Our Complete, Updated 2024 Written Financial Plan

To be honest, not a ton has changed recently in 2024 with our written financial plan. However, I realized that our complete and most updated written financial plan was not easily available in one single post anymore.

So, I am here to fix that!

I will first note that, as with my initial post, this is our actual, genuine word-for-word written financial plan. Nothing is omitted or missed or conveniently forgotten. I’ll always be 100% authentic with you or else what is the point?

To present our plan, I’ll list each section separately. Any items that we have completed will be crossed off. Anything that is still in process will be bolded. Anything in just plain regular font means we haven’t completed or done it yet…

For a full discussion of why the last 7 changes were made to our plan, this post goes in detail.

Selenid and Jordan’s Financial Plan

Financial Priority List

1. Pay down high interest loans (>8%)
2. Establish emergency fund (3-6 months of expenses)
3. Maximize VDC (403b) retirement account
4. Pay down medium interest debt (6-8%)
5. Maximize 457 retirement account
6. Contribute to backdoor/spousal Roth IRA
7. Invest in better cash-flowing real estate (expected CoC return >10%)
8. Contribute to 529 accounts
9. Contribute to taxable investment account
10. Pay extra to mortgage
11. Pay off low interest debt (<3%)
12. Maximize charitable contributions

As you know from my earlier plans, this first section is a priority list of where we want our saved money to go.

In this iteration of the updated written financial plan, maximizing my 457 account and contributing to Roth IRAs and a taxable account for both of us moved up the list.

We also have been able to “fill more buckets” and contribute to the majority of the priorities at this point which is very exciting!

General Financial Guidelines

• Save at least 30% of income every year (includes debt payments)
• Review and square budget on the first of every month beginning 7/1/2020
• We will calculate our net worth every 6 months
• We will calculate our savings rate and our total return and real return each year (1/1)
• We’ll use our credit card only once balance is at $0. At that point, we will use it for everyday purchases and will pay it off in full every month
• We will not use credit to purchase automobiles, appliances, or vacations

This next section lists the general “rules” of our financial plan

So far so good here. And no changes.

These are things that we basically agree that we “have to” do. There is no argument when it comes to these items. We do them without thinking.

Not a ton of change here. Our goal savings rate is still at least 30% although it currently is around 40%.

Instead of steadfastly saying that we check out net worth every 2 months, we went more lenient and said every 6 months.

We also eliminated the possibility of safe, fixed income investments from our account. We have better places to put our money when we reach closer to financial independence (see priority list above).

Specific Financial Goals

• Pay off consumer debt in 2 years (2022) (Woohoo! Done!)
• Pay off student debt in 5 years (2025) (On pace!)
• We will be worth $1 million in 12 years (2033) (On pace!)
• Save $40,000 to buy car 1 in 3 years (2023 – done!), save $40,000 to buy car 2 in 6 years (2026)
• Save enough to cash flow at least $250,000 in retirement (goal retirement at least 2045)
  • This will be via hybrid approach using equity and real estate investing
  • Save $1-2 million in equities for 4% yearly withdrawal of ~$71,000
  • Cash flow >$200,000 from real estate investments in 5 years (2025)
• Save $400,000 for Samuel/Emery/Camilo for college
• Save $250,000 for renovation/down payment new home
• We will pay off the mortgage on the home we are living in when we retire

This section delineates our specific financial goals

I am a huge believer in goal-setting. Goals should be specific and should be BIG. Once you have a goal, all that you need to do is plot the course. Without a goal, you’ll never arrive at one.

Nothing has changed here. Well we did add one more kid whose college we want to pay for. But still, we are on pace to reach all of our goals.

Our other goals include our cash flow plan for retirement has not changed. A lot of people ask me how we came up with this number.

And I don’t have a good answer. It’s arbitrary. We estimated out our expenses in retirement knowing that we will not have to save for retirement, not need life insurance etc., not be paying for our kids’ daycare/school. But really, how can we forecast that far into the future? We can’t. So, we just picked a way bigger number than we estimated we would actually need. I’d much rather overshoot.

