February 2015 Financial Update

February’s headline: “Massive net worth growth and tiny expenses”.  Our net worth shot up $74,000 thanks to robust returns in our investment portfolio.  We managed to spend less than $1,000 because two winter storms kept us partially housebound for two weeks. And we simply don’t spend a lot of money in general because we already own just about everything we need or want.



A slow month for our dividends and interest.  Our investment income was under $100 for the month.  The end of March marks the start of the first quarter dividend season from our mutual funds and ETF’s, so we’ll see a lot more income in this category in next month’s income report.  For all of 2014, we received $29,383 in dividends, which was up significantly from the $22,300 of dividend income during 2013.

Blog income, shown as “other income” in the chart, was splendidly higher than normal at almost $1,800.  December and January were actually very busy months at Root of Good and that traffic led to a decent bit of advertising income.  Thanks, clicking people of the internet!

I expect to make around $600-800 per month over the long term from blogging and freelance writing, and February did not disappoint.

I received $100 in random rebates from different sources (shown as “deposits”).


If you’re interested in tracking your income and expenses like I do, then check out Personal Capital (it’s free!).  All of our savings and spending accounts (including checking, money market, and five credit cards) are all linked and updated in real time through Personal Capital.  We have accounts all over the place, and Personal Capital makes it really easy to check on everything at one time.

Personal Capital is also a solid tool for investment management.  Keeping track of our entire investment portfolio takes two clicks.  If you haven’t signed up for the free Personal Capital service, check it out today (review here).



Now let’s look at February expenses:


At $903, we enjoyed a month of very low spending well below our target of $2,700 per month (1/12th of our $32,400 per year early retirement budget).  The last time we spent less than $1,000 in a month was June, 2014.

Big, lumpy expenses like property taxes, insurance, and our home renovation lead to the occasional outsized monthly expenditures, but we didn’t have to pay for any of that stuff in February.  Since February only has 28 days, we also spent slightly less than the 30 and 31 day months.  The short month plus no large, lumpy expenses make it easy to spend very little.

Our grocery expenses represent half of our monthly spending at $443.  This is lower than our long term average monthly grocery expense of around $500.  I spent $300 on groceries within a few days in February so I thought I was going to spend way more than we usually do.  Guess not.

I visited the Asian grocery store and picked up a 50 pound sack of 2015 new crop Jasmine rice plus a ton of other staples from the Orient like sauces, spices, curries, rice noodles, bean sprouts, rice wrappers (for spring rolls), and meatballs for pho.  For what some people spend on a single meal, we can stretch into a week’s worth of spicy tasty edible treats.  So far these little guys haven’t wormed their way into our diet (found next to the frozen pho meatballs in an Asian grocer near you):

Tempting. I bet they are creamy.  Chock full of protein and only 43 calories per serving.

Wrapped up in our rather modest grocery budget are little treats like this chocolate truffle and peach champagne combo.  This plus the next photo shows how millionaires celebrate Valentine’s Day for under $10.

If you see these chocolate truffles at Aldi then you need to buy every box they have. Incredible.


Flowers from Aldi. Still looking nice 3 weeks later. Mrs. RoG said she prefers roses but I thought these looked prettier. Oh, and snow.

That last picture also shows how I passed the time on a cold, snowy day.  Our internet was out all day so I had to fall back to analog reading material (free from the library).  Steinbeck’s “Tortilla Flat” didn’t disappoint.

The snow kept the still-working (for now) Mrs. RoG from driving to work for a total of a week.  The snow saved us a decent amount on gas and tolls (only $61 spent on gas in February).  Since I only drive about 80 miles per month now that I’m retired, I ended the month with almost half a tank and didn’t need to refuel in February.

Automotive expenses of $32 included new wipers for Mrs. RoG’s Accord (they take about 2 minutes to change), two quarts of oil, and a $10 windshield wiper fluid spray nozzle replacement.  The old nozzle was clogged and I broke it while trying to remove it.  A little DIY is how we keep auto costs cheap.

