Looking Back at Three Years Focused On Financial Freedom
Every once in a while it's good to come out from your life's forest and get the view of the birds.
I've been on the financial independence fix since I started my job in June of 2013, 2 years and 10 months ago. Let's get a mile-high view of how those years went, from my first day of "real" work till now, and see what it tells me moving forward.
For my job over the past about 3 years, here is my take home pay rate. Remember income is not everything. It's your savings rate that matters!
My Take Home Pay (After tax)
The income on that chart is higher than above because I ended up working a ton of overtime for the first two years. The place I worked at really need more time from its employees to get everything in order and running. So I benefited from the overtime work by pocketing a bit more than I had been expecting up front.
The biggest thing I look at on those charts is my savings rate. Here's what that looks like year over year.
2016: 71% (so far!)
The Big Fat Mistake
I took a huge hit in purchasing a toilet bowl of a car in 2013. You can read that big mistake right here.
Anyways I needed a car to drive to the city for work. I'd park at the beach, surf at sunrise and then ride my bike through Golden Gate Park into work. I'd also use the car for Santa Cruz and Santa Barbara trips and an unreal Baja adventure. In case you're interested the car was a 2001 Volvo XC70 (stay far, far away!) and cost $5,700 initially. Once I sold it 8 months later I had lost like $10,000 on it. Womp womp WOMP!
The cool thing is that ended up being completely fine in the long run because I was living efficiently, stashing massively and enjoying my life.
This year after handling my car purchasing a hell of a lot better I got a kick ass car for $900.
I had a fair amount of traveling in those years. Actually a bunch of travel! But I just kept it well within my means. Weekend trips, back packing trips, camping trips, biking tours, and sailing trips. Most were within a 6 hour drive radius and a couple were plane rides away. Either way these less expensive killer vacations gave me awesome memories and kept my stash growing.
I'm now getting into safely hacking credit cards so I can start flying more places for free. I already have a free round trip vacation to Hawaii or Baja ready to go at any time from doing it!
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In 2013 at the start, I also did something I told myself I'd never do. I moved back in with my parents. It was one of the best decisions I've ever made.
Not only did it keep my rent down around $400/mo, while my coworkers were paying $1,400/mo for their San Francisco apartments. (A ridiculous savings.) It more so let me meet my parents in a new light. They treated me more as a loving friend more than an overbearing mom and dad. I got to spend tons more time with them and that just felt really special to me. If lucky enough to have the opportunity, I'd recommend this option to anyone who might be transitioning from school into a career for that reason alone!
After 11 months at home I ventured out into San Francisco. Some friends and I hacked Craigslist to send us a nice email anytime a house we might be interested was posted, and we scored a great spot right along the beach. My rent skyrocketed to $1,035/mo. I'm a bit of a house slut because I want a home that gives me access to fun stuff like surfing and hiking and is also a nice place to relax and having crews of friends over for some good times.
Even with the spike in rent I was still quite happy as the average rent at $1,500/mo in San Francisco. My lack of materialistic and unconscious spending day to day also made this move feel totally comfortable.
This year I've been able to lower my rent a bit to $835/mo with a new member added to the house. This and the new way I found to super charge my paycheck has really bumped up my savings ratio in 2016. Though I expect it to fall a bit after I max out the pre-tax dollars available in my 401k.
Financial Freedom Outlook!
All in all I've stashed about $29,000/yr. Using the 9.34% S&P 500 return that's happened since I've been alive (1990-2016), if I save $29,000 a year for 10 years I will have $490,000. Using the 4% safe withdrawal rate, that is $20,000 a year I can take out forever! FOREVER, without worry of the portfolio depleting. That's only 7 years away!
Being that I foresee my lifestyle cost dropping extensively after moving away from San Francisco this is such an exciting thing to think.
Living an F– You Money Lifestyle Even Sooner!
The coolest thing is you don't even need to hit your financial freedom number to start living your dream life. All you need is enough money to give you the confidence to walk away from any situation you don't like.
That could be having $5,000 saved for a trip you've always wanted or simply getting out of the red by bone-crushing all your student loans and debt. What ever the number is for you, it is well known in the financial independence community as, "f– you money."
For me my f– you money is somewhere around 3-4 times my annual spending. Since I've hit this, I just acted to make my life better by getting a new job that I've ended up loving so much more. And I plan on acting even more to create a better and better life that I've always dreamed of living as my f– you money continues to grow.
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