Early Retirement: is it all it’s cracked up to be?

Early Retirement Cons Downsides FIRE Financial Independence http://jessicacoaches.com/2017/08/early-retirement-downsides/
Early Retirement Cons Downsides FIRE Financial Independence http://jessicacoaches.com/2017/08/early-retirement-downsides/

Early Retirement.  No doubt, you’ve seen the pictures with people doing leisurely activities, kicking back their alcoholic beverage of choice,

a gorgeous view of a Caribbean beach,

or even more simplistic, a person looking like they don’t have a care in the world.  

Ahh retirement, I want that now!

Why yes, I’m tired of trading my time for money!

Of course! I do want to spend more time with my loved ones!

Less stress and more time to nurture myself? Sign me up!

 

You might be delving into this world on the internet.  Everyone is talking about this, it even has a catchy acronym!  FIRE! After a quick search, you find endless blogs.  So many people are doing this.  I can too.  I just have to put my nose to the grindstone for a few years, and it can happen.

Related:  What is Your Financial Mindset? Are you FIREd up?

The Reality of Working to Retire Early.

But what does that look like?  Everything has cons.  If it were easy everyone would be retired right?  Is everyone not doing this just because they do not have the information?

Not to mention that if you are motivated enough to bust hump to retire early, it is unlikely all your days will be spent relaxing sipping pina coladas post retirement.  Likely you will just work on a different passion project.

It can be a marriage/relationship ruiner:

So you talk to your significant other about early retirement, they could be instantly wanting to know more, or they might just think you’re crazy.

Let’s spend close to nothing, get rid of everything we do not need, invest over 50% of our income for a few years so we can have freedom then.

Who wouldn’t be on board?

In fact, plenty of people do not want the intensity of early retirement.

They might have no desire to scrimp and save.

Their desire for consumer goods may just be greater than their desire for freedom.

Or perhaps, they just like their job and have no problems with working that to 65 or beyond.  They worked for a long time to get their position and have no desire to give it up.

Money is the biggest area of discord in relationships.  At the same time, working towards early retirement can be one of the most drastic monetary changes you can make in your life.  Those two things can spell trouble.

 

How much it changes your life depends on what your mindset and situation were like before starting on the path.

 

Even in the better outcomes, when you are both on the same page, it can be stressful on your relationship.  You tend to work a great deal more to achieve these things, doing side hustles, overtime at work, and financial research.  This means less time for your partner, and if you do not take care of your relationship, it can fall apart.

See:  Six Rules for a Successful Relationship

You can end up living for TOMORROW instead of today.

You know the old saying “Take time to smell the roses!” people who are working on early retirement sometimes have a hard time achieving this.

Things you want to spend time doing will fall by the wayside to be filled with all things money, figuring out how to save more, make more, and get the best return on investment.  Side hustles can become huge time-consuming endeavors.

This is all time you will not be spending on other things.  Many people while striving for early retirement decide to put their health or other things on the backburner because they plan to focus on it fully as soon as they are free and without a job.

When you have this big goal line ahead of you, sometimes you can put all our focus into getting there.  With early retirement, there is this shiny opulent goal of doing whatever I want.  If I just forgo eating out today or going on a trip this weekend it will get me closer to where I want to be.

 

Getting to Retirement can take a lot longer than you expect.

Unfortunately, the path to financial freedom can be a longer path than some blogs are advertising.  I have seen some boasting it only took them 3 years or headlines on how to have enough income to quit your job in a year.  Which can be done if you already are in a great starting place or you take some huge risks.

If you already have a great deal of debt that is not solvable by selling an asset, or if you are starting off with a low income earning potential.   It could take a lot longer.

For me, this is the 6th year of stressing myself out for the cause.   While we have taken some time to smell the roses, it has been to far and few between.  These years have taken a toll on us, and we go through periods of being utterly wiped out.  I just recently had a three-month turtle shell regrouping.  We are however close to that finish line.

See: I never have to pay into my retirement again!

 

Are you working on early retirement?  What have you had the hardest time with?

What is Your Financial Mindset? Are you FIREd up?

what financial mindset are you, are you fired up, fire, attitude, early retire retirement financial independance

How are you doing?  Are you happy with your trajectory in life?  Are you worn out?  Are you bored?  Are you just going with the flow of life? Or are you on the opposite end?  Stuck overthinking everything.  Treading water.  Unable to effect the positive change you would like to see in your life?  Do you know what you want out of life? What do you actually need?

 

Wow!  That was a lot of questions! However, these are things you actually need to ask yourself every once in a while.  So you should really go through each one.  Get a pen and paper, or even just pull up a notepad.  If you are not doing it already, you should live purposefully.

 

A helpful way to go about it is to identify where you are now and where you want to be.  This diagram can give you an idea of where you at with your financial values.  What is the most important to you? Production? Security? Freedom?

 

 

Money Values Financial Mindsets FIRE Freedom Time Security Reliability Production remote worker independent contractor 9 to 5 job

Values:

Reliability/Security:  Financial security is an overarching theme.  They cannot afford to or do not to wish to take any risks on if they will have money coming in consistently.  They would prefer to know when and where the money is coming from then earn more with a chance of famine.

Time/Freedom: The most difficult to fit into a circle, because they are literally all over the place.  They will work but it generally has to be a thing they would choose to do regardless of pay.  Or, they will work in short stints and quit to do other things. They work to live, not live to work.

