Mapping Out Our Journey to Early Retirement
If you just found our humble cyberspace, welcome to our home! We’re a multicultural couple currently living in Pennsylvania, and we started blogging on Valentine’s Day 2015. Click here to read more juicy stuff about us! We blog about stuff such as a cat named Pushok that loves to annoy Mr. Enchumbao, meaningful experiences that affect our lives, and, mainly, about a philosophy of life that brings us true happiness, and how reaching financial independence (FI) will help us reach early retirement and thrive along the way.
In 2011-12, after a soul-searching experience on my part, and reading a few finance books, we came to the conclusion that if we were to have 25 times our annual expenses in income-producing assets, we could consider ourselves FI, and would no longer need to hold a job to pay the bills. Getting to the FI point faster would mean that we could cut the traditional 30-40 year retirement plan to a mere decade! Doesn’t that sound exciting? We sat down, worked out conservative projections, and estimated that by cutting unnecessary expenses, getting the most value for our dollars, and spending only on worthy experiences, we could be FI by 2020.
Ever since then, we’ve been cutting our expenses more and more without sacrificing much. (Okay, so we did live in a tiny apartment that wasn’t up to code for a few years, but that was rather fun. Anything is certainly uphill from there.) Deprivation in the Enchumbao household? Not really. And, we’re happy to announce that without changing our initial FI number, we’re now projected to get there within three years. What?! Yes, it’s unbelievable how fast the combination of saving and investing diligently, along with compound interest, can you get there. And, we believe that you can achieve earlier retirement as well! Let MMM, one of our go-to FI bloggers, show you the shockingly simple math behind it.
Once we reach our FI mark, we’ll be financially ready for early retirement. When some people hear about our plans for early retirement, they become dumbfounded by the idea. They think of retirement as something that is only reserved for senior citizens. “What do you mean you’re going to retire? You’re so young! What are you going to do with your time – sit on a rocking chair? How are you going to pay for health care? How about your children’s college education? What if you get sick?”. The list goes on and on.
Well, we thought about all of these factors. I can assure you that we’ll be better prepared for any financial burden than someone who lives from paycheck to paycheck or on a financed lifestyle. Many of these people let their jobs define their lives and they feel that the only way to live is by following the norms prescribed by society. So they’d feel lost if they don’t have a job to go to when they get up in the morning. I’m okay with that, heck, more than okay – thrilled with the prospect.
There’s a difference between having a job and having work. What we are to do with our free time upon retirement is the least of our worries. We have a ton of activities lined up after early retirement. The kind of life we want to have is almost the same as every typical retiree: travel the world, spend more time with family and friends, and attend to hobbies. But the sweet part of this deal is that we’ll have many more years of retirement. Therefore, our bodies should have the strength to be more active, than if we were to wait until we’re in our sixties.
We’ll also be in a position to contribute to society in more impactful ways than working in a full-time corporate job, since we do intend to work in some capacity. Doing meaningful work is important to stay sharp throughout life. The difference is that we can finally do what we are really passionate about, like Mrs. Enchumbao’s plan of saving kittens and babies, for instance. 🙂
Retiring can have such an unattractive connotation. That’s because people retire mostly when they’ve reached an age where they are tired and feel that they can no longer work. According to history, retirement was not a popular term because it was designed to get rid of people, not help them.
To retire: to stop a job or career because you have reached the age when you are not allowed to work anymore or do not need or want to work anymore. – Merriam Webster Dictionary
When we no longer need to work, guess what this couple is doing? Oh yes, we’re retiring from corporate America! That’s right, Internet Retirement Police! We’ll be joining the other awesome FI couples, such as Jeremy and Winnie from GoCurryCracker.com, and Pete and wifey from Mrmoneymustache.com, who are living the dream having achieved financial independence, pursuing early retirement and still being productive individuals of society.
We’re living in a time where 35 is the new 65 when it comes to retirement. If you want to retire early, you begin your career in your early 20s and can be done with saving for retirement by the time you reach your mid 30s. We didn’t know about the possibilities of an extreme early retirement until later in our careers. Crunching the FI numbers and planning ahead played a big role in getting there. We didn’t start planning as early as we could have (if we could go back in time and teach our younger selves what we know now, I’d be writing this blog entry as an FI individual!), but we made enormous progress by changing our behaviors toward spending and saving. Below is how we’re mapping out our journey to early retirement:
Early saving years with an FI mindset (2011-2012)
- Before we started saving with an FI mindset, we were saving at least the minimum in our 401(k)s to get the match contribution from our employers. We should’ve started maxing out contributions right away, but we can’t turn back the clock! After we did our FI numbers, our goal was to increase the contributions until we were able to max them out.
- Mrs. Enchumbao, a debt-free disciplined saver with a no-debt mentality, was able to start saving more earlier in her career than I did.
- Sticking to a budget became essential after eye-opening revelations on how we were spending our money.
- Main goal for me was to pay off all my debt, including student loans, and for Mrs. Enchumbao to decrease spending on variable experiences.
Accumulating stage (2013-2014)
- This is the time when I joined my wife’s debt-free journey after paying off all my debt.
- We were maxing out our 401(k) contributions every year and investing the rest in taxable investment accounts. Our investments started gaining momentum. Compounding interest, anyone?!
- We invested any extra money from promotions, raises and bonuses. The key here was to keep adding to the investment pile instead of inflating our lifestyles.
- Since we’ll be moving abroad when we reach FIRE, renting made more sense than buying a house for us. So no mortgages for us, thank you very much.
Near early retirement (2015-2019)
We are happy to say that we’re at this point right now, almost at our final destination. 🙂
- Our savings are on autopilot. We’re still accumulating and started front-loading our 401(k)s this year.
- We don’t need to monitor our budget 24/7 because we’ve become disciplined enough to use our money wisely without being wasteful.
- We’re researching where we would like to live and will save aggressively to buy our first home, as a couple, after funding 25 years of living expenses! We want to be able to enjoy nice weather and have access to local fruits and veggies all year-round. That home would be the first leg of our early retirement years.
- We’ve researched loopholes that would allow us to tap into our retirement savings without penalties. We’ll be rolling over funds between investment accounts after we become early retirees.
- We’re planning to have at least one child for now, stay in the U.S. for another after he/she is born and then move shortly after. We want him/her to experience the world and the richness that other cultures have to offer.
- We’ll be looking into our health insurance options once we figure out where we’ll be living. We’ve done some preliminary research and they’re not as bad as you might be led to believe.
Retiring at such an early age is unconventional, and by default, we need to find unconventional sources of valuable information to be able to make informed decisions. Fortunately, we’re not alone on this journey. There are other bloggers we follow that have very useful information on the topics of financial independence and early retirement. We pick each other’s brain. That’s the beauty of the early retirement community, we’re willing to share information to help others reach their destination.