The Plan

I came to realize that while I have a financial independence day in the future, how I am getting there is not so clear to many of those who stop by to read my financial journey. Where I have come from might be just as unclear, so I wanted to take some time and share with you the details of my Financial Independence Day plan to retire early.

The Past 

About 5 years ago, I was living in Miami working part-time and spending full-time money. While my future Mrs. Even Steven was away visiting family, I went over my finances and realized not only was I deeply in debt, but it was clear that very shortly I could not make the payments each month, a decision had to be made. You see when you don’t have a full-time job and you are doing everything you can just to make all of the payments, something has to change. This wasn’t an easy decision, you see I was walking away from my future bride and it this point and I didn’t have a choice. Let me say that again, I had to walk away from my future bride because I did not have a choice financially, that’s something I find really hard to say, but it is a reminder of where I have come from. I put myself in a bad position financially, I didn’t wake up and find myself in over 100K in debt, no sir.


Sometimes you have to look into the past.

In 2010 around this time here is what my life looked like financially:

I want to give a good picture of where I was in assets. I owned zero property, nothing nada, the closest thing I had to an asset was my depreciating 2005 Mercedes-Benz, which of course the Kelly Blue Book value was equal or less than the loan I owed to the bank, so yeah I owned zero. Everything in my life could fit into my vehicle and in 2010 that was not much. The only exception and a small one at that, a couple thousand dollars from my 401K rollover from the years I worked full time before 2010.


Net Worth: >Negative ($100,000)

It’s greater than $100,000, but I can’t even give you an exact number. I was too ashamed to keep track of how great my debts added up to. While you don’t need to share your net worth with the world I consider it a must for your own personal tracking and goals, I highly recommend Personal Capital.


I might go back and check the totals, but honestly today I don’t care what debt I had 5 years ago. I care about our future and the plan we have to reach financial independence. That’s why I write on this blog, to hold myself accountable, to show others that you can be almost completely down and out, barely holding a job or making money, and thinking the next step is to just stop paying your bills, because you do not have a choice financially.  Change can happen it all starts with you.

From 2010 to 2012, major things began to occur and this was not on accident, things had to change.

  • I moved to Chicago
  • I started working full time at a 9-5 job
  • I sold my Mercedes Benz
  • I got married
  • I paid off my credit cards
  • Bought owner occupied rental home
  • Rented out Florida property

In 2012, we were making major moves financially. Adding the wife’s financial picture to Even Steven Money certainly helped the household. Mrs. Even Steven brought into the marriage only a couple things, but all of it was great:

  • No personal debt
  • Paid off vehicle
  • Florida home with mortgage
  • 9-5 full-time job

I think one of the things that Mrs. Even Steven Money brought to the household is an aversion to risk, which matched great with my want and need for risk. Some of why I was deeply in debt is because I did not value money. I wasn’t worried about student loans because I would get a big time job straight out of college. I went through a lot with my personal and financial life, so what does that mean? It means “I deserve a Mercedes Benz”, I worked hard for it or I went through a lot I should get something nice. I didn’t value money, today I fight for every last dollar.

We had lived in Chicago together for one year and rented to get more familiar with the city. We were making great strides financially, but not anywhere near where we should have been.


Sometimes your financial future will have obstacles in the way, but you can still see the beauty between the buildings.

The Plan

Our plan started in April of 2013, it was the first time that we decided to make an extra payment on our rental property in Florida. That was the day that I had the outline of a plan, I didn’t know for certain and today I don’t think for certain is the word choice I would use, but we started on our path financial independence to retire early in a little over 7 years.

The plan is simple and is very similar to my Early Retirement Blueprint:

  • Pay off all personal debt
  • Pay off all rental property

I had a rough outline that said if I get rid of all my personal debt and then pay off all of our rental property, the rental income will be greater than our expenses. In a way, it’s my own Financial Independence Real Estate Hack. I’m not going to sit here and tell you I had everything figured out, in fact, I still don’t think I have it all locked in. That’s ok, I actually built in my plan options to get ahead of our financial independence date, so I can save extra money in cash and investments. I hear the term buffer used when referring to the 4% rule or other examples of how to make sure your plan if full proof. This is precisely what I have done, I built in my personal debt for the end of the plan, essentially taking the snowball and moving from the Florida Rental>Chicago Rental>Personal Debt, this way while my last debt payment is planned to be completed in 2020, I have other plans;)

Some of you who invest in the stock market and have a plan to use the 4% rule based on the value of your stock market portfolio may wonder why are we paying off our rental home, couldn’t that money be used and put in the stock market to earn more money?  First let me give you the 3 simple reasons we are paying off our rental home early.

