The State of the Bear Cave – November 2016
Welcome to the second edition of The State of the Bear Cave where we share our current progress to financial independence. Our goal is to retire by the time our daughter turns 3 in a little under a year and a half. You can find all of our current numbers over in our financial independence tracker in our tools and research section.
State of the Bear Cave
The bear cave had a bit of rough month. Forward progress dropped for a couple reasons. First, we spent a bit more than last month, but for explainable reasons. Second, income was a bit lower but this was also expected; I didn’t have any stock options vesting this month. However, the BIG elephant in the room was the terrible performance of the stock market this month. So I’m going to take a bit of time out this month and talk about just how you should behave when the stock market takes a tumble.
Overall we did well on expenses this month. We had a few increases but all we not unexpected. Two Costco runs fell into October so groceries were higher. Mrs. Grizzly was in a trial in the first few weeks of the month so there were a number of increased expenses associated with that mess. Overall we’re still pretty happy with the results. Outside of housing and childcare, we kept everything below $2500. After downgrading to a significantly cheaper house paid in cash and elimination of external childcare we’re looking at an annual budget of around $30k, not bad for a couple early retirees. It means we need around $750k-$1M in investable assets following the 4% rule.
|Student Loan Interest||$400||$0||$0|
|Home Owners Insurance||$900||$300||$0|
|Groceries||$1,088||$550||$813||Two Costco runs fell into October so no real worry here|
|Clothing/Dry Cleaning||$513||$100||$199||Mrs. Grizzly was in a Trial in October so Dry cleaning was high|
|Utilities||$339||$200||$63||Solar net metering took a big chunk out of the electric bill + further reductions in water|
|Gas/Auto Maintenance||$120||$60||$92||Mrs. Grizzly’s trial caused more commuting as well|
|Home Maintenance||$100||$100||$270||Fence repairs + tree trimming|
|Cleaning Service/Lawn Care||$230||$230||$230|
Now let’s talk about the elephant in the room, despite savings of $15k our portfolio balances went down by $11k. The stock market did not do well. Oh No! Horrors!!
The SP 500 was down a more than 3%. The Grizzlies lost a more than 4%. $26k vanished in a poof of smoke! And what was our reaction to all this chaos? Absolutely nothing! We continued to plow money into our investment accounts at a slow and steady clip. I actually allocated a bit more towards investments this month, bringing our checking account balance down to near zero for a couple days in October.
This is a much larger lesson on how to treat the stock market – IGNORE THE SWINGS. If you follow the up and down movement of the market on a daily, weekly, monthly, even yearly basis you will only succeed in driving yourself crazy. Just keep investing, keep putting money away, confident that the stock market is almost always a great investment in the long term. If you hit a dip like last month, think of taking advantage of the sale on the US economy and buy even more!
- Overall, expenses are on track, they’re still far higher than our retirement goal. But almost all of the delta is now due to childcare, mortgage interest, and sky-high property tax. All three of which will be eliminated or reduced significantly post financial independence.
- Our net worth dropped by about $9k due largely to poor performance in the stock market. This does scare us one bit. We upped our investment in the market this month!
- Despite the blip caused by the market shifts, we feel we are right on track to leave our jobs by our target date.