As many of our readers know, when we finally started to correct our financial mistakes, we decided our ultimate life goals were to travel and save for retirement. That decision or that clarity came about nine years ago. We are happy to say that they are still our goals. Apparently, our long, introspective discussions worked.
We have traveled quite a bit already and have more travels planned thanks, in part, to travel hacking. David has one last continent to visit to have visited all seven. John is looking forward to visiting his fourth continent; South America. A vacation home may be in our near future, as our primary residence was bought for less than two times out combined annual salary. Winter Park, CO is looking appealing these days.
What we don’t often share is the progress we’ve made with our retirement goal. In 2005, we had $51,000 in credit card debt, were living in a basement apartment, had one newer car and a junker of a car and combined retirement and other savings of less than $120,000 and a net worth in the mid-$60,000. Since then, we’ve paid off our $51,000 of credit card debt, bought our condo and have invested heavily in our retirement.
Recognize where you are and where you want to go (set goals)
With regard to our retirement goal, we’re happy to report that everything is on track. We’d love to be 100 percent ready for retirement now. We know that it’s a marathon, not a race, though. Over the last nine years our net worth has increased 450 percent and our retirement has increased 350 percent. Our momentum took a hit when we paid off our debt and that negatively impacted us financially. With aggressive saving and investing, we’re making up for that. We are in our early 40s and are on target to have $3 million by the time we reach our mid-60s. Wooo hooo!
We are all where we are today because of the decisions we made yesterday. Personally, we recognized in 2005 that we weren’t where we wanted to be financially and knew we needed to make changes to get to where we wanted to be in 2014 and by retirement in 2035(ish). We knew we wanted to between $3 and $4 million for retirement. We assessed our finances at the time and calculated what it would take to get us to our financial goal.
We suggest playing with the calculators on www.moneychimp.com to determine where you are, where you are headed and estimate where you will be financially when you retire. Without a plan, you leave your future up to chance.
Live a life in line with your goals (spend on what’s important to you)
Suffice it to say, we feel good about our future. In addition to the income and retirement savings we’re generating from our day job we’re hustling our butts to diversify and grow our income stream. Our additional income stream will supplement our income soon and eventually be our sole income. We don’t want to wait until we are 65 to live like the retired. We want to move that up by 10 or 15 years and spend more time traveling and more time with friends and family now.
We could have afforded a mid-century modern, $350,000 to $400,000 house in a great neighborhood, but then we’d be house poor. We would spend all our time and money on our house. We wouldn’t be living up to our mutually agreed upon goals of traveling and saving for retirement.
Find ways to supplement your income to achieve your goals
Today’s economy requires multiple income streams as wages are stagnant and employment is less secure. As with investments, diversification reduces risk. Financial independence has been one of our goals ever since we can remember. We dreamt about it in the past. We were working towards it. Now we are speeding towards it because we followed these three tenants.
How are we supplementing our income? For now, we are using this blog and our eBooks. We are growing our ability to earn more. All of this wouldn’t be happening if we weren’t living our lives in line with our goals. Check out our library of eBooks on David’s Amazon author page.
Over the last nine years our lives have changed dramatically. Most people attribute such changes singularly to time. For us, we attribute our change to time, money and experience. We also have to thank great personal finance gurus who motivated us along the way; David Bach, Jean Chatzky and Gerri Willis. We’ve had a fantastic ride and this is just the beginning of our financial independence.
What are you doing different today than five years ago to achieve financial independence?