Financial Update – December 2021

Ok, the time for the next financial update – what progress has been made towards achieving Early Retirement?

Oh boy, what a month! November was a wild ride, soaring to the new highs (I am talking about the stock market here) and then crushing in the last week! So we ended up with net decline for a month, despite our relentless contributions…

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 temperamental market, the net contribution in November was -$25K.

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 November we were able to put $3,706 towards closing the gap (we did not contrubute as much as we normally do since we had to pay real estate taxes and spend money of floor refinishing). Cumulatively, since July 2021 we reduced the mortgage gap by $65,812, 21% in five 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.

As of July 2021, we needed to add another $102K by May 2023. In October post-tax accounts increased by $2,366, most of which was due to ESPP contributions (almost no market growth)

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 September our pre-tax accounts have declined by $31.2K, most of it due to market decline, with $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.

No college payments were made in October. the next expected bill is in January 2022.

Conclusion

In summary, November was a volatile month, stock market roller-coaster, driven on hopes and fears related to the new Omicron variant. At this point, we closed the gap by $91K, not counting the unexpected windfall in pre-tax accounts, which is an icing on the cake. That represents about 17% 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!