Ok, the time for the next financial update – what progress has been made towards achieving Early Retirement?
After the downer September came a better October! The markets behaved much better that last month, which made up for the declines we’ve seen in September. And that’s a good news, despite the fact that one of our companies’ stock is irrationally down… What is one company when the rest of the market is doing well!
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 October we were able to put $7,192 towards closing the gap. Cumulatively, since July 2021 we reduced the mortgage gap by $62,106, 20% in four months.
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 October post-tax accounts increased by $15,647, most of which is market growth and only $1,860 were due to ESPP contributions.
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 increased by $67.7K, Most of it due to market growth, with only $4,073 being 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.
No college payments were made in October. the next expected bill is in January 2022.
Conclusion
In summary, October was a more typical month, both in terms of paycheck income and in market growth, making up for the market driven losses we saw in September. At this point, we closed the gap by $85K, not counting the unexpected windfall in pre-tax accounts, which is an icing on the cake. That represents about 16% of the gap we need to close. 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!