Good morning! Today, I’d like to share a post from Maria, the blogger behind The Money Principle, a personal finance blog that’s both enlightening and entertaining. On her blog, she discusses money management, wealth, health, and whatever else catches her interest.
In the past, retirement was straightforward and almost automatic. People worked for about forty years, retired, and then spent their days in small routines like gardening, babysitting grandchildren, and generally living a predictable life until they passed away. This was during a time when large corporations dominated the economy, jobs were often for life, and self-employment was mostly for artisans, tradespeople, and artists. People back then saved what they could, accepted their circumstances, and tended to age early.
Those days are gone! The economy now includes many small players and networked individuals. It’s been a while since any of us have had a “job for life,” and the number of self-employed people is rising rapidly. For example, in the UK in 2012, there were 367,000 more self-employed people than in 2008, a 10% increase.
Do I feel nostalgic for those predictable times? Absolutely not—good riddance, I say! Sure, there was security, but it came with a lot of monotony. Whenever I read “The Hobbit,” I totally get how Bilbo Baggins feels; the Shire is lovely but dull for a spirit craving adventure.
The best part about these changes is that we don’t age as quickly. I can’t imagine my mom, at fifty, running a marathon in shorts or planning to dance Flamenco in Granada—things I now consider perfectly possible.
Retirement is no longer a fixed point in life. Nowadays, people can retire whenever they want and pursue their passions. The dream of early retirement is more attainable than ever.
Personally, I don’t share the dream of traditional retirement. I still associate it with sitting in front of the TV all day, wearing old cardigans and twisted stockings—not my idea of a good time! Instead, in five years, when I turn 55, I want the freedom to choose whether or not to be employed, while still living the life I want.
So, I don’t want retirement in the traditional sense. Instead, I aim for financial independence, having paid off all our consumer debt. My husband John and I could achieve financial independence quickly by either:
1. Selling our house to buy a smaller, cheaper one, thus eliminating our mortgage and living on our passive income and any side hustles.
2. Selling everything in the UK and moving to Bulgaria, where we already own an apartment and some land. This could allow us to live comfortably and even have money left to invest.
But why settle for the standard when you can pursue your dreams? We want to keep our house and have the resources to do what we love. For me, that includes riding a motorbike across the US, walking the Camino route, dancing Flamenco, and running marathons. John wants to fly planes, drive Range Rovers across the desert, take photographs, and we both want to travel, live in other countries, and learn new languages. Oh, and I want to write a novel people will want to read!
Our home might be big, but it’s ours, and we want our future grandchildren to visit. We want to show them how to live life to the fullest, focusing on the future and not regretting the things they didn’t dare to do.
Using our retirement calculator, we figured out we need £2.5 million ($3.7 million) to live the life we want. Does that sound impossible? Great! I love a challenge. We have until October 31, 2018, to make it happen.
We have a plan, involving rapid accumulation, investing, and building businesses, to reach our goal.
### Rapid Accumulation
We currently have a good cash flow and, thanks to our sound money management, we’re saving aggressively. Our cash flow is projected to increase soon because:
– My salary is expected to go up by about 40% in the next six to twelve months, and most of that increase will go into savings.
– John is about to launch a web-hosting business and we plan to develop other online businesses, including new blogs. This should start generating income in the next six to eight months.
– We’ve started offering short-term accommodation to academic visitors, which is good for cash flow and brings interesting people into our lives.
Three months after paying off our consumer debt, we’ve saved nearly £15,000 ($22,000). Instead of keeping this in a low-interest savings account, we’ve invested it in a Nutmeg ISA, which is currently returning over 20%.
By next March, we conservatively estimate having around £60,000 ($90,000), putting us in a good position to make big investments.
### Investing
The next stage involves mobilizing our assets. I’ve just sold an apartment in Bulgaria that I inherited, and we plan to spruce up another apartment in Sofia to attract short-term rentals. Even small gains from these investments will help us grow our wealth. We’re also exploring other investment opportunities in Bulgaria.
John is looking into various investment options, focusing on higher-risk ventures that won’t jeopardize our livelihood. The worst-case scenario is losing money we can afford to lose, meaning I might need to stay employed a bit longer, but we both have solid occupational pensions.
### Building Businesses
Building businesses plays a crucial role in our plan. Businesses can grow quickly as both income streams and assets, and can often be automated. Our target is £2.5 million, which translates into £10,000 per month, not necessarily in cash but in equivalent assets.
### Finally…
We have a dream and a plan. We know from experience that plans can go wrong, and we might not always get what we wish for, but that won’t stop us. I’m pursuing this dream with the determination of an addict, and if you see a motorbike speeding by, look for me on it!