It has been several months since I have provided a substantial update on this blog and I think it is about time to start writing more and updating what has been happening since the start of the Covid-19 pandemic. If you are just interested in the numbers you can skip to the last part of this post, but you will miss a lot of context that I think is important about our story so far this year. During this time there have been many challenges, a few bright spots, a few negative things, and a lot of things I would consider mixed. Most of all we have had to adapt to a lot of changes, some purposeful some out of our control. On top of everything going on with the pandemic, this has also been one of my busiest periods for work during a time where I have had limited time and focus. The best way to sum up the last few months is that I have been far too drained to write much if at all outside of my job. I have been mentally and physically exhausted and the amount of time to write for myself, such as on this blog, has been almost zero. Plus finding the words or motivation to write about personal finance during a global pandemic and the critical importance of the Black Lives Matter protests has seemed impossible and ill-timed.
Over the last few days however, I have found myself in a place where I am starting to get comfortable writing again for myself and so I decided to sit down and write a little bit about our story for the first part of this year.
So here a few of the highlights for me and my family for the last five months…
My Job and Work-load
My workload at my university since February has been far greater than most semesters. Even before the pandemic started to change everything, I had a lot of writing projects that needed to be completed including one book, two book chapters, and three articles in various stages of revisions or pre-publication. Needless to say around early March when Covid-19 started really impacting everything (or honestly when the United States started paying attention) my deadlines became unrealistic targets. Between homeschooling both kids when schools closed, trying to keep up with my teaching load, and some additional responsibilities added to my job, most of my writing fell way behind. In fact I just finished submitting the last set of some of that work more than several months late at the beginning of July. To be honest if some of this was not already in various stages of publication or required because of grant funding I would have just dropped as much of it as I could. I have reached a point in my career where I am completely over academic writing because I simply do not enjoy it anymore not to mention the only financial benefits goes to the publishers while mostly taking advantage of academic writers/faculty. It is an awful system that I am sure I have written about on this blog before. I guess the good thing is that with these submissions, I am reaching the end of my planned publication schedule since I still intend to leave academia in a little under two years. I have been actively working to wind down current projects and have not taken on any new or additional research activities since the Fall. If I planned this correctly I should wrap up everything just in time for my planned exit in the Summer of 2023.
In addition to teaching, research, and writing, I took on additional work because of the pandemic trying to help the North Carolina K-12 school system rapidly move some instruction online and helped train some groups of teachers to work in online and distance environments for the first time. I work at land grant university, and this type of work is always expected but the urgency of the need left little time to prepare and added a huge amount of work on me and a few other faculty members. The work was important so I am not resentful about it, but I had little capacity to start with and I had this added while also trying to teach and take care of my kids at home.
Once the spring semester was over I took on some additional work in the summer as usual, but this summer I took on a total of three summer courses, and one administrative project. Normally, I only teach one or two courses each summer. This was all off-contract work so everything I did this summer was for additional pay, and really that was the primary motivation for me to take on this work during this time of instability. I never underestimate, even in academia, the fragility of my job and career, especially since it is often politized, and in North Carolina it is also often targeted. This state is also notorious for targeting LGBTQIA+ employees in the public sector so I never discount the idea that my job could disappear or become untenable given the right circumstances, and I would certainly have a difficult time finding a new job right now. So being this close to my planned FI goal, I would rather focus on increasing my income where possible even though I would have preferred to take the summer off.
The one good thing about my job right now is that I was one of a few faculty members that was approved to work entirely from home for the next academic year. Unfortunately a lot of my colleagues are being forced to return to campus and are not being given that choice. Really the only reason that I was able to do this is because the courses I have been teaching for the last several years have always been online (and this was purposeful). I have a lot more to say about this and I am working on a separate post to talk about the current problems we are having at our university and students returning to campus during a pandemic.
