Author’s Note: This Big Goal Roadmap has been updated! Please see the new and improved Big Goal Roadmap here.
The common rule is that a goal must be SMART (Specific, Measurable, Assignable, Realistic, and Time-Bound). Making a high-level plan to get there ensures I have covered those bases. The following is my big goal and a brief overview of how I plan to accomplish it. Below that will be periodic posts updating progress toward this goal as well as detailing interim, smaller goals.
Specific: Retire From My 9-5 Job
This is the idea behind this whole endeavor. I want to have the freedom to raise my kids, enjoy my wife, travel, work at my leisure, pursue other passions, and relax. I want to own my time. I want to do this without having any financial worries or experiencing a noticeable drop in lifestyle
Measurable: (Passive Income + Side Hustles) > Expenses
In the initial phase of retirement, I’m content with having to “hustle” for some income, but I want to fund the vast majority of my expenses with passive income and without tapping into investment principal.
Assignable: It’s All On Me, Baby
Although I do have a very supportive family.
See Below for Strategy
Time-Bound: Baby 29’s First Day of School (Sep. 3rd, 2019)
This goal date is about five years from day zero; I’ll be 34 years old. To do this, I’ll have to overcome a rather significant problem.
Here’s the problem:
|Current Situation||(End of 2014)|
|Current Passive Income||$300|
|Current Side Hustles||$0|
Near-Term Strategy (Jan-Jun 2015):
Decrease Monthly Expenses (see financial reports here) from ~$9,000/mo to a far more reasonable $5,000/mo.
- Cars: Sell our two luxury vehicles (a two-seater Corvette Convertible and a Mercedes Benz) and purchase a family-friendly, economical vehicle. The associated insurance costs, personal property taxes, gas, maintenance, and car payments would save (conservatively) about $800/mo.
- Housing: Get a new job and move back to our permanent home in Virginia with an equal or higher salary than what I’m getting in NYC. The housing savings would amount to about $2,800/mo.
- Food/Other: The cost-of-living premium for food, dining, and household goods in NYC is, wet finger in the air, about 40%. I believe moving will save us $300/mo on these items.
- Phone: Consolidating under a low-cost carrier should save us $100/mo.
Increase Passive Income from $300/mo to $800/mo
- Dividend Growth Investing: Roll my idle 401(k) balance to a self-managed Traditional IRA focused on dividend growth investing. Immediately increasing my dividend income from $250/mo to $750/mo.
- Interest: Continue contributing to life-insured annuity, which currently yields $50/mo.
Start Side Hustlin’ from $0/mo to $100/mo
- Writing: Do what I like to be best, talk about stocks! Start writing on SeekingAlpha.com ~1 Article/mo.
These efforts should get me to here…
|Monthly Passive Income||$800|
|Monthly Side Hustle||$100|
Mid-Term Strategy (June 2015 – June 2019):
Decrease Monthly Expenses from $5,000/mo to $4,900/mo.
- Other: Optimize the use of rewards credit cards/gift cards to further eliminate $100/mo from categories like travel, utilities, and food and household costs. Dropping just $100 in expenses over the course of four years seems almost too easy of a goal. However, I’m gaming on adding a few children to the mix over this time, so that will likely offset a lot of my expense optimizing effort. I don’t really worry too much about inflation.
Increase Passive Income from $800/mo to $2200/mo
- Dividend Growth Investing: Continue maximum-funding our IRAs and 401(k), and rely upon solid, blue-chip dividends. Between contributions, dividend reinvestment plans, and probable corporate dividend increases, I plan to increase dividend income at compound annual growth rate of 25% per year, from $750/mo to $1,800/mo.
- Interest: Continue contributing to life-insured annuity, increasing interest income by 15% per year, from $50/mo to about$100/mo.
- Rental Income: Acquire 2-3 rental units yielding a average monthly net income of $400/mo. This can (and probably will) include us renting out our basement either full time or part time (like AirBnB).
Keep Side Hustlin’ from $100/mo to $500/mo.
- Writing: Do what I like to be best, talk about stocks! Increase writing on SeekingAlpha.com to ~4 Articles/mo.
- Blog: Not expecting a cash cow or anything, but it’d be great if I could monetize the blog to the extent that it pays for itself.
These efforts should get me to here…
|Mid-2019 Situation (Proj.)|
|Monthly Passive Income||$2,200|
|Monthly Side Hustle||$500|
Long-Term Strategy (Mid-2019 – Retirement…)
Decrease Monthly Expenses from $4,900/mo to $3,200/mo.
- Housing: Refinance and rent primary home, decreasing mortgage payment from $2,800/mo to $2,200/mo (thereby making a $2,500/mo tenant cash-flow positive). Upon entry into retirement, move to cost-friendly locale, taking out a mortgage and total housing costs not-to-exceed $1,100/mo. Ultimately, decreasing housing costs from $2,800/mo to $1,100/mo. Once retired, there shouldn’t be much need to stay in the high-cost DC suburbs of Northern VA.
- Back-up option: Rather than refi-rent-and-move. Simply sell our current primary home, take that equity and buy a similar home with cash in a low-cost locale. This would decrease our expenses another $900/mo or so, but would obviously remove the extra rental income shown below. We’ll explore this based on how things turn out.
Increase Passive Income from $2,200/mo to $3,400/mo
- Dividend Growth Investing: Continue maximum funding our IRAs and 401(k), and rely upon solid, blue-chip dividends. As retirement nears, fold in growth-oriented Roth IRA and 401(k) into the dividend portfolio $1,800/mo to $2,600/mo.
- Interest: Continue contributing to life-insured annuity, increasing interest income by 10% per year, from $100/mo. No real material change.
- Rental Income: Add our current primary home to our slate of rental units (see 1.a directly above). Along with small increases via inflation, increasing rental income from $400/mo to $700/mo.
Keep Side Hustlin’ from $500/mo to $800/mo.
- Writing: Do what I like to do best, talk about stocks! Increase writing on SeekingAlpha.com to ~8 Articles/mo.
- Blog: Not expecting a cash cow or anything, but it’d be great if I could monetize the blog to the extent that it pays for itself, potentially a bit more.
- Part-Time Work: This would hopefully be unnecessary, but my wife and I are still fully capable and healthy adults with pretty good skill sets. Should any of the above fall through (dividend cuts, bad tenant, unexpected large expense), we can always resort to a little part-time work. $0/mo.
|Retirement Situation (Proj.)|
|Monthly Passive Income||$3,400|
|Monthly Side Hustle||$800|
Is this possible? I’d say it’s certainly possible... but, it’s also certainly aggressive—which is fine with me. I’ll try to post updates at least quarterly with progress toward this goal, but the monthly financial reports should touch on it consistently.
There is one follow-on goal. Once retired, I’d like to continue to decrease any reliance on “side hustles.” Not that side hustles are any less reliable than regular work (what is regular work other than a side hustle that takes a ton of time?), but I’d like to continually gain more freedom and ownership over my time. My retirementality is that working in some respect is always going to be the case—but I want to freedom to not have to work.
Tell me, am I insane?