Ok, the time for the next financial update – what progress has been made towards achieving Early Retirement?
January has been a disappointing month for us financially (and not only for us)… The market has gone down and down and down, wiping most of the growth we’ve seen in pre- and post-tax accounts…
The gap to close shows what we need to accomplish by May 2023 to be able to retire early. As you can see, due to the factors listed above, the net loss in January was $102K!
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 January we continued contributing $3,770 towards closing the gap. We weren’t able to put away additional $3.5K (as I would normally do) because we unexpectedly had a project – replacement of the garage doors), which diverted those funds. Cumulatively, since July 2021 we reduced the mortgage gap by $96.8K, 31% of the gap.
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.
As of July 2021, we needed to add another $102K by May 2023. In January, while we contributed the usual $1.8K in ESPP, the market wiped out almost $30K from the accounts. Currently, it appears that we haven’t made any progress towards closing original gap…
Pre-tax accounts
Pre-tax accounts include 401K plans with our current employers and Traditional IRAs.
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 January our pre-tax accounts have decreased by $76K, cancelling any progress we made in December and then some. So as of now we have about $44K more in our pre-tax accounts than we originally planned, still a nice add-on towards the early retirement 🙂
College costs
We need to cash flow the first two years of college for our eldest son, who just started college in this year.
No additional payments in January, though our son was given an opportunity to move into a single room. We expect the difference in room costs to show up shortly. And the next payment towards college is planned in March.
Conclusion
In summary, January was not kind to us, resulting in net loss of $102K. At this point, we closed the gap by $132.5K, not counting the unexpected windfall in pre-tax accounts, which is an icing on the cake. That represents about 25% 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! Markets can go up or down, we will still reach our goal 🙂
Stay tuned to the future updates!