Restaurant spending of $32 included carry out pizza two times.  Mmm pizza.


At $3,452 of year to date spending, we are almost $2,000 under the $5,400 budgeted for the first two months of 2015.  It’s a great way to start out the year!  There aren’t any major expenses on the horizon.

In January, I signed up for a pair of Chase BA cards to get another 100,000 BA Avios points (= how we fly for free).  That means a $2,000 minimum spending requirement per card.  I might be buying a bunch of gift cards and prepaying utilities in March and April since we probably won’t hit $4,000 of natural spending by then.  Check out all of the current credit card deals if you want to cash in on free travel too!


Net Worth: $1,503,000 (+$74,000)

First off, I wanted to celebrate busting past the $1.5 million mark.  I feel like we just reached the top of the Financial Independence summit.  The view from up here is amazing.

We lost $8,000 in net worth during January.  We gained $74,000 in February.  That means we’re up a net of $66,000 for the year so far.  To put that amount of money in perspective, it’s two years of our early retirement living expenses.  Will the gains hold in March?  Who knows.  The value goes up and down.  Gaining $74,000 is only slightly more pleasurable than losing $74,000 (which almost happened in September 2014).

Since we tend to spend between $1,000 and $3,000 in most months, a $74,000 gain is almost meaningless in terms of day to day spending.  We haven’t made any changes to our spending habits so far.

At some point, we might decide the portfolio is high enough to start spending more money, and that probably means more fun money going toward vacations.


Since the stock market is doing really well right now, I have placed a few limit orders to raise some cash to fund our 2016 living expenses.  Buy low, sell high, right?



How did you do in February?  Did you catch the big uptick in the stock market?  



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  1. Hi, Justin…

    As your net worth swings up and down with the stock market, do you adjust your “safe withdrawal amount” accordingly? And is your monthly budget “allowance” a function of that safe withdrawal amount?

    To illustrate, in my case the answers are “yes” to the first question and “no” to the second. But that is because my passive income so far exceeds my basic living expenses that I have no need to adjust my monthly allowance downwards to match any kind of dip in my investment income for the month. Or, rather quarter. And, even though I do adjust my safe withdrawal amount “on paper”, in reality that has yet to have any effect on what I actually spend.

    1. Right now, I’m sticking with my $32,400 retirement budget. It’s not really based on our portfolio value but rather a bottom up budget based on what we have spent historically. I want to make sure our spending doesn’t creep up or change in unexpected ways without us noticing it and accepting that we want to spend more or differently. We don’t try really hard to stick to any budget each month, but rather remain cost-conscious for every spending decision (defeating the “latte” factor if you like).

      As for safe withdrawal rates, we are in excellent territory for safe withdrawals right now and could spend more. $32,400 is only 2.7% of the ~$1.2 million investment portfolio not allocated for other expenses (higher kid costs during teen years, braces, college, and a few other lumpy expenses). Our portfolio could drop to $800,000 and we would only be at a 4% withdrawal rate, so we have a lot of flexibility in that regard.

      This year, I hope to explore all of the different retirement calculators (and report back here) and look at alternate spending scenarios and rules. This will give me a little more confidence as to how much more we can spend each year without risking the depletion of our portfolio. Not that we would necessarily spend all of it every year, but it’s good to know for peace of mind.

      I’m also kind of winging it. 🙂

  2. Yup, February was a good month for my investments as well. Because I only have 30k invested right now, I “only” saw an increase of roughly 900, but that’s still more than half of my expenses for the month, and it’s also about a third of my regular monthly income; so I guess I had a 33% raise this month. Of course I’m working on investing more, and more, and more… I’m not financially independent just yet!

    1. That’s awesome! When we started out saving, those months where our investments made as much as our paychecks (or close to it) felt awesome and reinforced the fact that over the long term, we would see real gains from our investments that would lead to FIRE.

