year.

Other challenges: our stove bit it. It saw the shiny new dishwasher and furnace and decided that it needed some love too, so long story short – we have a new stove/oven.

In musing how to rearrange our kitchen during our remodel, we realized that if we traded our washer/dryer in for a washer/dryer combo unit we would have a lot of extra room (possibly for a fridge) in the utility closet. The only problem is that those combo units are expensive and you cannot find them used so good-bye $2K hello combo unit.

In the good news category, though, almost everything in our home is now shinny and new so we should be good for a while (knock on wood – a lot).

Despite all of these unexpected (OK – I guess they were somewhat expected) expenses, we still managed to save quite a bit. This was all me. I took on a few weddings and was able to bring in a few thousand dollars this month to contribute which really helped our numbers.

So, without further ado….drum roll please…..

Percentage of monthly savings: 42.35%

Percentage of house paid off: 49.77%

Percentage of the way to FI: 30%

February Recap

colors-22Adam is pictured here looking green because we are on the same team! (I know, its a stretch, but there are almost no photos of the two of us together).

Its the first of the month – which is my favorite time of the month because it is the time when I get to add up all the numbers and see how we did. Woo Hoo! Everyone gets excited about that, right?

Since we don’t use a budget, we pretty much treat every day like a challenge to see how much we can save (notice, I did not say, “to see how little we can spend.” I know it just seams like semantics but living in a place of abundance – “how much” – vs a place of deprivation – “how little” – makes all the difference in the world).

So, the beginning of a new month is kinda an exciting time in our household!

Adam and I sat down together yesterday and looked at our goals. Kinda like one of those important meetings that I’m sure he has to go to for his job – or the meeting that I have by myself once a year for my business (ah – self employment). BTW – these meetings are WAY more fun when there is more than one person involved.

We noticed that we spend a lot on groceries. This makes sense since we both agree that worrying about every little item in our cart at the grocery store is the quickest way to hate our lives and start to get snippy with each other (“that jam you are eating costs $4!” and “do you really need fizzy water everyday?” While expensive jam is just ridiculous, fizzy water is, in fact, a necessity – fyi). So, we don’t worry about groceries.*

What are the affects of not worrying about groceries, you might ask? Consistently around $700 a month. Bear in mind that we eat out maybe once a month so that is all of our food (breakfast, lunch and dinner) for the month.

We had been assuming that we would only spend $400 a month of groceries when we retire so we were faced with a decision: spend less on groceries or up the assumption number. Since we all know what happens when I don’t get my fizzy water, we chose to up the assumption number to $700 a month. This had the affect of pushing our retirement date out 10 more months. 🙁

We also noticed that every month we had some sort of random expense: January it was the great breakdown of everything that we owned; February it was a road trip to visit family in Northern California.

Rather than plugging our ears and humming a tune to pretend that these expenses don’t occur, we decided to include an additional $500 a month “other” in our retirement assumptions. This added more months to our retirement date. 🙁

My dear husband, being the eternal optimist poured over the numbers while we discussed different ways to bring that number back down. Not to leave you hanging, but we figured a way to cut almost a  year and a half off. I promise I’ll tell you more about it in the next post.

In the meantime – here is our percentages for the month of February:

  • percentage of the way towards our ultimate goal of early retirement: 25%
  • percentage of the way towards paying off our house: 47.2%
  • percentage of savings in February: 61.7%

*except for sugar and alcohol. we have decided that these luxuries should come out of our individual “slush funds” that we provide ourselves each month rather than the family food money