March 2019 Update: 24% to FI, Recurring Costs Cut By $27

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I started this series to reflect on our goals, summarize blog developments and share some things I learned this month.

I hope you get some value and enjoy following our journey. If you haven’t already, join the Flexcents community as it continues to grow!

Financial Goals

We discovered the financial independence retire early (FIRE) movement in January 2018. Before this, we were good about saving money, but we had no idea how to make out money work for us and how it could change our lives.

After much research, we became more financially literate and are now learning how to invest our hard-earned money.

We use Personal Capital, a powerful application, that keeps track of our budget, assets, net worth, and cash flow.

We then input all the data into our FIRE spreadsheet to track our income, expenses and investment growth.

One of the many things we also track is our progress to FI.

Progress to FI formula: (net worth / projected FI number)  x 100

The closer you get to 100%, the closer you get to financial independence and have the option to retire.

Our Progress to Financial Independence

We’re now 24% away from our FI number. Our FI number does change according to recurring goods or services we decide to either add or subtract from our lives.

January – 11.62%
February – 13.74%
March – 14.55%
April – 15.04%
May – 16.40%
June – 16.74%
July – 18.30%
August – 19.33%
September – 19.79%
October – 19.29%
November – 19.97%
December – 18.81%

January – 20.96%
February – 22.22%
March –  24.09%

Learn More About Financial Independence

Toggle through to learn what Financial Independence (FI) means and the VITAL role it plays in allowing you to live your best life.

Financial independence (FI) is described as when your assets generate enough passive income to pay for your necessary and discretionary expenses without having to be employed or dependent on others.

These assets are usually in the form of stocks, bonds, real estate or other businesses

FI allows you enough financial security where you can retire and have your expenses covered by the income generated by your assets.

If you’re like most people, you are planning to retire or semi-retire at some point in your life, but even if you plan to work for as long as you can, I am sure you would prefer to do so out of enjoyment rather than necessity. Nearly everyone is working towards financial independence whether they know it or not.

Ultimately, FI allows you to have more options and freedom. It allows you to be free from worry about how you would pay for your bills if you lost your job, got injured, or needed to care for your family.

It would also allow you to travel, spend more time with loved ones, explore hobbies, give back to your community, or sit on the beach without worrying about needing to go back to work.

SOUNDS GREAT RIGHT?

Now, what if I told you you could have this level of freedom before you are too old and wrinkly to enjoy it?

Most people wait until they can claim social security because they haven’t saved enough money, but there is a community of individuals who are way ahead of the curve. They have achieved financial independence decades ahead of their peers.

If you want to learn how to do the same, keep on reading!

If you haven’t heard of the 4% rule, you will today. It is a popular method to determine how large your portfolio needs to before you retire. Nearly everyone in the FI community starts at the 4% rule to determine their FI number.

The 4% rule is a rule of thumb used to determine how much a retiree should withdraw from a retirement account each year. This rule seeks to provide a steady income stream to the retiree while also maintaining an account balance that keeps income flowing through retirement.

– Investopedia

For Instance, if you have $1,000,000 properly invested, you should be able to withdraw $40,000 ( inflation-adjusted) per year without drawing down from your principal.

That means your lifestyle does not exceed $40,000 during the first year of retirement.

After the first year, you adjust for inflation each subsequent year.

If we assume a 3% inflation rate, you can withdraw $41,200 ($40,000 * 1.03) in the 2nd year and $42,436 ($41,200 *1.03) for the 3rd year.

To calculate your FI number we need to use the inverse of 4%, which is 25.

It took me a while to get it, so here is the math:

4% = 4/100 , Inverse = 100/4 = 25

Now let’s say you’re a nerd and kept a budget for the last year. You know exactly how much you spent in each category and you add up the total to be $60,000.

Use the inverse of 4% (25) to calculate how much you need by the time you retire.

$60,000 x 25 = $1,500,000

So you need $1.5 million to retire based on the above example.

All of the above comes from research called the Trinity study.

Our plan:

For us, the 4% rule was a great place to start, but everyone is a little different and we wanted to be more conservative.

Therefore, we are now using a 3% safe withdrawal rate (SWR) which means we have to save 33x our projected annual expenses. Some may argue this is too conservative, but we’re comfortable working a little longer for some extra security.

Using this method is not perfect, but it is a great place to start.

If your number looks TOO HIGH and you believe there is no possible way you can accumulate that amount of money even if you invested aggressively:

  • Check if you included recurring expenses that you do not plan to keep during retirement. These are typically any debts you owe or children that you will no longer need to support. If you find them, remove them from your FI number as you do not need to draw down from your portfolio to fund these expenses.
  • Maybe you’re just getting around to saving your first $1,000, $10,000, or even $100,000. It gets easier and more possible the more you save. Don’t let your belief’s limit your potential.
  • Maybe your current lifestyle is way too inflated and you do not intend to downgrade during retirement. If so, you need to be realistic about what is possible. It’s likely you either have to cut back now or cut back later.

