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Your lack of spending is really astounding. As we’ve said many times, the point of making money and spending money isn’t money itself, it’s to get something of value in return. At first I thought maybe there just wasn’t much that you valued because you spend so little. I think that’s partially true. You don’t value vacations like I do, for example. You don’t value clothes at all. You don’t, in general, value many things that cost money. But when you do value something, like education, you’re willing to pony up.
Turns out I value plenty of things in life that cost at least a fair bit of money. I value travel, eating out, a short commute to work (because I value work) and so on. Even though I’m not going to detail all my expenses (waste of time), I can still sneak some money porn into the post by highlighting a few things Mrs. Rich and I specifically valued in May. To wit:
- A Vitamix Ascent A2300 Blender: $380.30. Because we value healthy smoothies.
- A beach house rental for the summer: $653.22 (partial payment). Because we value family beach vacations.
- A deposit on our new apartment: $1,100. Because we value an apartment close to school, close to work, and close to enjoyable activities.
- A painting by a local artist: $410.88. Because we value art, and we value a beautiful reminder of our 2 years overseas.
According to many personal finance blogs, this is just craziness. We spent $2,500 on a few things and what did we get, really? A glorified blender, a painting, and some overpriced places to stay?
Yes, actually. That’s what we got. I do realize this kind of spending will prevent us from retiring early. But I don’t want to retire early if it means no smoothies.
I also realize that we spent more on these 4 items than you spent on everything in May. That does seem a bit crazy. How could we be so different? Which one of us belongs in the looney bin?
Most of all, I value going through life without worrying too much about money. I like thinking about money and managing money, but not worrying about money. I value financial security. Financial security is the basis for my goal of reaching a $1 Million net worth at age 45.
NET WORTH PROGRESS
Let’s check on that goal. Going into the month of May, I had a net worth of $603,982. Therefore, I still need $396,018 with 53 months to go. I need to average an increase of $7,472 per month. In May …
… my net worth increased by $7,749. Ding! In 2017, I’m up $57,951 , or $11,590 per month. I won’t keep that up but I think I’ll stay on track for my goal. Here’s a chart showing my progress since I started tracking it in September 2015.
Now, let’s look at each net worth category separately to see how I’m maintaining this upward trajectory.
Goal here is to max out the 401k and IRA accounts. I haven’t made much progress with the IRAs this year, but overall retirement is doing well. With retirement accounts increasing by $6,212 per month this year, I’m already 80% toward hitting my monthly net worth goal without doing anything else. In 2017, I’m up by $31,058 in retirement.
I’m in a holding pattern here — drawing down some investments and delaying some future plans until after we move back to the US. My LLC took a distribution, which explains the slight decrease there (it went to cash). In 2017, I’m up by $8,841 in non-retirement investments.
In May, I paid off one of my 0% interest loans in a big chunk, $8,700. I like paying in lumps, it “feels” better than paying a little at a time. It was due in August so I wanted to knock it out rather than roll it. The rest of the debt, $10,000 at 0%, is due in February. I’m not sure yet if I’ll pay it off or roll it. I’m leaning toward funding my priorities first (like my IRA or a 529 plan), and then paying off the debt if I have enough left over. Otherwise, I could roll it for another 18 months with a small transaction fee, like $300.
Why would I do this? A few reasons.
First, some investments, like IRA contributions, have a time limit. I can only contribute a certain amount per year. If I miss a year, I can’t get it back, so to speak.
Second, some investments practically guarantee a better return on my money. $10,000 in debt costs me $300, or 3%. But that same $10,000 in a tax deductible 529 plan saves me $575 in taxes, or 5.75%. So, if I need to choose between the two, the math says fund the 529.
Finally, while I was slightly uncomfortable with carrying more than $20,000 in debt, I don’t really worry about $10,000. I could pay it off or roll it forward at any time. I must get 2 offers per week for loans at 0%. Not a big deal when the money could be working for me better elsewhere.
At any rate, I’ll decide at the end of the year what to do with this debt. In 2017, I’ve paid off $18,250 in debt.
My cash level was basically flat in May and it’s flat for the year. I want a minimum balance of around $10K at any given time. My plan is to stockpile cash for the rest of the summer because we’re moving back to the US in the fall. Most of my financial thoughts right now are taken with planning for some big expenses. We’ll be paying rent again, we’ll need some furniture, and we’ll need a car. Suffice to say I’ll need around $35K – $40K available in cash by September to do all this. I’ll be detailing this more in a future post.
That’s all for now!