Do you remember that scene in Wizard of Oz where the wizard says, “Pay no attention to the man behind the curtain?” We then learn that the all-powerful Wizard of Oz was really just a random dude with some technology.
So that you don’t think I am simply a random dude with a bit of technology, today, I’ll give you a glimpse behind the Money Mile curtain.
In this episode, you’ll learn about my financial independence (FI) goals and how I got here. Hopefully, this peek into a financially independent middle-class family will give you a deeper understanding of how you can achieve your own financial independence.
You will want to hear this episode if you are interested in…
- What is really going on behind the curtain [2:02]
- What our financial independence looks like [4:00]
- Our flexible lives [7:10]
- How we got here [9:02]
- Where we go from here [11:11]
- The homework [12:25]
Where I’m at on my financial independence journey
Talking about money is always seen as a bit taboo. In addition to that, nowadays, when discussing money we have to worry about protecting our data privacy as well. These obstacles create a lack of transparency surrounding money that can make it hard to understand how others achieved the goals that you have for yourself. This is why I want to share our financial independence journey.
Our FI goal has been to be able to spend $6,500 per month at age 65. Using a 5% withdrawal rate we came up with a financial independence target of $1.6 million. We finally reached that goal in 2018 when I was 43. Now, 5 years later, our assets are closer to $3 million. Listen in to hear how we diversify our investments.
How did we get here?
In 2009 we had to reset our financial trajectory. A calculated risk that we had taken didn’t turn out the way we had hoped. We even ended up short-selling a house during the housing crisis. I tell you this because it is essential to realize that not every road to financial independence is a direct path.
In 2010 we restarted our efforts with two kids under two and a net worth of less than $300k. To achieve financial independence in 9 years we did a few things.
- We bought a house with a low-interest rate mortgage and grew equity by intentionally paying down the mortgage.
- We lived frugally.
- We saved diligently–often 40-50% of our take-home income.
- We were the beneficiary of a couple of windfall events.
When you earn between $120-$200k and save between $40-80k each year, you can get a lot of momentum which is why we are now proud to be financially independent.
Where do we go from here?
Although we have reached financial independence, that doesn’t mean that we have stopped working. I thoroughly enjoy the work I do and don’t plan to fully retire until I’m over 70. Now I enjoy a flexible schedule and the freedom to take time off and enjoy my family.
We purchased a vacation home on a lake and enjoy weekends boating. We are considering taking a couple of big trips each year rather than just one. This means that we would lower our annual savings contributions and shift the money to travel.
We want to enjoy the rest of our time together with our two high school-aged children. We know that our family time together is limited, so we are attempting to make the most of it.
Essentially, we want for nothing and would like to continue to live our lives the way we are now.
What about you? Where are you in your FI journey? Take a few minutes to articulate your FI dream. Then try out the Design Your Money Machine exercise.