State of the Wallet: July 2013

I've been on the road to FI (financial independence) for a grand total of 3.5 months.  Considering I expect to reach FI in about 10 - 12 years, I'm still a newbie.  My path consists of a few elements:

  • Reduce spending
  • Pay off all non-mortgage debt ($5K when I started)
  • Up my 401(k) contributions to 10% (I've calculated this to give us more than enough in retirement, even if we only contribute for 10 - 12 more years)
  • Create a small emergency savings ($5-10K) 
  • Put money into investment accounts to provide income between the point  where I leave the working world early and retirement age
  • Pay down mortgage 

 

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Sometimes I feel like I won't ever get to the top of this mountain.  I mean, if it were easy, more people would do it, right?  But I think more people would change their spending and saving habits if they knew what could be gained and how possible it really is. 

What will make me keep going is knowing I am making progress.  To date, I have accomplished 2.5 things on my list: 

  • Reduce spending (this will always be a work in progress but I've made reductions in groceries, gas, eating out, and discretionary spending)
  • Pay off all non-mortgage debt (done- YAY!!!)
  • Up my 401(k) contributions to 10%  (This is half done- I've done it with mine but Kris still needs to do it with his.  I've also properly allocated my investments to be diversified and to be in low fee funds.)

It felt so good to make that last credit card payment.  I'm currently working on the 4th bullet: 

  • Create a small emergency savings ($5-10K) 

I've got about $1300 so far and, SURPRISE, that is exactly what I need to pay for a major car repair that is scheduled for August (the ol' timing belt, water pump, radiator trifecta) .  Although I'm sad it means it'll take longer to build my emergency fund, I'm glad I'll have the cash to pay for it!

As for the $5-10K figure, I really just want to have enough cash on hand for "surprises."  Both Kris and I have secure work (I know, you never know) but once I start putting money in investment accounts, that will also be available for times of crisis.  Having too much in cash can be dangerous because it doesn't keep up with inflation; you don't earn anything for it.  I plan on saving separately for anything specific  (planned home repairs, trips, etc).

I'm on my way!  Happy money to everyone!