If you’ve followed our blog up to this point, you know that we are planning to start our early retirement (ER) journey this summer. It is going to look a little different than we originally planned, BUT one of the biggest keys to a successful ER (or life in general?) is to stay flexible. The last few months have definitely tested our flexibility, and I think we have responded perfectly. Let’s take a look at our revised plan.
To be clear, Tara has officially retired (yay!). This will set her up with the opportunity to devote her time and energy to teaching the kids and also will allow her time to pursue a side hustle that she is interested in (and to take daily naps apparently).
As for me, my plan is still to retire on 7/31/19, however, since there is still so much unknown in the world, I am choosing to turn my full-time job into my first side hustle in ER by continuing to work until 3/2021.
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| Tara’s latest FIRE read by popular blogger Millennial Revolution. |
But if you’re still working ... you can’t be retired!
Anyone who makes that statement does not understand what ER is truly about. To have a successful ER, one must be flexible, AND be open to earning income at certain points in order to lower their withdrawal rate during economic downturns. That really is all I’m doing for the next 8 months. Afterall this is EXACTLY what we will do WHEN the next crash comes. That is, be flexible, and pursue income (through side hustles or traditional work) that would allow us to lower our withdrawal during the downturn. This essentially lowers our withdrawal rate to ZERO to start our ER.
Ok, so what’s the revised plan?
I believe Tara has touched on this in a previous post, but I’ll hit the highlights and go into a little bit of detail about the financial side of things.
We clearly have to put off Spain due to the inability to get Visas at this time. And honestly, even if we could get the Visas in time, it just doesn’t feel right. Instead, we are going to move back to an area known as the Museum District of Houston. The idea behind this move is so that the Museums and Zoo can be used as teaching tools for the kids’s education over the next 8 months. Living in this part of town will allow us to turn Houston into more of a walkable city (which in my opinion makes life a lot more enjoyable). It also gives us peace of mind to know that we don’t have to send our kids back to traditional school during such uncertainty (COVID-19!).
With that said, let’s review our investment strategy going forward!
We have reached a place to where there is enough in this account to sustain us in our ER, so on 5/31/20, we made our last deposit. Obviously as time goes by, if we end up making more money than anticipated during ER, we will start depositing here again. But for the time being we have reached our goal (yah!).
Technically, this account is in the same boat as our Vanguard account mentioned above. We have reached our goal. BUT since I will continue working for an additional 8 months after our ER date, I will continue to max this out. It offers great tax benefits, and the company match that is offered is literally free money.
This is the account that I am now turning most of my attention to. We will use my income that is left after our monthly bills are paid to add to our cash cushion. Over the next 8 months, this will essentially give us an extra $10 - 15k. This will definitely pay off at some point in the future when we need to tap this account in order to lower our withdrawal during the next crash.
To wrap things up, while the last few months have been scary for everyone, it has proven to be a great test to see how we mentally handle stock market crashes. Don’t panic, stick to your plan, and keep buying!
So what do you think? Are you on a journey to ER? Do you have any side hustles? Or if you had one ... what would it be?
-Erik
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