  3. The stock market was up in February?! I should check into that

    Congrats on a great month. It is pretty cool how if you continue to LBYM after you are FI, your cash hoard just continues to grow and grow and grow

    1. Apparently it was up. 🙂 I think our international investments went up more than our US investments, but I haven’t looked that closely.

      Yes, the money keeps growing all by itself. Like a fungus or mold. Except good.

  4. Could you write a post on how much you invested each year for us young folks starting on the FI journey? Sometimes it’s hard to figure out how much to invest/save in order to get to FI.

  5. ROG,

    Awesome month! I am jealous of your grocery bill. My wife and I typically spend $1000 a month at the grocery store. To be fair, that includes housedhold products and pet supplies as well, but I would love to cut it a few hundred per month at least. I keep leaving the coupon section out on the kitchen table on Sunday mornings before she goes shopping. Unfortunately it magically disappears into the recycle bin. Maybe I can try some Jedi mind tricks.


    1. I unwrap the Wednesday sales paper like it’s Christmas morning. I flip through three local grocery stores (food lion, kroger, and Aldi) and figure out what’s on sale where. This usually results in Aldi being the best place to shop for the week and the others not being worth it to make a special trip. No coupons though since they don’t take those for store brand goods and fresh meat and produce.

      I’m also in charge of grocery shopping and I use my Spock-like emotionless logic to optimize the grocery purchases to minimize expense and maximize flavor. Mrs. RoG reads these comments so I won’t say what happens to our grocery bill when she goes shopping with me (because I enjoy her company while shopping! 🙂 ).

  6. My investments went up by about $35K just last month and my net worth is now past $750K. It all seems very surreal in an incredibly good way. I looked at my first month of investment statements where I socked away all of $100…I remember wondering how on earth I’d be able to retire someday. For anyone out there in the early stages of saving, just keep socking the money away, don’t touch it, and invest for the long run. Fortunately I have a pretty low-stress job and can wait to retire in about 4 years when the kids are done with school.

    1. Sounds like you’re in a great position and don’t have a long way to go to reach early retirement. 🙂

      Thanks for the wise words on sticking with the plan and continuing to sock away money. I too remember that first account I opened at vanguard with $3,000 (the minimum at the time) and then struggling to scrape up $100 or $500 here and there to add more to it. Getting to $100k or $200k is so much harder than getting from say $600k to $700k.

      1. Yeah, it seemed to take forever to get to $400K, and then beyond that the power of compounding definitely took over.

  7. Amazing job keeping the expense under $1,000. Congratulation on busting through the $1.5m threshold. You guys will be a multi millionaire soon. 🙂

  8. Sounds like February treated you pretty well. I saw similar increases compared to January as well. February should be a low expense month for almost everyone given its shorter duration.

    I have not yet signed up for the British Airways cards, but have them on the list for this year. Working on my wife’s Barclays Arrival and my Ritz Carlton card right now while on vacation in Hawaii.

    1. Ritz Carlton – thanks for the reminder. I remember looking at that over a year ago before I got the Barclay arrival card. Excellent hotel rewards program and I recall they offer 2 for 1 redemptions so you get up to 18 nights at the lowest category hotels for a single sign up bonus I think.

  9. Pretty good that your portfolio is continuing to grow even as you are retired. You may have mentioned it, not sure if I missed it, but do you save for your children’s college or intend to help with college costs? Also, is it hard to apply for credit card bonuses if you are “retired?”

    1. College – we have 529s for the kids with around 2 years of tuition each (currently $8.300/yr at excellent local State U’s). Beyond that, we’ll pay for what is reasonable assuming the portfolio continues it’s slow march upward. We have 8-9 years before the oldest 2 kids are in college and 15 years until the youngest starts.

      We also expect to receive some need based financial aid because our income is rather low and most of our assets won’t count against the FAFSA/financial aid formulas (house and retirement assets don’t count). Any grants or scholarships plus loans should cover what we can’t, and there’s plenty of room in the portfolio for a little extra help as necessary.

