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The BIG Financial Picture

Basic Personal Financial Philosophy:

1 - Make savings goals your first priority (pay yourself first). Manage goals around tax planning.

2 - Limit regular/recurring spending/contracts, etc. to x dollars

3 - Don't borrow for anything

4 - Strive for balance

Click on link for futher details:



The following post details our savings layers:


Current Status as of 12/31/16:

Emergency Fund (Current Balance: $15,000, or 3+ months expenses; Goal: $15k)
{Only to be used in a catastrophe. Prolonged job loss and natural disasters come to mind}.

Short-Term Savings (Current Balance: $0, saving $1300/month; Goal: met)
{For Property taxes, all insurance, car repairs, vacation, regular dental checkups, and for basically everything that is not a predictable monthly bill. Balance should be -0- as it is all spent up by end of year/end of most months}.

Mid-Term Savings (Current Balance: $20,000; Goal: save $5k per year).
{To pay cash for future cars, home maintenance, replace appliances, orthodontia, big/future purchases, and can also be used for emergency}.

Retirement (Current: 15% in 2015; Goal: 15% gross income)
{I don't think there is anything magical about 15%, but is just a good balance for us right now. More would be better, but when kids are grown or when dh returns to the workforce. We have always contributed a minimum of 10%. I'd say that 10% would be more than ample for the long run because we consistently saved so much in our 20s and 30s, but we aim higher so that we have the freedom to retire younger}.

Taxable Investments (Current Balance: $15,000; Goal:$200/month plus snowflakes).
{Opened this account in 2014. This money can be used for college expenses, mortgage paydown, and to supplement retirement. Mostly because we have maxed out all useful tax advantaged accounts and would like more liquidity until my job and kids' college shakes out}.

College Savings (Current Balance: $34,000; Goal: $40,000, save $2k+ per year).
{We have never saved a penny for college. But generous in-laws provide $1k per year per child, since birth. Which incidentally is more than enough to cover 4 years of college tuition, per child (about $20k/each). Our attitude to-date has been a combo of "Take care of ourselves first", college is very inexpensive in our state, and Grandma has it covered anyway. She gives us $2k every year to invest, on their birthdays. Interestingly, all of our own "college money" went towards down payment on a first home. & with current college prices I think we might end up just paying that forward for our kids - help them manage the cost of living, which is insane here. We may be able to cash flow college and to hand them Grandparents' money in a lump sum}.


I strongly identified with this article, 7 Secrets of Super Savers:


1 - Set goals and make them specific
2 - Live below your means
3 - Delay Gratification (Super savers often save up for months or YEARS in order to pay cash for all purchases)
4 - Avoid Debt (Super Savers pay cash for big ticket items like cars and homes)
5 - Save on the everyday expenses (compare prices, clip coupons, buy used)
6 - Have multiple streams of income (Live on one income and saver the other. Single earners have side hustles to earn extra cash)
7 - Track spending (*I* certainly know where every single penny of our income goes! With modern technology, doesn't take much time and effort to track)
8 - Automate Savings (AKA: Pay Yourself First!)


I recently found this blog post and really enjoyed it as it sums up my feelings on debt pretty well:

News Flash: Your Debt is an Emergency!!


Okay, Mr. Money Mustache is totally awesome:


This pretty much sums up our retirement plan. Not that I am taking advice from some random guy on the internet. He is just the only one I have ever seen talk about retirement in the sense that my parents retired. He just clarifies what I already know. Between MMM and my parents' retirement, we are thinking about retirement very differently, probably since around 2012.

In my parents case they are MMM-ish but very different in some regards. My dad had some health issues and lost his job at 57. My dad grew up in poverty and had pulled himself up into the upper middle class. I believe that as well as my parents have done, they just lacked the financial savvy to know they could have retired much sooner. They initially panicked with this turn of events, but after just about 5 years they seem to have more money than they will ever know what to do with.

One thing my parents have always done is live well below their means. Retiring early has given them significant tax advantages, which I have been able to help them with. The main thing my dad did not account for in his retirement calculations was that he was basing his calculations on his earnings/salary though he only lived on 1/3 of his income. When you add the point that he literally can live on only 1/3 of his salary because he no longer pays taxes, that is how you over-save even in the face of completely unexpected early retirement.

One way my parents are very different from MMM is that they live in San Francisco. They can easily live very comfortably on just $30k per year. The idea that you have to live in the middle of nowhere to achieve this is a fallacy. I could go on all day about the financial advantages of living in a place like San Francisco. The disadvantage is housing, if you are renting or paying for it. Not if you bought your home 30 years ago and paid it off already. (My parents have this advantage because they stopped buying up at a reasonable point - like age 30 - and they paid their house off early, before unexpected retirement). Other disadvantages would be raising kids; paying for kids or daycare. Not applicable to my parents. Certainly more of a concern if you retire while raising kids. It certainly wouldn't be my first choice as a place for them to pay for long-term care, I give you that. But it's not like they are locked in on that front. They could lower their costs significantly just moving closer to us or other family when they get to that point.

I keep reading the assertion that "MMM wants you to retire poor." With this comment, the entire point of the MMM philosophy is missed. MMM makes $400k per year from his blog and is always dabbling in money making ventures. Which is another reason I like MMM. He allows that some people want to work and make money in retirement.

Anyway, after just 5 years of completely unexpected early retirement, my parents are bringing in about 3 times what they are spending. What's absolutely crazy about this is that their investment withdrawal rate is 0%. ZERO. Which means that their money is just compounding and generating more income. (They took social security at 62, which is more than enough to live off of. Given their circumstances, was the best choice for them). There is absolutely nothing "poor" about them.

Our takeaway? We only plan to work full-time until we get to a point where we are done with big expenses like college and we reach a comfortable nest egg amount. From that point we plan to switch to part-time work and probably let our nest egg compound for another decade. (Thinking age 50-60). Will work just enough to pay current bills. We will stop saving at that point. Unfortunately, I can't turn off the fiscally conservative genes. We aren't going to cut it close (hence, the extra decade working to be sure). We aren't going to rely on social security. I am not counting the bajillion dollars that I will probably inherit. But I do feel comfortable taking my foot off the gas a lot more at a certain point and don't feel the need to work full-time up until the day I am ready to 100% retire. That is my biggest takeaway from all of this. Also, I am not going to be one of those people who saves up 25 x income a or has a $3 mil+ retirement goal. It's just overkill. (Though will probably get to that point *after* we retire, much like my parents or MMM have).