I don’t write a lot on this blog about the fact that I am a plaintiff in two federal court cases, and unfortunately there is still a lot I can’t write about these cases as they are proceeding and active. I will note that things have started to move more quickly now and have added a lot of time and responsibility as we move in to the next stage of our fight against health care discrimination. Currently we have one part of the case in federal district court and another in the federal appeals court. We were ecstatic to see the recent Supreme Court ruling on workplace discrimination under Title VII, now we have to continue the fight for healthcare and housing. So much more on this at a later time when I am able to write about it…
I think I would be remiss if I did not at least acknowledge the mental toll that everything currently happening has had on me recently. I have had a marked increase in anxiety and stress and it has been hard to address this over the last several months. Covid-19, police brutality, continued discrimination, disregard for Black lives, and extended family that have had to be excluded from our lives have taken a toll. Normally I would be the first person to say take care of your mental health first and get help when you need it, but that has been challenging to impossible for me lately and is certainly being felt. It is an area that I need to address sooner rather than later so I can continue to function during this time, and is my biggest thing I am trying to address right now.
Changes to Travel Plans
While all travel needed to stop because of Covid-19 it has still been hard watching so many planned trips we had for the spring and summer disappear. We spent a significant amount of time planning and preparing well over a year ago for all the trips we intended to take this year before the virus was even on the world radar. Once the Covid-19 situation became apparent we did not for a second hesitate in cancelling our plans. We are certainly coming from a privileged position to even be able to take the trips we have in the past and to have had these trips planned, but we do not regret doing what needed to be done and cancelling these trips and staying home. That does not mean however that we don’t miss the opportunities we had planned, or the hassle we went through to get refunds on so many things. Travel has been a part of our lives for as long as we have been together and it has been missed, but not traveling right now is what needs to be done. That said this is what we cancelled this year:
- Two weeks in England that was planned for late March/ Early April
- Three weeks split between Portugal, Spain, and France in May
- Over one month planned in Hawai’i on Maui and Oahu in June and July. (this had been planned over two years ago)
- Late summer travel to Florida
- A trip to California that was planned in late October
Spouse takes a new full-time job
Over the last four years we have been in a great and fortunate position that allowed my spouse to run her own business on her own schedule and not worry about the fluctuation in income. That has been one of many benefits of having a well thought-out plan and being as far along as we are on our financial independence journey. Having my spouse work independently has allowed flexibility for both of us with our young children, and as an added benefit allowed us the potential for more income than was possible in a full-time job working for someone else. This was simply a function of her working more or less as needed based on our schedule and her desired income targets. The problem we started to run into at the beginning of this year is that clients stopped playing once the coronavirus started to spread and businesses started to shut down. We are not talking about small businesses, but large corporate and government clients who simply stopped processing payments, even for work that was already done. We realized how important it was for us to have stability in our income and employment during this time and were fortunate to be in a position that allowed her to immediately ask and be employed full time in a job that for now she can be done completely at home. While the total income will be less (excluding any of her clients she keeps through her business if able) we now have two stable and predictable incomes and still a fair amount of flexibility with schedules. One big added benefit is that she now has health insurance which has decreased our monthly premiums by $380 a month that we were paying to add her to my health insurance plan. Another added bonus is that she has access to retirement benefits she did not have before, especially a 457(b) account. We are uncertain how long she will continue in this position, but for now it is what works best for us, and we are fortunate we could do this so quickly. Really it is a testament to the skills she has in her field and the connections she has made and kept while working for herself.