      I have used household income which is still right at $100k gross between Mrs. RoG still working, my freelance writing, this blog income, and taxable dividends and interest. When retired, that number will drop to $40k or so, but should still qualify us for all the good offers since it’s mostly based on credit score. I’m unsure as to how putting down “retired” versus “self employed” impacts the approval decision. I’m technically self employed since I do have a very small self employment income.

      1. Had to deal with the whole “retired” thing last year when I decided to go for a 1.5% home improvement loan from our bank (it was to replace our motorcycles but they wouldn’t have cared.) Even though we have no debt, significant assets, and I pull in a goodly amount from investments, all they really cared about was my wife’s pension income, which isn’t even very much. I asked them why they look more kindly on someone with a paycheck, which they could lose tomorrow, versus someone who has assets that will be there tomorrow. They agreed it doesn’t seem right but it is the bank’s policy. I finally walked away and told them I didn’t need their money. So you might see some “prejudice” when the wife stops her gig.

        1. I’m interested to find out. The credit card applications usually ask for income and employment type. I’ve seen some that say “income must be over $12,000” or $15,000. And there’s always the reconsideration line you can call if you’re turned down. I would hope you could escalate to a manager to get them to manually approve you if you can show a $1M+ balance sheet and verified $30-40k in dividend income or whatever.

  10. Wow those numbers are huge, impressive that your net worth continues growing even when you’re retired. I’ve been wanting to give Personal Capital a try but looks like it doesn’t support us funny looking Canadians….

  11. First, very impressive gain of $74,000 in one month. That is close to the amount I hope to increase my net worth for the entire year.

    I love that you get it. My investment rule # 2 is Sell into Strength. Most people don’t get this…or they get it but can’t seem to follow it.

    You know you could had just put up your net worth screen shot with one sentence : “I am root”

    That would had been bad ass!


    1. I’m trying this whole “raise cash while times are good” thing out. I set a limit order just a bit higher than the current price, so if the market jumps up another few percent it should execute. We’re good through 2015 and well into 2016, but it would be nice to have 2016’s cash on hand now too. If not, no big deal.

      I like that idea “I am root”. Maybe a future blog post will have 1 picture and those 3 words. The $2 million mark? 🙂

  12. Fabulous month for you! Nice! I am so impressed by the sub-$1,000 spending for your family of 5. That is seriously awesome. You know we struggle to do that with just the two of us (plus Hound). Your grocery costs are nothing short of awe-inspiring. And, huge congrats on hitting $1.5M!!!

    We’ve been enjoying our analog library options of late as well. Not only do we delight in the books, but the walk to the library, hanging out at the library–it’s a whole frugal outing for us :)! Our library allows food and drinks, so Mr. FW wants to take coffee and make it a frugal coffee shop for us.

    1. Nothing broke and no major bills came due in February, so it wasn’t too hard. We’ll see if we can do it again in March. 🙂

      Food and drink in the library? Sounds like a frugal coffee shop to me! I hope libraries don’t evolve away with the shift toward digital media. I’m about to head over to the library in a few minutes for their free children’s story time and then go to the community center’s free toddler open playgroup. Maybe hit the free outside playground if it warms up above 50 like it’s supposed to. I just wish I could walk the mile up there with my 2 year old, but the gentle bumps in the stroller put him to sleep. Hopefully he can manage the mile walk on his feet soon.

  13. Nice–ours bumped about $18K last month. I’ve been using Future Advisor, but am thinking about switching to personal capital.

    Just when i thought I couldn’t cut expenses much more, I ended up splitting a Netflix subscription with my brother in law to save $4.50 each month. Try to remind myself (especially as the stash grows larger) that no matter how small the reduction in expenses, it it almost always a worthwhile endeavor over time

    1. Love the netflix splitting. I just talked to a friend that splits hulu, netflix, and hbo online (or whatever it’s called) plus another service between herself and her sisters. So maybe $8-9 for unlimited entertainment options on demand. Very nice.

      In your case, you’re saving $50/yr and your bro in law is saving $50/yr. Some would say “It’s only $50”. I say “It’s $50 free dollars”!