  • Wife on Board-Mrs. Even Steven Money was on board with paying off the Florida rental home early
  • Simple-If we pay off the home early, we decrease expenses and increase cash flow
  • Interest Rate-Currently stands at 5.375%, which means we are getting a good rate of return and immediate return on our money

The big difference in an age-old argument should you invest or pay off your home, is we are essentially doing both.  We are getting 5.375% on our money(before taxes) and when everything is paid off, our mortgage goes to $0, but the income spikes to the exact amount of our mortgage payment which amounts to approximately $1100/month or $13,200 per year.  Using the 4% rule and reverse engineering the number you would need $330,000 to reach that number for 25 years.  Here are a few differences in paying off your mortgage vs paying off your rental.

  • Decrease your expenses to $0 in principal and interest, however, your cash flow increases by this exact amount once you pay off the mortgage
  • This can be done with as little as 3.5% down when you live in the property
  • If you are able to make the mortgage payment, then add the rental income as an extra payment(exactly double your P and I), the mortgage is paid off in less than 10 years

Plus let me ask you a question.  If you owned a rental property that made a small amount of profit that was bought at a great price and your wife doesn’t entirely drink the kool-aid, but really wants to pay off the mortgage, would you say “hell yeah let’s pay off that mortgage” or would you try and talk your spouse into investing the money into the stock market?

Rock Bottom Budget

Most people look at one part of the equation for financial independence.  The side most commonly dissected is I need 25x my expenses to retire early and the assumption is that those expenses are built in stone.  So if I have $40,000 a year in expenses then I need 1 million dollars or 40,000 X 25 years=1 million dollars.  Our plan takes a look at all the factors included.  We look at our expenses for the year and see $40,000, but realize that our mortgage(s) also make up this number.  So what if we can eliminate a mortgage that makes up $1,100 of that, which would bring the number to $26,800 in expenses which would take the needed number down to $670,000.  For me, that sounds fascinating, interesting, and insert all of your great sounding adjectives here.  By eliminating the mortgage payment, we have reduced our total needed by $330,000.  We all have a budget, but when we reduce or eliminate our fixed costs, it’s what I like to refer to as our Rock Bottom Budget, I believe everyone has one.  A few years ago I started out with car payments, credit cards, etc and my expenses and “fixed” costs were so high, but over time I have reached a new Rock Bottom Budget because those payments have gone away.  This is what is also included in the plan, over time the Florida property will only have taxes, insurance, and maintenance.  The principal and interest payment will be down to zero, while initially this amount will go to either our Chicago property to pay down the mortgage looking for the same result or in a constant battle we have with our decision making progress and our game plan as we get closer to FIRE this could very well get put towards one of those opposite of fancy, index funds.

Today I have knocked out “fixed” payments to my car loan, credit card(never pay the minimum), and student loans.  In December of 2016, the Rock Bottom Budget reaches a new low as we pay off the Florida home.  Imagine canceling out your mortgage payment for a minute?  For most people that frees up over $1,000 of monthly expenses.  What’s mathematically crazy for us, not only do we cancel out $1,000 of payments, we receive an additional $1,000.  Let me say that again because very few people have this in their financial arsenal so it may be foreign to them.  Before we were losing $1,000 towards principal and interest and like many of us out there with a mortgage, this amount if we paid off our mortgage would stop being an expense.  That sounds great right?!?!  Ours is even better we don’t have to pay $1,000, but we also receive $1,000 in income, so for us that is a $2,000 swing.  We essentially go from -$1,000 to +$1,0000 when you own an investment property and pay it off, for those of whom own a home without rental income it goes from -$1,000 to zero, which is great, but mathematically insufficient for many who choose to invest.

