“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” ~ Pablo Picasso
I am what Dave Ramsey would label “the nerd.” An ideal day for me for sure includes doing some planning, making a list, maybe some research. With this comes the love for goals, which it turns out, is immensely important in achieving a good financial situation. It’s pretty rare to stumble into wealth and those that do still need goals and plans or else they quickly find themselves stumbling out of wealth.
So what are our goals?
We want to be in a better financial position. We want to have the freedom to support ourselves, if one or both of us want to quit, go part time or explore a whole new career. Or sit around and do nothing for six months.
This isn’t a goal though, this is a wish.
A goal needs a deadline. When do we want to reach this ideal financial position? A goal needs to be measureable. How much is enough?
Well, for starters, we’re going to use the 4% rule to determine our number. What’s the 4% rule? Mr.Money Moustache explains it best here- http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/
First part of setting goals: Measurable
Our proposed monthly budget in retirement
Property taxes: $500 (we are assuming we stay in our current home for planning purposes)
Dining out: $100
Insurance/Healthcare: $400 (At this point, who in the USA really knows future costs here…)
Vehicle maintenance: $125
Cell phones: $125
Mr. poniesandFIRE fun: $200 (his hobbies are clearly cheaper than mine)
Ponies: $800 (yup, ponies are pricey. This is a conservative number for keeping 1 show horse for myself)
Savings: $150 (Building in extra safety)
poniesandFIRE jr: $150 (if we reach this before he’s grown, he may want to do sports/activities/etc, so needs to be budgeted for)
Annually = $48,900
This budget clearly has a ton that, by hardcore FIRE folk’s standards, could be cut. Eating out? PONIES? Travel? Easily could go, but that’s ok. We don’t NEED those things, but if we’re designing our ideal life plan, I think it’s important to include the things we’d hope to have.
Next, I round up. I don’t want to be so tight that a down market means we can’t travel for two years. So $48,300 becomes $52,000 for the sake of (more) safety.
$52,000 x 25 = $1,300,000. Whoa. Our goal net worth is pretty huge.
Here’s the time for a serious self-reality check. It has taken us about 15-20 years to amass our current net worth of $370k. Now, some of those years were “wasted” in college or working really low income jobs, and most of our wealth has been garnered in the last 5 years, but if we have about a million dollars left until we reach our goal, it’s time to get serious if it’s not going to take us another 30 years to get this done!
Second part of setting goals – Timeline
When do we want to hit our goal?
Well, let’s talk this through a little. Right now, Mr. poniesandFIRE and I both work 50+ hour weeks. With my side business, there are times when I average only 1 or 2 days off per MONTH.
That was all well and good before we had poniesandFIRE jr, but I don’t want us to miss his whole childhood as workaholics. I want to reach FIRE before he’s in high school and I want to work smarter, rather than longer hours, so during this time we aren’t unavailable to him or missing out.
Ten years seems like a reasonable timeline. Insanely hard and almost impossible, but somehow also reasonable. I don’t want to be reasonable though. I want to push our limits and crush our goals. I want to have the options in our lives that Financial Independence offers.
So seven years it is. Seven years to reach a net worth of 1.3 million. Let’s say by December 2025. Here we go and welcome to our journey.