To quote Hannibal from the A-Team, “ I love it when a plan comes together”. To reach goals in life it seems to be that having a plan is not only advised it is imperative. I’ve had a plan in my head/laptop for early retirement through financial independence for around 12 months now. I hope by letting you guys know what the plan is my level of accountability will go up.
Lets start with an outline of what position I started from … cue DeLorean and Doc Brown as we go back in time….
I got married in September 2015 to my beautiful wife. We were wedded at Caesars Palace in Las Vegas and then honeymooned for a month in California. Our trip included Lake Tahoe, San Francisco and Napa Valley.
I’ve not always been good with money, especially when I was at University and this was another one of those occasions. I came back from the USA with significant credit card debt having paid for the wedding and honeymoon. Around the time we got home It was decided, at age 34, that it was time to thoroughly sort my life out. We did own our own home via a mortgage but did not have any money in savings. If I lost my job for any reason it wouldn’t take long before some difficult decisions would have to be made.
I spent a lot of time picturing what I thought life should be like and seeing my wife for two days a week was certainly not what I had in mind. I don’t expect the travelling to stop but I do envisage my wife joining me on the travels.
I pictured in my head no longer working, spending 6 months of the year travelling and 6 months of the year in the UK. No money would be owed to anybody and we would have multiple streams of income, I didn’t expect to be monetarily rich but felt like the experiences would fully enrich our lives in other ways.
I wasn’t in a rush to stop work within a year or anything drastic. I love my job but it does take its toll. 15 years would be plenty time for us to get ourselves fully set up and probably left half of our lives ahead. Now if somebody did decide to give me their life savings then I would be happy to take that off their hands to open a home for unwanted dogs, Until then that idea will remain on the back burner.
My Plan For The Future
So to achieve the dream I would need a plan, which I broke down into some steps….
- Pay off the credit card bill – I’m lucky that I get paid a reasonable salary by my employer (although I did just ask for a pay rise)
- Become more Frugal – luckily my wife and I are generally quite frugal by nature (outside of weddings) so we found this fairly easy.
- Save an emergency fund – If I took a 75% cut in salary we would still be able to survive. This has led me to work out that I only need around 2 months salary in the fund. This would be enough for any significant housing repairs, to replace my car, or survive for 6 months with no income at all.
- Invest additional savings – By investing in the stock market I would (hopefully) be able to fund the lifestyle that I desired. I discussed investing with my mentor and he told me what he had experienced and gave me his opinion. Life had changed a lot since he used to actively invest, in those day’s he had to get the train to another city to go to a broker to buy shares. Now we can do it from our phones….Times change fast.
- Pay off Mortgage – This is one of the longer term goals, because interest rates are currently at such a low-level it does seem ludicrous to be paying off this at the moment when more money can be gained back from the stock market.
- Create more income – At the time I had one online business selling LEGO pieces (not strictly a sponsored link 😉 I figured that multiple streams would be better than one.
Telling The Wife
So I had a goal and I had a plan, it was time to discuss them both with the wife. She liked the idea of us both spending more time together. She didn’t necessarily want to postpone all the immediate satisfaction of our holidays. They are one of the few parts of the year when we can spend time together. She struggles with the fact that she doesn’t earn as much money as me and thinks that she isn’t contributing to our life . The thing she doesn’t realise is that without her I wouldn’t be trying so hard to do this. Life would be a lot more difficult without her.
It’s now 10 months into 2016, exactly a year after I returned from the
expensive wonderful honeymoon and how are things going? Well truth be told surprisingly well.
- Credit Cards – It took a good 6 months to get the credit cards completely paid off. It’s a great feeling seeing the balance on them all as nil. I still have them but have no plans to ever pay interest on them again. I will continue to leverage them to get air miles and hotel stays.
- Become more frugal – We are definitely achieving this goal, we have made cost savings on food expenses, utility bills, furniture and travel. I’ll discuss a lot my of what we do to remain frugal over the coming months. But needless to say any other ideas are more than welcome.
- Emergency fund – It’s not exactly where I’d like it to be at the moment but it’s very nearly there. I’m not rushing to get this filled up either. Within 4 months the fund will be exactly how much I want.
- Invest – As can be seen here the investing does seem to be going well. I’m on track to meet my target for the year and have plans to boost my monthly investments going forward.
- Pay off Mortgage – This is more of a long-term goal. Investments at the moment are returning as a percentage over double what the interest on the mortgage is. It’s hard to turn these returns down for the time being.
- Create more income – I started a business with a friend investing a small amount of money into product. Over the last few months he has basically been running it himself with the help of his girlfriend. Sales are up and down but as we run up to Christmas sales should increase.
All in all having a significant plan has helped guide my actions over the last year. If things aren’t working for whatever reason we pivot and continue moving forward towards the goal of financial independence.
How are your plans for financial independence going? What could I be doing better, let me know in the comments below.