After we reach our goal of paying off the Florida property, the original plan was to take the $1,000 and apply this directly to our Chicago mortgage.  This is the property we live in and also rent out today which acts as a house hack, a phrase made popular by the crew over at Bigger Pockets.  As we apply additional payments to the mortgage we will pay off the home in May 2020, a date that I can say with certainty I look forward to.  Simple right.  We take whatever rent we receive from this property and once again make extra payments towards the balance till it does the exact same thing as our Florida property, the $1,000 payment goes down to zero and increases by $1,000 which is the amounts we receive from rental income.  This has been the plan from day one, I anticipated we would finish paying off our Chicago property and look to travel the United States visiting friends and family over the course of the next year or two all the time the rental incomes were coming in and our house hack which had no mortgage or rent to speak of acted as our home for 12 months out of the year, but was more than likely lived in for 3-6 months.  I couldn’t wait………………..

Plans Change

For some of us crazy budget loving, index fund promoting, Warren Buffett/Charlie Munger impersonating, house hacking strategists, our spouses come along for the ride.  Most of them, they are happy that we are happy.  We tell them over and over about how great the budget is looking, the money we are saving, and how the future looks so bright.  They smile and are just happy you are not blowing your money on fast cars and anything else that costs loads of money that they really don’t understand why we like.  Then one day and your day may be different than mine, but they realize that the plan is working.  Mrs. Even Steven saw me paying off my credit cards, car loan, and credit cards, while this entire time the mortgage is making the way to zero and the 401K is making it’s way up the thousand dollar ladder all of the time.  I know because we keep track of it all on Personal Capital.  They don’t say it out loud initially, but they ask themselves if the plan is actually possible?  Then they want more info, you know that spreadsheet you built out over a year ago, yeah they want to know how it all works with real numbers.  You show them the budget and the debt repayment plan, then they say well what about investments, cash savings, and taxes…….oh that’s on this tab, you say with a big grin:)  then they ask about moving to Florida, oh my goodness, moving to Florida, you didn’t account for any of that!!!!!!  Wait a minute, maybe I did;)


Reminds me of a Florida orange!

The Florida Curveball 

Mrs. Even Steven more than anything wants to be closer to her family and move back to Florida.  So after we pay off the Florida property and are in a better position financially, we are going to seriously consider moving to Florida.  We need certain things to be in place, but 3 years ago I wouldn’t have even considered this as an option.  In 2017, we are going to take a serious look at moving to Florida, but the plan didn’t initially account for this.  We came to an agreement that these things need to be in place to make a successful move.

  • FL home paid in full
  • Both jobs either allowed to work from our new residence or set up with new jobs
  • Chicago rental income from our personal unit is equivalent to our Florida home

As you can probably imagine the job outlook will be a major factor in our potential move.  We will reduce our budget by a full mortgage payment, which does bring our budget down to a new Rock Bottom Budget it has not seen before, however, we still need to bring income to the table. If we have secured jobs or our company allow us some flexibility with working from a remote location, we still need a place to live.  The plan is to use the rental income from our unit in Chicago to obtain a similar apartment or house, we are estimating $1,200.  We won’t be living a life of luxury, but I don’t think this will be an issue in our search unless we start looking for ocean views and luxury living standards.  This will keep us exactly on plan with our FI date of May 2020.  We do have other options, but I see them as the less desirable.

  • Live with our in-laws for 6 months to 3 years-Saves money, but gives up privacy, etc
  • Live in the newly paid off Florida property-Costs money, slows down the FI date

The plan is flexible in this matter, but I don’t want to go into a crazy amount of scenarios, I’m going with the attitude to stay flexible and look for what makes us both happy.  My ideal plan would be to live 6 months in Florida and 6 months in Chicago, providing the best of both worlds, while I think we could pull this off with the house and living situation, this would slow down our FI date and would be a pretty tough pitch to our employers.  We will see, I know the Madfientist thought he was out the door a little while back and they offered him a dream situation which was hard to pass up.

Buffer and The Last Year

As I have mentioned a few times it’s important to have a buffer so your plan will not fail.  Some of this is being flexible and some of this is having money you do not count on in your FI calculations.  Here are a few examples that are not accounted for, that will give us just that.

