Goals Update

Here is a progress report on some of the goals that I created for 2015.


Financial

Since I plan on reaching FI within four years I think that it would be good to lay out at least a basic framework of how the next 35 years might look. Even the best laid plans have flaws and need adjustments from time to time. Without a basic plan, success rates diminish so it I at least needed to put the FI ball in play. I think I came up with a conservative, attainable FI plan and will tweak it from time to time. This plan is not perfect, but it's a good start. As always any suggestions or recommendations are certainly welcomed.

Here is my FI Hybrid Model.

The Lending Club plan as I mentioned last month is a no go in Texas so I will look at some other ideas to diversify my income streams. I do qualify as an accredited investor, so that may open my options to some alternative investments. I still hope that Lending Club will become available to Texas residents sometime in the near future.

18K in forward passive income and 16k in passive income received is on track. I will continue to take it easy as I exhausted myself and my a lot capital last summer and fall chasing my 14.5k in forward income goal. It's too early to say, but I think my heavy investment in energy companies is going to work out pretty well. Once I make it past tax season, I will ramp up the purchases and hopefully the markets will provide some good opportunities.

Another financial goal I made some progress on last month was to improve the quality of companies I invest in going forward. I think my purchases in TD, CAT, and JNJ will help towards this goal. I plan to continue adding higher quality companies throughout this year. Also I sold my entire position in ARCP and replaced it with NOV.


Health Goals

My largest goals involve running and a lot of it. During the middle of last year, I reached a personal best of 6.2 miles or 10k. Shortly afterwards I suffered a high ankle sprain which sidelined me for two months and when I started running again in September, my right knee started to bother me. That has never happened before and while the pain disappears within a few days it comes back if I try to run over 3 miles.

Recently I decided to just keep running since the pain is more of a nuisance than an injury (so I think) and I felt my left knee starting to hurt. I'm pretty sure that this was caused my trying to compensate for my right knee. The following day both knees were really sore.

I plan on resting them a few weeks and then try a different running pattern. I am beginning to think running exclusively on the track is causing problems because of all of the turns that I have to make. This is just a hunch, but that is why I plan on running straightaways and on dreadmills in the future.

If I see no improvement with my knees, then no big deal. I will swim, bike, hike, or something else. What I won't do is do is give up on cardio as my blood pressure and lower standing heart rates are very important. Nothing can replace good health and of course that includes protecting my knees as well.

Turkey, tilapia, salmon, and a lot of green vegetables are being consumed regularly so without question my diet is improving.


Education goals

I read The Choice by Og Mandino which is about a man who gives up a great career in management for the opportunity to chase his passion for writing and spend more time with his family away from the chaos of the rate race.

Og also wrote an excellent book called The Greatest Salesman in the World which I have read many times and is an excellent book whether you are in sales or not.

I also read The Intelligent Investor by Benjamin Graham which is fantastic as well, but it is not casual reading. Also the copy I read had somewhat annoying commentary from Jason Zweig which I mostly ignored.

I found this website called Coursera which offers free online course covering a variety of subjects from many different colleges and universities. I am currently taking a course on Microeconomics and find it very interesting. There are music courses, computer courses, physics (puke), and many others. I will definitely look into taking a few more throughout the remainder of this year.


Fun goals

Unfortunately I haven't made much progress in this category, but I have reduced my work schedule from six days a week to five and a half. Today I left at 12:00 and spent the rest of the day relaxing and watching movies with my wife who was sick today....no really she was sick not just playing hookie. :-)

Anyway the Horns baseball season starts in a week or so and I look forward to making the short drive from Houston to Austin to watch a weekend series soon. There is nothing like being outside watching or playing baseball in the spring.


Professional goals

Everything is going great at work and the team is kicking ass. We increased sales by 8% over last January and net profit rose by 28%. It feels great getting the year off to a good start primarily because January can be a tough month due to weather, taxes, and possibly some economic problems in Houston due to falling energy prices. I have seen no effects yet.

Overall I think I am off to a pretty good start and plan on reaching a few more goals by the end of this month.

FIRE Hybrid Model

Here is a rough framework for how I plan on funding my early retirement.




In December I posted my 2015 goals and two of them are to create a hybrid retirement strategy and another (exponentially more difficult) is to start using the HTML button and improve my blogging skills.

As you may have noticed, I have been working on both of these goals.

I must admit I have even impressed myself with this chart shown above. I successfully jumped back and forth between the Compose and HTML buttons. I then proceeded to make surgical-like adjustements to both widths and heights within the string of code.

Then I successful managed to insert a (br /)command so I can start typing below the spreadsheet.  As I typed this last sentenced I just realized that you don't want to be in the HTML mode as you type that break command or you will actually create a break. Duh.

Who says you can't teach an old dog new tricks?

Hell I may just start hanging out in the HTML during all my posts. It's kind of cool in there....NOT!!

Ok so maybe I won't be getting a job as a programmer at Google anytime soon, but slow and I mean REALLY slow and steady progress is fine with me.


Anyway here are some of the assumptions that I have made to reach FI at age 47.

• First and most difficult is that I maintain a very high paying job during the next four years.
• Raise my yearly dividend by $2500 a year for the next for years. (With a cleaner portfolio)
• Accumulate $320,000 in savings outside my taxable portfolio. (This will be a MFer)
• I assumed an average of 2.5% interest rate over time on my savings. If it is less, that OK too
• Dividend growth rate of 3% (Conservative because I have bonds also)
• Begin accessing 401k using equal installment payments (72-t) at age 50.
• Delay social security until age 70 (if it still exists that is)
• I have also a assumed a 2% increase in SS. It certainly could be more or less.
• While I will only have 25 years in the work force I will have maxed the payroll tax contributions in half of those years so I feel comfortable at $1500/month at age 70.

