Since we’re all being open and honest here, I thought it’d be good for me to lay out where I’m at and where I’m heading. I have a family (2 little boys). I am self-employed (A blogger). Currently my net worth, including everything, is around 10000$ which puts me above more than 80% of north Americans (sadly).
My ultimate goal is to be completely financially independent, and able to retire at around 30-35. I probably won’t, but I want to have the assets to do just that. I’m currently 25, so I’m giving myself roughly a decade to do that.
What would I consider a “retirable” state of income? Long term savings of 1 million dollars, and 10,000$ per month in regular diversified income beyond that.
The idea for this post came from a fantastic blog: Neville’s Financial Blog, where he talks about his goals.
I’m not yet at the stage where I can declare my goals so succinctly, however I think I can offer a reasonable state of play of where I’m at now, income-wise, and where I’d like to be (generally speaking) by the end of the year.
Year 1 Goals
Monthly Income: 5,000$
Consumer Debt: 0$
Student Loans: 0$
Income Protection Savings: 7500$
Long term savings: 5000$
Savings for house: 10,000$ (or bought one with this money)
Monthly Income: 3000$
Consumer Debt: 2500$
Student Loans: 3000$
Income Protection Savings: 4000$
Long term savings: 2000$
Savings for house: 0$
As you can see, I have a ways to go. Specifically, our income savings has dwindled of late (from 8000$), which scares me a little bit.
In getting to my goal, there are a few things I’m planning on doing, and there are also some reasonable cheques coming in. Over the next 6 months, here are my expected income and expense figures:
Write book: 15,000$
Prepare courseware: 3000$
InsideBlogging Income: 12,000$
Programming income: 5,000$
Contract writing income: 3,000$
Consulting income: 10,000$
Online advertising: 3,000$
Typically speaking our monthly expenses are about 2500$, however there are some other expenses to keep in mind as well.
Regular monthly expenses: 15,000$
Company-related expenses: 3,000$
Which leaves me with roughly 28,000$ in “extra” cash. Assuming we manage to actually ferret away 75% of that, that leaves us with 21,000$ in extra cash. Enough to actually hit my targets.
What’s the point of this? Well, from my perspective there is a process to becoming financially independent (beyond setting achievable goals):
1. Pay off consumer debt
2. Meet fundamental long-term needs (estate planning, low-risk savings, RRSP, life insurance)
3. Balance income and expenses
4. Grow your income
5. Begin investing
6. Expand your number of income streams
7. Grow your income, while reducing your personal work requirements
8. Continue investing
9. Grow your assets (liquidable and fixed)
10. Reduce your work requirements to a minimum while keeping your income steady
At that point, to me, I’d be “retired”. At least, I could choose to retire with no real penalty to myself, my family or my income. Because I love to do things with my mind, though, I’d likely keep working. But I’d be financially independent as well as financially free from responsibility.
How realistic is this in the next 5-10 years? I don’t know. I’m no money expert (yet). Obviously part of this process is a hell of a lot of learning. But, I should be able to hit points 1-5 this year. Next year I can focus on growing my income and my investments, as well as expanding my income streams. The 2 years after that I can continue to focus on those, while reducing my work requirements. At that point I’m effectively financially independent. And that’s only 5 years away.
The million dollars in savings seems unattainable right now. But, then, so does finishing my book. Maybe finishing my book will give me the perspective I need to actually plan out my path to financial independence and freedom.
I welcome all perspectives on this. I happily acknowledge that I’m not an expert in this. I’ve learned a lot, both through books and friends as well as life. But, I’m sure there are better ways to hit my goals (heck, maybe my goals are just plain wrong).
I’d love to hear feedback. This is me being more open than normal, perhaps even more open than is wise. But, I believe you learn by being open – even if it’s hard. So, here’s me. Like a book.