  • No raise, bonus, or promotion
  • Rental income will not increase
  • Paying off my personal debt is calculated as my final payments while I make this a priority today
  • All 401K, IRA, etc is not included in my FI calculations, instead it is a bonus intended to be used later
  • All Cash and Taxable investments are not included in my FI calculations, instead they are intended solely as a buffer

As you can see these items above are items that could change our FI date and the amount of money we have in different accounts across the board.  I did not include these because some of them are difficult to project, for example if I included the calculation for a raise, I should consider including the cost of living increase as well.  As many of you know a raise or bonus is not guaranteed and while you personally may be having a great year, your company may have done the opposite, bonus gone.  If you talk to a co-worker who received a promotion, there are 5 more people who were passed over, so this is even harder to account for, especially the promotion it relates to dollars and cents.  

What this all led to over the last few months is a decision to not move my FI date any more.  I started out with October 2020 and after making big student loan payments, brought the date the much closer.  My plan or my goal is reach FI in May 2019 a full year ahead of my original date used today of May 2020.  The goal is one of those Big Shoot for the Stars type goals, but why not, I paid off my student loans because I made a big goal just like this.  During the last year, we plan to practice Early Retirement.  What does practice Early Retirement mean?

It’s a work in progress, but the idea is to shift our budget to exactly what our rental income will provide while still maintaining our 9-5 jobs.  The money from the 9-5 job will go directly in our cash and taxable investments during that entire year.  Since our 9-5 jobs are much larger than our rental income, we plan to build up a 1-year rolling cash account.  

For example from May 2020-May 2021, we will actually be using money accumulated from May 2019-May 2020 to pay our expenses.

This will prevent us from being reliable on if the renter pays on the 1st of the month or doesn’t pay for 2 or 3 months.  It will also prevent any immediate sales of stock to cover any shortages.  This should have us looking at our budget in a 12-month calendar rather than month to month.

That’s our plan.  I don’t look at our plan as something that is set in stone and cannot be moved to fit our wants and needs.  I look at our plan as more of a sketch, you might draw a nice kitchen for your home, but realize that it no longer fits who you are and what your plans are.  That’s perfectly fine, remember it’s a sketch, not a finished product.

28 Responses to “The Plan

  • I’m glad you wrapped it up with the conclusion that you have to be flexible. That is biggest lesson we have learned. Our budget changes around here and there, and we know we can’t predict what we will need in the year 2027 vs 2042… but we just figure, we will be flexible and it will all work out. That was a HUGE adjustment to my attitude since I’m a plan-out-every-dollar type person!
    Mrs SSC recently posted…Layoffs: The conclusion!My Profile

    • EvenStevenMoney
      2 years ago

      Sometimes with all the math and numbers we look at and prepare, making sure we have flexibility is our secret wild card that makes all the difference.

  • Being flexible is an incredibly important part of planning for your future. I’m an accountant at a manufacturer and I know that when I create our budget for the next year, it will be obsolete by February because things come up that throw your plans out of whack. The important thing is that you know how to pivot.

    Did I read correctly that you don’t include cash or taxable investments in your FI number? If you don’t include those, are you own including your real estate?
    Thias @It Pays Dividends recently posted…Weekly Dividend Payout #12 – The 5 R’s of Not Wasting (MONEY)My Profile

    • EvenStevenMoney
      2 years ago

      That’s pretty interesting to hear a forecast for the budget thrown out in a matter of months, but I’m sure it happens all the time.

      Correct cash and taxable investments are not specifically included in our FI Date. Our FI Date is based off both rental real estate mortgages paid in full, once this occurs are expenses are so minimal that the income generated>expenses. The cash and taxable investments will play a part, but mostly as a buffer.

  • I think people glaze over the fact that paying off the mortgage can be a synthetic replacement for bonds or dividend paying stocks. This is true whether it is a rental or your primary residence.

    As you know we have a plan to pay off the mortgage on our primary residence in 7 years (January of 2022). Before we moved, we were paying $3,000/month in rent. We bought our house with about $23K down, a mortgage of $353K @ 3.635%, and a total monthly payment of $2,359 (includes taxes, home owners insurance, and HOA).

