How Jon is Reaching Financial Independence

This is a guest post from Jon of Money Smart Guides who will talk about his action plan to become financially independent. Let me know if you would like to guest post on MMYW!

 

financial independence

Last year, I wrote a post over at Reach Financial Independence talking about what financial independence means to me. In that post, I briefly touched on how I plan to reach financial independence with my wife. Today, I am going to talk about my plan more in depth. My hope is that others will find inspiration in my plan or learn some strategies for themselves as well. Additionally, I hope that by sharing my plan, others can provide insight on it and possibly see areas that I might have overlooked.

Our Plan For Financial Independence

Currently my wife and I are both in our mid-30’s. We are planning on starting a family within the next 12 months and would like to retire/become financially independent by 55 at the latest. Understand that retirement to us does not mean we will no longer work at all. We both plan on working after age 55, but instead of doing the typical 9-to-5 gig, we will instead be working part time (or full time if we want) on things we love. For me, it would be blogging. For my wife, it would be life/career coaching. But more on this later.

Sources of Income

As it stands right now, our income (money that we use to live on and pay the bills) comes from two sources:

  • My wife’s job

The salary my wife makes pays for all of our expenses each month, except for the rental house. The tenant pays for that. My main source of income is my blogs. I do earn a monthly income from my blogs, however we don’t use that money for living expenses. We use it for boosting our savings, in particular my solo 401k plan, general investing and our opportunity fund.

Our Savings

We have a healthy amount of savings. My wife is more of a saver than a spender, which is one of the qualities that attracted me to her as I am the same way.

At this point, we could let our investment portfolio ride (not add to it) and be OK if we wanted to retire at 65 and no major life issues arose. Obviously though, we are not comfortable with this scenario. We want to keep saving and become stock market millionaires sooner rather than later. With our investment strategy, we are confident we will get there.

Changes On The Horizon

As I mentioned at the start of the post, we are planning to have kids in the very near future. We do hope to have one of us stay home to raise the kids and are making it a point to do everything in our power to achieve this. We created an opportunity fund where we are directing a lot of our savings right now. It’s just an online savings account with the goal to cover us should we need to tap into money when the kid(s) come.

We have an emergency fund for unexpected expenses, but this opportunity fund is to allow for us to take advantage of opportunities. For example, after we budget for one of us to remain at home, we might find that we missed an expense here or there or that we budgeted too little for diapers. The opportunity fund covers us in these situations.

Another change on the horizon is my wife changing careers. The change will most likely result in a pay cut, which is another reason we are being proactive in saving as much as we can right now. We feel that the better we prepare for the future, the less stressful it will be money-wise. After all, you can never save too much money!

When this change does occur, I may be entering back into full-time employment. I am OK with this and still plan on running my blogs. The money from the blogs will still be used for savings.

Future Income

During retirement, the goal is to be able to mainly survive on the income that our investments produce as well as income from the rental property. We understand that we may need to dip into our incomes from time to time, but the hope is that the majority of our monthly expenses will be covered by investment income and rental property income.

Potential Issues

The biggest issues we face are all short-term: raising kids on one income and my wife’s career. We are confident about the income my wife can earn once her new career gets established. So it really comes down to being smart with saving as much as possible now and our spending after the kids arrive.

Putting Everything Together

Right now, we are saving close to 50% of our income. This will be lowered when my wife changes careers, but hopefully not too much. We want to be saving at least 20% per year going forward. If we can do this and keep our expenses in line – we are currently looking into reducing our cell phone and cable bills, and we’ve recently shopped our insurance coverage to save the most money – we should be able to reach our savings goals.

Final Thoughts

The takeaway for anyone reading this, whether you want to be financially independent or even financially comfortable, is to save and keep your monthly expenses in line. If you can do these two things, you will live a life of wealth.

The only difference between becoming financially independent and financially comfortable is sacrifice – are you willing to save more now to reach financial independence later?

As for my wife and I, I know we are going to have to keep an eye on our spending in order to make it, but we are both committed to our goal of being financially independent. Will there be setbacks? Most likely. But as long as we keep our focus on our goal, we are confident we will make it.

Author Bio: You can learn more about being a successful investor at Jon’s blog, Money Smart Guides. There he talks about getting out of debt and investing for your future so you can live the life of your dreams.


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About Pauline

A 30 something French girl looking for ways to make more money. I blog about real estate, side hustles, improving your career, investing and making money online.

