The Path to Freedom

[detect_148]

This is my first journal update. First of all, I'd like to thank everyone on the forum for sharing their knowledge. It's been very informative and helpful to read your journals especially regarding tax related guidance and strategies (this has been the biggest gap in my knowledge). I've learned a lot from you all, but I must admit that I have a long way to go in terms of knowledge and asset accumulation in order to acheive ERE. If anyone has any advice specific to my situation, I would really appreciate it!

Some basic facts about me: I'm 24 years old, working professional, renting. My ideal ERE date would be 30. My plan afterwords is to travel through India and southeast Asia, study yoga, and start a new life teaching yoga in eastern Europe or Norway.

Since ERE is still a rather long term goal for me I don't want to get too bogged down with the details. I'll just use my total liquid assets (no retirement accounts) and my spending over the last twelve months (as measured by financial tracking software) as key performance indicators to track my progress towards the 4% rule. With each update I'll consider current successes and challenges towards reaching my goal with a focus on continuous improvement. I don't expect to be extreme right away, but I want to keep moving in that direction!

Total liquid assets: $15900.47
Total annual spending: $21362.28
Progress towards ERE: 2.97%

Thoughts: I have a long way to go!

Acheivements: Business travel! I'm currently traveling 90+% which results in the vast majority of my expenses being covered by the company and mileage reimbursement. Last month I only spent $638.68! This is really helping me save money. After reviewing my finances and the ERE blogs, I realized that I was making some mistakes with my tax strategy that was really holding me back. For the past 18 months I've been maxing out a roth 401K which is really great for the future me (if he survives that long), but not so great for the 30 year old version of me that wants to bum around India and go surfing every day. Switched to the traditional 401K to lower my tax burden.

Challenges: Since I'm choosing to measure annual spending as a lagging indicator of the past twelve months, I really do not think this is representative of where I am now. I recently moved from the Bay Area to a much lower cost of living area. I've since lowered my car insurance, gotten rid of my cell phone, lowered my rent, and changed my attitude quite a bit. Moving into 2016, I expect to see some quick gains with the cost reduction improvements that I have made.

Goals: Continue to work on my yoga. Improve side hustle by learning tarot cards and giving readings at farmers markets (target market = middle aged women coming off their first divorce). Start side business (still working out the details).

[Dave]

Welcome!

I like your story and your goals for the future. I too have a desire to travel through southeast Asia upon achieving financial independence, and I actually started a yoga practice a few weeks ago.

First question, why would you not consider your retirement accounts in your calculations? Consider that there are in fact ways to access some if not all of the funds in your retirement accounts. Additionally, you are always able to just withdraw assets from nonretirement accounts, so if (Retirement portfolio of 50% and Nonretirement portfolio of 50%) = Total Portfolio of 100%, and can withdraw say 8% of your Nonretirement assets (if doing a 4% of total withdrawal) to achieve this.

You are off to a good start at $16,000, good work. It also sounds like you spend a large chunk of your time travelling, which enables you to really cut your other expenses - that is great! Since you listed your (trailing) spending at $21,000, you have a lot of room to make progress. Even if you have come down a lot since then, there is still probably room for further reductions. It would be helpful for you (and us if you want to share) to break out your budget by major categories, so you can focus on what to cut.

One thing that comes to mind is that if you are travelling 90% of the time, it may make sense to consider having a very tiny apartment or just a room at a friend/family member's house. You really do not need much since you won't be there often, it is really just storage for your possessions most of the time, and a crash pad the rest of the time.

I like your focus on working on your yoga skill, I find it is very helpful to have a vision and work towards it beyond just achieving FI. I caught myself focusing too much just on FI for some of 2015, and I became more peaceful when I developed a bigger picture goal for what I really wanted from FI. Side hustles are always a great way to stay entertained, build some skills, and make a little extra coin .

Best of luck with your journey!

[henrik]

How about a progress chart for your indicators? We like those around here

[sky]

I agree that at age 24, retirement accounts are not the way to go. Unencumbered investments is where I would start saving.

With your current traveling for work lifestyle, your current expenses do not indicate your future ERE expenses. Do you have a target FI amount in mind?

[detect_148]

Hi all, thanks for the comments.