    After taxes we are saving about $1,000/month vs. what we were paying for rent. If you look at that on a cash on cash return basis its a 52% return in year one (12,000 annual savings divided by 23,000 down payment). It’s actually a little less than this because of loan amortizations. But you get the point.

    Where I am going will all of this. Is when everything is said and done we will be saving about $1,650/month or $19,800/year. On a purchase price of $376K that is a synthetic dividend of 5.3% (19,800 divided by $376,000).

    What government bonds are paying 5.3%?

    Also, for those stock dividend junkies out there, you know how your company raises its dividend year after year? Well rents go up don’t they? By locking in your cost of living you are also locking in a likely 3% “dividend” raise every year.

    The only thing I would warn people of is to make sure that your primary residence doesn’t become more than 25% of your net worth.

    Go get it dude!

    Dominic @ Gen Y Finance Guy recently posted…The First Year of Blogging – Under the Hood [Post #100]My Profile

    • EvenStevenMoney
      2 years ago

      Man, I need you to run all of my numbers for me! You are 100% correct, essentially we have turned our primary rental and secondary rental into dividend payments throughout the early years while we pay off the mortgage, then since the there are very few expenses, the dividend increases to almost a balloon payment every month, except this has no end in sight.

      Great point on the 25% of your primary residence, it’s one of the reasons I believe most should start out with a catalyst in their investment, not diversify. This will be our plan coming into 2016, the math nerd in me is ready for action.

  • I like it! Our plans have changed a couple times since 2010, but I agree that these type of things evolve along the way. Your “sketch” analogy is very accurate. Besides, as a Florida resident, I will be envious if you can become a working snowbird!

    I hope you have a great week
    IncomeSurfer recently posted…Opportunity Seized!My Profile

    • EvenStevenMoney
      2 years ago

      Things change and just looking at my past, I’m glad they have! A working snowbird, has a nice ring to it, I certainly could pull that off for a few years before FI.

  • The key is now that you are organized and thinking about these things you can shift gears and modify they plan at any point because, now you and the Mrs. are in control.
    Brian @DebtDiscipline recently posted…Higher EducationMy Profile

    • EvenStevenMoney
      2 years ago

      Things are really coming more in our control, we have a couple things more to do before I feel entirely comfortable with large modifications like a FL move, but we are close.

  • Thx for this story. It is a great example of the importance of flexibility. You can plan for all you want, you have no idea what life will bring you… Being ready and being flexible for any change to the plan is the key message for me.

    Like Mrs SSc said, it is hard to plan life for the next 40 years or so… I tried it, it gives a FIRE date in 2029. Will I make it? NO idea… There might be windfall, set backs, opportunities to move, change job, travel the world and the seven seas…

    Your plans also seems to be a solid one… Only counting rental income and not any investments. this should give you a good first buffer. I also like the idea of working one last year. How will you avoid that after that year, you add one year more… just a thought
    amber tree recently posted…do I need to beat the market?My Profile

    • EvenStevenMoney
      2 years ago

      I have read very few people who start with a FI plan and hit a smooth path with no rocks or other obstacles in the way, plus most roads curve a little to get to your destination that’s how I see the FI road for us and for many.

      Really my goal is to beat my FI goal by 1 year, but since I don’t want to rush into anything I want some practice to make sure I see some of the early pitfalls while we still have 2 full-time incomes to help out with any mistakes.

  • Love the summary, I should maybe write one for our plan too. We share similar conclusion… it’s being flexible. If we wrap our head on an idea, we will get very frustrated if we can’t achieve this idea or if something changes. Being flexible is very important.
    Tawcan recently posted…Dividend Income – Sept 2015 updateMy Profile

    • EvenStevenMoney
      2 years ago

      I’d love to see a summary Tawcan, please do! For our plan even initially it has been flexible, I knew that we had 2 rental income producing properties, yet every day I read about dividend income and the 4% rule, plus with me having additional personal debt, I had to have a plan that was different than most we tend to read. I will be filling in the gaps with dividends and stocks, but still a different flexible story;)

