So, readers, you thought that you would not hear from us again! Ha! Unfortunately, you will.
In our “last post”, we were overwhelmed by your feedback and quickly realized that our little blog had made a much bigger impact than we ever imagined. To the new readers, we needed to put our blog on pause to be able to spend more time with the kids since weekends- our only spare time to blog- were quickly getting ridiculously busy with writing. Massive thanks to all who urged us not to quit the blog. We heard you and we thank you for your sage advice. We promised that we would check in periodically with some posts and here is our year-end update on an amazing 2016.
We’ll take you through financial progress towards our FIRE goals and a summary of things we achieved as a family during 2016. We have a lot to be proud of and this post is a little summary of what we achieved.
Let’s start with the pi-lights from our PIE life. See what we did there? How many more “almost PIE” words can we fit into this post? And you really wanted to hear more from us….?
PIE Life PI-lights
- We started our little blog on April 10th and managed to publish 43 posts by November this year. With 1153 comments (OK, half of those were OUR replies!) , we have been delighted to see such enthusiasm and engagement on our writing. Thank you! Thank you! It means so much to us.
- We put our blog on pause (Boo!) in November for many of the reasons that are at the heart of our decision to leave the workplace in the summer of 2018 – July 3 to be precise. More time with family, more time with each other, just more time.
- We started our family quest to hike all 48 4,000 ft’ers in New Hampshire. With the kids, we managed to knock-off 8 of the mountains in 2016. Mount Washington (a 9 hour round-trip on a searing hot day in September) and Mount Pierce (a beautiful winter hike on a clear, crisp and cold day in November) were the most enjoyable. The boys (9 and 7) continue to amaze us with their stamina for long hikes and joie de vivre for the great outdoors. I guess we are doing something right!
- The PIE family continued to spend intentionally on family vacations. In February, we spent a week at our mountain home in NH, took a long weekend in New York City (thanks to an award from Mr. PIE’s employer), vacationed for two weeks in NH and Acadia in the summer and will head to Quebec City for four nights between Christmas and New Year. Mrs. PIE also visited family in Britain in April for an extended weekend. Quality family vacation time is a big deal to us and use of travel hacking helps us keep the budget in check. In February, 2017 we are heading out west to Jackson Hole and our respective derrieres will be subject to some serious butt-kicking from the steep and deep stuff while skiing in the Tetons.
- We launched our Donor Advised Fund (DAF). Other bloggers (Frugalwoods, Physician on Fire) have written about the power of a DAF, the most important being a tax-advantaged way of making philanthropic gifts. Giving back is important to us and doing it from an investment vehicle that can grow tax free over time is a great feeling. In December, we directed some funds to a series of our favorite charities – including National Public Radio (NPR) and a number of charities to help needy children and the less privileged in our local area.
- We told close family and a few friends about our plans to retire early. A series of unique conversations and diverse reactions provide much amusement for Mr. and Mrs. PIE. Well, it was amusing once we got over the shock of some of the responses. The jaw-dropping that will ensue when we tell our employers and work colleagues is going to be yet another level of fun. Oh boy!
- One of the true highlights was making a whole bunch of on-line friends through our blog – too, too many to mention but Dividends Down Under, Our Next Life, Slowly Sipping Coffee, Early Retirement Now, FinanciaLibre, Physician on Fire, Jim Collins, Can I Retire Yet, Go Curry Cracker, Green Swan, Amber Tree Leaves, Think Save Retire, Northern Expenditure , She Picks up Pennies, Retirement Manifesto, Make Smarter Decisions, Budgets are Sexy, Mrs BITA and Freedom is Groovy are a few of our favorites. And a very special shout out to the first blogger who commented on on our site – Investment Hunting. And so many more of you that brighten our lives. Folks, we are honored to have met you on line and love everything y’all do.
- We snagged two fantastic tickets to see Adele at the Boston Garden – proof in the pic below!
- We lost our sweet little cat Charlie to old age and deteriorating health. She’ll hopefully be running around like a crazy, happy thing somewhere….
And this section would not be complete without a liberal sprinkling of photos of the PIE’s doing what they do…..
PIE Life FI-lights
2016 was a big year for us in our quest for financial freedom. We are already fortunate to be in a position of financial independence and 2016-2018 are the years to push onward towards financial freedom. We are both at our peak earning years. Combined with an understanding of everything that goes in and out of our various accounts and a laser-focused approach to saving, we have the necessary tools to get the job done. Summer of 2018 still seems so far away on some bad days at work, but taking a step back and looking at the big picture, we are fortunate to be contemplating this whole thing. It’s a beautiful thing when we stop and think about it.
The figure below shows the growth of our investment portfolio during 2016. Note the scaling of the figure is misleading – our portfolio has NOT actually doubled!! Wishful thinking….. :>)
There are a few points we should make that add a bit more context to the figure:
- The large jumps in first half of the year were mainly due to payment of 2015 bonuses and restricted stock exercises for both Mr. and Mrs. PIE. Mr. PIE received a performance bonus equal to 42% of salary (gross). Yep, his jaw dropped to the floor also when he got the news in early March. The company, division and himself all apparently had a very successful 2015.
- June through December was fueled by large monthly deposits to our Vanguard taxable account and maxing out all major saving accounts (both 401K’s, HSA). Saving into the kids 529 plans is not captured in the growth figure above.
- The bump in growth from Oct-Dec was the rally in the market post election as the DOW marches towards 20,000 – if you take that milestone to be anything of significance. Like air in footballs significance. Don’t you get Mr. PIE started on that one….
The figure below summarizes how all our assets are broadly allocated in the four major buckets.
Let’s look at each of the four buckets in turn.
Taxable / Cash
- Majority of assets in this bucket are in low cost index funds at Vanguard. The main funds in our account are VWIAX and VTSAX, along with some international funds. These two funds delivered a YTD performance of 8% and 14.2% respectively in 2016. The international funds were quite flat (2-4% YTD). Our cash position is a small percentage of our overall portfolio. Most of our savings currently funnels over to Vanguard (monthly deposit, bonuses, any restricted stock awards that vest).
- This is where the majority of our funds are allocated, with most within the 401K’s of Mr. and Mrs. PIE. The 529 college plans (with Vanguard) for small PIE’s are in this bucket also. We don’t factor these assets into our withdrawal rate planning as they are earmarked for specific things. Mr. PIE’s savings plan (aka pension plan) from his former employer in the UK are also in this bucket. The fund in this plan delivered a whopping 18% YTD return so far in 2016.
Equity in Primary Home
- We still carry a small mortgage at a low 2.75% interest rate. The proceeds from selling this home (our family home for the last 17 years) in 2018 will go directly to our Vanguard taxable fund when we relocate to our mountain home. 2016 was the first full year of owning our mountain home mortgage free. The peace of mind from moving fully into that home with zero mortgage is huge.
- This is a non-contributory pension fund. Mr. PIE employer currently pays ~12% of his salary (base plus bonus) into this fund each year. At separation form service, it will be taken in the form of an annuity rather than a lump sum.
As you can see from the percentages in each bucket, there is a healthy distribution of assets. We thinks so at least. The taxable : tax deferred will ultimately be ~50:50 in 2018 once proceeds from our primary home transfer over and we continue to aggressively squirrel money away into our funds at Vanguard over the next 18 months.
So there you have it. A short summary of the year that was. Another year older, another year wiser, another year closer.
What were you happy with in 2016, personal finance wise or otherwise? Any accomplishments that you look back on with a sense of pride and satisfaction?