I think I can….well at least that’s the goal.
Let me preface by saying that when I say financially independent, I mean that I won’t need to work but I won’t be fully retired. I still plan to work once I hit my goal, but I won’t be dependent on that work. Instead, I’ll be able to live mainly off the money from my portfolio and take side work to make up the difference (I’ll talk about that a bit further down).
But yeah, so my goal is to semi-retire by 35. Now, that would be really easy if I was making $100,000 or more per year. I could easily do that with the way I save currently. But I’m making a fraction of that amount. I’m actually making less than the median for my age group, race, and ethnicity according to the BLS. Last year I made about $33,000, the year before was $28,000 (after tax). Everyone who starts FI has their own set of circumstances, so I’m not going to try and say my way is the best because I have lots of things that benefit me that others might not have (a partner to split bills with, working from home). Let’s start with what I do have going for me.
A little background
- No debt, no car: First off, I got to go to college for free. It was mainly paid for with academic scholarships and my parents were able to cover the rest of my 3 years. I never had to pay for a car, since my dad was unable to use his when I was in high school. In college, I biked and walked so I wouldn’t need to buy a car. Now, I share my girlfriend’s car since I work from home.
- Worked during summers: During summers, I would work at a pizza restaurant and save all my money. Then I also had the benefit of getting money because I was a dependent and my dad was above the social security age. I earned that money for about 2 years or so. My grandma also left me some money in her will as well. So all of that added up to about the amount a low wage worker would make in a year. Coupled with the fact that I had no debt, I’m ahead of most people my age.
- Lived at home after graduation: Once I finished school, I lived at home and still didn’t need a car. I got a job right away at a restaurant, but quit and right away got an internship at a marketing agency (which is what I went to school for). Eventually I moved to another state and the agency allowed me to work remotely and started paying me above minimum wage.
- Have always lived in a 1 bedroom and split rent/bills: The first apartment I had was a 1 bedroom in a not-so-great area, and was split between me and my girlfriend. Since I worked from home, I still didn’t need a car and we barely ate so I spent almost no money. Eventually we moved to another apartment and still split the rent. I also use my girlfriend’s car (we split gas) but we really don’t go out much besides groceries.
- Started putting savings into Schwab Index Funds about 2 years ago
- No health insurance: That’s a choice I make, I pay the penalty
- Good amount of free time: My work is 25 hours a week. I have extra time to do things online and try to make extra money.
So my current plan is growing my money with my index funds and saving as much as possible. I used to live so frugally that I spent almost nothing, except on rent, food, water, utilities. Once I started traveling more, I realized that makes me happy and that spending money on it is a good thing. I could save much more if we didn’t travel, but we don’t go out to eat much, don’t drink, don’t go to the movies or spend on entertainment throughout the year.
We are also planning to buy a small piece of land eventually and get a tiny house plus two stand alone studios, or a small cabin (yes, very cliche millennial I know). With the tiny house, we expect the cost to be less than $80,000 which is much cheaper than a typical home. That will mean we don’t have the rent cost anymore. If we choose to pay in installments rather than a cash lump sum, it will probably be less than our rent right now. But I’ll still be factoring in monthly amounts to cover incidentals.
I still don’t plan to have a car. Maybe we’ll end up getting a shared car that we split.
So right now, I’m just trying to save as much as possible and will be experimenting with a few ways to save more and make more money (I’ll put some conservative estimates as to what I hope to make from each):
- Selling things on eBay & Craigslist: I have lots of junk at my parent’s house. I plan to bring some of it back with me when I go visit in April so I can list it on eBay. Mainly books. I also want to test out retail arbitrage (I know…I’m late to the game). ($1000/yr)
- Continue my current job: I LOVE my job! I’m super into FI, but if I can keep my job up until the point I hit FI I would still choose to keep working. My bosses are awesome, my coworkers are nice and supportive, and the clients are enjoyable to work with. The work we do is interesting and I think it really helps out the businesses we work with. ($30,000 after tax)
Two to three years ago I had no idea what financial independence or early retirement were, I’d never even heard of the terms. I don’t know how I discovered them (most likely Reddit), but I’m so glad I got introduced to the concepts and learned about all the people that have successfully done it. It’s like the story about the 4 minute mile. For years nobody was able to crack it, but once someone did, then scores of other people suddenly were hitting 4 minute miles too. Knowing that something is possible makes it so other people know it’s achievable and they’re willing to work for it.
It’s the same with FI. I’m a big time planner and I love punching in the numbers and seeing how changing up my savings and spending can increase my chances of FI in my 30s. Just knowing it’s possible makes it that much more motivating! It’s the best way to take control of my future, and it makes me enjoy saving even more.