  • I love how flexible your plan is. It’s hard to tell what will happen in five years as there’s a lot of moving parts in life. But it seems like you’ve really tried to take known, and unknown, variables into account so you can still achieve your goal no matter what life throws at you. Having a plan, even if it changes, will really help keep you on track. I should probably take your lead and work on a more solid plan for us to help keep us motivated and accountable.
    Jessica recently posted…Are You Doing the Bare Minimum?My Profile

    • EvenStevenMoney
      2 years ago

      Before we had a plan our money was going to places it didn’t belong. Today it pays off debt, mortgages, and gets put towards our 401K, that all started with a plan in April 2013. I say go all in with your plan, you will love it…….or hate it but at least you will know

  • I love the updated plan. You explore new possibilities, plan for flexibility, and include the fact that you and your wife are different people and have different desires. That’s important in marital finances! I also find that our plans are very fluid. As we’ve jumped into this journey, we’ve realized the freedom money can get us. We toy with all sorts of moves or changes because we’ll have the freedom to do that. It’ll be great to follow the continued journey!
    Maggie @ Northern Expenditure recently posted…“That Looks Like a Lot of Work”My Profile

  • Having a plan is great, but like you said, you need to be able to be flexible too. You never know what life will throw at you, so you can’t be too rigid in your plans.
    Cat@BudgetBlonde recently posted…4 Ways to Know if Working From Home Is Right For YouMy Profile

    • EvenStevenMoney
      2 years ago

      100% agree, even if it’s with a career plan or debt repayment, not reaching that goal cannot be the end of it all.

  • Your plan sounds super solid. On the mortgage question, we have another good reason to pay it off early, which we’re going to blog about very soon: Obamacare subsidy limits. When we retire in two years, we want to be able to keep our income low enough to qualify for the big subsidies, and if we needed enough income to cover a mortgage payment in addition to our other expenses, that would surely push us over the limits. Losing out on the big subsidy would cost us hundreds of dollars a month, which more than offsets the market gains we’d be likely to get if we invested the money instead of paying off the mortgage early. (note: this is true only on our primary home, not on our rental.) So we’re going to pay the house off while we have employer-provided health coverage. Maybe more ammo for you guys as you shape your retirement income plans!

    • EvenStevenMoney
      2 years ago

      I’m interested to read the Obamacare article coming up, reading GCC article made me realize how many ins and outs there are to this program, I think I may be a little naive to think that paying $300 for my wife and I will cover everything(that’s what I have in my current budget). I do have a plan to have approx 25K in my HSA or the next 4 years of maxing this out as another buffer in the back pocket.

      It’s great to think this way. I think most individuals think of FI on one side of the coin, needing 1.2mm to hit their number, when I think more people and those that are in pursuit of FI realize this more than others is the expenses side. 40K needs 1mm, 25K just needs 625K, That’s a huge difference and for a lot of people that 15K a year is a mortgage payment for the year so I am with you. In fact it’s part of the plan;)

  • Great write up… I think how we are getting from point a to point b is also obscured on our blog.

    But wow you have a lot of buffer. We don’t include raises or bonuses or 401k matches in our projections either but we do include all account balances

    • EvenStevenMoney
      2 years ago

      It’s funny you have this grand scheme all written down in your head, but it has failed to get the specifics to the blog:)

      I really do. I’m kind of going at this thing that I’m going to be 50% wrong and all of the real estate rental income projections and expenses are going to be skewed. I’m also thinking we are going to want to do a few things that are above and beyond the scope of the daily expenses. If we can build this up in 401K, HSA, IRA, Cash, and Taxable investments we will have options to either use this money in those items or choose to leave this money grow and use it more as a retirement bonus later on……..yeah I love this stuff

  • Great plan! My future plans change all the time. Sometimes it’s travel full time, then RV full time, then it’s rent in low COL area, or buy in low COL area, etc. Who knows what my plans will be in 5 years!? That’s why I plan for change and am flexible.
    Fervent Finance recently posted…Financial Independence Stealth ModeMy Profile

  • Thanks for sharing the updated plan ESM, it’s great to see how deeply you’re thinking about this and hope it continued to go well in 2016 plus you’ll end up smashing it into 2017 :)!

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