My Financial Independence (FI) Plan

Hey there! Thanks for stopping by to take a peek at my FI plan. I’m Nicole and my goal is to reach financial independence (FI) in the next decade of my life (by 2028- I’ll be 48).

I know…it’s a BIG goal. If you’re unfamiliar with financial independence or FI, it’s having enough money to sustain your lifestyle without having to actively work. Increasingly we’re seeing articles and stories around the internet about people retiring in their 30s and leaving their jobs behind to travel full-time or pursue other life goals. Living the dream, right? I guess it depends on who you ask.

Why Financial Independence?

There is more to life than working, paying bills, sleep, and repeat. Instead of working for 50 + years and anticipating a magical retirement on a beach (assuming I’m healthy enough to enjoy it), I’m instead choosing an accelerated, alternative path to my ‘golden years’.
Achieving financial independence will give me the option to design a life built upon time freedom. In other words, I have no intention of spending my ‘good years’ stuck in an office, begging my boss for time off twice a year.
My road to FI has been a winding one. In 2016 I made the final payment on nearly 100K of student debt. The original plan was only to become debt-free. I didn’t think much beyond that. Sometimes it’s hard to see beyond the mountain of debt blocking your view of the future. And then it happened…I stumbled into another world that I didn’t know existed. I discovered the world of financial independence.
It’s funny. Thinking back on it I can’t recall exactly where I first heard the term financial independence.
But soon after I began to devour blog article after blog article, and then, every podcast I could get my hands on about the subject. And now, I have arrived to the point where (I think) I have a solid plan for the journey ahead.
The original plan was to reach FI by age 43 (which at the time would have been 6 years away).

Barriers to Financial Independence 

I had several barriers to achieving this aggressive FI goal.
1. The hubs isn’t on board. He just doesn’t ‘get’ FI, but I’m working to change that.
2. An immediate and dramatic lifestyle change would have been required in order to make it happen within the original 6-year time frame I’d given myself (i.e. downsizing houses and moving to a lower cost of living area). And considering #1, this wasn’t a realistic goal.
3. After years of hustling and working extra jobs to pay off student loan debt, this girl was tired and needed a mental break from the hard-core financial grind.
So that brings me to today (October 2018) and I’m renewed and ready to give FI a go. 

A Few Details to Provide Perspective

  • I married my college sweetheart at the age of 23- we’re coming up on 15 years of marriage.
  • We have 3 kids (as of this writing they are 10, 7, and 2).
  • I’m a 6-figure earner as a certified physician assistant and (sometimes) university professor.
  • Hubs earns less as a self-employed pastor of a small non-denomination church.
  • For the past few years, I’ve been the primary breadwinner while my husband focuses on getting the church off the ground
  • I’m the money nerd of the relationship and hubby is the free-spirit (he’s not a spender, just not interested in the details of the money or budget)
  • We’re debt-free other than the mortgage.
  • We have a 30-year mortgage on our primary home purchased in 2015.
  • We also have a 30-year mortgage on an ‘accidental’ rental property (prior residence turned rental) purchased in 2009.

Specific FI Goals and Numbers

Target FI Goal: Age 48; Year: 2028
Phase I: Pre-retirement Rapid Accumulation Phase (2018-2028; Age 38-48) 10 years total
  • Contribute a minimum of 10K to tax-deferred retirement accounts; ideally contribute the max (but not at the expense of contributing to taxable accounts)
  • Max out Roth IRA during eligible years for myself and hubs
  • Increase savings rate and increase investments into taxable accounts.
  • Work side hustles (within reason) to generate additional cash without burning myself out in the process
Phase II: Early Retirement (2029-2040; Age 48- 60) 12 years total
  • Work optional
  • Fund lifestyle with passive income, liquid savings, and taxable accounts
  • Annual Expense Goal: $50,000 per year 
  • Sell current home and downsize
  • Purchase a smaller home in cash from proceeds of sale
  • Pay off rental property- will continue to use as rental or home base when traveling 
  • Increase travel
Phase III: Traditional Retirement (2040 and beyond; 60 +)
  • Goal $2.5 million in tax-deferred accounts (amount needed to fund Phase III from age 60 and beyond) 
  • Continue to travel and enjoy family
  • Leave an inheritance to our children 

Prepping for FI

Increasing Taxable Investments

I’ve done a good job of funding my workplace retirement accounts and Roth IRA (during eligible years) and I’d be doing GREAT if I wanted to coast and retire at age 60 or 65.
But looking at my current retirement picture through the lens of someone on the path of FI leaves a lot to be desired.
The bulk of my retirement money is in currently invested in traditional tax-advantaged retirement accounts that cannot be tapped (without penalty) until age 59.5. **There are ways to access these funds early but the process seems unnecessarily complicated. I’d rather not touch those funds until I reach 59.5.
So in order to fund Phase II I’ll need to significantly increase my contributions to taxable investment accounts over the next 10 years in order to reach FI.  I plan to use that money to fund our lifestyle during Phase II (early retirement years) when I eliminate or significantly reduce my workload.
Living Below my Means
Throughout the years there have been times that I have done this exceeding well and other times… not so much. I don’t plan to penny pinch, but instead, optimize my spending on ‘The Big 3′: Housing, transportation, and food.
At the top of the list is downsizing our current home in favor of something smaller. At present we live in a huge home in an expensive suburb (with great schools for the kids) with entirely too much unnecessary space (and exorbitant property taxes). Ideally, we’ll sell the house and use the proceeds to pay for a smaller home in cash.
Living below my means is critical because:
1. It will help free up more cash to invest.
2. It’s good practice for the less expensive FI lifestyle that I intend to lead.
Increasing Passive Income
I’d love to get our current rental property paid off, or at least cash flowing better, so that it can serve as a source of steady income once we reach financial independence.
It would also be amazing if I can grow my online brand and business (blog, Youtube channel etc.) to the point where I’m earning some reliable semi-passive income from it. I don’t want to give up my career to become internet famous.  But if I can make some money from stuff that I’m doing online anyway… then that’s a win-win.
Work on Mindset
Being the type A, goal-oriented personality that I am, I will need to resist the urge to race to the finish line. That’s a recipe for burnout. Not to mention I don’t want to make myself (and everyone around me) miserable by having a one-track mind.
Instead, I want to savor the journey and be intentional about figuring out what I want post-FI life to look like. We’ll continue to travel even while pursuing FI because we receive tremendous value from it.
Get hubby on board
To be clear, hubby is not anti-FI. He just doesn’t quite get what the big deal is.
For most of his career my hubby, Eric, has been a self-employed pastor, setting his own hours and not answering to a boss (except God of course!).
So I can kinda see why FI isn’t as attractive to him.
He hasn’t had to contend with crazy bosses and years of horrendous commuting, like yours truly.
(I also work in health care, a field that has a very high burnout rate).
But I believe the road to FI will be more fulfilling if the love of my life is by side for the ride.
I will keep working on him!
So…that’s the gist of my FI plan. It will certainly evolve over time. But I’m excited and looking forward to the journey.