Ok, the time for the next financial update – what progress has been made towards achieving Early Retirement?
October was a little bit of saving grace after a horrible month of September. Even though we diligently follow the plan, 2022 market declines make it look like we’ve been doing nothing. At least October gains improved that picture a bit…
The gap to close shows what we need to accomplish by May 2023 to be able to retire early. In October we “gained” $122K, which made the cumulative impact of $97K, with $426K to go… I still believe (and will believe) that our work will pay off as we get closer to the finish line.
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 contributed $3.8K towards closing the gap. I continue saving money as cash instead of paying extra mortgage (for now) to build enough emergency funds to cover us through 1.5 years since the market is currently in the current state.
Cumulatively, since July 2021 we reduced the mortgage gap by $143.2K, 45% of the gap. Since we have less than a year to go before we pull the plug, the question is – are we going to meet this goal by May 2023? At this point I would like to build up a stronger cash reserve than pay out the mortgage (which is at 2.5% right now). If some time in the next year or two the stock markets soars, I would be happy to pay it out with the appreciated stocks. As of now, that’s not such a high priority for me.
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.
In October, the value of our post-tax accounts increased by $27K, driven by the market performance, In addition to semiannual ESPP purchases. Since I am not planning to buy more shares at lower prices (building my cash stack) the only hope is that the market changes its mind and start going up 🙂
Pre-tax accounts
Pre-tax accounts include 401K plans with our current employers and Traditional IRAs.
In October, the value of our pre-tax accounts have increased by $91K, making the situation better but not offsetting the paper losses of September. On the other hand, I am стилл not so worried about theoretical losses in the pre-tax accounts – we won’t be able to use these money for at least five years, which means I am very certain by the time we get to use that money, there will be a significant growth in those accounts. When those losses are added to the progress I made in mortgage payments and investments in the brokerage accounts though, the overall picture is not pretty, at least not now…
Conclusion
In summary, the market rollercoaster continues. September was the worst, October provided some hope. Let’s see what the remaining months look like. We continue contributing to our pre- and post-tax accounts, knowing that eventually the market will go up, just not sure when… After a whole year, it appears as if we did not make much of progress, but if/when the market fully recovers, we should see a much bigger progress towards our goals. If I were to exclude pre-tax accounts, my gap is closed by 50%. I am still positive that we’ll be in a much better place closer to the retirement date!
Stay tuned to the future updates!