Progress to Early Retirement: 44%
Progress to Financial Independence: 87%
Progress to Half Income: 98% (Dropped Dec 2018)
Percent Home Ownership: 43.83%
Net Worth Breakdown: Home Equity 16% Non Retirement: 27% Retirement:58%
December 2018 – ER: 44% FI: 89% HO: 44%
November 2018 – ER: 46% FI: 90% HO: 43%
October 2018 – ER: 45% FI: 90% HO: 42%
September 2018 – ER: 42% FI: 90% HO: 41%
August 2018 – ER: 44% FI: 89% HO: 41.9%
This Month’s Story:
This month was full of food, holidays, and fun. We got our new couches finally. We spent lots of time with friends and family. We also lost a ton of money in our investments.
I figure folks want to hear our money story first, so I will start there and add my thoughts. Like everyone else, we are down a bit in total net value from our highs. It’s been a while since I did a full breakdown of our net worth. Personal Capitol does your net worth for just your investment accounts, and not for your other assets like cash and home net worth. Those two are significant for us. We keep a large cushion.
Lots of Cash
Our cash position is a bit high. We anticipated some greater costs that did not happen, and we saved a bit more than we expected. This is a good problem to have. I have also been a bit hesitant to invest with the likely downturn on it’s way.
Our Cash position, this is just checking and savings accounts is about 7.5% of our net worth. Including the mortgage payments and daycare and such, we like to have about 12 months expenses in cash or I bonds. We like that split 50/50, so our cash position is about 50% too high, and I guess a tad more than that. I should add that most of the cash is in high yield savings accounts at two online banks. Our I bond position is about 5.5 months expenses, so it’s right about where we want it. We’ll add to it this year, but then we are done. Since I bond rates tend to beat out high yield savings account rates, we will likely shift more money there from savings accounts over time. This year will mark that shift as we will likely put around 2 months of cash in it. I know that is a high number, but that is what our family feels comfortable with. All total, I bonds plus cash, we are at a bit over 10% of our total net worth. That has to drop, so there will be a bout a 3-5% move to some alternative investment this month. There will also be a move from cash to I bonds to increase that level. The tax savings there makes them more valuable which no doubt is why the government limits Americans to $10k per year.
The Big Picture
Going bigger picture for a moment, though, we lost about 7% of our net worth since I started blogging in August of 2018, in spite of adding cash at our steady rate to our investments; retirement, non-retirement, and paying off that mortgage. We actually peaked in October, and really it was really after that when our investments went down in chunks. It would have been worse if hour house had not bounced up rather significantly over the period
So one thing here is the mix or properly said, the asset allocation. As I started out saying we have about 7.5% cash, and when you add I bonds, that’s 10%. Our various investments are about 5.5% bonds (8.5% with I bonds), 7.5% REITs and other alternatives, 16% home equity, and 61% stocks. Our stocks are 3/4 US and 1/4 international. We’re probably a bit heavy in the stock market and cash. We should probably adjust some out of the market, and some out of cash. The old 100 – (your age) adage is where you see our stock allocation fitting in; we’re 42, so it’s within a few % of that number. Still, since most of our losses were in the market, it was higher.
I am now thinking that moving about 5% of our net worth out of stocks into bonds is a good idea, and moving about 3% of our cash into bonds or alternatives (REITs most likely) is a sounds idea. I hope to make those adjustments this month. It’s important, but so is some of the other things we want to do. Also, I am curious to see where the market will go. I know that’s more dumb trying to time the market, but what can I say. This is where I am at today.
The Personal Stuff
So that’s the money stuff, but what about personal stuff that effects money. Well, my wife and I didn’t go crazy on one another. I spent a bit much, about $300 on a new camera for her. Her old one, a DSLR, is about 10 years old and while good, it’s a bit delicate for hiking and the like. So, accordingly, I found a good shock resistant camera that can take drops from 7″ and can handle being up to 50″ under water. We spent a bit less on my son, and my wife had a hell of a time buying me a gift. I don’t need much. I have all my astronomy equipment, and I have a good computer. So, I ended up asking for a little $35 board game that we can enjoy together. I may get a new computer chair, it is over 10 years old, and not very comfortable. Do you notice something, 5-10 years is when I think about replacing stuff. Are you in that range? I buy quality, take care of it, and it lasts; usually. If I can go longer, so much the better.
We did buy those couches, but that was covered in another post. They were not cheap, but they were replacing 10 year old couches, and we have already gotten a lot of use of them!
Exercise wise, this has been a bad month. Dopey here got excited to be back in the gym, and strained my knee again. I really have to stop doing that. So, in a few weeks I will be back at it, but I have been sedentary more or less again. That was early in the month, and it’s mostly better now.
Big Vacation, Thank you Work Travel
Looking forward to the coming year, we have a few things we are talking about spending some money on. One is a potential trip to Europe. My wife has about 1,000,000 hotel points with one of the major chains and upgraded status for life thanks to working for a major consulting firm for many years. All that travel paid off in that. She also has a lot of air miles, so that trip will not be overly expensive. We’ll see how it goes. I have a major work project ahead of me this year, so that could impact our timelines.
Which Major Home Improvement Project
Another area of spending is for likely repairing and replacing our deck. It’s in bad shape, and we have never really been able to use it due to mosquitos. the negative part about living in a town with lots of wetlands thus septic/wells, is that with all that green space is a lot of wetlands. You basically can not be outside in the evening without lots of DEET on you or clothes that have that effect. So, I am not sure how much that will cost us, but I think it could be in the range of $10k to $20k. I know that sounds like a lot, but we want to have a 3 season room with a roof strong enough to handle snow. It would be a nice addition to our lifestyle, and that is worth it to me. There has to be a balance between spending and living, so there is our line. That will also setup our basement finishing which also will be a nice extra space. In truth, I am not sold on that job, but that is a future conversation with my wife. I am also looking at our kitchen which we have replaced the appliances with all new ones over the last 6 years as they have worn out, but the 1980s linoleum floor is looking it’s age. So is the counter top. Basically, we are thinking of paining the cabinets, replacing the sink, counter top, and floors, and calling it a day. Maybe some new hardware for the cabinets, but again, we will see. I am not sure which one will be done this year, if any, but I think we will do one, and I think it’s the deck. I will make another post soon explaining the deck with pictures, but to put it simply, it’s starting to rot away.