@Dave: Great to meet someone also interested in yoga, let me know if you have any questions about developing your practice. I focus primarily on Ashtanga, that is what I hope to specialize in as time goes on. Regarding the retirement accounts, I'm still in the process of transitioning my mindset to ERE from the traditional 30+ year career - retirement mindset. I have been maxing out a roth 401k, roth IRA, and HSA for the past 18 months, but I am realizing that this comes with a huge opportunity cost. If I could acheive at least semi-ERE within 5 years while still maxing out these accounts (treating them as an emergency fund of sorts), that would be swell, but at this point it seems like a pipe dream. I am not well researched on early withdrawals from retirement accounts, this is a gap in my knowledge that I plan to fill.

Regarding my expenses, I plan to post more details in my coming updates. I currently rent a spare bedrooom from a colleague to serve as my home base for $500/month including utilities. Not too expensive, but maybe I could do better..

@henrik: A progress chart would be pretty rad. I'm not too computer savvy so that may be difficult at present, but I plan to work on a website in the near future so maybe I can make that happen.

@sky: I'm not too sure about a target savings amount, but I can tell you that after Q1 of next year I expect to be traveling much less or not at all. So by Q1 of 2017, the indicators I've listed should be more representative of my actual lifestyle. I like the idea of using the previous 12 months of my expenses as an indicator for ERE progress because it forces me to demonstrate that I am capable of living within my ability to generate passive income/ on 4% of my networth before I take the plunge.

[detect_148]

Update: November 2015

Total Liquid Assets: $19,498.80
Total Annual Spending: $20,039.16
Progress Towards ERE: 3.89%
Projected FI: 5.5 years

Thoughts: After creating my last post, I was somewhat pessimistic about how far I needed to go, but at the moment I feel rather hopeful. Though small, I have made some measureable progress in one month. I'm happy, health, and enjoying life. I'm also still energetic and optimistic about my career and I don't see any reason for that to change anytime soon. Rather than focusing too hard on the end goal, I plan to just stay the course and enjoy the journey. After all, I might die tomorrow. I added a metric based on the calculations in my projection spreadsheet for the time remaining in the accumulation phase.

Acheivements: I am still traveling on business which increases my income and greatly decreases my spending. When I am at home, I have been much better with coming up with creative ways to save money. For example, the other day I returned to my car to find that a boot had been placed on it. The anarchist in my decided it was time to rebel. With the aid of an extension chord, angle grinder, and power inverter for my car battery, I managed to cut the thing off, saving an estimated $55.

Challenges: The downside of traveling is that I plan to start selling off some of my personal possessions and have not had the opportunity to do so. I have two saxophones and some electronics that I would like to part ways with once I have some more time on my hands.

[detect_148]

Update: December 2015

Total Liquid Assets: 23,493.35
Total Annual Spending: 19,187.88
Progress Towards ERE: 4.90%
Projected FI: 5.5 years

Thoughts: Cheerful. I'm currently in the interview process for a new job. Outside of work, I have been traveling a ton and doing fun things along the way. I will be flying home this month for the holidays and managed to book a round trip flight across the country for only $53 using a combination of airline miles and discount airlines. I am currently trying to figure out how I can minimize the cost of my transportation to the airport. Normally, I would park at the airport for a cost of $120, but if I can carpool or ride my bike I could avoid this expense.

Achievements: Dating on the cheap. Most notably, the hiking trip I took with my girl last week was very cheap. We stayed in hotels using my travel points and she prepared food for us for every meal of the trip. I was able to sell off several of my larger items on craigslist and have been living off the proceeds.

Challenges: I have a lot of money sitting in musical instruments that I never play anymore, but I have a strong emotional attachment to them for some reason. Finding the right buyer for them is also difficult and is preventing me from letting them go, but as soon as I do, I can probably pocket a couple thousand dollars.

[Dave]

Sounds like a productive few months!

Regarding yoga, are there any websites you recommend for a beginner to read, or perhaps any Youtube guided sessions? I did 30 days of "Yoga with Adrienne", which was a good introduction, but now I am looking for something else. She has other classes I plan to use next, but at some point I will need additional resources.

[detect_148]

Hi Dave,

My yoga knowledge all comes from the classes I used to take before I started ERE. I really enjoyed the experience of practicing with an instructor. They can answer your questions, adjust you, and introduce you to many new poses in a single session, but most importantly they can challenge you at a level that is appropriate. It may be beneficial to drop in on a course every so often and try to pick up a few new things each time. If you look hard enough, you're sure to find studios or organizations offering cheap or free introductory classes, especially in a big city like Chicago.

