Today we have a guest post from Jon. He blogs at Money Smart Guides and he is working toward early retirement.
Jon’s Early Retirement Adventure
I want to retire early. I’m just not a fan of having a commitment of 40 or more hours a week, 5 days a week for the next 30 plus years of my life. It’s not that I don’t like to work, I just don’t like the idea of being tied down to an employer. I’d rather retire and do the things I want to do. So this post is all about why I want to retire early and the steps I’ve taken to achieve it, as well as some potential roadblocks ahead.
Why I Want To Retire Early
At the end of the day, I want to retire early so that I can have choices. But let me back up for a minute. When I say I want to retire early, I am not talking about leaving the workforce completely. Even when “retired” I still plan on working, I just won’t be working 40 hours a week. I want to work if I want to, and travel or relax if I’d rather do that.
Additionally, I want to be there for my kids. I want to see them grow up. I want to be able to attend their soccer games or cross country races. And by attend I don’t mean just get out of work early enough to be there. I want to be present and not have a big looming work project on my mind or be exhausted because I just worked 85 hours last week and am running on no sleep.
Start of My Early Retirement Goal
I can remember the conversation like it was yesterday. In fact it was a little more than 6 years ago. I was out in Pittsburgh visiting my best friend. We were driving back from an all-day mountain bike excursion when I told him I need to find other ways to make money. Without hesitation, he told me how he knew that living on a teacher’s salary wasn’t going to cut it for him. It wasn’t that he wanted to buy mansions or fancy cars, it’s just that he wanted options in life, options that having money allows for. We went into detail about how we needed to increase our incomes so we could retire early. From that day, we have been each other’s ally in attaining early retirement.
When I got back home, I made it a point to sit down and create a plan to help me reach early retirement. The first part of the plan was to set up an automatic investing plan into a mutual fund I had just bought and I increased my salary deferral to my 401k plan. I knew that my first step was to save as much as I could.
Adding Income Streams
Once I had increased my savings, I needed to increase my income. I was fortunate enough to get a 5% raise at my work, but I needed more money. I started looking into various side income streams. In college, I used eBay to help me survive so I started going to yard sales again and reselling items.
My next venture was blogging. Actually, it was selling guides to be smarter with your money. I was going to post ads in newspaper classifieds, but decided a website might be a better idea. Over time, I slowly realized the income potential with blogging and shifted my focus to this and made my guides a subset of my blog. Today, my blog brings in a decent income. This income is not accounting for in the monthly budget however. After money is set aside for taxes and some more is put into a savings account to keep the business running, the rest goes towards personal savings. I opened up and max out a solo 401k plan and split what is left into my health savings account, taxable investments and mortgage pre-payments.
Forging Ahead
About a year and a half after starting my blog, I met an amazing woman and after dating, we married last year. She has a great job with good income, so we have been able to save a substantial amount of our income each year. It helps that she is totally committed to early retirement as well and has the same mindset as me. Without her support, who knows where we would be.
Through meeting her, I was able to turn my house into a rental property as I moved into her house since it was closer to work for both of us. Having someone else pay my mortgage is awesome and while building equity in my house is taking time, it is an important step in helping us to reach early retirement.
Where We Stand Now
As I write this, we are on our way to early retirement. Our investments are worth mid six figures and we are both in our mid-30’s. We would love to be done with work by age 50, of course, neither of us would complain if it happened earlier!
Going forward, we are making it a point to keep our expenses as low as possible. We are also saving to buy more rental properties. In a perfect world, we would end up with 10 rental properties. When I do the math, having this number of properties would essentially fund our retirement by covering our basic living expenses. If we needed money for one-time situations we could tap our investments. Also, we would consider selling a rental to help pay for a part of our kid’s college education or help them pay a chunk of their student loans.
But even with our current success and our plans for early retirement, the future is uncertain.
The Uncertain Future
For one, I lost my job late last year. I have been self-employed since, using my blog to generate an income. This is both good and bad. I love blogging and having the freedom it brings, but as any self-employed person knows, the income varies each month and this makes it hard to budget. I am happy that I do save as much as I do from my business income, but the idea of going back to a full-time job tugs at me. I’d love to have the higher salary and still keep my blog income. But, I would be devoting less time to something I really love doing. As with anything in life, there are trade-offs.
