Updating Financial Assumptions and Goals

When I first started this blog and began writing about my progress to financial independence (FI), I put a lot of thought into my goal net worth amount. That goal amount combined with my current savings rate, monthly expenses, and estimated investment returns are what I’ve been using to track my progress to FI each month. The problem is that over the past 14 months, since I started documenting my progress, my ideas about what financial independence is and what I plan to do when I get there have changed. Initially, I took my current yearly expenses, added a 40% buffer due to uncertainty in the future (likely kids at some point), and then multiplied that amount by 25 (based on the 4% rule) to figure out the amount that would be my target.

After reevaluating, I believe the 40% buffer is very conservative and probably not realistic. My initial reasoning was that my yearly expenses will inevitably increase once I finish traveling and settle into more permanent housing and will also increase once I have children. While I still believe that my expenses will increase, I have decided that a 25% buffer is probably more realistic especially when considering the fact that I will likely still have some sort of income after financial independence, although I’m still not sure what I plan to do exactly. In addition, I plan to spend at least a portion of each year living outside of the United States (at least in the beginning) in lower cost of living areas such as southeast Asia. Traveling and living abroad should be a great way to broaden my worldview while simultaneously decreasing my expenses.

I have now adjusted my spreadsheet to reflect the decrease in my spending cushion from 40% down to 25% and the result is pretty cool. All of a sudden my FI date is about 8 months closer, and I’m almost exactly halfway there after only working for two years. Seeing this result made me reconsider my goal. When I started this blog my plan was to reach financial independence with only a five year working career which would have been right around my 32nd birthday. After steadily saving more and more each month over the past year, the estimated date got closer, and now after this adjustment and a change to my estimated monthly savings last month, I have a new target in mind.

My new goal is to reach financial independence at the age of 30 after only a 4 year full time working career. I define financial independence as my current yearly expenses plus a 25% buffer being 4% or less of my total net worth. Although this goal may seem lofty, I am 100% certain that I can achieve it with higher paying travel jobs, working as much overtime as possible, working PRN jobs when available, and continuing to hustle with bank account and credit card sign up bonuses. I also plan to begin seeking out opportunities to make extra money by writing posts for other blogs and continue to earn referral bonuses for matching other travel therapists with a couple of my favorite and best recruiters.

It always feels great to put my goals out there for you guys to hold me accountable and follow along. The blog has grown a lot lately, and I sincerely appreciate everyone that reads my posts. I want to encourage everyone reading this to create your own financial goals and share them publicly for critique and to create accountability. I welcome any comments or questions in the comments section below! What are your goals for the next two years??

Progress to Financial Independence- May 2017

Another month in the books. Whitney and I have been working and traveling a lot lately, so time really flew by this month. Since starting our new jobs I’ve averaged eight hours of overtime per week through the first eight weeks. This would really be awesome if overtime pay was truly 1.5x our normal hourly travel pay, but unfortunately that is not the case. I’m planning to write a blog post regarding overtime pay as a traveler soon, but we effectively earn only half of our normal pay when we work overtime due to how our pay is structured. Even though it isn’t as much as our normal pay, I still am fine with making the extra money, although it is draining to stay at work until 7-8 PM or later most nights. One day this past week I actually had 13.25 hours on the clock which is definitely a record for me. As far as weekend trips go, we traveled to: Charleston, SC, Philadelphia, PA, Atlantic City, NJ, and Shenandoah National Park in Virginia all in the month of May. We spent every weekend out of town this month which meant a lot of packing and unpacking. Our trip to Shenandoah National Park was to hike Old Rag Mountain with Chris and Kim who write for the blog “Eat the Financial Elephant.” It was awesome to meet up and talk with them after Chris recently wrote an amazing guest post for us that ended up being the most popular post on this site to this point.

Due to all the trips out of town and late nights at work (leading to eating dinner at restaurants way more than we should) my expenses were up quite a bit this month, but luckily this has been more than outweighed by the overtime. The extra hours have led to me being a little more liberal with my spending, which has actually been a bit of a relief since I’m usually so adamant on spending as little as possible. The market continuing to rally, combined with these higher paying jobs and the addition of overtime pay has led to a drastic improvement in my net worth this month. I decided to make some adjustments to my Excel spreadsheet that my charts are based on due to consistently overshooting my savings goals each month. I added an additional $200/month to my “savings per month” category, which should make the projections a little more realistic. The increased net worth from this month and the extra $200/month projected into the future has moved my projected financial independence date up by two months! It’s likely that I will also make some adjustments in the future on my projected spending per month. I purposely made this number higher than it needs to be when I first started my spreadsheet in order to account for increased expenses in the future but, after reconsidering, I think I estimated a little higher than I needed to. If that amount is adjusted to a more realistic number, then that will put me even closer to my FI date.

Even with my future expenses likely exaggerated a little, I am still on pace to reach financial independence in April, 2020 based on my projections. The surprising part about that to me is it means that I am nearly halfway through my full time working career and I have been working for only two years. I am continuing to stockpile liquid assets right now in anticipation of purchasing my first rental property in the near future. The rental property should be an awesome way to put my money to use while diversifying and hedging against my stock market and personal loan investments.

June should be an interesting month because, although I will be receiving five paychecks, I have some big expenses coming up that will likely negate the extra paycheck. Nonetheless, I am optimistic that I will reach, or hopefully surpass, my savings goal for the month and continue to push my FI date closer and closer.