The name for this financial blog is “Fire Checklist.” There are so many folks like me who desire to say goodbye to Corporate America and retire early. There’s MANY “FIRE” blogs all associated with the same subject matter, financial independence, retire early. I don’t want to be just another FIRE blog. I want to provide content that’s unique and at the same time, provide useful information for those who really want to retire early and with peace of mind. Hence, my Fire checklist, a format to follow, a roadmap to the end of the rainbow. Also, this blog is about my own personal journey toward my inevitable future. Please follow along and hopefully we all reach the same goal….
There are many early retirement strategies, but the CORE are provided in this diagram I’ve included.
- Start Saving Early- the earlier you begin, the more wealth you’ll create at a younger age. Procrastination is a mortal sin! I know someone my own age (I’m 51) who doesn’t have a measly $20k to their name! Unfortunately that’s a reality in today’s world. What will these folks do during the next recession? LESSON # 1, START SAVING EARLY!
- Create a Financial Plan- start by building an emergency fund of $2000. (double what Dave Ramsey recommends). Look, stuff breaks, people get sick, cars need repairs, etc. etc. Set aside a minimum of $2000 ($500 in cash in a safe place, $1500 in a savings at your local bank. Beyond $2000, continue building up a reserve of 6 mo’s living expenses in an emergency fund. Store it in laddered CD’s or an ultra-short term bond fund. If you’re within One year of reaching retirement, make sure you have 3 years of living expenses set aside. You wouldn’t want to sell stocks during a bear market. This explains why I recommend 3 years in savings this close to retirement. I’m extreme; with five years until retirement I have a savings account equal to my mortgage balance. This way I can pay off the entire mortgage at the drop of a hat in the event I suddenly need to, like loss of employment. ALSO: Max out your 401k and Roth IRA (if your earnings are under the threshold for Roth contributions).
- Retire Debt- READ MY EARLIER POST ON DEBT!
- Build a Budget – I admit that I’m guilty of this one! My spending varies month-to-month so budgeting for me is tough. We don’t have many bills or obligations, which means I have a surplus of cash remaining from my paychecks (even after my 401k deduction which is set at the max, approx. $2000/mo.). All bills are automatically paid via auto-deductions from my checking account, even tithe I pay the church is on auto-pay. Spending is something I need to get a handle on, which I have plans to do when we return from vacation.
- Keep Track of Income and Expenses – Uh oh, I fail at this one too. By all means; do what I say, not as I do! I can say this proudly; I do pay myself first, through 401k contributions. On top of that, I receive monthly bonuses from work which are immediately transferred to savings. Also, all dividend distributions from my real estate Crowdfunding are transferred to savings (monthly & quarterly, approx. $28k/year total). I’m keeping track of income. Same goes for how much is automatically transferred to savings (all total, approx. 30% of my income; so I’m on track to retire in the 2022-2023 time frame). The area I need to keep close tabs on is how much I spend. Again, I’ll jump all over this when we return from vacation.
In summary, this is the place to start. I have so much material I plan to write which contains wisdom that I promise to impart, over the course of the year. Follow this blog and keep returning. I’ll have fresh material here 1-2 times per week.