It was a tough Q2 in the industry I work in, but it has been tough in the global economy too. Yet among all this lay-off and recession talk, I’m also very grateful to be pursuing financial independence. We are only a little over half way there, but having a handle on what we earn, spend and save each month has been one calming force among all the crazy news from this year. Fortunately, we also only knew 3 friends to have gotten Covid-19 we think (2 tests gave different results), and they were mild cases and they’ve recovered fully.
May, June, and July Progress Report
May
- Networth percent change from prior month – up 6.53% compared to April
- Percent complete to goal – 52.71%
- Months till goal – 78.6 (6.6 years / January 2027) vs 96 (8 years/May 2028 set in April 2020)
- What drove the changes in May: 3 paycheck month for Ms BA. No mortgage payment due to refinancing our home. But paid out real estate taxes. Mask making paid off.
June
- Networth percent change from prior month – up 2.39% compared to May
- Percent complete to goal – 54.07%
- Months till goal – 73.4 (6.1 years / Sept 2026) vs 78.6 (6.6 years / January 2027 set in May 2020)
- What drove the changes in June: Ms BA finished maxing out her 401k for the year; Mask making paid off again this month. Started a project to upgrade Ms BA’s office with some new cabinets for storage and crafts .
July
- Networth percent change from prior month – up 5.36% compared to June
- Percent complete to goal – 56.97%
- Months till goal – 64 (5.34 years / March 2026) vs 73.4 (6.1 years / September 2026 set in June 2020)
- What drove the changes in July: Markets rebounding since February and March. Mask making paid off a little again this month.
The last 3 months have been positive changes, but I have mixed feelings about the progress. On one hand I’m incredibly grateful as noted above to be pursuing financial independence and to appear to be making progress on our overall goal. However, I can’t shake that feeling of “when is the other shoe going to drop?” It’s hard to not feel like another market correction isn’t right around the corner, but the markets appear to be bullish again. We have states that are regressing on reopening plans and schools are starting in all sorts of different ways. I had thought that school reopening and getting kids back to learning would be an incentive for the US to get the virus under control, but no such luck.
Still No Crystal Ball
Despite this feeling, we don’t have a crystal ball, and so we continue to invest and save according to our plan. Mr BA and I continue to discuss a rental property purchase. Now maybe a tough time to own our first rental, but I’m still interested.
We haven’t written it off, but right now we are continuing to save for a potential down payment, but also weighing our options. I like the idea of diversity in assets from owning real estate given our other investments are primarily index funds. Plus bonds returns are so low due to low interest rates, making them unattractive right now. I also like the idea of owning a tangible asset during tough times. There is something about being able to see and touch it that seems nice.
However, the simplicity of owning index funds is hard to beat. Never having to worry about them not paying rent, getting sick, losing a job, etc. Yes the prices and dividends can fluctuate quite a bit which may not be the best when we are in early retirement, and past performance is no guarantee of the future. That 128 month bull run was nice 🙂 But, overall my heart sinks at the thought of evicting someone. And, with 28 million people in the US facing eviction, and the government stepping in with a moratorium on evictions or restrictions on showing, it’s hard to imagine we wouldn’t be impacted.
Still like Real Estate
Prior to corona virus, we thought of ourselves as real estate investors that would have a management company to oversee our rentals day to day. But, I’ve also thought of myself as someone who may be willing to forgo a management company depending on where the rentals were. Mr BA did not buy into this idea 100%. Nevertheless, even if we did have a rental company, I’d like to think we would be the type of landlords that were proactive to try and work things out with our renters as needed.
Overall we are softies and pragmatists too. Now is not a good time to be kicking people out of their homes in the middle of a pandemic. Layoffs, reduced hours and illness are the reasons that rent is lapsing these days. It’s not because they’ve just decided to stop paying rent. So, clearly I’m not sure we are ready to be landlords now, but we still like the concept of real estate.
Still Grateful for Cash On Hand
The other thing I like about saving extra cash now just like most Americans (the U.S. Savings rate hit 32.2% in April – which is huge given the savings rate was 6-8% over the past 10 years) is due to potential layoffs. While I feel okay about my and Mr BA’s job now, things could change, and change quickly. Mr BA and I both graduated during the dot com bust and lived through round after round of layoffs during 2007-2008 financial crisis. These times are no fun, but that’s why I’m grateful to be pursuing financial independence this time around.
Not only do I have the routines and processes in place to keep track of my savings, spending, and income, I’m also pursuing some fun on the side, like making masks, improving my sewing, and now have a little side hustle which is fun. And, while this is very, very small, I still feel like I’m learning and growing and working to diversify my income – a concept I wasn’t remotely familiar with during the last down turn, and definitely wasn’t familiar with when I first started working.
Spend Less Than You Make
I listened to the book called Lifeonaire by Shaun McCloskey and Steve Cook while I was getting ready for the week. The book is a quick read about the principals of living within your means as told in a narrative format. I like the story telling aspect but it was a little cheesy. I finished the book because I’m a recovering live-within-your-means believer.
Up until about 2 years ago when we learned financial independence was a possibility, we did not understand our earnings, spending, or savings. We knew how much we made roughly, and we saved in our 401ks but didn’t completely max them out. Our HSA accounts were maxed but we spent them down each year. Small/medium sized purchases were saved for in advance, but we were in the process of planning a home renovation. It was more nice to have than need to have and we couldn’t pay cash for the growing wish list. Spending was not well understood relative to earnings (Amazon was at my door dropping stuff off more days than not). To sum up we were not intentional with our money, which is another great point in the book.
Plan for the Life You Want to Live
I like the concept of thinking about the life you want to live based on experiences. Plus that’s the name of the book Lifeonaire vs Millionaire – nice, right? You don’t know if you are going to make it to that day when you reach your financial independence number. While we plan to reach that day, there is no guarantee. We have to start creating the life we want to live now so we have an idea of what we’ll do when we leave our corporate jobs. I can be single minded and forget about the fun. Mr BA is good at having more day to day balance, and having fun things to look forward to. I like goals, setting them, working on them, tracking them – you get the picture.
So, thinking from a life experience perspective recently, it was kind of a bummed but when my brother chose to have his wedding this September back in the Midwest. He and his fiance want to start a family ,and don’t want to wait for all the pent up wedding demand to clear to plan their big day. So, we RSVP’ed as ZOOM attendees for the big day since we are not comfortable getting on a plane yet. Bummer from a life experience perspective but not much we can do about it. But, after reading the book I think we’ll be resurrecting our FI bucket list. We started the list this year but have stagnated with the pandemic since many of the things I noted involved travel. For now, we’ll keep being grateful to be pursuing financial independence, and stay the course with our plan while remaining flexible to changes.
Are you grateful to be pursuing financial independence? Has your plans or priorities changed in 2020? What have you learned this year? Share below.