The Year Behind and Year Ahead

That’s me, day after day with the same brick wall. OLY?

The New Year has rung in a severe case of One-Less-Year syndrome as opposed to the One-More-Year syndrome that seems to afflict many as they approach their FIRE target. Mine has manifested itself by questioning, how much passive income I really need, how much active income I intend to make after FIRE, and most of all, what I need my life to be right now.

Some things feel as if they can’t wait, like let’s just get on with my 2nd Act already. Most mornings, I wake with the feeling that I am not living the life I was intended to live. But here I remain, because I struggle to get a true picture of what I want my future to be.

For now, I continue to reduce the amount of financial “obligations” in my life in an effort to strip away all the noise that keeps me from appreciating what my life is now. By decreasing the need to hang on to work that is unfulfilling, I can free up my mind to consider more important reasons to keep working… or not.

I take it one year at a time and re-evaluate. Did we meet our goals last year? Do any adjustments need to be made? Do we think that we can sustain a low-spend lifestyle after FIRE?

Again, one year at a time. Let’s see how we did.

 

 A Year in Review

In 2017, we spent $39,664, a total which includes the home mortgage. Without the mortgage, our core expenses cost us $24,073.

Even though we over spent our original budget, due in large part to home maintenance costs and a slight overspend on vacations, we had a very frugal year.

 

2017 Total Expenses versus Budget

Generally, I set our initial budget low with minor contingency money. When we have extra money coming in through the art business, we tackle home projects that drive our expenditures up temporarily. By addressing home maintenance issues now, before FIRE, we reduce the expenses for these projects later.

In 2017, we spent 4 weeks traveling to New York City, Oklahoma (twice!), Texas, and Southwest Colorado. By utilizing credit card reward points, our thrifty camper, and free national park days, vacation expenses were only $3,243. This is a far cry from the $10,000 we used to spend on travel!

 

2017 Savings versus Goals

We saved $81,795 through investments vehicles such as a 401k, Health Savings Account, Traditional IRA, and Vanguard index funds. We earned $5,936 in dividends which were automatically reinvested. The dividend earnings popped us up over our savings goal of $83,042, however dividend payments were not included when I set these goals.

 

A Year Projected

Our savings goal for 2018 is $92, 190. This total includes estimated dividend earnings of $6,000 which will be automatically reinvested.

After a reduction in bonus and base salary over the last few years, I expect my company will reinstate normal incentive payments this year. We never spend any windfall. Instead all extra money gets invested in our brokerage account.

Additionally, the IRS has raised the maximum contribution limits to certain savings vehicles; $18,500 for 401k (individual) and $6,900 for HSA (family). We have increased our contributions to take advantage of these tax-deferred accounts. We will also contribute $5,500, the maximum contribution limit, to the traditional IRA.

All remaining income will be funneled into the Vanguard brokerage accounts and invested in VTSAX (low-cost index funds). Based on my projected income for 2018, we should save $43,675.

When possible, I will add extra money into cash savings to build up the emergency fund, just in case I decide to pull that FIRE trigger early. My company just announced a $350 per month COL adjustment to be added to our paychecks. Maybe this money will go directly to the savings account.

 

 

The 2018 budget is $34,506 and includes home mortgage and core expenses. It excludes business expenses, health insurance, and taxes.

I consider health insurance to be a benefit provided by my company, which offers a very generous package. Any associated costs of health insurance are a condition of my employment and are deducted from my paycheck. This year, I will spend $1,092 to cover medical, dental and vision expenses for a family of three.

If we add health insurances costs to the 2018 budget, our total spend will be $35, 598.

 

Business Income versus Expenses

The art business remains an experiment in supplemental income. Generally, the IRS qualifies an activity as a business if it is carried on with the reasonable expectation of earning a profit.

 

Mr. TJL puts in a ton of effort to make sure his business remains profitable. This year we created a business website to sell his art, attempted a little online advertising, and gained more commissions through general exposure to his work.

We continue to brainstorm ways to bring in more income, without adding expenses, like offering welding classes, art shows with low to zero commission fees, and display in more galleries regionally.

This summer we hope to add a couple of summer festivals to the docket to see how profitable those can be. We also need to be more diligent about marketing.

Despite our efforts so far, the art income has stagnated, although the business is still profitable.

I would like to see the business bring in about twice as much as it does currently. To see this kind of increase we will need to upgrade the electric to the garage and purchase a Computer Numerical Control (CNC) plasma cutter.

Ideally we will upgrade the electrical this year, at a cost of $3,000.

A CNC plasma cutter costs anywhere from $5,000 to $30,000. Instead of purchasing, we will look into leasing time on one of these machines at a local metal shop until the business gets enough work to justify the investment.

 

Anyone else suffering from OLY Syndrome? 

Jump?

 

 

 

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5 Responses to The Year Behind and Year Ahead

  1. TTR says:

    Me! I am like “are we there yet?” Lol

    Good work on those savings and nice to see the cost of living adjustment from your company!

    • ska@thejollyledger.com says:

      Yeah, I forget how much I have accomplished. I just want to skip to the end. I feel so ready to jump, but we really aren’t ready yet.
      Funny about the COL adjustment, I wasn’t even excited about it. The money just doesn’t interest me anymore. I wish they would offer me more free time instead.

  2. Raman K says:

    Great work last year. I am not quite there at the one less year point but hope that it would happen sooner rather than later. Good luck for this year’s targets!

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