And as we're exactly seven years out from my fortieth birthday, it's time to check in on the crazy multi-year plan and see if we are on track.
The Plan for August 11th 2013:
Reality for August 11th, 2013:
Normally I fight the urge to check my accounts mid-month because, I figure, I can only do myself harm with this information by trying to time the market. But checking in on our plan for financial independence seems like a pretty good reason to break the rule. And it looks like despite our mediocre efforts, we're slightly ahead of schedule.
Rental Home Planning:
If you're interested in buying rental property and haven't yet read Brandon Turner's post from last week, definitely give it a read. Brandon gives some great approaches for finding a good deal in real estate, and the tips are helping us plan out how best to approach our rental home purchase.
We're currently heavy in cash, as we are planning to purchase a rental home in the next twelve months, hopefully in cash. I can almost hear the hair being ripped from the scalps of personal finance gurus as they read that sentence. But we are comfortable with the opportunity costs, just as others are comfortable with risks inherent with investing while still in debt. Different strokes, you know? Although I agree that over most time periods, you are likely to come out ahead by leveraging a loan and investing the funds. We're just not comfortable proving that truth with our own money and needlessly taking on more debt.
Plus, I like to think that being debt free allows us some freedoms & benefits that we wouldn't enjoy as easily if we had two mortgages and a bigger pile of investments. I'm already seeing how our debt free peace of mind is helping me perform better at work, to take calculated risks on my projects, and to be more confident in meetings with leadership. I'll never be able to quantify what (if any) additional compensation I might get from this, but my intuition is that a less-stressed, more confident worker will, in general, be better paid, all other things being equal. Additionally, my wife already has enough stress from getting her PhD; the last thing she needs is the stress associated with debt on top of that. Most importantly, we are happier being debt free. Peace of mind and happiness might not factor into financial analyses, but, at least for me, it's actually worth something: a lot more than relatively meager opportunity costs.
I know that taking a different approach that involved multiple mortgages coupled with more investments would likely get us to our goal of financial independence even more quickly. We could change the blog name to "Done by Thirty-Eight". But our approach is a risk averse one, because we want to be sure we don't hit a bad market and then not get to our goal until forty-two. We're fine with a slightly slower & smoother ride, I suppose. I'll trade the chance to get there early for some assurance that we just get there on time.
Thank you, sincerely, for reading and I hope you all have a great day.
*Birthday cake photo is from Matt Comi at Flickr Creative Commons.