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Author: whyohwhyoh Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5082  
Subject: FIRE mid-year update 2009 Date: 7/31/2009 4:26 PM
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A bit late, but here is a mid-year update on our retirement goals....

--Net worth down 19% since 1/1/09. Now at 2.9 NW/AI at age 35.

Current Portfolio:
27% Picked Stocks
26% 401k Mutual Funds (75% S&P500 index fund)
44% California Real Estate (Our House Value*0.93-Mortgage)
4% Fixed Income (Savings, CA-exempt MM)

2009 Notes so far:
We made the move and sold our small home to purchase a much larger house in the same area. This was a very difficult process, especially with 2 small children, but we felt it was the best time to make the jump. We could never have afforded anything like this home last year. We purchased a home that lost nearly 40% of its value during the crash, and locked in a 4.875% 30yr fixed loan. I sold quite a bit of stock to bring the down payment up to 25%... ravaging our Roth accounts. We are on schedule to fully fund my 401k this year, and will fund an HSA as well, maybe 2 ESAs. Not continuing Roths going forward.

Despite the hit to our net worth mostly from the costs of selling/moving and purchasing + fixing up a new home, financially I feel very stable going forward with the potential for a huge upside if the housing market recovers. We are in a comfortable home that we purchased at a great value and should provide excellent inflation protection, and my career & company are doing very well.

NW/AI historical chart
http://pic40.picturetrail.com/VOL362/677161/15775683/3708420...

2008 Update: NW/AI=3.7
http://boards.fool.com/Message.asp?mid=27349532

2007 Update: NW/AI=5.3
http://boards.fool.com/Message.asp?mid=26243566

2006 Update: NW/AI=4.6
http://boards.fool.com/Message.asp?mid=24999370

2005 Update: NW/AI=3.7
http://boards.fool.com/Message.asp?mid=23507890

2004 Update: NW/AI=2.5
http://boards.fool.com/Message.asp?mid=21842676

2003 Update: NW/AI=1.4
http://boards.fool.com/Message.asp?mid=20380221
--
whyohwhyoh
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Author: FIgirl Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4743 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/1/2009 1:28 AM
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I'm glad you posted, whyohwyoh. It's good to keep the FIRE goal in focus, which has been harder for me this year. My NW is up by 22% since 1/1/09, but not due to more focused saving. In fact, I have fallen short of my savings goal almost every month this year. Some of that is "noble" - I've been giving more to charitable organizations because the need has been so great recently. Some of it is learning a lesson the hard way - I backed out of a house contract that just wasn't right for me, lost a lot of $$ in the process. And the rest is just not having the same intensity. Not quite sure why that is.

FIgirl

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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4744 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/2/2009 5:34 PM
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Thanks for you update why oh why.

It looks like historically during good years y'all went up by about 1.0 AI per year, thus you should be going up again in a consistent manner when everything settles out.

In the scheme of a 90 year life, the current time frame will be washed away and all that will remain is a graph and some memories. Sometimes I look at fallen investments and feel anguish, sometimes I blow it off as if it happened a long time ago, and is not really relevant to who I am or how I am moving forwards.

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Author: Volucris Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4745 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/13/2009 12:12 PM
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We made the move and sold our small home to purchase a much larger house in the same area

Weren't you contemplating a move to France?

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Author: clrodrick One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4746 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/17/2009 5:51 PM
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Can someone please remind me what NW/AI stands for? I'm guessing NW = Net Worth but can't figure out the AI part.

As for my personal situation, I still remain very focused on achieving my saving goals for 2009. Steady job, steady income, no debt, etc. My longer term FIRE goal has been pushed back by about 2 years given the tumultuous past 12 months in the stock market. Yet I remain optimistic overall that I'm making forward progress to where I want to be in 10 years.

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4747 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/17/2009 6:05 PM
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Can someone please remind me what NW/AI stands for? I'm guessing NW = Net Worth but can't figure out the AI part.

