Financial Independence: Ground Zero

Over my past few blog entries, I explained our Goal of Financial Independence, the simple math of FI in Running the Numbers on Early Retirement, and the Impact of Saving a Few Chronic Dollars with Compound Interest.  And Stephanie explained How We Pay for Stuff.

Now lets put it all together and show our starting point.

Recall, in Our Fiscal Epiphany Stephanie stated our goals:

1. We pay off our mortgage(s) in less than 8 years.
2. Mike wants to "semi-retire" as soon as we can.
3. We declutter our lives of stuff. 
4. We spend as much time as possible together as a family.

By using Stephanie's operational budget as our starting point, let's look at our current spending, debts and assets. 

Our Spending.

Using Stephanie's envelope system, we have been able to get our spending under $25k, more specifically $22,584.  This includes groceries, utilities, spending money, vacations, car repairs, home repairs, auto insurance, gas, clothes, gifts, charity and even wine and hair cuts, okay Stephanie's hair cut. Me and the boys all go to the same barber named Mom.  Of course, this is our budget.  It has been in fairly accurate since we began several months ago.  This DOES not include property taxes, mortgages and health insurance. We will re-evaluate after we have been through a full year's cycle.  Even though we budget for an item, it does not mean we need to spend the budget every month.  We still are making fiscally responsible decisions with every purchase. Any extra money is going toward our mortgages or stock investment.

Our Debts.

The $22,584 yearly spending amount DOES NOT include our only debt, our mortgages.  Yes, we have two.  We have our primary residence worth about $270k with about $125k left on a 15yr mortgage at 3.75%.  Not too bad.  We also have a lake house worth about $110k with about $77k on a 15yr at 3.5%.  I am not going to go into detail on these properties, it really deserves its own blog entry.

So you can see why our #1 goal is to payoff our mortgages.  We have made some adjustments to our lifestyle to get down to the $22k spending level as well as shifted some assets to get some cash to throw at our mortgages.

Our Assets.

We have been very lucky to to be relatively debt free.  We paid off our student loans quickly and have had great support from our parents for higher education.  Although we have made several car related mistakes, we are now on the straight and narrow with used cars paid for with cash.  We currently have 3 cars, a '09 Pontiac Vibe, '06 Subaru Outback and an '82 Alfa Romeo Spider.  The Alfa was not a mistake, it has taught me a ton about cars that only saves us money, plus it was basically free albeit highly unnecessary.  Other than the cars, we have some stuff that we have been holding onto for several years for no apparent reason.  Oh yeah, we also have a small 14" fishing boat and some kayaks and a canoe.  Other than that, we just have out furniture, appliances, kids toys and clothes.

It's date night without the kids and time for another beer, in my next blog entry I will go over all of our financial changes that are going to help achieve our goals.




Photo credit: Jeremy Brooks / Foter / CC BY-NC