How We Unlocked More Options and Insanely Better Choices

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Welcome to the monthly update of our journey to financial independence, where we report on the progress of our FI tree, aka Freedom Fund. Our mangoes are almost ripe and our goal is to reach financial independence by July 2017. This means that we’ll have enough investments to live off of without ever having to work again to pay for living expenses. We’ll consider ourselves financially independent when our Freedom Fund is able to support our lifestyle indefinitely. Our Freedom Fund is comprised of the following income-producing assets: index-based investments, short-term reserves and a real estate property.

The big announcement!

Hola, Enchumbao readers! Wow, what a month January has been, financially speaking. The market ended up in positive territory. We spent very little for the month, except for a splurge on concert tickets to see Ricky Martin in Maryland. That should be a nice weekend getaway during Cinco de Mayo. We also accomplished lots of planning for the year, while our dollars were working hard in the background to help us meet our financial goals. Something that we’ve been looking to achieve also happened during last month.

We’re extremely excited to announce that we have become financially independent!!! Let’s hear it one more time: We are now financially independent! That’s right, folks, we hit our mark. Yes! We reached our number on January 14. It was the weekend that I came down with a cold. I woke up, and with very little energy, checked our Mint account from bed and boom! There it was, totally unexpected, the income-producing assets reached the digits we’ve been looking forward to seeing for a few years.

It feels surreal

Bert, from Dividend Diplomats, made a comment in one of our update posts that declaring financial independence must feel like the episode in The Office where Michael Scott declares bankruptcy. See the video below. Bert hit the nail on the head. That’s just how we feel right now.

We…declare…financial independence!

Since I was sick, I couldn’t show my full excitement as I told Mrs. Enchumbao that we reached our goal. This reminded me of why it’s important to enjoy the journey to FI and not just overwork yourself to reach a number. My sickness was temporary, but imagine the people that reach financial success and sacrifice their health along the way. It’s definitely not worth giving up health, so enjoy the journey, take the time to take care of your health and celebrate the milestones.

Although we haven’t had a chance to do a little FI celebration yet, we feel that it’s surreal that we got here. Our relationship with money has been transformed and money will soon become background noise for us, as we start to put more time and effort into our happiness without worrying about how bills will get paid.

How it all started

We discovered the FIRE concept in 2012. For the past 5 years we did this “work” thing that guaranteed us financial independence, if we came up with an FI Plan. Basically, if we could save up to 25-30 times our estimated living expenses in retirement, we could declare ourselves financially independent.  Well, that’s what we did. We tracked our expenses for all those years and estimated how much we needed to retire. Now that goal has been met, the 9-5 almost feels like a hobby because it’s really optional. We still need to accumulate a little more for other plans, but if we were to retire today, our bills would be taken care of, almost forever, more like 99% forever.

So that’s the exciting news we have for you. Now let’s see how the Freedom Fund did for the month and how it achieved the ultimate goal.

Freedom Fund Progress

Percentage of Freedom Fund reached in January

The market had a nice return for the month, but we also spent very little, so we’ll take credit for the new money that got invested. Our Freedom Fund jumped to 101% in January! That’s a 4% increase from the previous month. After slow growth from March through May, and July through October of 2016, the fast turnaround caught us by surprise.

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If we were to retire today, our investments could cover annual expenses of up to $35,574 a year. That puts us beyond our goal by $574! The extra savings beyond our Freedom Fund goal will be used for a few short-term goals.

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Happy finances, happy marriage! 🙂

The road ahead

This is kind of a bittersweet moment, since it’s our last monthly report on our FI goal. I wish we had started reporting on this earlier because I do enjoy producing these reports, but it is what it is.

Here’s a list of our previous updates:

Our Freedom Fund: Creating a Portfolio That’s Built to Last

August 2016 Freedom Fund Update: 6.3% in Market Gains

September Freedom Fund Update: We’re in Good Shape for Retirement!

October Freedom Fund Update: Earnings Increased 25% Over a Year Ago

November Freedom Fund Update: Progress is Not Always Visible

December Freedom Fund Update: We Are Very Close to Declaring Financial Independence

January Freedom Fund Update: We Reached a Dividend Goal Last Month

Would you like to see more Freedom Fund Updates in the future? If yes, how often and what kind of data would you like to see in the report? Let us know in the comment section.

