One year later – Check in & graph [M 39: Net worth 2.6M → 3.7M]

Disclaimer/Warning – I made my money in the tech industry with a higher than average wage. I know this is not fair and this triggers some people, please move on if you are not interested in on progress of a high wage-earner executing FIRE.

Recap

Last year, I made this post when I left traditional employment (I’m not a fan of really calling it retirement at this point). I’m not going to rehash my process up to leaving traditional employment, 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.

The Overall Numbers - One year later

I stopped contributing to my my NW through employment, started post-employment withdrawals, and saw the largest year-over-year increase to my NW... over 1M. Huh.

A graph of my NW over the last 5 years can be seen here. The red doted line is the point of where I left employment. Clearly this last year has gone better than I had dreamed, and it came a key time, the first year has the largest impact on the future health of the savings. I wasn’t sure how to represent withdrawals on the graph, but they are draining from the bottom category first (private contributions, leading it to go below the zero line).

There is also a new category of net worth on the graph, housing. Up to this point in my journey, I had not bought a house. I hadn’t necessarily decided I was going to do so after FIRE’ing, but, growing rental prices had me concerned that at the current trajectory, my current MCoL city would price me out, and I would have to move after several years. I also had growing concerns of inflation (which now seems to be justified). Locking in my monthly housing costs, the largest portion of my budget, seemed like a smart move. You may notice that my NW had a higher housing portion in Q1 2021 than Q2. Given my lack of transitional income, I had taken a greater starting cash position of the house, before settling on an 80% financed position, in order to get an optimal mortgage rate.

I’m keeping my allocations largely the same as I outlined in my first post. I still have 2.5 years of living costs in cash/bonds as part of my “modified bond tent” plan. I’m still keeping 10% into speculative investments, and my picks for the last year have worked well (yes, it’s hard for that not to be the case in the current market).

Withdrawals

I totally blew past my annual budget of 87k, withdrawing 117k. I sold off a large position of TSLA and had a larger tax bill that accounts for the difference. TSLA grew to a value where I viewed it as overvalued, and I wanted to lock in my gains. A larger than expected tax bill is not something I had originally budgeted or foretasted in my models. But I’m going to basically view a larger tax bill combined with a much larger than expected return for a year as “just fine”.

At this point, I’m not adjusting my budget based on better-than-expected 1st year. So with 2% inflation I have a budget of 89k for this next year.

Life

I never really had a point of it “hitting me”, I just slowly grew accustomed to not working my traditional job. I don’t miss 90% of the job, but I do miss some of the people I worked with. Overall, I’m much happier than I was a year ago, and far less stressed.

Mid-COVID crisis was a less than ideal time to move from my HCoL to my new MCoL city. I’ve moved several times in my life, and this has been by far the most challenging time I’ve had trying to establish a new set of friends. But as things are finally recovering, so are the social possibilities. I hope to greatly improve this over the next year.

I’m a driven individual, so I wasn’t able to just quit working and just play games, watch movies, and travel. After a few months off after quitting, I quickly ended up spending about 40 hours a week on a mobile app. It’s a niche app that I find fun/challenging to build, and likely won’t substantially make an impact on my finances (that is not the point). Its pulled in an extra 10k of income, which amounts to $6 an hour, hah. I’m using the extra money as a “budget bonus” to fund house projects.

As mentioned, I bought a house. It was largely a fixer upper, but hey, I have the time. For the last ½ year I’ve been doing about 20 hours a week fixing up the house. I don’t have a ton of experience in this type if thing, but now is a great time to learn, there are countless YouTube tutorials that have helped guide me.

I’m also now in the best shape of my life. Roughly 4 times a week I take a morning or afternoon and climb, hike, bike or do whatever fun outdoor activity that is both fun and great for maintaining a healthy life.

Wrap-up

Once again, I’m not really sure what I’m looking to get out of this post. Mostly I guess it’s a good exercise that forces me to reflect on the last year. Hopefully it’s interesting or of value to someone on this subreddit. I'll answer some questions below, and do an update in another year.