Real Life Personal Finance Dork Like Me!

I finally stumbled on to someone at work that is looking at retiring early like I am.  I was shocked when her date was two years sooner than mine (we are the same age).  It helps that her husband is older than she is and already qualifies for a pension and has a large 401K.  She will also qualify for a pension at 55 but she’s looking to retire before age 50!

We only had a short conversation about retirement but I look forward to talking more with her about it.  She mentioned that they’d been to a financial adviser and I was thrilled to hear that she used a “fee only” adviser to avoid all the conflicts of interest with the other types.  While we haven’t gone to an adviser yet, I’ve been considering it in the next couple years.

I was able to share a few things with her that she wasn’t aware of including that our 401K plan now lets you invest after tax dollars (up to a max of $53,000 a year including pretax) and then lets you do annual ROTH conversions.  For us it would allow us to drastically increase our ROTH contributions, although I haven’t even taken full advantage of ROTH’s because we never set one up for my wife.  That’s currently the number one thing nagging me in the back of my brain.  It’s been foolish for me not to have started a ROTH for her.  I found myself justifying by saying that I wanted to get more money put in post tax accounts to help us live during the years before we turn 59.5 even though I KNOW I can access all the ROTH contributions before 59.5.  You know how sometimes you just make stupid decisions and can’t explain it?  Yeah, this is one for me.  My goal for this year is to correct that.

 

Updated Net Worth

Time flies when you’re having fun and apparently money piles up too.  We have seen some very good gains in our net worth over the last 10 months.  Overall it was an increase of over $150,000.  That’s more than $15,000 a month, which is more than we make by far.  We are starting to see the rewards of compound interest for sure.  I’ve also been keeping an eye on dividend income.  I don’t know why I never spent more time paying attention to dividends but now that our balances are larger, it’s awesome to see that money paid in to our accounts every quarter.  I’ve been aggressively transferring excess income in to our brokerage account by using automated transfers.  It’s much easier to pay yourself first consistently when the transfers happen automagically!

I’m starting to think more and more about an early retirement.  While I won’t be setting any records in that territory, it’s starting to look more and more like I’ll be able to check out of the rat race at around 51 years old.  I’ve chosen that as my target because my daughter will be heading off to college (using funds from a 529 account we’ve been building for years).  I expect my wife will work a few years longer than me since she’s a bit younger and that will help us continue to compound our investments that much longer.  I’d like to get our net worth as close to $2M as we can before I retire but I’m not going to make that a mandatory requirement.

I’m also spending a lot more time on our after tax investment accounts.  Looking back, this was the single biggest mistake I made during all of our years of saving and investing.  I had always been somewhat scared of the tax requirements on after tax accounts but it’s not nearly as tough as I thought (especially now that brokerages have to track my cost basis).

Anyway, that’s the quick update on our net worth.  I’m hoping to get to $1.25M by the end of the year.  We’ll see how it goes.