We’re feeling FIRE in the air. The first piece of the “FIRE” puzzle just landed in place. We’re at a point in our lives where we can choose whether we want to continue working or not. Which brings us to the following questions.

Are we going to quit our jobs right away?

Nothing is changing in our lives in the short term, since we can’t just pick up and go. We have a transition plan for the next couple of years which involves saving more for a house, selling the rental property, helping my dad sell his Pennsylvania property, and planning a move abroad. We’re not in a big rush and are giving ourselves two years to close this chapter.

What happens if there’s a recession and our Freedom Fund drops over 20% over the next couple of years?

Well, if the market drops, then we’ll buy at a discount. 🙂 Otherwise, we’re not concerned. We have a proper asset allocation that let’s us sleep well at night. Our plan continues without interruption, no matter what happens in the market.

Are we done saving for retirement?

We’re basically done saving and investing for retirement in the sense that the Freedom Fund can now support us for a lifetime. Does that mean that we stop all contributions to retirement accounts? Of course not! We’d be foolish to leave money on the table by missing out on a company match. We’ll continue to max out our retirement accounts until the day we retire to take advantage of the match and lower our taxes.

Are we suffering from the “one more year” syndrome?

A few in the FIRE community tend to work for one more year after they reach FI and this has been dubbed as “The One More Year” Syndrome. For many people it can be a tough decision to give up the paycheck. This is not the case for us. Working a little longer after reaching FI has been part of our plan all along. We’re not adding working years just for the sake of it and already have a retirement date in mind. We can see the light at the end of the tunnel and it’s shining like the mid-afternoon sun of a Caribbean beach!

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The beautiful playas from the Dominican Republic await the return of these future early retirees!

However, if our working environment was to change for the worse and trigger the “we have FU money, this is not worth it” feeling, we would consider shortening the timeline. That’s the power of having FU money: more options and insanely better choices.

The next two years are going to be very exciting for the Enchumbao household. Stay tuned!

How are your FI plans going? How much progress have you made?

Risk disclosure: All investing involves risk, including the loss of principal. The material contained on this website is for discussion purpose only and should not be misconstrued as financial advice.

First post image by Sarangib

Please like & share:
January Freedom Fund Update: We Reached a Dividend Goal Last Month
Not Born to Pay Bills and Die: 15 Powerful Steps You Can Take to Reach Financial Independence Faster

Mr. Enchumbao

Mr. Enchumbao retired at 44. He worked for 13 years at Vanguard, primarily as a Communications Project Leader in the Institutional Division, helping people save for retirement.

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8 Responses

  1. Congratulations! I remember when we first realized we were FI, it’s a great feeling to be free from needing to work. Enjoy your success, you earned it 🙂

    • Thanks! We can’t wait to be retired like you guys. It a great sense of accomplishment to realize that what the industry promotes as a 30 year goal (retirement savings) we got it done in less than 10, and well done. After all, how many retirees get to retire without counting social security or a part-time gig as part of their retirement funds?

      Even though our routines haven’t changed, our mindsets feel a little different and I think that will also be reflected in the kind of posts that we’ll be writing moving forward. I guess it’s part of growing and learning. 🙂

      Thanks for stopping by!

  2. Alex C. says:

    Congratulations!!! That must be such a relief! So what’s your next big goal?

    • Thanks Alex,
      Our next big financial goal, which is already in progress, is to save up the funds to either build or buy our home abroad. This will happen while we take care of a few things prior to retirement over the next couple of years so we’ll try to do as much as we can since we do have a retirement date in mind. Thanks for commenting.

  3. Louis Bautista says:

    Huge congrats to you guys! I am early in my journey, but I have you guys to thank for inspiring me to pursue this journey. Wish you a lot of success on your future endeavors.

  4. EL says:

    Hey Congrats on reaching the FI figure you hoped for. Im sure it feels great to finally have met such a big goal. Yeah if your work situation is not so bad or stressful, why not work a bit longer to have a buffer. If work sucks I would leave as soon as possible. Good luck.

    • Hi Rich Uncle EL –
      I agree. There’s no need to run for the door if the job situation isn’t uncomfortable. As we get to ready to make our retirement move, our investments will definitely create a nice buffer. Thanks!

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