My Journey To Financial Independence And Early Retirement
Posted On February 24, 2021
Since this is my first post it serves as both a blog starter as well as a supplemental “About me” page. There is an age-old saying about knowing where you came from in order to find out where you’re going. Here is my story and how I plan to achieve financial independence and early retirement.
The early days
You could say that my journey to financial independence and early retirement began approximately thirty years ago. When I was a kid I liked saving pocket change and left over lunch money in a little box. Whenever grandma gave me cash to buy something “nice”, I wouldn’t spend it. When dad sent me to the store to buy bread I’d keep the change. I would carefully squirrel it away and grow my financial nut. Coins I would exchange for bills, and small bills for larger ones. I don’t know why I was doing it. It just felt like the right thing to do since I didn’t know of anything worth spending my mini fortune on, yet.
By the time I was a teenager I had saved a relatively good amount of cash. I was even able to lend money to my mom when the family was in a pinch. In hindsight, I wish I knew about interest back then.
Growing up I had no financial education outside of playing monopoly with my sister. Being frugal and living far below my means always felt natural to me. In college I was making $6/hour washing dishes at the dining hall. There was free food for us cafeteria employees. That meant I didn’t have to spend money on food outside the occasional $1 for a 7-pack of ramen noodles. Then, instead of buying overpriced textbooks at the university store I’d borrow a classmate’s and make a photo copy. Alternatively there was half.com where I could buy and sell used textbooks.
When I got my first job right after graduating, I needed to buy a car. I bought a little Toyota Tercel with 137,000 miles that I found in a newspaper ad for $1,200. Sometimes when driving with more than 60mph on the highway the car felt like it might fall apart. However, it got me to work and back just fine, and that’s all I needed from it. Furthermore, I spent nearly $0 on maintenance and eventually sold it for $800. Not bad.
At that same time I was renting a room in a house where my rent was only $50/month. My landlord was a nice elderly guy who had a bad back. He needed help doing the heavy lifting in the house. In return for the low rent I would take the trash out, mow the lawn, and shovel snow off the driveway.
Saving vs investing
My first job after college was as a web developer. I wasn’t making much but my living expenses were very low so I was able to save some cash. Saving and spending money was all I knew, though. I was clueless when it came to personal finance and investing.
Naturally, I didn’t invest in anything I didn’t understand. When it came to finance – I didn’t understand anything. Things like a 401k and Roth IRA were so alien to me that I ignored these benefits for a while. I even missed out on years of discounted company stock because I was not familiar with the stock market and was afraid of losing money. Buying stocks seemed a bit like gambling to me, and to be honest it sometimes still does.
Fast forward to financial stability
After about 15 years of working in corporate America I have collected a decent amount of savings. Unfortunately my portfolio, if one could call it that, is not at all diversified.
Over the past ten years I’ve been saving cash for a down payment on a home. At the same time I’ve been holding cash so I’d be ready to invest in the stock market when the next recession comes. I was not able to invest at the 2008 discounted prices as I had absolutely no money to invest then. All my savings went to pay for graduate school at that time. For the next recession, however, I told myself I’d be ready! Well, the 2020 bear market came and went and here I am, still holding my cash and thinking – was that it? Did I really miss it? Now what? And even though I’m looking, I have not found the perfect home to lock with a down payment, yet.
Time to make a move
As Gandhi famously said – “The future depends on what you do today.” If I want to retire early I need to make a move sooner rather than later. Plus, the economy is not doing too well right now and inflation seems like a real possibility. People are even talking about hyperinflation potentially being on the horizon. At the same time interest rates are low and at 0.40% my money market account is barely returning anything.
That being said, I’ve been educating myself on how to diversify my portfolio. I’ve been reading a lot of articles and discussions, and listening to podcasts. I’ve decided to double down and start this blog to help me learn as I share my experiences with the community.
Setting a retirement goal
Therefore, I’m setting a goal to begin investing and be able to retire five years from now at the age of 42. By the way, I don’t think of retirement as just sipping cocktails on the beach for 40 years. Rather I think of it as being able to work on whatever, whenever, and as much as I want.
In conclusion, to achieve financial independence and early retirement I plan on doing the following:
Continue spending less than what I earn
Improve my personal finance literacy
Create an investment strategy
Invest and share my experiences on this blog
Learn from you!
Being frugal has helped me get here. Now I need more than just that if I am going to reach my goal of financial independence and early retirement. I hope this blog will help me stay the course and navigate through uncharted waters. Needless to say, your support in the comments below would be greatly appreciated.
Finally, here are some resources I’ve been using to educate myself and that inspired me to start my own blog:
Chris (the Finance Squirrel) is a personal finance blogger on a journey to learn about building enough passive income to retire early. He has been working in corporate America for over 15 years and has been able to (and still does) save a significant portion of his earnings while living well below his means. Having accumulated cash which he has not invested well is one of the main reasons for him to start this blog and share his experiences as he learns. Chris is a family man and has a baby boy whom he would like to spend more time with. This is the other main motivation behind this endeavor to improve his financial education.