Update to our Long Term Plan
All of this leads to a big question of how all of these changes might be affecting our financial independence plan, or as we like to call it, our FI Project. After spending a lot of time on this over the last few months we are fairly confident that our timeline is unaffected thanks to having significant flexibility in our plan. In addition our financial independence plan does not necessarily involve stopping all income (retire early) when we reach our number-based goals. We ascribe more to the work optional mindset rather than the “retire early” plan once we hit our financial targets and consider ourselves financially independent. That is we will probably continue to do something for income, even if is small, it will just be completely on our terms. Even with everything going on and all the current changes, a lot of our plan is still solidly on track for hitting our goal in less than two years. One big part of this timeline for me is that I will have completly vested in my ORP plan (Optional Retirement Plan) and more importantly at that point I will be able to continue my health insurance even after I separate from my job only needing to pay 50% of the employer side premium (total cost $525 a month including children). This makes health care costs for our FI plan easy to predict because it provides continued access to the state health insurance plan until we are eligible for medicare, and even at that point the plan will continue to provide additional benefits. This benefit can not be overstated and is one of the driving factors in why I feel comfortable leaving my academic job. Predictable and accessible health care is one of the reasons that we have a large degree of confidence in our FI plan. Now if we can only get rid of some of the discriminatory aspects of the plan…
June Numbers (income, net worth, savings, and spending)
So with all the non-number based updates out of the way, here is our financial update for June. It is worth mentioning that June and July are the two biggest months for me for additional income, and this summer will show the most job-based income I have ever had over a monthly period. Picking up three summer courses and an administrative project provided me with an additional $21,095 of pre-tax income, with most of that amount being paid in June. We are also finally getting a few of my wife’s past due invoices for her work paid, so this has been a really good month for income and saving! Our net worth at the end of June was $977,109 which is still below where we were at the beginning of the year, but not too far away. We are almost back where we started 6 months ago.
We are well on track to meet our goal this year to save at least $50,000, and will most likely exceed that goal unless we have a financial emergency or large unexpected expenses. We have been able to save at least $4,000 every month so far this year and our yearly savings is now $31,392 when we added the additional amount this month. Last year we barely met our savings goal, but this year I expect we will exceed it by a significant amount.
We calculate our net worth by adding all of our pre-tax retirement accounts (403b, 457b, Traditional IRAs, and ORP), our after-tax retirement accounts (Roth IRAs), and our after-tax brokerage and savings accounts together. We also include real estate equity (i.e. our home) discounted to a price we think we would be able to get after closing costs if we needed to sell the property as quickly as possible. After we add up all the assets above we subtract our current mortgage (our only debt) to arrive at our current net worth.
This month our income was $23,910 which was well above our normal amount thanks mostly to the additional work I took on over the summer. My wife has transitioned to a full time job as of June 1st and we are still expecting additional income she is owed from unpaid invoices from her business in addition to her new salary.
We calculate our income by taking our net income (after tax income) and adding back the amount that was withheld/saved in our retirement accounts, including the 6% of my salary contribution I get from my job in my ORP account (I mean technically it is income).
We spent $7,309 this month, which is above our normal budgeted amount, but not unexpected given the circumstances. We continue to spend a lot more on groceries and eating out than typical, but much of this is by choice, and we tip extremely well for the privilege of having these things delivered to our door or even picked up outside the restaurant. This is an added expensive we are more than willing to pay for the work they are doing and for our families safety as we still are seeing cases increase in North Carolina. We also have spent a fair amount of money on additional learning supplies and books for the kids as we continue their education at home.
Our goal we set for 2020 is to save a minimum of $50,000 inside our retirement accounts, with maybe a little additional amount in our after-tax brokerage or savings account. We met our goal last year (barely) and saved $50,414 and are doing much better this year. This month we saved $7,514 in our pre-tax accounts, with no additional amount in after tax accounts. With my spouse taking a full-time job we now have a ridiculous amount of pre-tax space available to save our money that we will not be fully able to take advantage of this year. While we did increase our cash buffer during the previous months in our after-tax accounts, we feel pretty confident that we have more than enough in those accounts now, especially given our employment situation.
Some Closing Thoughts
This month I wanted to provide a more in depth look at what has been happening for us over the first half of this year. Until now my posts have been limited and very minimal, but I expect that to change over the next several weeks since I have a new motivation (and a little more time) to focus on some topics I have been sitting on for a while. I actually had to take a lot of what I was writing in this post and remove it to make them into their own separate posts. I am not sure anyone was interested in reading an additional five pages of writing all in one post so I will end this here and hopefully have provided a little narrative and story about how thing are going for us in our very unique and individual circumstances.