First retire, then get rich

The title is a reference to this Mr. Money Mustache post.

Last week I discovered an awesome new blog called Saving Money In Your Twenties. Over there Ashley is blogging about a whole bunch of Mustachian things like saving money, brewing beer, cutting her own hair, and yes, leaving the 9-to-5 grind behind. I was inspired to read through her archive, where I learned how to find free parking in many cities while traveling and how to make a cheap and delicious quinoa stir fry, among other things.

Afterwards I was inspired to blog about how cool I think it is that she's quitting her full-time job to move to upstate New York and figure out empirically if she can make a living doing something other than working full-time. I'm not going to steal her thunder: for the juicy details, you should go read her blog. Suffice it to say that she saw an opportunity and she decided to jump on it.

It's unusual that someone quits their job without having another job lined up first. This isn't at all related to criminal law, but I explain this fact by a lack of means, motive, or opportunity. I think many people have sufficient motive to quit their jobs, based on nothing more than the frequency of job-based complaints. Means and opportunity must be the limiting factors. How many of us have a year's worth of expenses saved up (means)? I know I don't.  I'm still lacking enough savings to be able to comfortably quit my job if I wanted. And how many of us have a proximate reason to try to do something else with our lives, which might negatively impact our future employment (opportunity)?

I have given some thought to taking an extended amount of time off of work. Besides a great deal of relaxing, I'd have more time to pursue my hobbies, like home brewing, contributing to the open source community, and practicing security analysis so I can get better at investing. I'd also be able to take on some new hobbies, like writing a book (I've heard publishing on Kindle is pretty straightforward), or maybe a new blog project or two.

A number of these hobbies have a chance of bringing in income. I'm interpreting Mr. Money Mustache's post on "First retire... then get rich" in this light. Sure, you can retire once you have enough money to live off your passive income. That's a given. But you can also temporarily retire once you have enough savings to fund your expenses for a few months. It will mean living off principal, but it will give you an opportunity to do something else with your life years before you could otherwise.

On this note, I'm excited for Ashley, and I'm looking forward to following her journey.

P.S. Yes, I understand MMM's post is addressing a different point, namely how a lot of common retirement advice is "work as long as possible and save as much money as possible because you might run out of money before you die". I think he has an interesting point, and I think it's even more interesting when that point is stretched to its logical conclusion.

October net worth update

As part of my goal to have six-figures invested, I'm posting periodic updates of my net worth. I missed posting in September, but in the grand scheme of things late September is pretty close to early October, so I don't feel too bad. Besides, the daily fluctuations aren't important. What's important is the focus on continually investing my excess cash so that my dollars are working for me.

My last net worth update was August 25th. Here are the current totals, along with the differences:

• 401k - $25,413.58 ($1,239.99)
• Lending Club - $2,374.32 (-$29.32)
• Schwab - $2,946.30 ($1,450.00)
• I-bonds - $1001.28 ($401.28)
• Total - $31,735.48 ($3,061.95)

The increase in my 401k was probably half from new contributions, and half from market increases. Of note I've been changing my contributions to the various mutual funds my plan allows. I think my new contributions are 100% into the utilities fund, and I rebalanced to somewhere around 80% utilities, 10% international, 10% REIT. I chose the funds mostly based on their relatively low (yet still insanely high) expense ratios.

My Lending Club account is showing a loss. This isn't due to someone defaulting on their loan. Instead, I withdrew around $60 of cash because I was scraping together money from my various accounts to buy some stock. Interest is still rolling in, and the notes I have seem pretty solid (no defaults yet), so I feel okay about Lending Club for the short term.

My taxable investment account at Schwab is showing a big increase. I bought another 100 shares of Corning (GLW), this time for $14.85. If you recall, I bought my first 100 shares of Corning back in March for $12.51. Back then I still had student loans. I'm excited about Corning. I love the company and I think that at current prices it could be a great long-term value (I'm talking 10 years or more). I currently have 201.3878 shares, thanks to two dividend reinvestments so far. Fractional dividend reinvestment is a big reason I like Schwab.

For the I-bonds, I'm opting to use the "current value" which includes accrued interest, even though I can't redeem the bonds until a year has passed since the date of issue. I am really happy with my I-bonds. Passing the $1000 mark feels good, and even though the interest rate is a measly 1.18%, my emergency fund is guaranteed not to lose value to inflation. I'd like to keep up my $200/mo contributions for as long as I can.

In the end, my investments increased by over $3k this month. This is really good. I don't think I can keep up this rate of increase, but if I can, I'll be at $100k in less than two years.

I have about $2k in cash. I'd really like to buy another 100 shares of Corning, but I think pragmatism is going to get in my way. I still have a little over $3k in 0% credit card debt that will come due in March 2014. I should also have a short-term liquid emergency fund for if and when I switch jobs. We'll see how the next month goes. Either way I'm feeling pretty good.