The State of the Bear Cave – December 2016
Welcome to another monthly edition of The State of the Bear Cave where we share our current progress to financial independence. Our goal is to retire by the time our daughter turns 3 in a little under a year and a half. You can find all of our current numbers over in our financial independence tracker in our tools and research section.
State of the Bear Cave
Overall the Grizzlies had a great month. The confluence of a few things this month pushed our time till FI down significantly. A large traunch of my stock options vesting this month, great performance in the stock market, and some appreciation on our house all combined to push our time till FI to 2.9 years. A piece of that reduction is due to the spike in income so it won’t all last, but a very solid month at the bear cave.
Overall we continued to do well on expenses. We continued to keep everything outside of housing and childcare to below $2500. Which means we’re still on target for our post move budget of around $30k. There will be some puts and takes with the move. For example, we will still have property tax, but our food budget outside of the bay area will be MUCH lower, and a greatly reduced dry cleaning bill.
|Student Loan Interest||$0|
|Home Owners Insurance||$0|
|Cleaning Service/Lawn Care||$230|
Stock Options (or what to do with a windfall)
The big event this month was on the income side. A BIG chunk of my stock options vested this month: an additional $29k after tax in a single month. This is obviously a lot of money, and it gives us a perfect opportunity to talk about how to treat a sudden windfall like this (either expected or unexpected).
All too often you hear about folks taking a sudden influx of money and doing crazy things: buying a boat, buying a new car, etc, etc. If you didn’t need a boat before the sudden windfall why exactly do you need a boat now? Same thing with a fancy new car? For some reason, you were able to be perfectly content in you life before you received the sudden influx of cash. What’s stopping you from maintaining the same lifestyle and buying something even more important: your freedom.
This is exactly what the Grizzlies do with ANY larger than expected influx of money that falls outside our normal salaries (which we also save a ton of): stock options, bonuses, gifts, cash back from credit cards, etc. etc. We immediately transfer the full amount into our Vanguard Account. There’s no debate, no discussion of what we could buy. Extra money is saved, no questions asked.
The other big event this month was another recorded uptick in the value of our house. Nothing special here, I just updated my valuation based on the current market conditions. I use a pretty simple, and somewhat conservative heuristic. I take 3 different valuations: the Zillow Zestimate, the Redfin Estimate, and my bank’s current assessment. I take the lowest of those three and subtract 10%. That’s the current value I record here. Will we be able to sell for more than this? Possibly, but I feel being conservative here is prudent.
- Overall, expenses are on track, they’re still far higher than our retirement goal. But almost all of the delta is now due to childcare, mortgage interest, and sky-high property tax. All three of which will be eliminated or reduced significantly post financial independence.
- Our net worth shot up by about $150k. A combination of housing appreciation, stock options, and market improvement contributed to the increase.
- We’re at our lowest “time to FI” metric ever, sitting at 2.9 years. This will drop quite a bit more when we’re finally able to get rid of the housing and childcare costs.