Here is a helpful guide to estimate your goal retirement nest egg.

General Investment Plans

• Our primary equity investment vehicles will be stock index mutual funds and bond index mutual funds, preferably within tax-sheltered accounts
  • These will primarily be funded through Jordan’s income
  • We will strive to minimize the effects of taxes and expenses on our investment returns
  • In general, we will favor passively managed investments over actively managed investments
• Our primary real estate investment vehicle will be cash flowing rental investment properties with goal 10% cash-on-cash return to reach our real estate goals
  • This will primarily be funded by current rental income as all cash flow from real estate will be re-invested in real estate
• We will strive to achieve a real return of at least 6% per year, averaged over our investment lifetime
• In a market downturn or bear market, we will not panic and sell low; however, we will try to use any truly extra cash (not emergency fund, etc.) to rebalance by buying more stock (or other depressed equity)
• We will tax loss harvest any losses >$3000 each year
• Once we are 50 years old or our net worth is >$1 million, we will meet with an estate planning attorney

Here are some general guidelines for our investment strategies

No changes here.

We still use a hybrid approach with both equity and real estate investing.

For equity investing, we use only broadly diversified low-cost index funds. For real estate investing, cash flowing rental properties with >10% cash-on-cash returns remain our primary vehicle. We have 1 such property that cash flows over 22% and are closing on 2 more currently.

Equity Asset Allocations

• Maintain a 90/10 stock/bond allocation, decreasing progressively to at least 60/40 by retirement
• Our primary asset classes will be domestic stock mutual funds, international stock mutual funds, and US Government bond mutual funds
• Our equity allocation will include domestic, international, and emerging market stocks and large-cap, mid-cap, and small/micro-cap stocks.
  • We will also allocate a percentage to REITs and other alternative asset classes if they promise diversification benefits and solid long-term returns
  • For the most part, these will be broad total market index funds, but they may be supplemented by small amounts of value index funds as needed to maintain a slight value tilt.
• Our 403b will be in the asset allocation below and which we will rebalance yearly
• Our 457, taxable, Roth IRA accounts with be using a 2 fund strategy with a TDF and small value index fund
• Our bond allocation will be split 50/50 between nominal bonds and inflation-indexed bonds in tax-sheltered accounts as much as possible.
• Our emergency fund will be in a savings account and will not count towards our overall asset allocation
• Rebalance 1x each year (July) by buying more stocks/bonds as dictated to maintain goal allocation

Initial Asset Allocation:

• 40% US Stocks
• 35% International Stocks
• 5% REITs
• 10% US Bonds
• 10% TIPS (Inflation indexed bonds)

The main changes here are an increase risk tolerance with a higher stock ratio in our asset allocation as well as a transition to a two fund portfolio construction moving forward.

Again, those changes are detailed in more depth here.

Future Changes

• Any change to our financial goals must be agreed upon by both Jordan and Selenid after careful consideration of short and long term benefits and risks
• Any change to these investment percentages or change in funds used will require a 3 month waiting period
• Development of any new asset class or new funds allowing us to invest in an asset class such as international small or international value stocks will require a 3 month waiting period prior to transferring funds

This section is evergreen.

And this is the system we used to make these more recent changes to our updated financial plan!

So there you have it. That is my updated written financial plan.

I would expect that any changes in the coming years are somewhat minimal as we feel pretty sturdy and confident in this plan. But as always, time will tell and then I will be the first to tell all of you right after anything happens, as always!

I hope that this helps you as you work your way towards financial freedom just as I am!

Looking to get started?!

1. Join the PPS Facebook group to network and learn from likeminded individuals!
2. Calculate how much you will need to retire using a simple equation
3. Learn about stress-free stock market investing
4. Let me show you why real estate investing is a wealth accelerant

Or, watch my Masterclass Webinar on The 12 Steps to Financial Freedom for Physician here!

What do you think? Do you agree with our updated written financial plan? What would you change? Do you have a written personal financial plan? What does yours say? Leave a comment below!