  14. First way to go on your net worth. Very impressed. Second: re the accounting do you figure into your annual expenses the fact that one day you will need to replace your car, paint the house, new roof, vacations etc… As and example I set aside $400 per month for a “new car” fund; $500 per month for vacations; $300 per month for a home fund for a new roof one day etc…. So when the time comes I have it in the fund. I keep these funds in a money market account. Otherwise for example one month you will need to say our monthly expenses were $11,000 as we bought a newer car this month. Or this month our expenses were $10,000 as we took a European vacation along with our normal expenses etc…..

    1. Thanks!

      I assume replacement for all of those items you mentioned. I don’t keep the money in a separate fund, but instead explicitly budget for it in my $32,400 per year budget. That includes car replacement, roof replacement, big lumpy vacation expenses, etc.

      In practice, this means we’ll have months like February where we spend under $1,000, then months like December 2014 where we spent over $10,000 (which included $8,700 for a major exterior renovation consisting of new siding, new windows, and major roof repairs). Our overall spending for 2014 was $34,500, so very very close to our budget in spite of the lumpy $8,700 expense at the end of the year.

      We might buy a newer car in the next few years for around $10k or so, and that year we’ll probably have higher than average expenses. But in 2015, we won’t be buying a car or replacing the roof or the siding or anything, so we will probably have lower than average expenses. But over time, I’m expecting to hit our target budget pretty close.

      Here’s an article on how I developed a roughly $1,500 per year “home replacement expense”. We don’t put that $1,500 per year into an account, but we acknowledge it’s a real expense that will occur to some extent every year (we replaced some major appliances in 2013, then siding/windows in 2014 for example).

      For vacation expenses, so far they have mostly been cheap trips of $1000-2000. There might come a time (like 2016) where we spend more than our $5,300 annual budget on a massive all summer long vacation. But we might not spend the full $5,300 in 2015, so we can “cheat” by carrying over some of the balance. Maybe we spend $2000 in 2015 and $8,600 in 2016 for example.

  15. And here I was thinking I was doing good in February with monthly expenses being $2150 (family of 4). Then you come along and kick me in the nuts. Thanks!

    Congrats on getting by the $1.5 mil mark! That’s got to make you feel good especially considering your low expenses. Hopefully Mrs. RoG will be joining you soon in retirement.

    Keep kickin’ ass. It’s inspirational.

    1. The combo of breaking the $1.5 M mark and keeping spending below $1,000 is pretty exciting together. We could fund 125 years of spending like February (ignoring any growth in the portfolio). I think we’ll be okay. 🙂

  16. Nice! I’m not even bothering to keep track of net worth until a couple of major bills are out of the way. They’ll wipe out savings, so keeping a running tally of how well we’re doing — and then, in October, how we’re back to $0 — would just make me curl up into a little ball.

    1. It’s definitely tough to look at the NW updates when you’re losing ground. But still motivating to see those entries from the “liabilities” column shrink over time!

  17. I’ve seen all sorts of strange things in Chinatown and the Asian supermarkets here, but silkworms are a first. Yuk! But I guess some people like them.

    Nice work on your progress. Staying indoors from snow can definitely help with saving on expenses as long as your utility bill doesn’t shoot through the roof and your pipes don’t burst. I had a heck of a time shoveling snow and trying to insulate pipes at my parents last month. Doesn’t feel like it’s March already!

    1. We’re pretty lucky that it doesn’t stay below freezing for too long here in North Carolina. Our utility bill was slightly higher in February than January (which is way abnormal!) ($138 in Feb vs 115 in Jan). Not bad at all though really.

      Today it’s almost 80 degrees, the windows are wide open and it feels like summer, not spring. I’m just hoping we have a little spring for a while before the real heat starts.

  18. Congratulations on keeping the spending low and increasing your net worth. Living in the Northeast my expenses were down, but part of that was because my wife was in the hospital and I spent most of my time there or shoveling.