-detect_148

[thrifty++]

Sounds like a productive few months!

Regarding yoga, are there any websites you recommend for a beginner to read, or perhaps any Youtube guided sessions? I did 30 days of "Yoga with Adrienne", which was a good introduction, but now I am looking for something else. She has other classes I plan to use next, but at some point I will need additional resources.

I would recommend just going to classes. You can learn so much more as well as meet interesting and nice people. I often go to Hari Krishna ones as they usually practice good techniques as well as have a spiritual and meditative focus. Some of them also provide you with food afterwards and an opportunity to talk to the other yoga attendees. Such classes can be quite cheap and it becomes a dinner and a class. A cheap night out!

[detect_148]

Update: January 2016

Total Liquid Assets: 32415.63
Total Annual Spending: 19565.00
Progress Towards ERE: 6.62%
Projected FI: 5.25 years

Thoughts: Much has changed in the last month. I've recently accepted a new job within my company and will be transitioning during the month of January. A relocation will be involved so I will be needing to find a new place to live. I'm hoping to find somewhere where I would be comfortable staying for several years potentially. I also want to be very careful about the cost of rent, I'll be back in the Bay Area so clearly the sky is the limit in that department. I am also planning to sell my car and instruments in the month of January so that should be a big boost in the right direction. I'm thankful to have spent the last two weeks at home with my family and friends celebrating the holidays. I have recently been very engaged in reading Benjamin Franklin's autobiography and some literature on beekeeping. Interesting stuff.

Achievements: I built my first beehive. I just need to find someplace to put it and some bees to inhabit it and I'll be on my way to being a beekeeper.

Challenges: I have a lot of changes to deal with. Selling my car, relocating, and finishing up my current work assignment will make January a busy month, but I look forward to the new opportunities that will come with this change. Once I am settled in my new living arrangement I plan to focus the majority of my ERE learning on food preparation and the use of staples to keep food costs down. I've already learned a lot by browsing all of your journals on here, I just need to put it into action for myself.

[detect_148]

Update: February 2016

Total Liquid Assets: 44792.51
Total Annual Spending: 22041.00
Progress Towards ERE: 8.12%
Projected FI: 6

Thoughts: This month was insanely busy. I have now changed jobs, found a new apartment, and am in the process of moving in. Acclimating to the new job has been rather demanding, but I'm managing it well and getting caught up. My rent increased, but I got the best deal I possibly could find at $700/month and happens to be a very ideal living situation. I got very lucky in a lot of ways. Overall it was a very active month financially. I received relocation packages, but also had higher expenses that usual due to the move and financing a year long gym membership. My eater habits have substantiially improved, I am eating healthier and much cheaper.

Acheivements: This entire month has been an achievement, just the fact that I could make this all happen.

Challenges: Stuff. I have way too much of it. I lived off of a backpack for a month while my stuff was in transit and it made me realize that I don't need any of it. Going to start giving away/ selling things tomorrow until there's nothing left, but the things that I use.

[detect_148]

Update: March 2016

Total Liquid Assets: ~48000.00
Total Annual Spending: ~21000
Progress Towards ERE: ~8.97%
Projected FI: 6

Thoughts: I've been sick this week so I'm trying to recover. I ate an entire bag of chocolate chips this morning which wasn't my finest moment. On the positive side, but overall net worth including retirement accounts surpassed $100K for the first time this month which I felt great about.

Achievements: Still breathing.

Challenges: Need to do more biking, yoga, and climbing. Making that a priority this month now that I'm pretty well settled into the my new job/life.

[thrifty++]

Wow your net worth is increasing at such a swift rate! Do you know what percentage of your net income you have been saving? Must be pretty high I imagine.

[detect_148]

Savings rate after deductions for taxes, 401k, HSA, and insurance was about 65%. I've also been helped out a lot by a hefty relocation package over the past few months. Definitely on the right track.

[detect_148]

Update: April 2016

Total Liquid Assets: 55,282.87
Total Annual Spending: 21,236.00
Progress Towards ERE: 10.41%
Projected FI: 6

Thoughts: March was a good month all around. I received my yearly bonus which gave me a hefty surge in income. My spending was not the best as I decided to take a surprise trip to the Denver area for skiing, but by using hotel points I was able to keep the overall cost of the trip well under $1000. I also took a fun backpacking trip to Big Sur. I learned a couple new recipes this month which has helped me improve my skills and satisfaction in the kitchen. Overall, things are going well. I'm happy and on track to meet my savings goal for the year.

