After my last post went live I got this text from a friend…
And yesterday morning I received this DM from Mrs.1500…
On Wednesday afternoon I finished a 3 day trip with a harried 11 hour day that started in Albany NY at 4:30am. After 3 flights I landed in Chicago, rushed to my friend’s house to pick up Bubba, drove 1.5 hours home, changed out of my uniform, broiled a quick tray of bean nachos and jammed them down my throat before rushing to a Rover clients house for a meet and greet. From there, fearing the $1 late fee, I drove to return my wifi hotspot before the library closed at 8pm. As soon as I got home, and with no wifi to distract me, I hurried through my presleep routine like a zombie on cocaine and finally crashed my head into my pillow at 8:11pm. It wasn’t until morning (and the tweet referenced above) that I realized the Marketwatch story had broke.
Apparently, it’s time to address this…
After 4 years of thinking about it and 3 years writing about it, sometime in the last 6 months, I became financially independent – FI.
According to the article/video, using the 4% rule, I have reached my FIRE (Financial Independence/ Retire Early) number of 24k/year.* This is true. But not because I have 600k. I don’t.
You see, the actual numbers of FI are sometimes difficult to pin down particularly when real estate is involved. I stopped publicly updating my net worth 2 years ago but in an effort for full transparency (and especially because mainstream media loves to pick shit apart), I figured I’d put it out there one last time. So here is a breakdown of my FI calculation today:
- 445k in assets (about half is in not yet taxed 401k but all is accessible with a bit of pre-planning ~ explained best by Mad Fientist HERE)
- 100k Condo**
- 36k Caboose***
Total assets 581K.
Not exactly 600k. But who’s counting? The market goes up and down on a day to day basis so a 20k swing isn’t much of an issue. What is more important to me is how much money do my assets make? That’s a completely different number and the one that I am basing my FIness off of. The question you have to ask yourself is “Does my investment income cover my expenses?” For me, that answer is yes.
Here we go:
According to the Mad Fientist’s lab report, my current cash assets are bringing in $1468:
Above graph based on a 7% growth rate, 4% withdrawal rate, and 2k a month in future expenses.
Not included in those numbers are my properties.
Though my condo is valued at 100k, I bought it in cash for 64k in October 2014. In 2017, I started renting the condo for $950/month. The current lease is $975/month. This property was making well over the 1% rule (explained best by Paula Pant) from the beginning and I could easily be getting $1100 for it but have chosen to keep the rent low for one single reason – my tenant is a landlord’s DREAM COME TRUE!! He pays his rent early direct deposited to my account, he never calls to complain, and more importantly, no one calls to complain about him. He is single, has no pets, and stayed at his last apartment for 6 years. I won’t be raising the rent for at least another year. I am keeping him as long as I can. Anywho, minus taxes, assessments, and any repair work over the past two years, my property nets $700/month.
When adding my assets ($1468) + rental income ($700) together, my total income is $2168/month.
My total expenses for the past 2.5 years (January 2017-June 2019) = $59647.**** It’s amazing how much you can live on once you lower your housing costs. I attribute this to be the sole reason why I hit FI so quickly.
Divide that $59647 by 30 months (or 2.5 years) and my expenses averaged $1988/month.
I currently have ZERO in liabilities.
Now, I’ve said it before and will say it again, don’t frugal yourself into a corner. Do not decide that the lowest possible number you can live on is the number you should settle for the rest of your life. The scarcity mindset that follows is brutal. I know…
In 2016, my first year of tracking my spending, I went down to bare bones everything. I wanted to see just how little I could spend and it turns out $1500/month and 18k a year was that number for me. I could have been FI a few years ago but in order to do that, I would have had to live in my paid for condo in Chicago and really cut back on some of the stuff that I enjoyed doing like dining out, traveling (though I still managed to fit a little of both in that year), and taking chances. Some may call that LeanFI. I call it depressing. Don’t get me wrong, I think it is super helpful to know the smallest amount you can live on for all those Just in Case scenarios like if the markets tank, aliens invade, or the sky falls. But for a full-time retirement plan, lean anything is a scary place to be. I prefer to aim for comfy.
