In case you missed it, we purchased a vanlife minivan and we’re taking a much slower approach to this whole financial independence/early retirement thing in favor of enjoying life now perhaps by way of our own vanlife adventure. We’d like to think that we have FIRE on “autopilot” since we decided to make our personal finances boring.
In the interim between today and FIRE, we’ve been working toward a fully-funded lifestyle change.
Thanks to the couple over at Slowly Sipping Coffee, we have a framework for the fully-funded lifestyle change, which means we have the opportunity to do something a little different than the “hustle like crazy to FIRE approach.” I’m looking forward to the somewhat slower pace since we worked so hard to become debt free.
What would a fully-funded lifestyle change look like?
To make the transition to self-employment, we had to cover past and present needs (and have a plan for the future).
Phase 1: Past Sins
1. Pay off all debt and then pull all of our credit reports to verify that all accounts have been closed/paid in full. DONE!
After pulling all of our credit reports, we’re confident that all of our debts have been paid in full.
Phase 2: Present Needs
1. Put $30,000 in an emergency fund with Ally. DONE!
After the Volvo died unexpectedly, we had to make a withdrawal to purchase a minivan, but we’re back on target today.
2. Set aside a few months of living expenses in our local savings account. DONE!
Since we earn money running our own business, we didn’t feel the need to set aside quite as much, especially with the emergency fund within arm’s reach.
Phase 3: Future Plans
1. Invest $500,000 in a taxable brokerage account for dividend investing. 4.4% DONE!
Our plan does not include withdrawing any money from our traditional retirement accounts — that’s money that we’ll reserve for much later in life. Thus, our contributions to our taxable brokerage account will generate the dividends that we need to live off of (or, cover the majority of our expenses).
Even with this money, we won’t quit working. We don’t foresee a future in which we’ll stop doing meaningful work.
2. Rent our “tiny” house to generate $5,000 in income annually. NOT DONE!
We’re planning extensive travel in 2019 and beyond so that we can figure out where we want to live in the future. When we’re not in PA, we plan to rent the house, perhaps as early as next summer.
3. Save $XXX,XXX to relocate and buy a new home. NOT DONE!
Details are TBD. We do not plan to settle down for several years; when we settle, we won’t return to our current “tiny” house because we’ll have relocated to another state.
What’s excluded from this lifestyle change?
First, we earn money from running our own business. Since our biz is location independent, we will continue to work. Taking a reasonable salary from the business will cover our living expenses.
Second, we have money set aside in tax-deferred retirement accounts. According to this retirement calculator from Keep Thrifty, we are “retirement free” with respect to our traditional retirement investments. But, we’re not going to stop contributing for our traditional retirement plan; we’re developing a new plan for managing our money so that we can make those SEP IRA contributions. And, we’re not going to take any money from these accounts before we “retire” at 67 or later.
What’s the timeline for our fully-funded lifestyle change?
Well, we’re taking in the great weather than summer and fall in Lancaster afford us, so we’re not really in a rush to make a transition. Instead, we’re taking advantage of all that this region has to offer. Think hiking, farmers’ markets, fruit picking, and time at the makerspace.
As winter approaches, we’ll be singing a different tune. We have never cared for winters in Pennsylvania, so I’d like to relocate either temporarily as a snowbird. We have house/cat sitters lined up for a few months to give us some time and space to figure out our long-term travel plans and practice running a location-independent business.
Do you have a fully-funded lifestyle change planned?
P.S. Close to paying off a mortgage? Wondering what to next after you paid off your mortgage?
|Taxable Brokerage Accounts We Use||Where to Sign Up|
|M1 Finance offers a platform free for investing by way of a brokerage account, which we use ourselves. Seriously, no fees. Use our affiliate referral link to try it out.||Sign up for M1 Finance|
|Vanguard is handles our retirement accounts and a brokerage account. We're investing only in Vanguard ETFs since they are free to trade.||Sign up for Vanguard|