Financial Independence Forks in the Road
I love talking about Financial Independence and the dream of early retirement. Here at Even Steven Money the dream has become a journey with steps being taken to the final destination or like one of my previous posts, the Early Retirement Blueprint towards building the dream house. I am a strong believer in multiple streams of income as stated in my ER Blueprint, similar to Financial Samurai except my current goal is not $200,000 in passive income, although he does make a pretty strong argument that this is the correct amount for living in San Francisco. My goal of reaching Financial Independence is less than 5 years away and while it’s easy to see a cloud in the sky, it’s more difficult to know where that cloud will end up. Which brings me to my morning walk to the park with my dog Angel and my beautiful wife Mrs. Even Steven. We know that our plan is to declare Financial Independence and have the financial freedom to choose our next adventure, but there is so many forks in the road that come up along the way, how do we know which way to turn?
My original blueprint made a simple assumption, Even Steven Money would live in Chicago until both rental properties were completely paid off and then look to move to Florida, closer to Mrs. ESM family and the opportunity to enjoy nice weather in the winter, and no state tax. Moving back to Florida would create an extra stream of rental income, which would offset or equal any property we would rent or buy in the Sunshine State. Along the way we will reach certain milestones that deserve a visit back to the ER Blueprint. We recently hit a milestone with my final payment to my student loans and a fork in the road occurred. Many roads are available as my decision to payoff personal debt, mortgage, or invest needed a decision. These options were all in the Blueprint, so nothing to get to worked up about as all roads were still part of the plan, despite that fork in the road.
The next milestone is December 2016, this is the month our Florida rental property will be officially paid off, this lies a Paul Bunyan sized fork in the road and one that we continue to discuss as time goes on. The first fork starts January 1, 2017 and the roads are plenty. Here a few of the roads we can choose:
- Stay on the same road and move right to the next rental property and pay off this property (original plan, OP)
- Take a small break from paying off debt and then proceed with the OP
- Take a small break and pile up cash like the Great Depression is coming
- Take a small break and pile up cash for a house in Florida***
- Take a small break and save up for a European vacation, it’s our reward for paying off the house so quickly and then back to the OP
- Divert from the OP and take all income that was being allocated to the property and move to investments to create a larger stream of secondary income, choosing to reap the rewards of the market and the low interest rate with our current mortgage
As you can see we have many options to take beginning in 2017 and very similar to my decision with my next step after paying off my student loans, these options do not divert from the Blueprint very much, with a small exception that leads to the Paul Bunyan sized fork in the road. Which as you may have guessed it is piling up cash for house in Florida. Piling up the cash in 2017 does not concern me since it is part of many of the plans and the only value we would be losing would be from the interest repayment of the mortgage or any investment income this would create, since it is a small amount of time, I can look out of the window for a few moments while this occurs, just not to long.
The Paul Bunyan sized fork in the road begins with the fact that I made a promise to revisit our plan in 2017 and give serious consideration to moving back to Florida. A few things would need to happen for me to feel comfortable with this move, but as a wise man once said “Happy wife, happy life”. Here is what would be 100% necessary for us to move in 2017:
- Florida home would need to be paid off with a extra comfortable emergency fund
- Obtain job(s) equal or greater than our current positions or obtain permission from our current employer to work from home…… in Florida
- If income is equal or greater, understand that it is not necessary for the other individual to work, rather any additional income would be a bonus
In the case for moving to Florida, the house situation could also face multiple paths including:
- Moving in to the rental home recently paid off (not ideal since we would be giving up rental income)
- Moving in with Mrs. Even Steven’s family, living close to rent free until we finish up the FI plan or make the decision to rent/buy our next property, this could be as little as 6 months and as much as 2.5 years
- Renting for a year or more would give us the chance to look for a property that would fit our needs in ER, checking out neighborhoods, prices, and any other forks in the road we need to consider (in-law suite for my parents, multi-unit for more passive income, etc)
- Purchasing a home is probably Mrs. ESM #1 choice and my least favorite. While I think buying a home will be in the cards in the future, I do not want to move Day 1 into a new home, I want options and I see this move immediately tying our hands for travel and also locks us into our current location for the foreseeable future. I think FI is a time to be flexible and this move takes away some of our flexibility and freedom we are fighting for.
What scares me is the amount of forks in the road that we can see ahead. I know that staying in Chicago for the next 5 years makes those forks in the road easier to manage, but I also know Mrs. Even Steven looks forward to the day she can share more time with her family and have warm weather year round. In a perfect world we would just move up our FI date to early 2017 and make the move in 2018 when we have a road directly in front of us that says “Early Retirement Ahead”. With any plan you are bound to face bumps in the road and a time when you can go left or right, honestly I look forward to make financial decisions that affect our long term financial plan as long as we are making them together with the same goal in mind.