We are striving for financial independence, one with no debt. We call the process FIND (financial independence, no debt) freedom. This is fundamentally different than FIRE (financial independence, retire early). It is difficult to consider anyone with debt to be financially independent, the two things are mutually exclusive. When you have debt you are in a fragile position. Debt makes you a slave to someone else. Our last remaining debt is the mortgage on our house, but its days are numbered.

Mortgage

We are aggressively paying off our mortgage. Why? The feeling of freedom that it will provide. Once we don’t have a mortgage we will require much less income. Owning a house makes us more robust to job loss or other financial disruption. We will have no debt and more options. Also, a house is called real estate for a reason. Unlike paper assets like cash and stocks, the house is a tangible asset. It meets one of our critical needs, the need for shelter.

In October of 2017 the percentage of our mortgage remaining crossed below 50%. Our goal at the beginning the year was to get below 25% by the end of the 2018. We make extra payments pretty much every time we get a large deposit. The cool thing is that our paychecks are on alternating schedules so that we can make an extra payment every week. That continual progress makes a long term thing like paying off the mortgage more tangible. At this rate we will own the house outright in 2019.1/1/2018: 46% → 11/30/2018: 25%

Savings rate

Why is knowing your savings rate so important? While you are earning a income savings rate is the best indicator of your financial health.

We keep track of savings rate by the month and year to date. We have a goal of saving at least 60% of our income in 2018. This fall we spent more than we expected, it will be close to see if we are able to save 60% this year. The major change is the expense of Mrs. LOTT going back to school. This is definitely an investment, it will have a short payoff time upon completion of the degree.

Counting school as an investment, are close to our 60% savings rate goal for the year. Our year to date savings rate at the end of November 2018 is 60.5%.

Our long term savings rate since 2014 the savings rate is split 50%/50%.

Net worth

Net worth is calculated using Mint.com. We are in the accumulation phase of our lives right now. We are keeping track of the trend of net worth to know how the choices we make impact our financial goals. The chart below includes home equity. While owning our home is a big part of our current strategy, the money in the house isn’t liquid. Owning your own home reduces your living expenses, but it doesn’t generate passive income. Part of our strategy needs to generate passive returns. As we pay off the house, we will need to revisit other places to invest.

Bimodal strategy

We’ll write about this more in the future. A bimodal strategy or barbell strategy popularized by Nassim Taleb in The Black Swan is a strategy with low risk, low reward on one side and high risk, high reward on the other side. One bimodal strategy is to have a steady job and a side hustle. Starting a blog is a side hustle and part of our bimodal strategy. As long as you have your job (low risk depending on your occupation) then you will be able to survive. Your side hustle(s) may or may not ever pay off, but you are less likely to have to live on the street or move in with the in-laws because you went all in on the equivalent of a lottery ticket.

Other investments

Watch this space for other investments. Why other investments? Once we pay off our house we will have a large monthly increase in cash flow. We will be looking for investments that will either provide some sort of periodic income or reduce long-term expenses.

Returning to school for a Master’s degree.

Mrs. LOTT officially started a fully online M.S. program for Nursing Education. Higher education right now is the definition of buyer beware. Young people are taking on a tremendous amount of debt to get a degree that might not ever pay off. But for Mrs. LOTT there is a large difference in salary between a B.S. and an M.S. degree at the same employer for the same job. Upon completion of the degree the pay off time due to the increased salary will probably be about 1.5 to 2 years. The M.S. will not only make a difference in the current job but it opens up more employment opportunities for the future. Obviously, besides just the extra money there will have to be other sacrifices. Night and weekend activities will now be replaced with homework, papers, and study.

Tools

This is a special category of other investments. A tool is something that can produce income or reduce expenses. We plan on investing in tools that last for a long time.

Delta 26-2250 12″ Dual Bevel Sliding Cruzer Miter Saw

This is a large miter saw, but unlike some of the others, it can be used close up to a wall so it doesn’t take up as much shop space. We plan on building a miter station around it.