Production/Motivation: These people like to see results, be it a fat check or their name on a prestigious paper.   They tend to prefer situations where there is no cap on their growth.

 

So how many values are you actively working for right now? I tend to view it in a tier system, with only one value being worked towards being tier 1 right on up to tier 3.  Are you ready to move up or are you happy with where you are at?

 

 

So What is FIRE?

 
F– Financial I-Independance R-Retire E-Early

 

 

It is where the Venn Diagram of financial values meet:

 

  • You want to have security and know you will have the financial where with all to survive if you lost your ability to work today.  Not an ambiguous time in the future.
  • You want the freedom to do what you want today, While not giving up your future. Be it lounging on a beach or volunteering your time.
  • You value productivity and want to see results sooner rather than later.  You are looking forward to doing your passion project because you surely have several.

 

 

Okay, so it is all well and good to want all those things.  Some of you might say that seems kind of unrealistic, how would one even get there.  It is possible!  People are retiring early all the time, you could be one of them.  You don’t have to wait for the government or an employer to give you basic income to live off of, you can create one yourself.  And it does not have to take most of your life to create, the only limitation is you!

 

 

There are four parts to freedom-
– Earn More
– Need Less
– Use debt, don’t let it use you.
– Invest in yourself.

 

 

If this is a new concept to you or could use some honing in this category check out you should read this related article: Are you tired of worrying about money?

 

 

 

Wanna get there?

 

Habits of successful people who have reached or are working towards FIRE.

 

  • They absorb as much information as they can. (networking, books, podcasts, blogs)
  • They celebrate different milestones.  They view old inexpensive cars, or better yet no car as a sign that someone is successful instead of that shiny new car fresh off the lot.
  • They know that experiences are more valuable than things.
  • They believe in working hard today for a better tomorrow, and that it is a mission that never ends.
  • They take action.  They know things will never be perfect but do it anyways.
  • They surround themselves with other like-minded people and know that this can be the difference between the wind under your wings and a pair of concrete boots.

 

Are you FIREd up?  What are you working on right now?  Did I miss anything?

 

I never have to pay into my retirement again!

How I never have to pay another penny for my retirement at 34 on a 30,000 per year salary. Financial Freedom. early retirement travel money real estate rentals investment fire money http://jessicacoaches.com/2017/03/never-pay-retirement-again/
How I never have to pay another penny for my retirement at 34 on a 30,000 per year salary. Financial Freedom. early retirement travel money real estate rentals investment fire money http://jessicacoaches.com/2017/03/never-pay-retirement-again/

That is right, if I decided to hold all my current investments and not pay another cent into my retirement, I could retire comfortably at 65.  What is my secret you may wonder?  Well, it isn’t a secret, this is a proven wealth building strategy that has been used for a very long time.  The only difference from then to now is it is easier to get into the game.

Here it is:  I have someone else investing in my retirement for me.

 

I am a real estate investor.  In particular a buy and hold rental property investor.  What this means is, I buy properties with the intention of keeping it forever, and renting it out to others.  Not only are my renters paying my mortgage, giving me more net worth every month by paying my principle down.   They are also giving me extra to set aside for rental management, repairs, and cash flow which can be used now for life or to get to that retirement faster.

 

If we just held everything we have now at our current rents we would have $3,700 dollars of monthly income at 64 which is when our longest mortgage finishes at.  This is a conservative estimate, paying for property management, capital expenses (big repairs averaged over time), and vacancies.  The best part, rent keeps up with inflation.  So $3,700 today will be the equivalent in the market in 2047.  Which for us would be a very comfortable lifestyle for us.

 

 

So how did a family on a 30,000 salary start real estate investing?  Houses are expensive!

 

Our six-part strategy to fast tracking our retirement:

 

1. Finding a property that needed fixing up and getting a good deal.

 

2. Choosing a property that had at least two units so we could live in one and rent the other out to help cover our costs. See:  House Hacking: Lets You Get Your Housing For Free

 

3. We leveraged ourselves with owner-occupied, low-downpayment, mortgages.   See:  How to Buy a Property With No or Low Money Down!

 

4. We lived in the unit we were renovating doing as much of the work ourselves as possible.  

 

5. We went slow.  This is not a story of buying four properties in one year.  We have been at this for six years and have three multi-unit properties.

 

6. We managed our money, we didn’t let our money manage us.  See: Are you tired of worrying about money?

 

 

Lessons from our first rental property:

 

-Don’t over improve the property for the area.  When you are living in something you tend to fix it up for you, don’t improve it to your standards, improve it to just above the average standard for a rental in your area.  You will be more worried about what renters will do to your property, and you just don’t get the money back.

 

-Rental properties are a numbers game.   Make sure you get all the data and give yourself a conservative cushion to make sure it will be a profitable rental after renovations.

 

-Separate the electricity between the units if it is not already done.  It is just so much more hassle to provide utilities included!

 

-It is better to jump in on something you think is good, than wait for perfect. Even though our first purchase was not the ideal purchase, it still built us wealth and taught us an innumerable amount of things.  It was better to jump in with some basic knowledge than procrastinating finding the perfect property.

 

Now, I don’t have to invest another penny in my retirement, but I am going to! A retirement age of 65 seems so far off and I think with dedication I am going to try to retire before my husband hits 40, which gives us….. just less than 2 years.  Think we can do it?

 

Do you have rental properties? Or are you wanting to get in the game?