Lately I’ve been hearing about some terrific plans that others have made for early retirement and financial independence. Even though I’m still fairly young, I don’t think it’s a bad thing to be dreaming of the days where we are no longer beholden to the chains of a 9-5 job. If anything, thinking about the future gives me extra motivation to save!
I thought I would share the details for how I plan to reach financial independence, as this goes hand in hand with early retirement for me. I’d like to go the non-traditional route, where I reach financial independence, still work, but not depend on the income.
Having the freedom to do what I like, when I like, is very important. There are so many hobbies I’d love to explore that I don’t have the time for right now, and I wouldn’t want a miserable job to get in the way of that. If I make money doing what I love, great. If not, still great! I want to be in control of how I spend my time. After all, we only have so much left.
Step one: get out of debt
Obviously, I need to pay off my student loans before any of this can remotely become a reality. I have been working hard at this all last year, and I am really hoping to be able to pay off these loans early next year. I don’t have a specific date because as frequent readers know, so many things are still up in the air for this year.
I’ve already made a few extra payments this month, and I’m planning on putting most (if not all) of my tax return toward my smaller loan. It’s getting close to the $3k balance, and if I could have that one loan paid off by the middle of this year, I’ll be thrilled! Then I can proceed to roll over the extra payments I was making on that loan to my bigger loan. Exciting!
Step two: move and reduce expenses
You all know that I’m planning on moving to lower expenses, mainly rent. The main goal of this is to accelerate payments to my student loans (anything I manage to cut goes toward it), and after those are paid off, to accelerate saving.
R is pretty much going to follow the same path as I am. The only reason I’m centering this more around myself, is because he doesn’t seem very enchanted with the idea of early retirement (yet). He thinks he would get bored and doesn’t mind working longer than I plan to.
We are willing to continue living frugally in the spirit of getting these nasty loans taken care of. There will be no lifestyle inflation until that occurs, and even then, there’s not much more that I can think of that we truly need. Ideally, once the loans are done, I’d continue saving the amount I was putting toward them.
Step three: advance in careers
The ideal scenario: we move, R receives a promotion, gets more bonuses, and in a year, possibly gets promoted again. R was hired on as a manager trainee, and the company encourages employees to move up the ladder.
R has an amazing work ethic, and I’ve always admired that about him. He worked at a grocery store for 4 years (during college and after), in hopes of getting into a full-time management position there. They were taking too long and making empty promises, so he left. I have no doubt he would make great management material, and he is willing to take on the long hours for the big bucks.
We’re hoping this will allow us to essentially live off of his income alone, saving mine and maybe part of his. This probably won’t be a reality for another three or five years, but we can dream, right?
In case you’re wondering about me – I’m still undecided as to what I want out of a career. I’d love for a law enforcement opportunity to crop up for me in our future destination, but if not, I want to try freelancing or making income online. I wouldn’t turn down a regular full-time job if the pay, location and people were right. It just depends on how things turn out. I would feel much more comfortable giving freelancing a go once we could live comfortably on R’s salary.
Step four: create multiple income streams
I would really like to get into rental properties, and R has interest in remodeling a home. While both are very far-fetched right now, they could be future possibilities.
Investing is the other choice avenue, specifically dividend investing. I’m still new to all these ideas, but I’ve heard great things about putting your money to work for you, and fully plan on doing that.
I would also like for R and I to develop a side hustle that we can do together, like flipping furniture. My dad has all the tools, it’s just a matter of having the space and time for it. Working on the blog gets lonely sometimes. R is a horrendous writer (his words), so I doubt he will ever have interest in it.
Step five: save aggressively for retirement
I am happy to say I finally opened an IRA this month. I knew I would regret it a lot if I didn’t start “early.” Time really is on my side, and I need to use that to my advantage. Sadly, I’ve never worked at a place that offered a 401k, so I am technically starting a bit late.
R has a 401k with his company. While he doesn’t like seeing the money being taken out of his paycheck, I’ve managed to convince him it’s for the best. Even though it can’t help him out right this second, it will be there in the future, so it’s not going to waste, as he likes to put it.
Being able to live off of one income would be huge for this goal. I admire those that can put one salary toward savings goals. Any extra side income would go straight to this as well.
Step six: relax and enjoy
I don’t have any “set in stone” plans for early retirement, nor do I have any numbers. I have no idea where or when R and I will end up settling down, and we probably won’t be buying a house until then. Considering he currently plans on working until 45ish, I’m perfectly fine being able to pursue my own interests while he does that.
We both have dreams of traveling around, and while I would like to go sooner than later, hopefully he’ll have acquired a decent amount of vacation time in 10-15 years for us to be able to take some nice trips.
That’s about it in a nutshell! Pay off debt, save, find a career path, save some more, create several income streams, live off of one salary, put more toward savings, and then enjoy the efforts we made early on.
Do you have any plans to retire early or become financially independent? What steps are you taking to get there? If neither of these interest you, are you taking a traditional path to retirement?