    You guys are doing great. I do have a question for you are you guys doing ESAs or 529s for the college expenses? At what point did/do you stop funding them and just let it grow with the market?

    1. I hope your wife is doing fine after the hospital stay. And hope those bills aren’t too crazy!

      As for college, check out my response to Andrew up above. We basically quit contributing to 529’s in the last year since our state got rid of the tax deduction/credit for 529 contributions.

  19. What is that $1 service charges and $1 entertainment? Totally impressed. <$1000. You just give me a new goal for this year: Have a less than $1000 spending (not counting mortgage, insurance, and kids tuition) month.

    1. $1 service charge = checking account fee at my credit union. Technically they donate the $1 to charity or something, but it’s still a fee. In exchange I get local branches (plus all the free services they offer like notaries and coin deposit), no ATM fees from my own CU, and easy money management. They also pay 0.25% on checking and 1% on money market, so it’s a nice safe place to keep cash and get a little return. I usually keep under $1000 in checking and leave the rest of cash in money market to max the slightly higher yield. Typically the interest on the checking covers the $1 service fee, so it’s almost as good as a no fee checking account that tends to pay no interest and/or have high minimum balance requirements to avoid fees.

      $1 for entertainment = A Humble Bundle of computer games. The game I wanted was Supreme Commander 2 and it justified the $1 I spent. I haven’t played it yet, but I’ve discovered a few real gems from the Humble Bundle “pay what you want” site that releases new offers every few weeks.

  20. Can you tell us how you deal with paper towels, ziplock bags, soaps, deoderant, and other toiletries? i’ve paid for lesser priced laundry detergent and it’s ruined many clothes and so we are back to Tide per my Husband’s insistance. 🙁 Do you make your own? use coupons? for us this is a large expense and we don’t buy paper towels or napkins. I don’t remember you mentioning it before.

    Also, when you order pizza what do you order? and from where? Do you eat something besides pizza when you eat take-out? like a salad, fruit, etc., to make it stretch? Do you wait until there is a special promotion? I can’t figure out how you’re spending so little. thanks! wonderful, excellent blog!

    1. Paper towels, ziplock bags, soaps, deoderant, and other toiletries -> Aldi for the bags, toilet paper, napkins. Walmart for most of the rest. The grocery store for sales on paper towels and sometimes deodorant. We’ll stock up if it’s a really good deal (2 8 packs of paper towels take up a lot of space though). All those costs are included in my “grocery” expenses since we buy them the same places we buy groceries. They add to $100/month or a little less.

      I mostly ignore name brands for paper products. We go generic for some stuff like mouthwash. Detergent, soap, shampoo, toothpaste is all name brand and we rarely use coupons. We buy arm and hammer detergent for example, still way cheaper than Tide.

      Here’s a good summary of the groceries and household products we bought for a whole month.

      For pizza, we usually get it from Cici’s (which has surprisingly good take out pizza at our location in the neighborhood). Or domino’s where they run promotions for BOGO or $5.99 for a large 1 or 2 topping. That means a large pizza is about $6-7 at either place, with domino’s being a slightly better value when they run the promotions.

      We don’t really wait for a coupon, but if we happen to see they have the deal and we want pizza we’ll get it. Or buy a bunch for a special occasion like kids birthday parties. Our local grocery stores sell very decent deli style take and bake pizzas too, and sometimes we’ll get those. Or bake our own (although the toppings like cheese and pepperoni are expensive!).

      We don’t do anything to stretch the pizza other than dipping sauces. Marinara from the $0.99 jars or make up some butter garlic sauce. Sometimes I’ll make salads if others are joining us for dinner, otherwise I’m about the only one that eats salad.

      For Chinese take out, we’ll spend $10-12 for 2-3 lbs of chicken, potsticker dumplings, etc (sold by the pound off the buffet). When they are busy it’s very fresh and tasty. And cheap. We’ll make rice in the rice cooker and sometimes cook some broccoli and peas or some stir fry veggies to accompany the take out. And ramen noodle lo mein. We’ll usually have leftovers even from one $10-12 tray after feeding the five of us.

