FI – FREEDOM.
I am sitting here looking at my “FI Life” to do list and so many of our boxes have been checked off already. I suppose I will need to keep adding to the list, there’s always room for improvement, right? Curt and I have been working H-A-R-D. Totally laser focused. We are determined. We WILL retire early. On a beach somewhere – watching our children grow, experience new cultures and finding adventures. Are you skeptical? Read on.
If you are tardy to the party and are wondering, “What is this FI-Life? What is she talking about?” There are people much more able than myself to tell you. I would highly recommend you check out a few of the different sources listed below.
Mr. Money Mustache’s site is basically required reading, I would start here with this classic, The Shockingly Simple Math Behind Early Retirement. As is JL Collins’ site, The Simple Path to Wealth. Mr. Collins has a book of the same name, mentioned in my previous posts. GET IT. If you are into podcasts, like me, the gentlemen at Choose FI are top notch, as is the Mad FIentist (which is how I first learned about FI). On Choose FI – I would specifically listen to episode 38, The Why of FI, and episode 21, The Pillars of FI – they have a great website too, you can check that out here. If after reading and absorbing all of this information you have not crossed over to our tribe, well…then, you enjoy working and would not mind doing so until you are one foot into the grave – me? No thanks. I’ve already wasted so much time. There is no more time to waste.
You may also be wondering how we intend to do this. How do we intend to go from a NEGATIVE net worth to between $500,000 and $750,000 in 8 years? And how on earth can we survive the rest of our lives on that amount? (You should know this by now – if you have not gone back and read the suggested posts above. Shame on you – do that now…really – DO IT.)
Here is a synopsis of how we intend to do it. We are focusing on three (well maybe four) areas:
- Paying down debt with a fervor – no new debt!
- Saving aggressively – currently we are at 20% but the goal is to increase to 50% as debt is paid off and expenses are reduced. (We were at 10% just 66 days ago, so doubling our existing savings rate in 2 months is REAL progress)
- Reducing expenses.
- I would also consider the rehab of our home as part of our overall objective. Every dollar we spend on the house must have a good rate of return. Every repair or improvement must bring value. We also save on repairs by comparison shopping and doing much of the work ourselves. (Since purchasing our home as a foreclosure in October, we have added more than $100,000.00 to its value.)
If we do these three (or four) things – there is no reason we cannot meet our goal. Its called MATH.
When I sat down to update the numbers, check balances, and analyze our spending and savings, I was nervous to plug it all and compare. I was worried that there would be no overall gain. I don’t know why I worried – again – MATH. Reducing spending + increasing savings – always equals more money in the bank.
So what are the gains?
We have an overall gain of $24,309.00 in 66 days – a 46 day gain of $18,989.00. Keep in mind that some the gains are carry overs from June and July that did not make it into the July spread sheet. What is the bulk of this? Its mostly retirement. But we also paid off quite a bit of debt as we have reduced our spending significantly.
(Your income may not be as high as ours – admittedly, we are high wage earners. However, we also have a very high cost of living – living in San Diego is not cheap. For your circumstances, focus not on the dollars, but the percentages. Many, many other FI-ER’s are not high wage earners and FI can be achieved by every income bracket.)
The following are some of the highlights of the “wins” since the last update:
- Cut cable – savings of $200.00 a month.
- Purchased 3 Fire-sticks. We have not missed cable one bit.
- Cut food spending by 50% (yes – 50%. HUGE budget buster)
- Paid off 3 consumer accounts and 3 other bills (consisting of tuition and dental work) – Total monthly savings of $1531.00
- Cancelled Gym memberships – savings of $125.00
- Put power on a peak savings plan and utilized the “super cool” method to cut A/C expenses. Not sure of the savings yet…July and August temperatures fluctuated greatly and I have not seen the new bill yet. October should give us a better picture.
- Opened a Vanguard VTSAX SEP IRA account and funded a total of $10,000.00.
Our plan for the coming months is to continue doing much of the same, but specifically:
- Pay off Wendy’s car.
- Pay off at least one credit card.
- Call mortgage company to see if we can get PMI taken off with an appraisal.
- Open an IRA for Curt to supplement his retirement from his employer.
- Supplement Wendy’s income via Real Estate to speed up debt reduction and savings.
This train is chugging. We are gaining speed. There are hills up ahead, I am sure, and we cannot quite see what is around every corner – but we know our destination and we are undeterred.
I’d love it if you all would hop on, grab hold and join us.
Love and Prosperity,
Your Girl FI-day.
***The picture was taken by my friend Tara Ross (so please do not copy or share without permission). It captures the spirit of the freedom financial independence brings.