Additionally, my wife is considering a career change and while we do not have kids at the moment, we are planning to start a family sooner rather than later. All of this will have a huge impact on our goal of early retirement. We are making it a point to save everything we can and invest everything we can since we don’t know what the future holds. But we are both confident that as long as we plan the best we can today, tomorrow will work itself out. In other words, we are putting ourselves in the best possible shape to weather anything that happens in the future.
Final Thoughts
Overall, I feel we have made great strides in reaching our early retirement goal. I continue to find ways to bring in additional side income on top of my blogs and my wife and I remind each other that the path to early retirement is a journey, not a sprint. We aren’t going to save a million dollars tomorrow and suddenly find ourselves retired. We have to work at it every day to put us in position to retire early, whenever that time comes.
Bio: Jon writes at Money Smart Guides a personal finance blog that helps readers get out of debt and begin investing for their future. There you will find simple, straight-forward advice to take control of your finances and reach your financial goals.
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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Hi Jon,
Came across your site recently and have very much enjoyed it. Having “retired” several times in my life before 40, I am in total agreement that a huge part of what happens after leaving is a personal growth process. Though there were moments of panic, doubt and a fear of the unknown, I wouldn’t trade the experiences I had for the world. Learned new languages, lived in other countries and got to enjoy the retirement life while I was still young and healthy enough to do so. Waiting til 65, there are no guarantees, and as I’ve seen firsthand during my “retirements” some folks are simply too old and burnt by that time to take full advantage of the time they have left. I’m back to being a wage-slave and feel that my past experiences are helping to curb some of the truly impulsive stuff that I already did 10+ years ago. On the other hand, knowing to some degree what awaits in the process of jumping again, and being older and physically creakier now, my main financial concern is health(and insurance). Each time I have a medical visit or have a prescription filled, I thank my lucky stars that my company has great insurance and I pay very little out of pocket. Claims are rarely denied, and my monthy health insurance premium is incredibly low. So…long story short….I was wondering what your approach to health insurance is, especially with kids (I’m single btw). Are you covered under your wife’s insurance? If not, what would you suggest? I looked at COBRA, which would allow me to keep my current insurance for 18 mos, but at an outrageously high monthly cost. Perhaps one option would be to do as the older retirees do, and plan on an overseas medical out-of-pocket trip if things get severe?
Great to hear your story Jon, sounds like you’ve achieved a huge amount already and are well on your way to being financially independent. I also like your comment about working at it each and every day – it really is something that takes a consistent commitment, something I struggle with day to day as it seems like such a distant goal for me.
But the best part of all this is that you met someone who shares your ideas and goals in life, wonderful to hear 🙂
I feel the pain too, Jon.
I think one of the things that push people to FIRE is mostly the lack of balance in modern working life. People are now expected to be available and responsive almost 24/7 and weekends, holidays, vacations are getting encroached upon. It’s tiring and you feel almost under bombardment with conflicting priorities. And, throw in the portability of cellphones, you can almost never get away from it.
After awhile, you just start getting numb to it all. I imagine that it’s even worse for working parents.
But, it looks like you’re on the right track with real estate. IMHO, it’s the way to go.
Good luck and keep swinging!
Great point Jason. One would think that technology would give us more freedom at our jobs, but in reality it hasn’t. It keeps tied down even more. I think there has to be a complete shift in the way we look at work. At my last job, I hated having to be there for 40 hours a week. Many times, I finished up my work and had gone around to my colleagues to see if there was anything I could help them with. Most times, there wasn’t. While I was able to find some work to pass the time – clean up my emails etc. – there were times I resorted to just surfing the net. A complete waste of both my and the companies time.
Jon’s story is very similar to my own. The kids and all the expenses seemed like it happened overnight. We just had to adjust our goals to make sure early retirement did not get set aside when the first of the two boys arrived!
