What a time to be a Vigilante! We just had another big spike to our net worth, eclipsing the $25,000 mark in liquid investments only months after meeting our 4Q 2016 goal of amassing $10,000 in the same investments. These liquid investments – an asset class I’m now defining as “Assets on FIRE” – are the key assets that directly support our early retirement. They are the investments that generate passive/fuck you income with avoidable or minimal penalties:

Vigilante Net Worth 1Q 2017

Assets not on FIRE
Assets on FIRE
Liabilities
Net Worth: -$66,477
House: $230,000SIMPLE IRA:$9,825Mortgage:$175,596
Vehicles: $13,500457(b):$4,864Student Loans:$178,983
Pension:$10,704HSA: $3,063
Cash:$5,000tIRAs: $11,146
Subtotal:$259,204Subtotal:$28,898
Total Assets: $288,102
Total Liabilities: $354,579

Yep, it took us nearly 30 years to invest $10,000, and then only three months to increase our investments to 250% percent of that! This crazy increase wasn’t due to lottery winnings, market growth,1 or evening employment paid for by local gentlemen of means. No, this was due in equal parts to creativity, discipline, luck, and – oddly – stupidity.

How did stupidity more than double our investments?

In my Million Dollar Club Pledge, I pledged to put “as much as possible” into my traditional IRA to expand our progress bar on that page. Mrs. Vigilante pledged to do the same. This was in recognition that our tIRAs served as our pre-tax savings of last resort. After maxing our employer-sponsored accounts and paying our taxes, loans, and our necessary expenses, any little bit that might remain could go to tIRAs to buy some additional tax savings and appreciating assets.

We weren’t sure if we made enough money to actually max them out. And sure enough, very little money ended up making it that far in 2016. To be precise, my pre-New Years-hangover contributions totaled only $3,000 and Mrs. Vigilante’s only $1,100.

Here was our big mistake: Form W-4. Mrs. Vigilante and I rode the Winter Wedding Windfall in late 2016. And I mean “late” as in “final month” late – December, complete with Christmas tree and Sinatra classics during dinner.

Why does this matter? Well, the date had been set for nearly a year; we easily could have amended our W-4 withholdings at the beginning of the year to prepare, since you are married for the entire tax year if you are married on December 31. But we made the rookie mistake of never thinking to do it, even though we were well aware of this rule.2 So, we each spent the entire year withholding our higher single tax rates like a couple jabronis.

And what’s more, our 2016 withholdings assumed that we would take the standard deduction, since we both always had. This turned out to be insanely low, as we suddenly found ourselves married with a mortgage deduction, real estate tax deduction, student loan interest deduction, charitable and other deductions, and shiny new traditional IRAs we hadn’t planned for, dropping us to the 15% income tax bracket. For the first time, we itemized and deducted an extra $3,000 or so of income beyond the standard deduction. All unexpected and welcome changes.

In late January, we found that we were slated for a huge tax refund – about $3,000 total. Even though we felt like fools for giving such a gigantic interest-free loan to the government, we were thinking clearly enough to realize that if we could fill our traditional IRAs before April 15, we could increase that refund to an unheard of $4,000, with only an 8.72% effective rate. We had a few options, and we had to be creative if we wanted the full refund:

  • Save as much as possible by April 15, knowing that we wouldn’t contribute the remaining $6,900 unless a miracle windfall came. (It didn’t.)
  • File a tax return, get our refund, use it to fill the gap, and file an amended return. Not sure this is actually allowed, but I was planning to look into it. (Disclaimer: I never looked, because we got lucky with the next option. Don’t try this without doing your research!)
  • Take what would be essentially a payday loan to fill the accounts and pay the loan back after the refund came. But we’d need someone with a few thousand dollars to spare, and they had to trust us – which is a lot to ask since I’m so damn selfish.

Enter: Luck!

Ultimately, we found a family member with enough cash on hand to fix our mistake. We borrowed a few thousand dollars to help max our tIRAs for 2016, filed our return in early March, and paid that family member back immediately upon receipt of our tax refund and our next paychecks. For those keeping score, this is the very first valid example of clear privilege on I, Vigilante – the privilege of knowing someone wealthy enough to front an interest-free, pseudo-payday loan for a good cause! Notice how even this privilege, like all others, can be used wisely or squandered: We could have hit our family up for money for heroin and never paid them back. Instead, we hit our family up for a small loan, invested it, and immediately repaid it with money we knew we’d receive, making ourselves $1,000 richer at no discernible cost or risk to them.

But in the end, it leaves us precisely where we would have been if we had only corrected our W-4s last year and made automatic contributions to our tIRAs all year long. Or, technically, it leaves us worse off – we missed out on solid returns in 2016 while that money was in the hands of the federal government rather than our Vanguard accounts! Sometimes, privilege isn’t all it’s cracked up to be…

And, of course, we used discipline.

Contributions continue to accrue at the best pace we planned for. Spending continues to remain roughly the same with minor declines due to conscious planning of electric use, increased herb growing with more sunlight, and finding new deals on food. (That said, we still splurge quite a bit when it comes to our diets. We spend around $500 per month on food for two, but we eat like kings.) We expect a small increase in spending soon as we finish decorating our one-year-old home.

We’ve also been working very hard and seeing the results in our paychecks. Mrs. Vigilante will be getting another unexpected raise this summer, just like last, and I received a 17% raise this February due to outperforming expectations in 2016. And the trend seems to be continuing, as I’m proud to say I am among the top attorneys in billings and new client retentions in my firm this month!

Setbacks

We did have a couple of minor, decidedly unprivileged setbacks this quarter. I refinanced my massive student loans and, due to some silly and unnecessary problems relating to a bank that shall go unnamed, my loans were refinanced quite a bit later than I hoped. The bank that ended up giving me the best deal to refinance, Darien Rowayton Bank (now Laurel Road), did so with an outdated payoff quote (through no fault of their own!) and overpaid my loan by about $1,500. That money, currently, is floating out in the aether, waiting to be repaid by my prior lender to the new lender. So, I have some temporary financial drag as I accrue interest on an additional $1,500 in student loans. Thanks for all the help, unnamed Asshole Bank!

More importantly, Mrs. Vigilante has had a slight disagreement3 with her body since quitting birth control,4 and one particularly rough night found us in the emergency room waiting for blood tests and ultrasound results from about midnight to 6:30 a.m. It turns out that all is well and the worst seems to be behind us, but ambulance rides are pricy. Mrs. Vigilante has wonderful insurance, though, and our total cost for the night will be around $150 (and maybe up to $400 more depending on a yet-to-be-determined bill). Non-monetary costs included extreme pain for Mrs. Vigilante, a few new gray hairs for both of us, and a very rough day at work for me the next day. Silver lining: It turns out clients love it when you take care of their emergencies despite spending the entire night dealing with your own!

Despite minor setbacks, we’re not only on track for FIRE – we’re actually way ahead of our most generous predictions! I see things slowing down in the future, but for now, feel free to celebrate us with your favorite whiskey!

  1. Although steady growth with a portfolio of temporarily 100% stocks in a year of good gains didn’t hurt. Thanks, corporations of America! You’re good people!
  2. I even blogged about it…do as I say, not as I do, Vigilantes!
  3. Ok, waaaay worse than slight.
  4. We are planning on having a baby soon, hence all the baby guest posts!

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