Welcome to the third update for the Guinea Pig (GP) experiment. The GP experiment allows us to follow the entire journey of someone going from $0 net worth to financial independence, using real-time market returns.
So, it seems the market has continued its march upwards since our last update. The GP is making great progress and is no doubt feeling pretty happy about his decision to pursue FI.
Let’s take a look at the FI Laboratory graphs for both the normal and the optimized GP scenarios (if you haven’t started tracking your own progress yet, use Personal Capital to automatically calculate your net worth and then plug your numbers into the FI Laboratory to see if you can keep up with the Guinea Pig).
Here are what the normal scenario contributions looked like last month:
FICA Taxes: $459
Federal Income Taxes: $943
Taxable Investments: $2,398
Total Invested: $2,398
Rather than plow money into taxable accounts like the Normal GP, the Optimized GP has instead continued front-loading his 401(k). He’s nearly reached the contribution limit on his 401(k) so he’ll soon be shifting his contributions to his IRA. Here are what his contributions looked like last month:
FICA Taxes: $459
Federal Income Taxes: $276
Employer 401(k) Match: $180
Total Invested: $3,245
In both scenarios, all money gets invested in VTI, which is Vanguard’s ETF version of their Total Stock Market Index Fund (note: only whole shares can be purchased through Vanguard so there may be some cash left over after each month).
On May 30th, 2014 (The GP’s payday for May), VTI closed at $99.62. Here’s how the GP portfolios look after the fifth month:
Taxable VTI – $12,253
Taxable Cash – $81
Total Portfolio Value – $12,334
HSA VTI – $3,487
HSA Cash – $59
401(k) VTI – $13,449
401(k) Cash – $23
Total Portfolio Value – $17,018
Well, not much excitement in May but the Optimized GP is making great progress and has saved nearly eight months’ worth of expenses in just five months.
Even though the GP hasn’t made any big mistakes yet, head over to 1500days.com to read about some of the financial mistakes I’ve made over the years: 10 Questions with the Mad Fientist.
How have you done? Have you kept pace with the Guinea Pig this month?
Guinea Pig - Update #4
Check out the six-month update of the Guinea Pig experiment and learn about the first ever Mad Fientist Fience Fair in Washington D.C.