It was a good month for our investments across almost all asset classes as our portfolio value jumped 4.8% in just the past month. At the same time we had a very good month on the spending front, dropping our average monthly expenses by $90. This took our assets from 15.3X to 16.4X annual expenses in the course of just one month, finally making the graph look a little nicer again!
Crossing the Line
When starting out investing, the amount that you save is by far the most important determinant of your net worth when tracking on a monthly or even yearly basis. If you have only $10,000 or even $100,000, a 10% gain or loss in the market is almost unnoticeable if you are plowing substantial contributions into your investments regularly. You can simply buy through all but the biggest up or downturns and pretty much always see steady progress. However, you at some point will cross a line where this is no longer the case.
Once you obtain a substantial net worth, market fluctuations will be the primary determinant of which way your graph is moving. We have crossed that line. Over the previous 4 months, we have been continuing our regular investment buying schedule (actually adding even more per month since September) and yet we saw progressive major drops in our net worth. This month, we continued the exact same path and saw the graph take a big jump upward.
For a couple of control freaks like ourselves this is a bit of a weird transition. On one hand, it makes us feel very good to know that we have built the capital where the gains in a single good month like this one could possibly sustain us for an entire year. At the same time, it is a bit like being caught in a riptide in the ocean. We see that we have little control over the direction we are being pulled.
We know we have to simply stay calm and ride the waves whichever direction they are taking us. It is now a matter of simply trusting the processes and plan we have developed.
Trapped In Comfort?
Another of the unique thoughts to someone working towards early financial independence that we have been discussing recently is the idea of being trapped in comfort.
I regularly follow the blog Slowly Sipping Coffee. Mrs. SSC has been chronicling the process of layoffs within her company and thinking about options if she lost her job. Recently, she posted how things finally played out. Spoiler alert: “And I didn’t get laid off. And I am disappointed.” I would assume that at least 90% of Americans who cling to a paycheck to paycheck lifestyle couldn’t comprehend reading a statement like that, and I’m sure more than a few would get resentful or even angry reading it. However, I get it completely.
I am not one of those people who want to retire because I hate my job. I am a physical therapist. My work is ofter very rewarding. I work with different amazing and inspirational people every day. I work in a fun environment and am compensated very well for doing it.
However, I also don’t love my job anymore. The amount of time required to perform aspects of my job that I don’t like such as doing paperwork are massive. The one part of my job I do like, working directly with patients, requires me to keep a schedule and does not allow for freedom of my time.
I simply like my job. I spend every day not hot nor cold, but lukewarm. So should I just quit?
I personally think not. We know that the grass is not always greener on the other side. After looking at the big picture we know that we are choosing the path that makes the most sense to us on many fronts for long-term lifestyle while living a pretty decent short-term lifestyle in the process. We therefore plan to stay our course.
We however also know that we have positioned ourselves financially where we would be fine if one (or even both) of us lost our jobs. Losing a job could even be a good thing because it would force us to take on a new challenge that we may like and/or benefit from even more. Being let go would make a decision that we deep down want, but aren’t ready to make on our own.
So while much of the world may look at Mrs. SSC as crazy for being a bit bummed for not losing her job, I just wanted to let her know that at least there is one other crazy person out there that relates. Here’s to hoping we can both lose our jobs soon! Until then we will continue on with the admittedly first-world problem of being trapped in comfort.
A Little Light In The “Black”!
Almost daily, we are bombarded by spam from companies telling us about the next greatest ever, limited time only, must buy now offers. When I saw a message in my inbox recently from REI, I assumed it was another one. I’m not sure what prompted me to open and read it, but I was pleasantly surprised when I did. In the e-mail, REI announced that they would be closing all of their retail stores on Black Friday to be consistent with their company mission to allow their employees a day to be outside.
I often times feel that as I write my criticisms of our hyper-consumer culture that I come across as some anti-capitalist, anti-American extremist. To the contrary, I am very pro-capitalism and pro-business. By investing primarily in stocks, I am banking the future of my family on this system. I feel captilism is the best hope for solving many of the problems that our society faces.
I don’t believe profit is evil. However, when people care ONLY about profit and are blind to everything else, I think it can become evil. I love to see people and companies make money by being innovative and bringing value to consumers.
I think that we need to support companies that do the right thing and help promote those companies. It is why I do whatever I can to promote and highlight Vanguard as a light in a sea of darkness that is our financial industry.
If you agree that REI is doing a good thing by pushing back on the Black Friday “Holiday” that is the biggest retail day of the year, then show them with your wallet if buying any outdoor products for yourself or gifts this holiday season. Help them spread the word about #OPTOUTSIDE. Maybe if other companies see that this can be successful, they will follow course and begin to restore Thanksgiving to a day of family and gratitude rather than just another day of shopping.
Have a great November! Feel free to share your progress and agree or disagree with any of our ideas in the comments below.