2016 Retirement Accounts Review

It’s tax season and this is a good time to review how my retirement accounts performed last year. I have a 401k (traditional and Roth) plan through my current company, a rollover traditional IRA from my previous company and a Roth IRA that I opened over a decade ago on my own.

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2016 May Passive Income Review

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May was a bad month for passive income. Compare to the second month of last quarter, passive income decreased by about $85. I picked up 20 more shares of GPS and 50 more shares of MYC this month.

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Five Year Plan to FI/RE Review

Lets do a quick review of my 5-Yr Plan to FI/RE targeting April 15, 2020. It has only been a month and I am still working on the details of each step. I track my income, expenses and net worth on a regular basis so it’s easy for me to know how well I am progressing toward my goal in any given month. Continue reading

Step 1: Pay Off Primary Home Mortgage

The first step of my five year plan to FI/RE is to pay off my primary home mortgage or have the means to pay it off. What I mean is that I am planning a two part process. Part One is to continue to pay additional principal until I reach $40K of principal at the end of five years, or before that. Part two is to invest in a Muni-Bond every month until I reached $40K at the end of five years, or before that, to cover the rest of the principal.

The loan amount on my primary home after the last refinance is $120K with a 3% fixed interest rate and a 15-year loan term. I have already paid off more than a quarter in the last few years since the refinance, and the current loan amount is a little shy of $85K. Since my internal target is October 15, 2020, that leaves me about 53 months to pay off $45K. What that means is that I need to pay off $850 in principal each month. Currently the principal portion of my monthly payment is about $615, so I would have to pay additional $235 per month. Currently I am paying $300 additional principal per month so Part One of this step is covered. Ideally, I would like to complete this step by March 15 of 2019 ,so I will increase my monthly payment by about $675 instead.

Part Two is to invest in a Muni Bond until I reached $40K on October 15, 2020. The exact breakdown is $755  a month for the next 53 months. The reason I am doing this is that when my mortgage reaches $40K in principal, the interest portion will be less than one hundred dollars per month, and the interest on the Muni Bond will earn more than enough to cover the mortgage interest. At that time I will be free of my mortgage. I have the option to pay it off, or not, depending on the Muni Bond interest. When that happens I wouldn’t mind riding the rest of the loan to term, knowing that I have the money to pay it off, if necessary. It makes more financial sense if I keep the money in Muni Bonds to earn interest, and have an extra cushion of liquid asset in case of emergencies.

Step 2: Sell Las Vegas Rental

Cheers,

Lady Butterfly

 

2016 March Passive Income Review

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March was a decent month for passive income. Compare to the second month of last quarter, passive income decreased by about $40, but this is largely due to the extra year-end dividend distribution in December. Last month I picked up 25 shares of LLY. My first purchase was at $71.25 and when it dropped to $68.71, I picked up more shares.  I also picked up another 50 shares of MYC.

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