AI = Annual Income

AJ

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Author: clrodrick One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4748 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/18/2009 6:54 PM
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Thank you AJ! I should have been able to figure that out, heh. Well, my NW/AI ratio is identical to whyohwhyoh... 2.9

Guess that's now a bad thing, I'm currently 36. I'm aiming to get a NW/AI ratio of about 11 before I declare FIRE. My real life monetary needs are much lower than my annual salary so I feel comfortable with a ratio of 11 which would give me an initial withdraw percentage of just under 3%. The only real snag is what the healthcare climate will like then.

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Author: VikingErik Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4749 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/19/2009 12:00 AM
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I think net worth to annual expenses is indeed a much better figure than NW to annual income. Think about it - getting a raise decreases NW/AI even though it's a strictly better financial position. NW/expenses is what will count in retirement; your former AI won't matter. NW/expenses of 20 directly means that you can be retired for 20 years without running out of money.

That said, NW/AI can be a good guideline for FIRErs starting out and getting used to the possibly strange idea of leaving money unspent even in quantities greater than 1x AI. NW/AI exceeding 1.0 is a clear sign of great progress.

- Erik

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Author: decath Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4750 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/19/2009 2:30 PM
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I think net worth to annual expenses is indeed a much better figure than NW to annual income. Think about it - getting a raise decreases NW/AI even though it's a strictly better financial position. NW/expenses is what will count in retirement; your former AI won't matter. NW/expenses of 20 directly means that you can be retired for 20 years without running out of money.

I agree! And as you get older, if you continue to live frugally, your NW/expenses ratio will tend to go lower as kids are raised, mortgage is paid off etc.. It may not always be the case for everyone, but it has been that way for DW and I.

Another % that I pay attention to is my investment contribution/gross income. If you are increasing income each year, hopefully, you are increasing your investment contributions as well.

As DW and have seen our expenses go down (2 of 3 kids gone now) and our income go up, we've tried to strike a balance between increasing the investment contributions and having more fun, travel and entertainment.

decath

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4751 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/19/2009 7:56 PM
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>> As DW and have seen our expenses go down (2 of 3 kids gone now) and our income go up, we've tried to strike a balance between increasing the investment contributions and having more fun, travel and entertainment. <<

Yeah, striking that balance is important. Saving/investing for the future is important, but the landscape is littered with folks who deprived themselves in the present in order to save for a future that they didn't live to see.

A little morbid, I know, but IMO important for perspective.

#29

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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4752 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/19/2009 9:00 PM
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Here is my sad confession:

- The stock market tanked horribly and destroyed our assets (not as bad as could have been but did)
- We paid off most of all our debts completely
- I have a much better job than before

Suddenly, there is less pressure financially, and investing in a future which may or may not have invested monies seems less certain. Thus, we have begun living a bit more freely (like going on a vacation to the mountains that cost $500 or so)

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Author: Volucris Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4753 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 8/23/2009 11:24 PM
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A little morbid, I know, but IMO important for perspective.

Very important. As I have gotten older I have seen it happen twice now. As a result, I've halved my retirement contributions and spend the money on travel and fun. No regrets.

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Author: whyohwhyoh Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4754 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 9/22/2009 12:34 AM
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Yes, France is still on the table....

Subconciously... we are hoping that the economy, at least locally, recovers over the next few years so we can reap a nice profit on the abode and go try out a new lifestyle....

We are well leveraged if a real estate recovery occurs. 20% over a few years would be sweet.

We'll see...

--
whyohwhyoh

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Author: EsamMoney Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4760 of 5082
Subject: Re: FIRE mid-year update 2009 Date: 10/8/2009 5:01 PM
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What do people here typically use for Annual Income? Net Income? Gross Income? I can see where expenses would be useful, because something like a mandatory 401k contribution doesn't seem like it should be counted either.

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