24k a year to me is comfy. I am a 40-year-old single childless frugal
spinster badass with a penchant for cheap travel and tiny house living. That sum of money has allowed me to do some HUGE things in the past 18 months.
Here is a not so conclusive list of joy bringing, money spending things I accomplished within that 24k/yr spend:
- Lived in Denver for a year despite the HCOL
- Traveled to Europe (Hungary & Prague in 2017 / France, Netherlands, and Belgium in 2019)
- Did a cross country road trip in 2018
- Visited with family and friends in LA, Portland, Denver (before I lived there)
- Dined at restaurants way too many times to count
- Drank lattes & ate avocado toast with reckless abandon…sometimes at the same time
- Traveled to meetup after meetup after meetup
- Hosted meet up after meetup after meetup after meetup
- Went to Camp Mustache and FinCon two years in a row (that shit is costly!)
- Attended multiple concerts and other sorts of pricy entertainment
- Built, filled, and planted multiple raised garden beds from Denver to Georgia to Wisconsin
- Replaced my faded/re-dyed black jeans – twice!
- Bought all sorts of random stuff on Amazon that I didn’t need but just wanted.
I have certainly not been holding back on “Experience Spending” at all. I also haven’t held back on replacing items that make me happy or, again, comfortable…things I might have done had I stuck to my LeanFI budget.
All of this to say that I am financially independent. FI. Not LeanFI, not FatFI, just FI…ComfyFI.
Back to the Marketwatch story and the title itself. The title is a bit misleading. It reads “This flight attendant has enough money saved to retire at 44, but she wants to keep working”.
It should actually read…
“This flight attendant has enough money saved to retire at 40, but she wants to keep working until 44”
Regardless of the title or the accidental miscalculation, the overall story is correct. I don’t want to quit work at the moment. After almost 18 years on the job, I have no interest in leaving with the promise of lifetime flight benefits being just within reach. With 4 years to go, I am perfectly content working part-time, getting super cheap health benefits and figuring out what retirement looks like for me. And most importantly, what healthcare in the US looks like in 2022. Maybe I will quit then, maybe I won’t. The benefit of being FI is that I don’t have to decide. Not now, anyway.
Until next time…
Shit that I didn’t think needed to be said but apparently needs to be said…
*You can read all about the Trinity Study and 4% Rule HERE and HERE. Whether you believe in it or you believe I should be basing my future retirement off of it is not up for debate. After having lost my properties a few years back, I am far more conservative and risk-averse than I ever was. I am continuing to work for the next 4 years to provide a “what if” cushion. I haven’t accounted for social security at all in my future numbers so if it is still around, it is likely to be a bonus to my nest egg. I also haven’t accounted for future employment, passion projects that spit out cash, or the $20 my grandma gives me for my birthday every year – all bonus money!! All I have accounted for is the money currently sitting in the bank, in my well-diversified 401k, my cash cow property in Chicago, and the caboose that I write this note from. I am likely to add more real estate to my portfolio in the coming years but I have very specific rules I follow for real estate and it’s a slow process to find “The One”.
**I hate real estate estimators but I find Redfin to have the most accurate numbers, Zillow is a joke:
***My monthly expenses don’t account for two large purchases that I made last year – my new used car, a 2007 Honda CRV (9k), and the caboose I am currently living in/renovating. Those are once off luxury items not necessary to my overall financial plan going forward. The caboose brings in a tiny bit of rental income but since it is the first year, I am still not comfortable counting it as an income producing asset. Being that I am still working, I like to frame those purchases as work paid, not asset paid if that makes sense. Had I not been working and living primarily off of my investments, chances are I would not have spent 1.5 years of living expenses on a luxury item such as a caboose. Being that I haven’t retired and my income isn’t “fixed”, I have the option to do just that. Another benefit of being FI with an income! Super silly purchases that don’t need to produce anything but fun.
****I refuse to address ridiculous statements saying that you can’t live on 24k/year. Many people can. I have. And I know plenty of others that have too – even with kids. Of course, there are extenuating circumstances, but they are not part of the majority debate. The real question is, do you want to? If not, move on. There is nothing more to see here. 🙂