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Comments

  1. It sounds like you and your wife have really got things sorted out and you are on the right track.

    My wife and I are also on the same page when it comes to saving money, but ever since she stopped working to look after our son full time our savings have pretty much started to stagnate :(
    Hopefully when my son gets to school we can proceed back down the right track.
    Glen @ Monster Piggy Bank recently posted…Investing In Your Childrens Safety and Their FutureMy Profile

    • We are planning for our savings to stall when one of us stays home as well. That is why we are trying to saving every last cent now while we can to hopefully make up for some of that time in the future.
      Jon @ Penny Thots recently posted…How To Beat DebtMy Profile

  2. Hey Jon,

    That sounds like an awesome plan! Our goal is for Greg to be able to quit within a few years. We’re working toward that goal, but it takes time.
    Holly@ClubThrifty recently posted…How We’re Going to Jamaica For FREE Next YearMy Profile

  3. Jon,

    Sounds like you have a good plan and you are approaching it from the right frame of mind. When the kids do come, one tip to save buckets of money is use hand-me-down clothes or get them from yard sales. We’ve saved thousands using this approach!

    Good luck!
    Derek @ MoneyAhoy recently posted…Make Money on Craigslist with FlippingMy Profile

  4. Everything seems logical for your financial independence plan. I do have a ? If you are currently at 100% of your income today, what percentage do you plan to live on when you retire? I know it’s a number that has less importance since you are already saving 50% of your current income, but curious either way.
    Even Steven recently posted…What I Learned Working for Michael JordanMy Profile

    • We are hoping that most of our income to live off of will come from rental property and investment income. Any money from our “jobs” or “hobbies” or whatever you want to call them would just be icing on the cake and not the cake itself.

      We would like to generate around $50K/yr from those sources.
      Jon @ Money Smart Guides recently posted…Ready For Zero ReviewMy Profile

  5. I’d say that’s a solid plan. You can never plan for every single thing that might come up, but you can do your best and adjust as things happen. But you sound like you’re on a great track!
    Tonya@Budget and the Beach recently posted…So Many Goals, So Little TimeMy Profile

  6. It sounds like you have a good plan. There will probably be some setback as you said, but you are still in a good position. I’m making moves in order to reach financial independence some day, but since I just started I really don’t have a concrete time-frame. Still working on that.
    Aldo @ MDN recently posted…DIY Phone Screen ReplacementMy Profile

    • I’ve learned over the years that my plan has changed. That’s the thing though I like best about having a plan. We can review it every year and see if anything needs updating and then make the needed revisions and go from there. My suggestion would be to just get a plan written and then review it regularly and change as needed.
      Jon @ Money Smart Guides recently posted…Paying Off Debt Is Hard WorkMy Profile

  7. Savings 20% is great. Saving 50% of your income is outstanding. Having a life plan like yours is great. Congratulations. Sounds like you have it well out together.
    Brad @ How To Save Money recently posted…Create a Grocery List to Save MoneyMy Profile

  8. It sounds like you are right on track to hit your goals. I think it’s great that someone will stay home with the kid(s). They are only little once and I regret that I worked so much
    when my daughter was a baby. Kids aren’t nearly as expensive as reports would have you believe, but they do add expenses and it’s good that you’re prepared.
    Kim recently posted…Should You Give Money To Family?My Profile

  9. Congrats on planning to start your family soon! I think having financial freedom by age 55 is an admirable goal. How much per month are you and your wife targeting you’ll need?
    MMD recently posted…How to Increase Your Google Adsense Revenue Using My Simple EquationMy Profile

  10. Lagoonboy says:

    What concerns me slightly with your plan is you don’t say who is going to stay home and look after the kids.

    Of course this is in fact none of my business, but you do say you’d like people to comment who may be able to indicate things that you may have overlooked.

    This comment is entirely made with that purpose in mind.

    I mention this because when I stayed with a family that had a newborn I had to leave after 3 days because I was walking around like a zombie from too little, and frequently interrupted, sleep.

    Maybe its different if they are your own kids.

    But I worry how little mention is made of the tremendous upheaval that having a newborn in the house can create.

    I’ve seen newspaper articles where “go-getting, career-minded, creative” women have admitted that being there 24/7 primarily for the child is the most mind-numbing thing that can happen to an intelligent adult.

    Maybe this doesn’t apply to you, but I worry that there is no mention of how the parent that stays at home may feel after a month of 24/7 childcare.

    “We very much hope the child will come within 12 months”.

    “One of us will stay home with the child”.

    “My wife wants to change career”.

    “I may have to go back to work but I’m ok with that”.

    If you examine those 4 statements there are a few scenarios that will fit, but you don’t specify which one you’ve settled on.

    My point here is: “Are those 4 statements a plan?”

    By which I mean, if you don’t specify who stays home, is it a plan?