Hi Jon – great blog! I did the corporate life myself for many years and left it when I got laid off. I am now a NYC financial planner running my own practice and love the flexibility in working hours as well as working with individuals at all stages of their lives. I was wondering if you are incorporating a Roth IRA into your strategy? Also, rental properties are great but make sure you establish an LLC to protect yourself from any lawsuits .
We do have Roth IRAs. As of this writing we make too much to contribute directly, so we opened up Traditional IRAs and do the “backdoor” conversion.
Jon, you have the right philosophy and are well on your way to early retirement.
Here are a few of my favorite quotations to help you keep focused on your dream.
“Getting a job and trading your time for money may seem like a good idea. There’s only one problem with it. It’s stupid! It’s the stupidest way you can possibly generate income! This is truly income for dummies. Why is getting a job so dumb? Because you only get paid when you’re working.”
— Steve Pavlina
“All paid jobs absorb and degrade the mind.”
— Aristotle
“Sometimes it’s important to work for that pot of gold. But other times it’s essential
to take time off and to make sure that your most important decision in the day simply
consists of choosing which color to slide down on the rainbow.”
— Douglas Pagels
“Have you ever heard of a wage slave? Even worse . . . are you one? Wage slaves
may live in big houses. They might drive Porsches. It doesn’t matter how “rich” you look, if you can’t walk away from your job — even for a second — because you
would no longer be able to pay the bills, you’re a wage slave.”
— Sara Glakas
“It’s more satisfying to dig a ditch with friends than to design a skyscraper with a team of sociopaths.”
— Jessica Hagy
“If your success is not on your own terms, if it looks good to the world but does not
feel good in your heart, it is not success at all.”
— Anna Quindlan
“The three most harmful addictions are heroin, carbohydrates, and a monthly salary. ”
— Fred Wilson
The way I see it, you will have attained true freedom in this world when you can get up in the morning when you want to get up; go to sleep when you want to go to sleep; and in the interval, work and play at the things you want to work and play at — all at your own pace. The great news is that retirement allows you the opportunity to attain this freedom.
Ernie J. Zelinski
The Prosperity Guy
“Helping Adventurous Souls Live Prosperous and Free”
Author of the Bestseller “How to Retire Happy, Wild, and Free”
(Over 225,000 copies sold and published in 9 languages)
and the International Bestseller “The Joy of Not Working’
(Over 275,000 copies sold and published in 17 languages)
Great quotes! Thanks for sharing ????
I love quotes and these are awesome!! Thanks so much for sharing them. I am printing them out as I type so I can keep them as reminders.
Jon,
Sounds like you’re doing great to me.
I also have the same goal – freedom. Call it retirement, financial independence, or whatever you want. Doesn’t matter to me. I call it freedom. The freedom to be able to spend your time however you want is priceless, and beyond any amount of money.
Best regards!
Thanks – and I agree, all of those can be used interchangeably and they all mean the same thing.
I had the same debate about writing/blog career vs. working a traditional full time job + side hustle to reach early retirement. I’ve decided to go the blog route for now since it does feel like a way to have more freedom now AND still save for retirement.
The great thing is that your choice isn’t set in stone. You can review your plans and choices in a few years and make the change if needed. Having a plan allows you to do this. Without a plan, you would just keep doing the same thing and would never know if it is the right choice or not.
I like the fact that you pointed out that early retirement gives you options and that it doesn’t mean one should stop being productive and contributing to society.
I think too many people look at retirement the wrong way. I don’t want to just sleep in late and lay around all day long. I want to do things (granted sleeping in late might be one of them) that I love to do and that excite me.
Continued success on reaching your goal. I will be sure to check out your site.
Jon – thanks for sharing your story. I think it’s representative of what so many people really want but don’t believe they can have. When my husband and I decided we wanted to retire early, we started getting our financial education and looked at keeping his job but adding multiple streams of income. We now have 3 rental properties and just put an offer in on a 4th, which we want to do as a flip so we can raise more capital to get another rental. I think 10 is a good number too. If you feel confident about real estate, don’t be afraid to ask people to invest their money. There is a lot of private money out there. We joined a real estate investment group and that has helped our confidence. The 2nd thing we did was to start a business but not from scratch. We didn’t have the time or money to invest in a start-up. Instead, we became a strategic partner with a life sciences company, working to bring their new technology and product to market. It’s not easy but has given us huge personal growth, a new outlook, and slowly but surely, another passive income stream that has the potential to far exceed real estate investments. You just have to keep your eye on the prize! Thanks!
