Ok, the time for the next financial update – what progress has been made towards achieving Early Retirement?
September was a downer! The market giveth, the market taketh away… Despite our making a dent in Mortgage and college costs, as well as normal additions to pre- and post-tax accounts, the net impact of September is negative due to the stock market going down… Oh, one step forward, two steps back…
The gap to close shows what we need to accomplish by May 2023 to be able to retire early. Obviously, this is not ALL the resources we have, but closing the gap above will be the final stretch to round up our financial situation and provide us with the piece of mind needed for the early retirement.
Mortgage
This is the largest item in the table above. We want to retire without any debt, and the vacation house mortgage is the last debt item we have.
As of July 2021, we had $315,827 in principal due to the bank. In September we were able to put $7,175 towards closing the gap. Cumulatively, since July 2021 we reduced the mortgage gap by $54,914.
Post-tax accounts
Post-Tax accounts include cash and stock we own in our Brokerage Fidelity accounts. They also include the value of contributions I am making towards ESPP purchases (the money is being taken from of my paychecks and accumulated in a separate account, out of which twice a year my company’s shares are purchased at 15% discount and then placed into my brokerage account).
As of July 2021, we needed to add another $102K by May 2023. In September post-tax accounts decreased by $35K, essentially erasing any gains and contributions to such accounts since July… Not worrying about this much, just stating that the market movements may have larger impacts on the balance in those accounts than the regular contributions we are making at this point.
Pre-tax accounts
Pre-tax accounts include 401K plans with our current employers and Traditional IRAs, into which we converted our previous employers’ 401K plans.
Note that the gap to close for post-tax accounts was $0. That’s right, we already have enough funds in the tax-advantaged accounts and don’t need to actively grow them as much. However, we continue maxing out our 401K contributions to reduce taxes and to take advantage of company’s match.
In September our pre-tax accounts have declined by $46.4K, despite the 401K contributions/employers’ match.
College costs
We need to cash flow the first two years of college for our eldest son, who just started college in this year. Since the chosen college is out of state and our income is high, unfortunately, the college costs are also high, even with receiving some scholarship.
September was the first time we paid for the college costs (including the tuition costs for the Fall 2021 quarter, the dorm accommodations, meal plan and whatever financial help we received from the college). That was a sizeable $17,430 bill, definitely not peanuts… One payment made, five more to go before the retirement…
Conclusion
In summary, September was a typical month in terms of paycheck income, but not great in market growth, and we also made a dent in college costs. Due to market declines, we appear to have lost $56,297, taking a step backward. However, we continue to chip away at our financial goals and hope that the market cooperates in the next couple of years!
Stay tuned to the future updates!