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Now I understand why a lot of people say they will pursue FI(financial independence), but only a few actually become FI.
No, it’s not that they suddenly decided that they do not want to be financially independent anymore, but rather it is because the journey to FI is hard and can be complicated. It entails sacrifices.
Although we’re barely at the starting point of the path (actually not even on the starting line), we can already see why it is indeed a road less traveled.
The road to Financial Independence is not a smooth path; it’s a rough, very bumpy, and zigzagged road. A lot of obstacles along the way.
As you may already know, earlier this year, my husband and I had a long talk and decided that we will pursue FI but still have fun along the way.
Actually, it was a cumulative series of discussions of “Should we need to take care of our finances?”, “Do we need to budget?” “Do we want to work until retirement?” and so on.
And so we did, we created our financial plan and started working on it right away. In order to better understand our stats, you can refer back to where we were earlier this year.
So, in my previous post about our aspiring to FI journey, I laid out some action plans that we needed to do to stay on track. These are from the cumulative knowledge that we learned from listening to podcasts, reading blogs, reading forum and reading books.
Here are some of the things we did and where we’re at at the end of the year.
Our net worth early this year was in the negative zone, and honestly, we did not even know what net worth means back then. But now, we are obsessed with it. We track our net worth through Personal Capital.
The app gives us a clear view of how we are doing financially, assets versus liability. Although the number fluctuates, it still motivates us to keep working on our goals.
At the end of the year, we were able to get in the positive zone. Basically, it means that our assets are a little bit more than our liabilities.
Once we started budgeting and became aware of where our money is going, we were able to pinpoint the areas where we can cut down or even eliminate. The process made us able to save our starter emergency fund quickly.
And oh boy! Having an emergency fund definitely eases anxiety and elicits peace of mind.
401K used to be something that we just put on the back burner before we started our pursuit of financial independence. But now that we know more about it through our research and from the FI community, it became one of our priorities.
We were able to contribute up to the company’s match so as not to leave money on the table. We could have contributed more but because we have our #1 priority, which was to pay off credit card debts.
Also, we went ahead and look deeper into our investments inside our 401K and made some changes to minimize fees and also focused on low index funds.
One of our goals this year was to maximize tax-deferred accounts to lower our tax burden. Because we cannot max out our 401K yet, we looked into HSA and FSA.
My employer offers FSA, and although it is not as good as HSA, I took advantage of it because of the medical expenses were incurring anyways.
My husband’s employer offers HSA, which he maxed out, and we’re planning to keep this long term of its great benefits. If you want to learn more about the benefits of HSA, check out this post from the Mad Fientist.
CREDIT CARD DEBT
Earlier this year, we had a whopping $35,000 credit card debt! So after a lot of hard work and sacrifices, we were able to pay it all down to ZERO. And it felt Uh-mazing!
It seemed impossible to think that we can do it in a year, but by breaking the big goal down into smaller doable goals, it became manageable. It was all hard work, but all worth it.
PERSONAL LOAN DEBT
Early this year, we took out a personal loan of $65,000 to pay off a rental investment that we have abroad. It is not a good investment, but it is helping my family.
However, ever since I became financially aware, I developed a great distaste for interest rates on debts. Although the interest rates for the personal loan is decent, it is STILL an interest.
So the moment we paid off the credit card debts and started receiving zero percent balance transfer offers, I went ahead and transferred the personal balance into our credit cards.
Of course, there is a fee, but the cost is way much cheaper than the total interest that I will be paying for the whole lifetime of the loan.
I know you might think me as crazy for putting myself again inside a credit-card-debt jail, but at the end of the day, it’s all about SAVING money.
TRAVEL ON A BUDGET
As I have mentioned before, our goal is to achieve FI while still having fun. It might make our journey slower and longer, but for us, TIME is something that we cannot recover. Things that we’re able to enjoy right now, we might not be able to enjoy ten or twenty years from now.
Therefore, we make it a point to travel and do the things we love. Our biggest trip this year was Kauai, Hawaii. And with our points and careful planning, we were able to enjoy Kauai for half the cost.
GOALS FOR the YEAR 2020
2019 was a rough year for us physically, financially, mentally, and emotionally due to our miscarriage, and we are SO ready for 2020. Here are our goals.
- Fully Funded Emergency Fund
- 50% Paid Off Credit Card Debt(Balanced Transferred From Personal Loan)
- Increase 401K Contribution
- Individual Brokerage Account With Vanguard
- Refinance Mortgage
- Travel On A Budget
There you have it!
Our first year in our journey to Financial Independence was not easy but as we see our progress( although very little), it gives us a feeling of achievement. We made baby steps and planned to do more baby steps this year.
If you are have not started yet, it’s never too late. You can still live your life while preparing for your future.