Three years later! Post-FIRE check-in with graph and thoughts [M 41: Net worth 3.0M → 3.5M]

Note to mods - we have had issues with approving this. I'll post with no links, and see if we can get it approved. I'm guessing the issue was the shortened image hosting site i used for the graph (Imgur has been over capacity). After it's posted, I can try and edit or post a reply linking to the graph image on another site (and remove this header).

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Disclaimer/Warning – I made my money in the tech industry with a higher than average wage. I know this may not seem fair and this triggers some people, please move on if you are not interested in post-FIRE progress of a former high wage-earner. I have nothing to gain by sharing this. I´m doing this anonymously and want to share what I've learned/experienced with the community. I also use this as a forced point of reflection.

Recap [links broken, simply look at my history for now for posts]

• Original FIRE Day post - Today is the day! With thoughts, numbers, and graphs [M 38]
• One year check-in- One year later – Check in & graph [M 39: Net worth 2.6M → 3.7M]
• "Two Year check-in post" - Two years later! Post-FIRE check-in with graph and lessons learned [M 40: Net worth 3.7M → 3.0M]

I’m not going to rehash my process up to leaving traditional employment, that is covered in the first post, but to summarize – I took me 10 years of work to reach 500k net worth (NW). Then in the next 6 years I was able to grow to a NW of 2.5M, reaching my targeted 3.3% withdrawal rate to give me 87k (pre-tax) annually to live off of.

I have the following target investment allocation

• 50% S&P 500 and growth index
• 5% Tech funds
• 10% International (reduced 5% from last year’s target)
• 15% Small/Mid cap
• 15% Speculation individual investments (increased 5% from last year’s target)
• 5% Bonds (2.5 year bond tent for surviving a recession)

My updated budget for FY2023 was 92k.

An overall view of my net worth the last 10 years

[links to graphs are broken ATM, will edit in later]

Note: The amount shifting below the zero line represents the amount of FIRE withdrawals that have reduced my net worth.

Investment performance

Not a bad last year, my investments have grown 17.9%, outperforming the S&P which grew 13.6% in the same period. Factoring in the higher inflation, and the fact I had a loss of 26% the prior year, there is still a ways to go before it has really made a full recovery.

I had been draining my “modified bond tent” the last 2 years in order to avoid harvesting stocks while they were at low points. I’m now slowly refilling up the bond tent in order to be ready for the next market downtime. I’m making sure to do a maximum I bond purchase each year. In addition, I’m manually maintaining my staggered bond purchases— buying bonds at a quarterly interval as the prior bonds cash out. Last year I learned a costly lesson in assuming a bond fund that does the same staggered repurchasing would have the same store of value in a down market. If you are unsure why that would not be the case, I recommend reading my prior "Two Year check-in post", don’t make the same mistake I did!

The small amount of long term speculative investing is still doing well. I had unloaded all my stocks I felt had exceeded their value (Netflix and Tesla). My 2020 investment into nVidia and AMD has been performing quite well. My Amazon that I purchased nearly 10 years ago, and continue to hold, is nearly back to all time highs. My only stock sitting in the red is Cloudflare, and it has nearly recovered to the point where I purchased it. My new speculative pick is Intel. They have lost a lot in valuation, and the massive amount of investment they are making should have them in a good state in a few years. My speculative investments are extremely tech heavy; I feel very strongly that this is a sector that is and will continue to shape our society. It is also an area I fell like I have an OK enough knowledge for reasonable long term speculation.

Inflation

Per the US Bureau of labor statistics, there has been 18.3% inflation since I pulled the FIRE trigger. Anecdotally, it seems a lot of my costs have increased more than this amount. Grocery prices seem to be up roughly 25%. While building and home maintenance prices have fallen from their crazy highs, they are still sizably higher than they were a few years ago.

The decision to buy a house 2.5 years ago was a key one (Discussed in my "Two Year check-in post"). Rental prices have grown to a level where I would be approaching not being able to afford living in my ideal MCOL area anymore. I may feel quite differently about my FIRE process if I was already being forced to move for budgetary reasons only 3 years in. My car that I purchased used in 2020 is now worth slightly more than I paid for it, and will soon be paid off after one more year.

With money not going as far as it has been, to keep to my budget, I’ve eaten out a bit less, skipped on a purchase or two I may have been able to do in the past. But, critically, this has highlighted how uncontrolled inflation could totally derail my FIRE plans. Fortunately, for now, it is looking to be falling under control.

Budget and actual

My budget FY2023 was 92k USD. It is worth noting this was taking my new lower 2022 net-worth and applying 3.3%, rather than growing my original budget by the inflationary amount(98k). My plan is always to take the lesser of the original inflation adjusted budget, or the current invest-able net worth * 3.3%.

I withdrew 107k, and I earned a passive 11k income from my software I developed my year and 1/2 of FIRE, giving me a 96k net withdraw. The excess amount largely comes from 3k in extra taxes from selling the remaining Tesla and Netflix stocks I had, and roughly 3.7k in business expenses.

Largest components of the 107k spent:

• 29.4k taxes
• 28k mortgage
• 5.8k car payment / insurance
• 4.4k Business expenses
• 4.2k Health insurance
• 4.1k in vacation costs (Flights, accommodations, activities, etc)
• 4k home improvement
• 3.5k Utilities (Power, gas, water, sewer, internet, trash)

For this next years budget, taking my original 88k budget and adjusting for inflation: 103k. This is more than the recalculated 3.3% of the current invest-able net worth, so it is nice to be out of that situation.

Life

Now after completing 3 years, this finally feels normal.

I continue to spend a large amount of my free time on niche app development. Lately I’ve certainly allowed this development to take up a far larger percentage of my time than I would have preferred. I’m nearing the release of my second product, and it’s taking a bit of push to make it across the finish line. This still is nothing in comparison to the crunch I endured when in the industry. The work is also far more interesting and I have a much larger personal interest and investment in what I’m doing.

I had hoped to do more volunteer work, but that has basically fallen off as I just don’t have the time for it. After this next release, I plan to take some time off to do that kind of thing before starting whatever next personal project I come up with.

I also still have the ability to interject this larger than preferred work schedule to take breaks to bike, climb, hike, ski, etc. when it is most ideal to do so. As a result, I continue to be in great physical and mental shape with minimal effort.

Wrap-up

I end this 3rd year of FIRE feeling more comfortable than I did after the 26% drop in NW I had in my second year. While the individual ups and down are unforeseeable, they are all falling within the expected overall path. The next few years will continue to be the most critical to this FIRE plan’s success. Let’s see how this continues...

I hope this was helpful or interesting for some of you. Feel free to ask me any questions and I´ll do my best to respond for the next few days. After that, I won´t log on to this account until another check-in next year.