      The truth is we just don’t eat out that much and spend money on groceries instead.

  21. Thank You!

    I was impressed before with your low grocery budget but now that I know it includes almost $100 in household goods…wow. Excellent job.

  22. The interesting thing is…I think people who are thinking about financial independence at 17 are the ones who are much more likely to actually achieve it, even if their initial plan is seriously flawed.

  23. Hi Justin! I learned about your site tonight while listening to your recent interview on the Dough Roller podcast. I really enjoyed everything you had to say, and your site/blog looks awesome. You’re now officially in my Must Read category on Feedly. 🙂

    I’m curious to know if you’ve ever written about your investment strategy and, more specifically, how you use your investments to live off of at such a young age. I’m 47 so I kinda missed the early retirement train. However, I’m still hoping to retire “early” at around 52. The majority of our money is invested in a 401K, Roth IRA’s and HSA. Whatever else we’re able to invest monthly goes into a taxable account account at Schwab and soon to be all at Betterment.

    The big thing I get hung up on is how exactly to access all that tax-sheltered money when it’s time to retire and live off of it. I just don’t see how I’m going to have enough in my taxable account in the next 5 years or so, but I’m gonna try!

    So, I’m really curious to learn from other early retirees exactly HOW they access the money in their various financial accounts, and what they use day-to-day to pay living expenses.


    1. Hey, Dave!

      As for managing investments, I stick with low cost passive index funds. Here is my asset allocation. I rebalance to my asset allocation a time or two per year. Specific funds I own are shown in a table in this article on dividends.

      Accessing the 401k and IRA funds is a little tricky but not impossible. We have roughly 75% of our funds in 401k or traditional IRAs.

      We have about 12 years worth of expenses in taxable accounts. We’ll spend those down first. During those 12 years (age 34 to 46), we’ll be converting traditional IRA assets to Roth IRA assets. There’s a special rule that allows roth IRA conversions to be withdrawn penalty free and tax free five years after the conversion. So we’ll have 12 years of ~$25,000 per year of IRA conversions ($300,000 total). Starting in year 13, we’ll start withdrawing from Roths from that $300k of conversions, and continue converting each year after that. So age 46 to 59 = pulling on Roth IRA conversions. After 59, everything is penalty free for withdrawals. Hopefully I’ll get a good article pulled together on this soon because I get asked this question a few times per week!

      Your HSA can be used any time in early retirement to pay for medical expenses. Your initial contributions to the Roth IRA can be withdrawn at any time penalty free too (contributions = the $5,500 per year you contribute, not any earnings though).

      1. Thank you for the excellent response! All of that makes perfect sense. Would love to read a more detailed post on this topic when you get it written. 🙂

    2. I could have written the same posting Dave wrote – I’m in almost exactly the same boat: I have all the “fundamentals” mastered (debt gone/mortgage only, hacking away at spending, learning about investing). My current investments are almost exactly like his: 401k at work, Vanguard Roth IRA, Betterment, then some local credit union accounts I use for moving money around and paying bills. Your answer to Dave was very helpful.
      Now: you have mentioned that you have some money in interest-bearing checking, savings, money market (sounds a lot like mine). Do you keep much there (trying to actually get that big fat .25%?!?!) or do you use your bank accounts for paying bills and moving money?

      1. Right now, we have $27,000 in a money market account at our credit union drawing 1% interest. I could do slightly better going with bonds or multi year CD’s, but I want the money liquid without penalties. If the market drops sharply, we’ll have about a year’s worth of expenses sitting in cash already to live off of.

        While working, I only kept around $3000 in cash and that was just to pay bills month to month.

  24. Wow hughe numbers! Really inspires me. Me and the wife just became debt free last month and have continued to build our net worth steadily. It was slow going at first but since we broke the 100k mark I noticed it is climbing with greater speed. We may not hit 1.5 mil but we already feel rich. We now live like we are retired and enjoy every minute of it.
    Loved the post. Will be visiting often.

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