Achieving our goals, thanks to long-term frugality

Since it’s been a year and a half since I posted anything on here, I guess I’m a bit overdue for an update. All is well here, but I’m currently freelance writing for four separate organizations, so there is always paid work to be done when I’m in front of my computer. And when I finish that work, the last place I want to be is in front of my computer. So this little blog gets neglected for very long stretches now. But I’m still here, and still frugal! I’ve had a few requests for an update on our life, so here’s a summary:

Our boys are in 4th and 1st grade now. So we’re well past the homemade diapers and baby food days, but our family has been able to remain just as frugal as ever, even as our boys grow. We do pay for karate classes for them ($135/month total, for both of them), but there haven’t really been any other major new expenses over the last few years, other than more groceries!

If you were reading this blog back in 2013, you might remember that we refinanced our mortgage at 2.44 percent for five years, planning to come out ahead by keeping our money in a Vanguard municipal bond fund instead of paying off the mortgage, since the bond fund was paying more than 2.44 percent. That’s worked out very well, and the five years is almost up — time flies! The money to pay off the mortgage is in our taxable account at Vanguard, but the portion that’s in the municipal bond fund has been federally tax-exempt all this time, which made it even more of an easy decision to hold off on paying off the mortgage.

Our mortgage interest rate will reset in April 2018, and they’ve been indicating that the rate will likely go to 3.59 percent. That’s more than we make in the bond fund however, so we’ll go ahead as planned, and pay off the mortgage in March. We bought our first house in January 2003, so we’ll have been making mortgage payments for just over 15 years when we make the last one. We made extra payments nearly every month until we refinanced in 2013 (at that point it didn’t make sense to pay extra, since the interest rate was so low — we just stashed the extra payments in Vanguard instead), and the idea of being mortgage-free always seemed very far off. And yet here we are, with just three mortgage payments remaining.

Our current house payment is about $890/month. That includes property tax, but not insurance, which we pay directly to the insurance company. Property taxes are ridiculously low where we live. Our home is worth somewhere between $350,000 and $400,000, and our property taxes in 2017 were only $2,068. I’m sure it will be a little higher in 2018, since property values have been going up. But that’s all we’ll have to pay, instead of the $10,680 that we paid in mortgage payments this year. The difference will be diverted right back into Vanguard, to fill up the hole we’ll be making when we take out the money to pay off the mortgage.

Other than the one year in 2011-12 when we had a car payment, we’ve been debt free except for the mortgage for more than 10 years. That “except for the mortgage” bit seemed like it was going to last forever. But now that we’re just a few months out from being debt-free altogether, it seems like it’s gone by in the blink of an eye.

Speaking of the blink of an eye, our older son is going to be 10 in a few months. How in the world are we more than halfway through the time he’ll (probably) live with us full-time? I find myself wanting to seize the moment all the time, and appreciate what we have now, rather than looking towards the future. I remember daydreaming about how amazing it would be to have our mortgage paid off and enough money stashed away to retire whenever we wanted. But I also remember thinking to myself that by the time we had our mortgage paid off, our dog would be old and our kids would be halfway grown. And sure enough, our dog will be 14 in about a month, and I’m very aware that she’s slowing down. That’s been a reminder to me that we need to just enjoy every day, rather than focusing on some day in the future.

We’re still a one-car household, and have been for about five years now. Our Mazda 5 has been a fantastic car. We put about 7,000 miles/year on it, and it’s handled everything we’ve thrown at it. Lots of camping and hiking trips, and it holds all of our gear plus the four of us and the dog.

We’re planning a road trip for spring break, which will be a first for our boys. They’ve only road tripped to see their grandparents, so they’re exited about a new adventure. It’s about a seven-hour drive, and we’ll be in an area where we can just enjoy the great outdoors, with endless hiking trails. Initially, I just assumed we’d camp, since that’s what we always do. The last time we paid for a hotel room was in 2002, when we went to San Diego for the weekend. Since then, every trip we’ve ever taken has been to visit friends or family, or camping (or work-related and thus funded by someone else). But then we thought about how nice it would be to have a kitchen and a real shower after a day of hiking… especially after the fifth day of hiking. So we looked on VRBO and found a trailer for $86/night. I love that we’ll have a full kitchen, so we can just go grocery shopping and then cook as we normally would at home — no need to eat expensive, not-very-nutritious restaurant food, or to pack a week’s worth of pre-made food in coolers. There was a time when we would have camped, without a question, to avoid the extra cost. It’s nice to have reached a point, financially, where we can choose to spend a little extra money in order to make the trip more enjoyable. But I know that the fact that we’ve gone 15 years without paying more than campground fees for vacation lodging is part of what got us here, and I’m not losing sight of that… we’re continuing to be very thoughtful in how we spend our money.

Our investments have reached the point where minor fluctuations in the stock market now have a much bigger impact than our monthly contributions. That’s another thing that I remember reading about on other blogs, and thinking how we were so far away from that. For a long time, our contributions were by far the biggest factor in terms of how much we had each month (well, except for 2001-02 and 2008… those declines were pretty precipitous, and definitely outweighed our contributions for a while). We’re continuing to contribute as much as we can to our investments. We max our IRAs and HSA each year, and we each put 25 percent of our salary into our SEP IRAs. But we’ve also focused for the last several years on our taxable investment account, as that’s our early retirement parachute. Our plan is to use the money in the taxable account to cover our expenses from whenever we retire until my husband turns 59.5 and we can start accessing his retirement accounts (technically, we could also use Roth IRA contributions before age 59.5, but for now, we’re planning to just use the taxable account). My husband will be 42 in a few months, so we’ve still got quite a few years of leaving our retirement accounts on autopilot. We don’t have any sort of fixed goals right now in terms of retirement. For now, we both enjoy our work, and we have a lot of flexibility in how we spend our time. We’ll definitely continue working for the next few years, but we’re getting within striking distance of a realistic amount of savings to retire, so it’s something we’ll think about more in the coming years.

Although our boys are older now, much of our day-to-day life is the same as it ever was. We still cook all of our meals at home, shop almost exclusively at thrift stores, and enjoy free hobbies like disc golf, working out in our basement gym, hiking, going to the library, etc. Our boys are developing their frugal muscles too, saving a good chunk of their money and always defaulting to thrift stores when they want something new.

I hope you’re all having a great holiday season, and that 2018 brings good things. Cheers!