I just finished a 10-hour binge reading session of FIRE blogs and I’m ready to pull the trigger. I estimate I can retire in 10 ½ years, financially independent. All I have to do is increase my savings rate to 65% by cutting my expenses and increasing my income.
The expenses will be easy. My biggest expense is housing, which I can almost completely eliminate. If I sell my house and move in with a friend, Boom!, huge savings. Also, he lives closer to my job so I can sell my car and bike to work. After housing and transportation, food is my next biggest expense. Oatmeal for breakfasts, PB&J for lunches, and beans and rice for dinners should get me right where I need to be. And if I spend enough time working on my side hustle, I won’t have to worry about spending money on free-time leisure activities!
Speaking of side hustles, I need to increase my income. Driving for Uber would work but not if I get rid of my car. I can use my bike to pedi-cab people to local events or give guided tours around town on weekends.
This will be easy. If I can keep it up for just over a decade, I won’t have to ever work again!
Wait… my expenses would have to stay where they’re at in order for this to work? I’m okay with eating beans and rice for a little while (10.5 years) in order to quit my job, but not forever. And I’ll probably want to be able to have a little fun after I retire.
Also, my wife and kids might have a few reservations with living at my buddy’s place. And the car thing. And the food thing. On the plus side, I won’t have to endure the complaints for long. Between my job and side hustle, I’ll hardly be home.
Maybe there’s a better way to reach FI for my family
I wish I had learned about Financial Independence when I was young and single. Not only would I have started my FI journey earlier, but many of the useful tools that are commonly practiced by young FI-ers would have made sense for my life at that time.
If all this is discouraging and makes you want to drive your new suburban to Costco… not so fast. You can still use many of these same tools by making a few simple tweaks.
If taking a roommate or house-hacking aren’t an option for your family situation, you could choose to downsize or live in a less expensive neighborhood and invest the difference in an income producing rental property. If you need a car to get the family around town, there are plenty of reliable, affordable, used options that will still allow you to save and invest a considerable amount.
Kids are picky eaters. Fortunately, many of their favorite foods aren’t very expensive. There are tons of healthy, delicious, kid-friendly meals that are also budget friendly. For best results, try meal planning and keep track of what you’re spending per serving.
Finally, you are going to have to work on increasing your investment returns. The best way I have found to consistently create ample investment returns is real estate. Even today after the market’s recovery, there are still rental properties that will create returns of 10-15%. If you’re new to real estate investing, check out www.biggerpockets.com. The site is a community of real estate investors with lifetimes of experience and you can find answers to any real estate investing question you can think of.
Trying to reach Financial Independence as a family is not impossible. Some of the strategies you see others in the FIRE community use will not be an option for your family. If you’re unable to hit the hallowed 50% savings rate, focus on the other foundations of financial independence – investment returns and time – to find an acceptable path for you and your family.