Financial Freedom, Financial Planning, Investment, Money Habits, Retirement Planning

December 2016 Non-W2 Income Report

We’re sharing our non-W2 incomes on the blog not to brag. We want to show you what is financially possible. If you’ve read some of my previous articles (such here, here, here and here), you know that both my husband and I have been saving aggressively over the past decade. Our savings rate ranged from 55% to 75%. This was true even when our combined income was below $100,000. The total passive income number you’ll be seeing here is the result of a decade of financial discipline and strategic investing. We took no shortcuts nor did we stumble upon great luck.

december 2016 income report

In our household, our biggest financial goal currently is to build up our non-W2 income. Sometime in the near future, my husband and I will want to leave our W-2 employment. At that time, we want our annual non-W2 income to cover our annual expenses. Ideally, we prefer 95% to 100% of expenses will be covered by our passive income sources (such as from dividends and interest payments from stocks and bonds and income from rental properties) and anything beyond that would be a bonus/extra cushion. We are certainly not there yet; we currently have enough passive income to cover our basic expenses. This is the reason we’re looking into rental properties to fill the gap (click here to read my rental property investing series where I share our journey on this new adventure).

Part of financial planning is financial tracking.

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Financial Planning, Investment, Real Estate Investing

Real Estate Investing: Building Our Monthly Cash Flow and Passive Income

In the upcoming year, on this blog you’ll be seeing many articles on real estate investments. It’s a new investment area my husband and I are planning to venture into. There are some things we already know about this asset allocation, but we have a lot to learn, too. We plan to share our research and adventures with you along the way.  If real estate investments are in your horizon either now or in the near future, we hope this series will be useful to you as well. Through rental property investing, our goal is to build our monthly cash flow while increasing our passive income.

cash flow passive income

Passive Income

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Early Retirement, Financial Planning, Lifestyle, Purchase Decisions

Early Retirement and Health Care Coverage and Premium

Back in September, 2017, when I shared on the blog that my husband was going to join me in early retirement, many of you asked about our health care insurance situation once he leaves his W2 employment. In this post, I’m sharing the process my family and I went through to get health care coverage for year 2018. 

The Perceived Obstacle to Our Early Retirement

The thought of having to pay the high cost of health insurance premium out-of-pocket (we were thinking about $1,000/month) was one of the biggest reasons my husband and I hesitated about retiring early. Early retirement conversations first came up between us around year 2012. Back then, the Affordable Care Act (ACA) was a mystery to us, and we were too lazy/busy to do more research.

I’m typically pretty resourceful and I’d search above and beyond to get the information I want. However, the following years continued to be big transition times for my family and I, and learning more about ACA was not on the priority list. So, as a couple, we reasoned (and made a compromise) that we’d have to work more years to save up for full, out-of-pocket health insurance premiums and retire when we reach our late 40s or early 50s. 

New Information Helped Made Early Retirement Possible for Us

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Financial Journey, Marriage and Money, Money Psychology, Retirement Planning, Social Comparison

Scarcity Mentality: The Onset and Its Effects on My Family and My Health

The Onset

I recently went through a pretty dark period in my life. Back in late 2016, when my husband brought up the topic of early retirement for both of us, I suddenly found myself going down the rabbit hole of fearing there’s “not enough”.

By that point, he and I have reached a consensus that we’d be in a great financial position to retire (for both of us) within the next year or two. That was our agreed terms, so I thought (I soon learned that was really the terms I put on our relationship). There was a certain financial number I (and only I) wanted us to reach. That was the number I was comfortable with. I don’t know why I was so stickle about that particular number. Maybe I like the sound of it. Maybe I like the roundness of that certain number. Maybe I like having extra built-in cushions in our finances before having both of us retired from our jobs. Whatever the reason(s) might be, I was adamant about reaching that magic and comforting number.

In the fields of economics and psychology, one living with the fears of “not enough” is said to be living with a scarcity mentality (or mindset). If you google “scarcity mentality” and read some of what’s been written, you’d quickly gather that living life with a scarcity mentality can be limiting and debilitating.

scarcity mindset onset effects

For me, I tie much of my sense of security to money. I don’t need to have a lot of money. However, when we’re talking about early retirement, I’d have liked to have reached a certain amount of money before I can feel safe. Both my husband and I had very good compensation benefits. Those benefits were a big part of my family’s safety net. In this blog, I’ve spent a lot of time talking about the awesomeness of reaching financial independence and early retirement (see here and here). What I left out was my fear of giving up all the great benefits that came with W-2 employment (see here). The thought of having to let go of all that safety net seemed scary, overwhelming and wasteful. And I cringed at the thought of all that we’d lose when we leave our employment.

Naturally, feelings and thoughts of scarcity started creeping into my head and I found myself in a big mess. Consequently, the quality of my marriage and family life suffered. My mental and emotional health had also suffered.

Shedding Some Light into this New Mental State Experience

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Early Retirement, Financial Freedom, Financial Independence, Financial Journey, Lifestyle

A Year in Review: Reflections, Early Retirement and New Directions

REFLECTIONS

I published the first post on this blog about a year ago (on September 18th, 2016). Since then, my family and I have gone through lots of changes. Back then, I wrote in this article that my husband and I would be looking at early retirement in year 2018, while in our mid- and early-30s, respectively. Our estimated annual expenses would be $50,000. In a later post, where I shared about the 4% Withdrawal Rule and its relevance for my family, I mentioned that my family’s financial goal (a.k.a the amount in our net worth) was to reach 30X to 33X of our annual expenses.

As I’m writing this article, I’m happy to report that our total net worth has reached over the 33X number. The image below was captured on 9/11/2017 from our Personal Capital account, prior to the stock market opened. We use Personal Capital, a free financial tool, to track our net worth, view our investment performance, analyze our asset allocations and project and reevaluate our retirement goals. I wrote a comprehensive review of Personal Capital on another post. I encourage you to check it out. According to Google Analytics, that post is a readers favorites. I plan to do an update on this financial tool and share more recent images on the blog soon.

ms financial literacy Personal Capital score board

Now that this part of my family’s financial goal is reached, my husband and I have both arrived at the conclusion that it was time for him to join me in early retirement, too. September 8th, 2017, marked his last day of W-2 employment. This is a great financial milestone for my family. We became an early retiree family before our daughter turns three.

Note: In a more recent post, I shared that we created a “fun fund”, where we gave ourselves the permission to spend up to $60,000 per year. Of that $60,000, about 30% would go to travel and large disposable item purchases (you can see a list of our monthly expenses here). At this point, we are flexible pacing our annual expenses anywhere in between $40,000 to $60,000. 

EARLY RETIREMENT

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