My path to Financial Freedom [FIRE]

At 40, I want to have a choice.

Not necessarily to stop working – I enjoy my job. But I want the freedom to decide whether I have to go to work or whether I want to. The freedom to take three months off and travel. The freedom to find a remote job instead of spending 2.5 hours a day in a car.

This is my plan to get there.

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Disclaimer: This article is meant to serve as an example and inspiration. I'm intentionally leaving out specific numbers – "enough" means something different for each of us. My path is mine, yours will be different. And that's okay.

It's hard to hit a target when you don't know where you are and where you want to go...

Where Are We on Our Journey?

To talk about the goal, I need to explain where my wife and I currently are.

When I average our ages, we're about 30, expecting our first child, and working diligently toward our financial freedom.

How are we doing in terms of "Assets"?

• We always have an emergency fund ready
• We own 2 cars (not new, of course), with no payments
• We live in a newly renovated house, no mortgage, nothing
• We're paying off a second house, about 12 more years until it's fully ours
• We're already 20% of the way through our investment journey to cover our vision of financial freedom

Our Path

If everything goes well, my wife and I want to continue our current approach for the next 10 years, until we're 40. By then, we'll have enough invested and will have the option of choice and freedom! At 40, we don't plan to fully live off investments – not at all, actually – and we'll let them grow for another 10 years, until we're 50.

If everything goes according to plan, at 50 we'll have a very solid monthly income and will start enjoying our freedom to the fullest, whatever that may look like.

This graph really displays the phrase "Your money is working for you".
When we contribute aggressively for 10 years and then not at all, look at the change in the curve. None!

The Rules of Our Journey

Every journey is different, has different rules, different turns, and you need to adapt. To avoid being too superficial, let's look at specific areas and how we approach them.

How Much Do We Invest?

Usually the first question everyone asks me. As a household, we set aside a minimum of 40% of our income, aiming for 60%.

Is that a lot? Yes. That's why I recommend having a clear goal. If I didn't have one, I'd struggle to resist a nicer car, a more exotic vacation, and impulse purchases...

Our Household

I have our personal approach and principles described in this article about marriage, but I'll quickly summarize. We have one main account for our household where both our salaries go, we review all expenses once a month and categorize them, so we have an overview of where the money flows. Part of these expenses includes a pool for "random expenses" – anything we agree is currently important to us. It could be a new cabinet from Ikea, a stroller for the baby, a gift for friends, a vacation, ...

How do we handle our fun money? Each of us has a "side account" (an account set aside where we don't track where the money goes), to which we send a percentage each month for fun – clothes, nails, dinners, pubs, ...

What About Our Cars?

As I mentioned, we own two cars. I described the expenses for our "main car" in this article in great detail. Our general approach is to always buy a reliable used car. That's why we own a VW Golf and a Toyota Auris. These cars seemed like a reasonable balance of price, reliability, and fun.

Our First Child

This will be a challenge we don't yet have an answer for. But what my wife and I do have is a plan. We've gone through the change in household income after the baby arrives and also estimated the increase in expenses, creating both an optimistic and pessimistic scenario.

What does this mean in practice?

1. We've already had to cut back on expenses to buy necessities like a stroller, car seat, etc. in time
2. Right now we're investing the absolute maximum – we have an annual goal and it never hurts to build a "cushion" ahead of time
3. We think through our purchases, using a "time test" – for more expensive items, we give ourselves a week to think it over before buying

Conclusion

Everything is more beautiful and harder when there's two of you, but when you have a clear goal, everything goes better. For us, the most important thing has been to talk about everything very openly and honestly, including money.

If you're curious about anything else, don't hesitate to reach out! I'd be happy to share more details from our journey. My email is vymerd@gmail.com