June 2019 Financial Update

Originally published/last updated on myearlyretiremenjourney.com on Jul 7, 2019.

In case you’re just joining us, here’s a little bit about me.  I currently work as a consultant in a tele-health call center making around $40+/hr. I started my professional life in 2015 at the ripe ole age of 31 after a few false starts. I spent 2016 paying off about $10,000 worth of credit card debt. I spent 2017 paying off about $20,000 in private student loans; I still have about $300,000 in federal student loans for which I am currently on an income-based repayment plan for the next 25 years, give or take.  I started really getting into savings and investing late 2018 when I stumbled upon the FIRE (financial independence, retire early) community.  I initially thought about saving for a 10 year sabbatical and soon realized with compound interest, I could make the journey to early retirement.  Along this journey, I give all sorts of updates, just like this one.

This is my June 2019 Financial Update.  In case you missed it: here’s my last financial update.

Let’s quickly recall some working budget items:

2019 Savings target: $45,000/yr (incl 401k)

2019 Spending target: $26,000/yr ($2167/mon)

INCOME AND EXPENSES

Income

My income is from my day job. No side hustles this year, thus far.  Total below does not include 401k payroll deductions. Provided as context for my expenses.

Total Take Home (YTD): $29,632

Expenses

Reminder. Target Spending: $2,167/mon

Actual Expenses (YTD): $18,255 (quarter avg. $2817/mon)

Apr 2019: $2,211

May 2019: $3,695

Jun 2019: $2,546

Notes

So… so far this year I have not reached my spending target of $2,167/mon. I think it’s fair to say that spending target was a little aggressive. Last quarter’s average was about $3,200/mon so I have improved a bit. These incidental expenses really add up.

In April, my Everyday expenses were a little over due to getting new glasses and a massager.  In May, I was over budget by about $1,500 due to paying my rent twice to reach a credit card spending threshold (first time trying to travel-hack) and in the Extras category. Extras for May included: my trip to Ecuador and interview-related beautification expenses. In June, I was over my spending target again primarily due to the Extras category. Extras for June included:  travel to my cousin’s graduation ($147) and job interview related expenses ($507). Full disclosure: ‘interview-related expenses’ included things like a manicure, pedicure, some new shoes, emotional eating, and a trip to Vancouver, BC to ease the emotional distress.

At a cursory glance, I’d say my target spending is on-target or at least target-adjacent but for the Extras which are not part of my core spending and for the most part wholly non-essential.

SAVINGS AND INVESTMENT

Savings

I generally try to keep six months to a year’s worth of expenses in a regular savings account using CDs. I’ve been able to maintain that safety net since Jan 2018. So the majority of income not earmarked for expenses goes straight to my investment accounts….well that was true until May 2019.

One day I just had enough of work. I stopped sending auto-deposits to my broker account.  Now that money is collecting no interest in a regular savings.  In the back of my mind, I’m hoping to live a small dream of being a stay-at-home person from Sept 2019 to March 2020. There, I said it! No husband or baby needed. No million dollars in investments.  I don’t know if I’ll do it, but I like knowing I could.

Investment

For most of 2018, I was at 90/10 stock/bond allocation. After the losses experienced at the end of 2018, I got scared and moved toward a 68/32 stock/bond allocation. I’m still learning.  On July 7, 2019 I moved it back to 80/20. I’m a fickle woman.

2019 Investment goals:

• Max out 401k: $19,000
• Max out Roth IRA: $6,000
• Contribute to broker account: $20,000

Investment goals (YTD): (accurate as of 6/23/2019)

• 2019 401k contributions: $10,000 (on target)
• 2019 Roth IRA contributions: $3,000 (on target)
• 2019 broker account contributions: $5,025 (below target)

Notes

I’m grateful I’ve been able to stay on target with my 401k and IRA contributions. The additional savings is below target not because I have been completely reckless albeit a little spendy on travel and interviewing and overall not caring but because I am socking away money in my regular savings account. I’m not investing my extra savings at the moment. I’m not investing my extra savings at the moment because mentally I’m in flux and having the money in regular savings adds an element of security.

BONUS: Life Update

Today is July 7, 2019. I’m needing that element of financial security because as I type this, my life could go in a few different directions. The foreseeable options are:

 #1 Nothing changes

• In this scenario, nothing changes: same job, same apartment
• • This means none of my job applications and interviews lead to anything promising.
  • Staying at my job seemed ok for the last month or so because I was moved from the team that was bumming out through no fault of my own.
  • I don’t think I fully realized that team was bumming me out until I had to do back-up work for that team and I started to feel that sense of dread again.
  • My apartment is fine; the places I think I’d rather live aren’t as affordable and the more affordable places are in other states and don’t seem worth the hassle.
    • Although, I recently got a reprimand for leaving my apartment door open when I cook so that soured me for awhile.
    • Plus my lease renewal is coming up so who knows what the new rate will be.
    • I am constantly ruminating and searching online for a new place to live but have yet to land on anything concrete. Yet I keep searching. What’s that about?
  • In this scenario, that extra savings I’ve been socking away will end up in my broker account by year’s end.

 #2 I quit my job

• In this scenario, I quit my job in in Sep 2019 with $10k in savings (see hoarding savings above) and no plan.

• • In this scenario, I am pretty much in Scenario #1 except I don’t have to work for 6 months to a year.
  • When I was on the bummer team, I was looking for any way out. That’s when I stopped auto-investing. Now that I’m not on the bummer team, the days that bum me out are not as frequent.
  • Right now, this is actually my default plan. Although conceivably, making no change (i.e. Scenario #1) seems like the default.

#3 I move to Spain

• In this scenario, I move to Spain. This past week I got my school placement. This requires an action to accept and turn in some paperwork by July 13, 2019.

• • I don’t feel what I thought I’d feel. Again, I didn’t fully realize all my escape plans stemmed from how bummed out I was on the Bummer Team.
  • Moving to a new country doesn’t really solve my core problem: which is finding peace and purpose.  I would just be trying it out to see if it fits. It feels like a layover.
  • When I look at this plan compared to Scenario #2 (a 6-month hiatus), the hiatus wins.

 #4 I change jobs

• I take whatever job is offered to me.
• • This plan is the most risky and the one I have the least control over relatively speaking.
  • I’ve applied to twenty jobs since my last interview (Jun 21). I anticipate this week is the decision week. If I don’t hear from anyone, then this is effectively not an option.
  • If I’m offered a position I think I can manage and a salary that allows me to increase my savings, I decided I’ll just take it…and see what happens.
    • Why this rationale is acceptable in this scenario vs moving to Spain- it hits a couple checkpoints: career advancement, possibly leaving NC, a change of scenery/pace, more money = more money to save, opportunity for a new start
  • What scares me: My current job is really easy; I’ll have to enter a new game of politicking at new job; ugh, it’s still work
  • Safety Net: Here’s where that $10k comes into play again. I feel like this is a good time to make a career move because having those savings readily available means if the next place is crap, I can still quit and take my six-month sabbatical. Seems like a win-win.
    • Also, I’ll get some additional insight into what jobs to look for after my sabbatical.
  • Downside: I don’t get to live my stay-at-home person dream…right now, at age 35…something I’m mildly fixated on.