Achievements: Rather spontaneously, I joined a local bee club, ordered a package of bees, found a local man in need of pollination services, and established my first bee colony, achieving a long time dream and starting a new hobby altogether. I'm really stoked about this and looking forward to developing my apiculture skills. This is also something I can use to develop another income stream down the road.

Challenges: I got leveled by another bout with poison oak after hiking. This is the third time this has happened in the past year. I need to be more cautious about avoiding poison oak altogether and I also need a good strategy to clean up during and after hiking to lessen the blow. I know that Technu is designed to remove poison oak so I may invest in some of that. So far, I've used various surfactants to remove the oil from my skin, but it spreads so easily that it's difficult to get it all off.

[detect_148]

Update: May 2016

Total Liquid Assets: 66,715.08
Total Annual Spending: 21,836.00
Progress Towards ERE: 12.22%
Projected FI: 4.5

Thoughts: Not such a great month. I had a family emergency which was very stressful and difficult for everyone. It was also expensive with travel costs as I needed to fly home. Aside from that I am doing a pretty good job at eating well and staying in shape. I had a few good hiking excursions so I'm pleased with that.

Achievements: I've had my beehive around for about a month now and they seem to be doing well. The queen is healthy and laying tons of eggs and I've only gotten stung twice (in the face lol). I just need them to fill up the bottom brood chamber so I can start adding honey supers. I also want to learn how to breed queens and make preparations for a split early next season. Upon reevaluting my ERE calculation sheets, I decided that I should be able to safely quit my job before about a year earlier than previously quoted, especially since I am not factoring my retirement accounts into my calculation. Big boost of income this month from selling my car.

Challenges: Trying to get out there and socialize a bit more without being too extravagent. I find myself going on dates that don't end up being too expensive, but still puts me a bit outside of the budget. To me, it's a worthwhile cause. Even if it doesn't end up working out with any of these girls.

[detect_148]

Update: June 2016

I'm not feeling much up to composing a status update due to the events of this past month, but rather, I'd like to take this as an opportunity to reflect. My father passed away during the month of May. He was an incredibly generous, creative, loving, funny, and caring man and he died too young. I'll always be grateful for how he supported my many and varied endeavors throughout life including the pursuit of early retirement. My father and I were very close and, consequently, the loss has been especially difficult to bear. Watching him decline in the hospital broke me down emotionally and physically as there was little I could do to comfort him and nothing I could do to save him.

I've spent the last few weeks at home following his death helping my mother and sister prepare the funeral and wrap up some of his projects around the house. I returned to work today.

It remains to be seen how the events of this month will affect the course of my life and my pursuit of early retirement. On the short term, I did have higher spending in May due to the costs of traveling and contributing to the funeral. I also now have an urge to shower my mother with various material comforts to help her cope, which may affect me in the long term. This feeling may also fade over time. It may be motivation though that my dad had been retired for several years and was loving every minute of it pursuing projects that he was extremely passionate about. By pressing for early retirement I can ensure more of that lifestyle for myself and the people around me to share it with.

I also got in a minor car accident today and sprained my ankle in an unrelated incident so I'm really hoping that I've hit rock bottom!!

[Eureka]

detect_148,

I am sorry about your loss and all the things you went through lately.

I am brand new to this forum and searched "ashtanga" to see if there'd be any fellow ashtangis around. And then I found your journal. I have been practising ashtanga regularly for many years and really feel it makes a difference to my life, both mentally and physically. And getting on my mat has helped me get through hard times so I hope you are able to maintain some kind of practise even with you sprained ankle.

All the best wishes to you and your family,

From an ERE ashtanga friend

[detect_148]

@Eureka and naomi: Thank you for the support. I'm doing quite a bit better. I have indeed been keeping up with my Ashtanga. I don't have a daily practice, which I would like to change, but I balance it in with my routine of climbing and biking. I do share your sentiment. I feel swell after doing yoga and all the stress and tension seems to melt away.

Update July 2016:

Total Liquid Assets: $72,034
Total Annual Spending: $20,084
Progress Towards ERE: 14.34%
Projected FI: 4.5

Still working the bees.