If your number looks TOO LOW and you feel it is not enough for retirement:

  • This may be the case depending on where you are in life. This equation becomes more accurate the closer you are to retirement because you have a better idea of your current and projected expenses.
  • Maybe you’re used to seeing results from those retirement calculators that estimate how much you’ll need based on a percentage of your income. Those are usually pretty inflated because they usually aim for you to need 70% of your income to live. For instance, if you make $100,000, they will project your retirement to need 70k per year. For me, that is much more than I need to live on per year, but to each their own.

If you want to start your own path towards financial independence, sign up for my resource list so you don’t have to spend months doing your own deep dive and potentially get overwhelmed or turned off some life-changing information.

Blog Developments

I finally got my subscription bar working again. It turned out to be a problem with the theme which fixed itself during its last update.

With more content on the site, I actually had to upgrade my hosting service through BigScoots. They’re not as large as some of the other hosts, but I think they’re one of the bests with their customer service and fast servers.

You still can’t go wrong with hosting through SiteGround. They give you a large amount of space for a low cost, but after the promotional contract period is up, the price will hike.

As far as content production, I published 3 articles in the month of March.

  1. February 2019 update: Our Most Expensive Vacation & Goal Updates: If you missed last month’s update, here’s another reminder to see what some of my developments were in February.
  2. Visiting These Doctors Saved Me & Can Save You Too: This article talks about the health professionals I have seen this year that provided me valuable insight that inspired me take action towards living a healthier life.
  3. The 10 things exercise: This article describes a self-reflection exercise that can lead to lifestyle changes for the better. My wife and I also went through this exercise.

Frugal Wins

DIY Phone Repair – Saving $212.21

Unfortunately, my wife got pick-pocketed while we were in a large night market in Vietnam and was without a phone for the remainder of the trip. Thank goodness she barely uses her phone as it is.

When we came back to the U.S. she was going to settle for a phone on Amazon.com which cost $222.79. The only thing is that she had a tough time finding a newer phone that wasn’t too big for her hands.

I then remembered I kept my old Honor 8 which was identical to the one she lost. The only problem was it couldn’t hold a charge.

Too bad battery replacements aren’t as easy as popping out the back and popping in the battery. That didn’t stop me though. I began looking up tutorials online, then ordered a battery replacement kit.

Battery replacement kit – $15.58

When this battery replacement kit arrived, it took me around an hour from start to finish to install the battery. I crossed my fingers and it powered on! My wife loves that she has a phone that she can hold comfortably and that we were able to save a couple hundred bucks. Needless to say, I felt like a nerdy superhero.

Employee Mobile Phone Reimbursement – Savings $27/month

As I am a home care physical therapist, most of my mobile usage is for patient care.

When I heard my employer provided a company phone or a cell phone reimbursement benefit, I hopped on it as quickly as I could.

I had two choices: Company flip phone or $27.00/month reimbursement

I was much more excited about decreasing my monthly expenses rather than add to my tech clutter. The last thing I want is another device to charge or another device to account for when I leave the home.

The reimbursement I receive each month is $27.00. This is the entire cost of my line alone! What a win this was.

Trash for Cash

I have a running list of things that I post on ebay and the facebook market place. These are items that I no longer find useful, but they are also things that I find on the street while driving around my town treating patients.

I found an old sauce dispenser in my home and saw the market value for something similar would be $10. I placed it on sale a couple of months ago and finally sold it on eBay. The buyer paid for the shipping too! Now I’m really wondering what else can I sell around that house that isn’t providing any value? This project now is really just for fun.

January:

  • Old office desk: $45.00
  • Old college textbook: $49.00

February:

  • Music Stand: $10.00

March:

  • Sauce Dispenser: $9.99

Total: $113.99

Fitness Goals

Alright, it’s been a little over a month since I came back from vacation and my healthy routine is still thrown out of wack. My workouts have been sporactic and I have been unintentionally skipping my lunch during week days. Part of this was due to getting a case of bronchitis. The other part being that I almost forget to eat because of my busy work day seeing patients.

My mother is a dedicated mail carrier and I can now see how easy it is to get caught up in work and forget to eat.

While she is inching towards retirement, she is also losing weight due to insufficient caloric intake based on her activity level. One thing my mom and I have agreed upon is to call each other during lunch to make sure we eat.

My goal is to reach 140 lbs at 10% body fat by the end of the year is looking more and more difficult as my list of things to do is growing, but I’m not going to give up. I’m down to 134 lbs and hovering around 13% body fat.

Thank you for tuning in for another update.


3 thoughts on “March 2019 Update: 24% to FI, Recurring Costs Cut By $27”

  2. Congrats on all the wins!

    I’ve only ever cracked my phone screen one time. I actually bought one of the DYI kits for about $25 on Amazon. The kit came with everything I needed including the screwdrivers. I was able to pop on a new screen in about an hour. I think if I had to do it again I could do in less than 30 minutes!

    Reply

    • Hopefully, your phones will not suffer the same fate again, but I’m glad you’ll be able to replace it quicker if needed in the future. I remember after I replaced my battery, I wanted to replace everyone’s battery. Gotta love building that talent stack right?

      Reply

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