Retirement

My Goals & Strategy

I’m posting this on a rather inauspicious day, but since this blog will be focusing on achieving financial independence I have to detail at some point my overall goals and starting position. These are ambitious goals,even intimidating goals now that I have them staring back out at me from the page. There is nothing like putting fuzzy ideas on paper for everyone to judge to make them real.  I’ve set the bar and I’ll be evaluated by how well I reach it.

With that said, here is where I’m coming from and where I’m going (as of Sep 2017 at the age of 31).

Long-term Goals
  1. Earn $60,000 in passive income. I would financially independent at $20-25k a year (i.e. having passive income greater than expenses) but I prefer a large margin of error. This would give me more than I would ever need, but would also keep the nest egg and cash flow growing substantially every year.
  2. Retire by 40, or maybe 45 at the latest.
  3. Get married and have kids. If this happens, I’ll obviously need to reevaluate these goals.
Short-term Goals (i.e. next 1-2 years)
  1. Pay off my personal business loan of $14,800 @ 10% interest (initially at $25,000).
  2. Pay off my grad school loan of $18,800 @ 6% interest. (initially at $40,000).
  3. Pay off part of my remaining home mortgage, which is presently at $190k @ 4.125% interest, to $100k and then refinance to lower my monthly payments.
  4. Install a bathroom in my basement, where I have a mother-in-law unit that I rent out. The current rent is at $650/mo, which is 30% below market rate for my area. With the shower I could rent it out for $950 a month easily. This would be enough to pay my mortgage, property taxes, home insurance, and much of my utilities too.
  5. Once these steps are complete, my yearly expenses should drop to $20k a year. At my present salary of $82k and a passive income from my mother-in-law unit at $7.8k a year, this would equal $50k+ in savings every year after tax, for a 55% savings rate. Fortunately, I have cheap hobbies and have no desire for expensive cars or other gadgets, so this should be easy to achieve.
Medium-term Goals
  1. Buy a rental house or a multi-family property every two to three years.
  2. Develop at least one side-business, to accelerate the retirement curve by shrinking how much I need to live.
Starting Position

Assets

$3k in cash
$2k in bonds
$25k in 401k/Roth IRA
$44.5k in stocks
$50k home equity (House value $240k – Home mortgage $190k)

Liabilities

$15k in a personal loan (being paid off at $534/mo)
$19k in school loans (being paid off at $600/mo)
$190k home mortgage (at 4.125%, being paid off at $1400/mo, half from me, half from a mother-in-law unit I rent out)

Well, there it is. Now that the path is clear, all that remains is to keep walking down it. Hopefully I’ll get there by age 40 (or maybe earlier!), but even if I miss my retirement goal by a bit I’m sure I’ll look back at this post years from now and at least be grateful that I’ve managed to rid myself of all the debts that weigh me down. $2000 a month in debt payments just kills me 🙁

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