Don't worry about the mule being blind, just load the wagon.

There are so many moving parts within this plan that it is most certainly will be altered a bit each year. In fact, I feel like Christopher Columbus when he first started his journey from Spain to America. Should he pack sandles and sun tan lotion or a heavy wool coat. I think that I have done a good job packing for all weather conditions with this model.

The one thing I do know is that I am heading west and if I have sunny weather and a nice strong breeze behind my sails that would be wonderful. If the waves are rocky and I have to use the oars during the entire trip, then fair enough. I am certainly no stranger to putting oars in the water and struggling against fierce opposition to reach my goals. Hell sometimes  a  few people have to be thrown overboard to lighten the vessel (I am referring to future expenses here, not real people).

Now that I have my FI voyage mapped out, I am excited and eager to continue on my journey.


Where are the life rafts on the cruise ship?


If you have ever been on a cruise ship, you know that there is an emergency training exercise which requires the passengers to head towards their designated life boats in the event of an emergency. When I get on the cruise ship I am all over this process. While my wife is trying to nap or worse find ways to spend money on things like massages, overpriced excursions, and on board souvenirs, etc. I am planning worst case scenarios knowing full well they won't ever happen. That's why she is probably napping? Oh well, what can I say....I am a pragmatist.

Hope for the best and plan for the worst is my motto.

Even the best laid plans don't always go according to plans. Like I mentioned above there are a lot of unknowns that can and most likely change things over the coming years. But then again, life is full of unknown pitfalls and opportunities and I will certainly embrace either as they present themselves to me.

The biggest potential problem would be a rapid job loss. This could result from dissatisfaction with my job performance, the company being sold, a dramatic change in economic conditions, etc. These are all real possibilites and would cause me to  quickly change course with my FI plans. Health conditions are certainly another factor. I could also simply choose to not continue with a 6 day a week, 10-12 hour daily schedule. In fact this is probably more likely than the first set of problems I mentioned.

Other jobs and side hustles could fill the void that would be created in the "Cash Withdrawal" column. There are a lot of opportunities to bridge the divide between income and expenses and I am not overly worried about this problem.


Living like a third world refugee is absolutely not in my FI plans


I will NOT retire eating Ramen noodles, canceling my cable, keeping the heater at 60 in the winter, living without AC in the summer, spending hours cutting coupons, playing board games at home for entertainment, wearing 30 year old suits, mending socks with holes in them, etc.....but I would without a doubt and with zero hesitation do exactly these things which I would HATE and much more dramatic things if necessary.....ALL HELL would have to break loose though.

Enough with the gloom and doom talk. FI is awesome concept, but living on $1500 a month for the next 40 years is not what I considering living the American Dream. It wasn't 20 years ago when I was 23 years old starting out in life, it isn't at 43, and it damn sure won't be when I am 63.

And yes I realize that working 60-70 hours a week is equally shitty and I will not continue down the fucked up path much longer. I just need to find a healthy balance between these two extremes

If I have offended anyone, it was not my intention. I do realize that we all have different wants and needs and that some of my career decisions seem without a doubt seem equally idiotic.

I just hate seeing potential wasted as it can result in regrets later on in life.


Isn't this a dividend FI blog???

As a side note, I truly would have liked to create a dividend only retirement plan, however I just don't have the time to build that large of a portfolio and I believe that it would be too inefficient for me.

Waiting another 10 years so I can have a $1,200,000 portfolio creating $40,000 a year sounds great in theory but is not practical in my view. I know I know....I may be forced to turn in my Dividend Communtiy Member badge. I really like it though.

Dividends will still be large part of my overall strategy, although I just don't see the benefit in having a 1.2 million dollar portfolio at 53, a 2.5 million dollar portolio at 63, and 5 million at age 73. This would be overkill in my opinion and a lot of the capital would end up unused or underused.

I also like the idea of my retirement airliner have four separate and independent engines rather than one engine that could malfunction or worse just stop. The cash withdrawal and 401k withdrawal components provide the shock absorbers that hopefully will allow me to sleep well each night.

Also the idea of having dividends, cash, and a small withdrawal program from my 401k seems to be a safe, balanced approach that will give me freedom sooner rather than later.

At this point I am open to all POSITVE FEEDBACK, suggestions, comments, questions, compliments, complaints, hostile discourse, and most importantly encouraging words.......and did I mention POSITIVE FEEDBACK?

MDP

CORRECTION

I just noticed that I show $10k a year taken out of my 401k after the age of 70. It will obviously be much higher than that as my current balance is $244k and the IRS requires a withdrawal per year based on life expectency. I obviously don't know what the balance will be 27 years from now or what the laws will be, but I should definitely increase that yearly number.

2nd CORRECTION

Thanks to a reader's comment I was informed that I cannot start withdrawing money from my 401k penalty free at age 50. Apparently age 50 is for IRAs and 401ks distributions have to begin at age 55. Why is there a difference between the two. I don't know and it seems pretty stupid to me. Anyway I have changed my 72t distributions to age 55 to reflect this change.  Hopefully I don't even need to use this additional income as age 55 as I hate dealing with anything related to additional tax confusion.