When we tell family, friends, and colleagues we want to retire in less than ten years we get a mix of responses – looks of confusion, positive support (sometimes followed by a list of objections), and curiosity.
In fact, if you told me two years ago we could save enough to be financially independent in ten years I probably would have reacted this way, too.
So, how did we get on a path to financial independence (FI)?
Here’s our family’s story
Flash back three years ago and our financial situation looked a lot different than today. Like so many Americans, we were spending most of our income and we were saving at a minimal level.
We did not have any credit card debt, but we did have a mortgage, a college loan payment, two car payments, large cable and phone bills, childcare expenses, and a large discretionary budget – especially for food and travel. We were contributing enough to our retirement accounts to receive the full employer match, though we never managed to save much more than that.
So, what changed?
It all started a couple of years ago when my husband, Eric, landed a new job 30 minutes outside of Seattle and we began discussing whether our family of four should move closer to his work.
With two boys and a large dog, our small Seattle home was starting to feel tight. Yes, it would be nice to have a shorter commute and to live in a lower cost-of-living area. But at the same time, our Seattle home was worth a lot and we were emotionally attached to calling Seattle home.
Should we move, or not? Should we add an addition to our house? Should we tear down the house and rebuild?
For almost a year we mulled over these three options, discussing them at lengths.
One week we were going to move, the next week we were looking at remodeling plans and timelines.
But then, we put our emotions aside and started crunching the numbers
We realized we could purchase a larger, newer home close to Eric’s work for $100k less than our Seattle home would sell for.
By choosing the right home, in the right neighborhood, we could easily get by with one car and bike commute. Have you read Mr. Money Mustache’s article on commuting? If so, you know the true cost of commuting is significant in regards to both time and money.
The bottom line was living 30 miles from work in a high cost-of-living area (when we could be living 4 miles from work in a low cost-of-living area) did not make sense.
We decided to move.
We were also greatly inspired by the FI community.
We started voraciously reading every personal financial blog and Reddit forum we could get our hands on to understand how we, too, could get to FI sooner than later.
What do you mean, FI?
We’ll talk more about financial independence (FI) on our blog in the months to come, but the basic idea is to save as much money as possible using your 401k, IRA, and HSA. Once you get to about 25x of your current spending, you are safe to retire withdrawing 4% from your investments. Pretty straightforward, non-controversial stuff in the finance world.
But to us, it was revolutionary.
If we focus on saving now, we don’t have to work forever. In fact, using online FI calculators, we estimated we could retire in ten years.
We were totally on board
From that point on, we had a clear financial plan and decisions became a lot easier.
We immediately started to tweak our spending and savings, starting with the low-hanging fruit. We moved, payed off a car loan, ramped up savings, cut our $1,500/month grocery bill in half, eliminated wasteful spending, and prioritized purchases.
We started thinking about how we would educate our two young boys about money.
Which leads us to this blog.
Our path to financial independence isn’t just about us – Eric and myself.
It is also about raising our boys to understand the value of money and the value of saving.
It is about forming a community of families who are also looking to raise smart savers. It is about sharing tips, ideas, and tools that have helped our family reach our savings goals.
Our journey will be educational, challenging, rewarding, and humorous — and we’re happy you’ve come along for the ride.