I have a whole post dedicated to the reasons for saving money. However, I think it’s about time for me to open up and let you know what my PERSONAL plan is for the next few years. What is my main reason for saving, finding ways to earn more, and growing my net worth without sacrificing happiness? Why am I dedicated to this lifestyle so much that I want to shout it from the digital rooftops? The answer is time and freedom. So here’s the situation:
I am 30 years old.
I plan to “retire” before I reach my 40th birthday:
- Failsafe Goal: Retire by 39
- Realistic Goal: Retire by 36
- Aggressive Goal: Retire by 34
When I say “retire”, what I really mean is reaching financially independence. I no longer need a salary to live out the rest of my days. For me, that means moving on from a 9-5 grind.
How I plan to get there
- Salary: I have been fortunate enough to make what I consider a decent salary in NYC. I have climbed a few rungs up the corporate ladder, but I still don’t make the $80k per year that some claim is necessary to live in NYC. If you are interested in retiring early, you have to have an income of some sort. Working to increase your income will get you there faster.
- Saving: I plan on cooking many of my own meals, as well as avoiding cabs. I refuse to pay for cable, sign up for Groupon, or let my monthly bills get out of control. I should be able to save a large portion of my income with these saving strategies and I will actually improve my quality of life by eating healthier, tastier meals, avoiding too much TV, and walking more.
- Index Fund Investing: I will continue to take a large portion of that savings and pump it into my 401(k), IRA, and taxable accounts at Vanguard. The money there will work for me, creating more money, which in turn creates even more money! When I have enough money that 4% covers my expenses for the year, I’ll be ready to retire*.
- Real Estate: I am in the early stages of my real estate investing strategy. Thanks to FI Fighter and his posts about turnkey real estate investing, I have discovered this new path to passive income. I have a very simple formula for accounting for my real estate income: Annual expenses – annual real estate income = net annual expenses. I will use 4% rule described above on my net annual expenses, meaning I should be able to reach financial independence faster and be able to retire sooner.
- Passive Income Projects: I hope to look at various online projects that will make me passive income. This is last on the list because I have a lot to learn to understand this and if I can even pull it off. I promise to keep you updated along the way!
Along the way
You might think that I will need to make sacrifices in order to reach my goal. I’ll be living a life that is “less than” in the meantime. Nothing could be further from the truth. I still get to live in one of the greatest cities in the world and I plan on taking full advantage of that. I will go on NYC adventures[link]. I will experience the amazing art scene of New York. When I do eat out, I plan on eating delicious, cheap, and fun foods that make New York so unique. I will still spend money on traveling as I have prioritized travel over purchasing “things”. I will get to spend time with friends, as well as my band. I will be generous with my time and make my charitable giving go further.
Oh, and I definitely plan on drinking (and brewing) beer. The next few years could very well be the most full years of my life! No, I won’t feel as though I am sacrificing my lifestyle.
What happens when I retire
Early retirement means different things to different people at different times – so I’m not 100% sure. That’s part of the fun. But I know that I won’t be bored. If I retired today, I have plenty of activities and areas of focus to keep me busy. I’d have a chance to visit other states as well as do more of the activities I currently love**. However, four to nine years from now, my goals, hobbies, and priorities may change drastically. As long as I keep asking myself what those priorities are, I will never be bored. And just because I retire, doesn’t mean I am forbidden from ever doing anything that could make me money in the future. For instance, if I wanted to create a non-profit that promoted financial education for kids or start a new e-commerce site, just for fun, I would. I wouldn’t let the fact that technically I would be “working” stop me from pursuing those goals. The difference is, I am free to pursue those goals or not on my own terms (plus if a project doesn’t work, I can easily move on to the next one). The freedom to pursue goals, relationships with friends and family, travel, and get out of my comfort zone are what financial independence is all about.
* I plan to save a little more than 25 times my annual expenses, as a failsafe for future plans. I have to be careful here though because it would be easy to go overboard and never feel as though I have enough of a nest egg.
** If I retired today, you would all likely have to endure even more posts from me!
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