So we are a little late posting our goals for 2017 but thought it was important to settle on them and post them before making any additional update posts. In some ways not much has changed from 2016 and in some ways a lot has changed. Since 2016 we moved to a new state, took new jobs, bought a new house, and had a second child. This has led to budget adjustments, but after spending a significant amount of time calculating our FI trajectory we are still on target to be FI in 2021.
I also had to be realistic of what we are capable of doing both financially and for me personally, preventing burn-out from trying to accelerate this process. After I spent some time talking about how I would never overload myself with work, I did it again in January taking on a intense project that I just finished. The good news is that with that one project (more in a future post) I was paid $35,000, the bad is that I did it by overloading myself to the point of a near breakdown. I think I am going to refrain from taking on anything extra for a while and try to focus more on enjoying the present rather than pushing so hard right now. So after consulting and having a family meeting with my wife here are the goals (mostly FI related) we have set from ourselves for 2017:
Last year we set a goal of saving $60,000 in 2016 and we reached that goal, even exceeding it by a small amount! At the time, that goal was a huge stretch and I was unsure that we would be able to save that much again given our current income streams. I anticipated setting the goal a little lower this year based on early projections of income and spending, but after an extra burst of income from a project, I think we can meeting this goal again. So for 2017 we are setting our savings goal once again at $60,000. This puts us close to a 50% savings rate based on our current project income.
In 2016 we set a goal of spending $5,000 a month or $60,000 for the year. In most months we failed to meet that goal, typically overspending by a few $100. We were closer to $65,000 for the year so we had a little under 10% of overspending. This year I am going to set a little bit more realistic spending number that incorporates an expected increase in child care. As I have mentioned before in prior posts I am well aware that we could easily cut our spending and reach FI faster, but we have made a conscientious well-informed decision to balance our FI plans with a comfortable but not excessive amount of spending. Honestly most of the spending that is higher than it could be is associated with our house, which for us is important. Every person and family has different spending priorities, and for us our house and more importantly location are important to us. For others this is a huge expense to tackle, but for anyone pursuing FI there are always trade-offs and decisions you have to make, and I believe as long as you approach them with a clear understanding of how it impacts your finances, you should find what works for you.
So this year we have set our spending goal at $70,000 for the year. Almost $20,000 of that is associated with child care costs and tuition which will only last a couple more years. At $70,000 a year that gives us a little over $5,800 a month to work with that will fluctuate depending on the month.
With the spending and savings portion set none of this works without considering our projected income for the year. This is an area which most of the time would be easy to predict, but with my wife working for herself, and me picking up side projects every now and then it has become a little more challenging. Regardless, based on completing one project already and the base income from my primary job I estimate we will have an income of around $150,000 in 2017. This is an incredible number for us considering our past income amounts. I am hoping this is a number we can maintain for the next four years, if not increase. I realize how fortunate we are to have a family income at this number, and never thought we would be at this amount when we both started out in our professional careers as public school teachers.
Other goals for 2017
Now that I have covered our income, savings, and spending goals here are some other goals we set that have at least some bearing on our FI project.
- My wife will try to complete or at least get close to finishing her Ph.D. degree. This will free up more time for her to focus on her business, as well as opening up new opportunities.
- We will expand the business my wife runs and more importantly create a more stable and predictable income flow. I also hope to allocate a little bit more time to help with the business administration side of the business.
- I co-own (50% with my brother) two beach properties in Florida that we need to work on creating either a stable rental income from or we need to consider selling the properties. One needs some significant repair work and updates and we are hoping to do something with these before the spring rental season begins. I am not sure if it will bring in a lot of additional income from renting since a fair amount of money needs to go back into the properties for repairs and upgrades.
- Last year we focused on decluttering as a goal and made a lot of progress but between two moves and items acquired with our new child (mostly gifts) we still have more work to do in this area. To be honest it is not one of the top priorities this year, but we are still working on this as we are still unboxing and setting up our new house.
- Along with decluttering one of my primary goals this year is to simplify our financial accounts. Two years ago we started a huge credit card and bank account spree opening a significant number of accounts to gain points and cash bonuses. We did extremely well with free travel and cash back, but there are still accounts that need to be consolidated and closed. So the main goal is to consolidate bank accounts, and close credit card accounts where needed (especially those with annual fees). We also are working to consolidate our retirement accounts from previous jobs where possible.
So that sums up our 2017 goals. Meeting these goals should keep us on track for financial independence in 2021, but as with any goals we will revise when and if necessary. I will update our progress on each of these goals monthly to see whether we are staying on track.