This blog is personal. It is a part of me that I want to share with you… so you can see the power of financial independence… and learn what it can do for you.
I am not a financial expert. I do not have certifications at the end of my name like CFA or CFP. What I have is a love for finance, which means I geek out during the financial discussions in Game of Thrones. I look forward to my car rides in the morning Austin traffic while listening to investing, finance, and retirement podcasts like Motley Fool Answers, BiggerPockets Real Estate, and Smart Passive Income. And I thrive during my stairmaster workouts each day listening to books on Audible like The Simple Path to Wealth by JL Collins.
With these early posts, we covered “where you are” using the FIN formula. I calculated my number as…
FIN Formula -> Monthly Expenses * 12 * Consumption Multiplier * FI Risk Multiplier FIN = $3000.00 * 12 * 1.1 * 30 FIN = $1,188,000.00
And we have identified “where you want to be” by creating a list of goals and calculating net worth. Currently my Net Worth Calculation is…
Net Worth = Total Owned - Total Owed
Net Worth = $13,550.00 - $30.00
Net Worth = $13,520.00
In order to bring “where you are” in line with “where you want to be”, we will need to save more money, increase personal revenue (money coming in), and take smart risks with investments.
Just to give you an idea of the timeline to bridge my gap, the chart below identifies how much per year I would have to save if I invested those savings in an index fund that tracks the average yearly return of the S&P 500 of 8.6% (this is the average over the last 40 years):
|Retirement Age||# of Years||Yearly Amount of $ to Save|
As you can see above, I have to save a lot each year to hit my number. If I want to accomplish it by 65, then $1K per month it is… but by 55 it will be much more challenging. To accomplish this feat, I will need to take smart risks… and to push myself beyond what I currently think is possible to earn and save. Luckily the tools to build that bridge over the gap between where I am and where I want to be are all around me, waiting to be used.
It is time for you to use them too!