    The next question would have to be:

    “Has the mother cared for an infant from 4pm Thursday to 3pm the following Thursday, with the husband absent for the usual work-hours?”

    At the end was she exhausted? Was she convinced this is what she wanted to do for 5 years?

    If it’s possible it may be the husband charged with childcare, we could ask the same question:

    “”Has the father ever cared for an infant from 4pm Thursday until ….”

    My point here is that, for the plan to work, whoever is the main carer, they must expect to have that responsibility for the next 5 years, no matter how it makes them feel, if you maintain that one adult will remain home.

    I mention this because in the UK they gave life-size dolls to girls who were at risk of becoming pregnant before they finished school.

    It was pre-set to cry at the times a real baby cried, and wet itself at the usual frequency so that it required changing the diaper.

    After just one day with the doll, many of the girls lost their starry-eyed ideas about how great it would be to be a teenage mother, especially if it was given to them on Friday when they intended to go out with their friends on Friday night.

    If you had said in the blog post:

    “My wife tells me she desperately wants to be the one to stay home, and will spend 7 continuous days with her friend who has a newborn to see how she responds”

    then you do have a plan.

    If you had said:

    “My wife needs to get back to work as soon as she can after having the child, and I am perfectly happy being a stay-at-home Dad and I’ll spend 7 consecutive days staying with friends who have a newborn to see how I react”

    then you have a plan.

    Of course you didn’t have to say either of those things – it is none of our business – you are perfectly entitled to keep such things private.

    Sorry to be the one who has to say this, but is this question too awful to consider:

    Is it possible that you both hate the mind-numbingness of newborn care?

    Then where is the plan?

    So I worry on 2 counts:
    1) the 4 statements above are not specific enough about who has a job and who stays home – I don’t think that is really a plan – it’s more of a wishlist; and
    2) I don’t think you’ve adequately taken into consideration how demoralised, frustrated and upset the one staying home may become. And I stress it is “MAY become”. For they might love the experience.

    But what if you both find you don’t like childcare?

    What if you both don’t want to be the one to stay home?

    I raise this because I had no idea that newborns can so quickly and effortlessly make adults into zombies, before I experienced it.

    So I could easily have made your plan and overlooked this key issue.

    I guess most people don’t want to face that maybe they want children but maybe they hate being the stay-at-home child’s carer.

    Again I say “MAYBE” – these issues may all be irrelevant in your situation.

    But I thought I ought to raise it, so you and your wife, if you wish, can deal with this difficult issue that many couples are frightened to ask each other about, or explore at all.

    I truly hope things work out. But changing the career of the main earner and having children at the same time does seem to be taking on quite a lot.

    You are fortunate in having another property, other income, investments and savings.

    I recognise these are deeply personal issues, so please don’t feel that you have to address them in any way in a reply.

    I merely flag these issues up – I do not wish to pry – I do not wish to know the details of how you both think you will react to the prospect of giving 24/7 child care.

    I raise this issue in good faith, as something that may be relevant to your plan, as you requested.

    I do sincerely wish you the very best of luck.

    Or maybe this will expand things a little to Plan B:

    “Both get jobs and use rental income for childcare” :-)

    • Great points. We have both babysat for nieces and nephews for long weekends – Thursday through Sunday at various ages. It is definitely a lot of work and the first time(s) very frustrating as you don’t know why the baby is crying.

      As it stands right now, the plan is to see how my wife reacts to raising a child for the long term. If it turns out she would rather work and I stay home, that is the route we will take. This is why we are saving so much in preparation for the child. There are some things you just don’t know until you experience them. All we can do is be prepared the best we can for everything and let the chips fall and go from there.
      Jon @ Money Smart Guides recently posted…Ready For Zero ReviewMy Profile

  11. Sounds like you and your wife are working as a team, which is great. 50% of income savings rate is impressive. We aren’t there yet (especially not with this wedding coming up) but we’ll be pretty close in a couple of months when this is all over and I start my new job, which will give us more room to wiggle.
    Daisy @ Prairie Eco Thrifter recently posted…Why Travelling is Good for the SoulMy Profile

  12. I can sense that both you and your wife are financial literate. Being literate when it comes to your financial aspects is really important. Even though how big your earning is but if you don’t know how to budget or how to spend it, you will be a loser. It is good that you and your wife are financially literate.

Trackbacks

  1. […] Make Money Your Way has a guest post by Jon who shares how he and his wife plan on reaching their financial independence in 25 years through saving, investing in stocks, blogging and planning for changes in their family. […]

  2. […] an adult – for the same amount of money!  Delayed gratification: it’s what separates FI achievers and FI wannabe’s.  Compound interest is something to be respected.  Oh, and no I don’t […]

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