Thanks for the tips Kari! I have to look into a real estate group to join. Being just outside a major city, I am sure there are plenty of groups to look into.
I think the key to reaching a big goal like this is staying motivated no matter what happens. If you keep pushing through, I’m sure you’ll get there!
Agree…we have smaller monthly and annual goals to hit as opposed to just looking 15 years into the future. I think if we only looked that far out, we would easily lose motivation.
My wife and I are on the same wavelength when it comes to early retirement. It’s great when both spouses can do the same. Makes the journey much easier.
Having a kid is going to add more cost to your budget but there are many ways to reduce the cost.
It is nice to have your spouse on the same page. I wouldn’t have married my wife if she wasn’t.
As for kids, we’ll do a ton of reading to see how to be smart with keeping the expenses down. It’s all about learning to put yourself in the best place.
Way to go, Jon! Sounds like you are well on your way to an early retirement sooner than the traditional retirement age for sure.
I wouldn’t worry too much about kid costs. You can make then as large or small as you want to (within reason bounds of course).
I am a little concerned, but my wife and I are on the same page when it comes to buying clothes and toys. So hopefully the expenses won’t be too extravagant over time.
My husband and I are on the same wavelength. We don’t want to keep working like crazy dogs for the rest of our lives. We both work 50-60 hours a week, not counting commuting time and it is stressful and draining. A lot of people get used to it and justify it by getting a bigger house to fill with more things. We are trying to avoid that trap!
Good to hear. I agree that many others just get used to that lifestyle and buy more things. It’s always interesting to take a step back and ask yourself if you really need it when buying something. Most times, the answer is no.
Having a plan is the first step in getting real freedom back. Good move on the rental property, as having others pay off the mortgage is financially smart. I would have liked to see more on what investments you prefer, index funds, etfs, dividend stocks? Good overall summary though.
I am mainly a passive index guy. I have started though to buy into some dividend stocks for the income they throw off, but this will only be a small portion of our overall portfolio.
My husband and I feel exactly the same way–we crave the freedom of financial independence. Like you, we still plan to work after we retire early, but not in an office, not for 40 hours a week, and not for other people. It’s so wonderful that you and your wife are working together towards your goals. That’s so important to my husband and I and it’s really what makes it all possible. Thanks so much for sharing this!
If we weren’t on the same page, then there is no way we could reach our goal. Having someone else on the same team really helps to keep pushing forward in times when the journey just seems too difficult.
Good luck to you and your husband for reaching your goals!
Kids are expensive. They bring tons of joy….and most Americans don’t want to have just one kid. So, figure approx $500K in 2014 dollars to raise 2 kids from birth to age 18…. Add another $300K for the cost of two 4-year university educations including living expenses to get them from 18 to 21, graduated and out of the house. Finally, add $50K-$100K if you have a couple of girls – for their weddings X 2 or for boys…for a new car x 2 … Poof… There goes a cool $1M ….
Curious – What kind of income does your blog generate (annually)?
Did the income rise when you went from working on the blog / web site full time versus part time as when you were gainfully employed?
What caused the loss of employment – could there be a “fatal flaw” in your demeanor or capabilities that could impede your ability to find work in the future?
Yeah, kids are expensive! We have agreed that paying for our kids college isn’t a priority for us. We both had some help from our parents and then took out loans for the rest. We are going to do the same for our kids. But that still leaves a lot of expenses up until college.
I was laid off from my job because the firm wanted me to go in a direction career-wise that I didn’t want to go. They gave me a nice little severance package and I was out the door. Since I have been blogging full-time, my income has gone up (as compared to when I was just doing it part-time). I am almost at the level annually where I would be if I was still working a full-time job.