Freed by 50

I started this blog on April 18th 2017.  Earlier this week I was re-reading my first post and noticed my closing paragraphs contained a few sentences that I should revisit now that it’s 32 months since I started.

We currently have about 20k in savings, 120k in retirement accounts, 42k in student loan debt and a 370k mortgage.  We don’t carry any other debts, we pay off our credit cards each month and any major purchase we need to make is carefully planned and saved for.  Still, we are far from our goal of financial freedom.

We just had our first child this year, and we plan to have at least one more (most likely two more) by the time I’m 40.

My daughter was three months old when I wrote that.  She just turned three a couple of weeks ago, and her brother is one and a half.  I missed my goal of being finished by 40 because I’m 41 now and have plans for one more kid in the next year.

Now to the numbers.  Since I set off down the path of financial independence, our savings rate has exploded.  It helps quite a bit that my pay has jumped considerably since 2017, but we’ve also cut back on frivolous spending, paid off debts that were dragging us down, and we’re running out of home improvement projects.  That said, we had about $20k in savings in 2017, and we’re currently sitting on $98k.

Of the $98k less than half is our emergency fund, which I wouldn’t touch unless it was truly an emergency.  The rest is earmarked for our kitchen remodel.  I still consider it savings because it’s money in the bank, and nothing is forcing me to do this remodel.  If there’s a catastrophe tomorrow, the remodel is off and I’m sitting on $98k.

Thanks to a booming stock market and my maxing out of our 401k contributions, we’ve gone from $120k in retirement accounts in 2017 to about $210k at the beginning of 2020.  That’s an average increase of $30k/year, and I only maxed out my contributions last year.  That means, I earned way more in investment income than I contributed.

When I read about the $42k in student loan debt we had in 2017 I cringed.  Those were dark days my friends.  I couldn’t stand having student loan debt.  And that number was after many, many months of sending up to $1000/month at the loans.  When we paid off those loans in one $34k lump sum in June of 2018 it was like a massive weight coming off my shoulders.  It made a huge impact to our bottom line and gave us the freedom to do things like max our 401k and employee stock purchase plan contributions.  Our lives were noticeably improved by eliminating that debt.

Finally, our mortgage.  It pains me to say that our mortgage has only been reduced $10k from the $370k I reported 32 months ago.  I’ve refinanced twice in that time, and closing costs have eaten into some of the loan reduction I’d hoped would happen.  That said, our first refi removed PMI from our loan, saving us $195/month.  Had that never happened, we would have paid $5850 in vapor between the time of that refi and now.  Our second refi reduced our interest by 1.25% and cut four years off of the length of our loan.  So while there hasn’t been much reduction in our principal in the past 32 months, we had a 30 year mortgage six years ago and now we have a 20 year mortgage with virtually the same payment.  If all goes to plan this year, we’ll be significantly ahead of where we would have been if we never refinanced at all.

I’m generally an impatient person, so being able to look back at where I was and compare it to where I am today is a huge help.  From the start of this blog, our savings has increased $78k, our retirement savings has increased $90k, our student loan debt has been reduced $42k, or mortgage has been reduced by $10k (and four years), and our household has increased by one tiny human.  I would consider this momentous progress in under three years.  I’m 41 and 15 days old at the time of this post.  Nine years and 350 days until my goal of being freed by 50!