How FIRE prepared me for RIFE.

How FIRE prepared me for RIFE.

Last week my employer RIFED me. RIFE (Reduction in Fulltime Equivalent) is a fancy way to say my job was eliminated. Now for many people that would send them into a panic mode. As it very well should. Losing one’s job is a horrible thing, but for me grasping the FIRE movement has been a great help. Thank you Mr. 1500!

Why you ask am I not in complete panic? Let me list the reasons:

I had a feeling that my job was not secure, so I began to get organized. I took the initiative to understand my current situation, put together a list of needed changes and then implemented them. So what did I do?

Expenses: I got a thorough understanding of expenses. What are fixed, what are variable and what changes need to be made.All my fixed expenses were put on monthly billing to one credit card that is not used for anything else. My monthly fixed expenses total $681.

Debt: I paid down as much debt as I could as fast as I could and am now left with a mortgage, a HELOC and a car payment. The car payment will be paid off very quickly and that will leave a monthly debt service of $835 per month.

Cash Reserve: I built up $20K in cash on the sidelines for emergencies. This needs to get bigger but it is better than the beginning of the year. My ultimate goal is to have $240K in cash to cover the first two years of living.

Variable Expenses: I use a different credit card for all variable expenses to make it easy to identify where our money is going.

One time expenses: Property taxes and Homeowners Insurance will run $4800 and $2700 respectively.

Investments: I looked at all the different investments that we had and made a decision that a change needed to be made. The change was simple. Reduce the number of holdings, focus on stocks that have a good dividend that is sustainable as well as growing and finally put them all in one place. I chose TD Ameritrade for its platform, research and ease of use. My goal is to have a dividend stream of at least $48000 per year in 5 years. I am at $15000 now and all are in Roth IRA’s.

Future:By going through this process I have also been able to really focus in on what I will need to get to the next phase of my life. One with less work and more fun. So in 7 years I will still have my fixed expenses, debt will be gone and variable expenses will be at approximately $3000 per month. That being said my goal is to have an income of at least $84000 per year. So if I work backwards $84000 – $48000 (Roth dividends) -$12000 (Traditional IRA) I will need to fill in with $24000 from either work or Social Security. My Social Security is estimated at $24000 as is Mrs. Frees. We should be good to go up to $108K per year. I am just keep some in reserve.

My plan now is to find a dream job that I can keep until I decide to retire. But does that mean I will stop working. Not at all. But it will allow me to do what I want at my own pace and be totally free to walk away if I want to. Just a little later than most of you.

2018 goals and plans

My goals for 2018 are really pretty simple.

1. I want to pay off the 2 new Subaru Outbacks that we purchased in 2017. They were not planned purchases but were unfortunately necessary purchases. We had two cars, one,my Volvo, had 250K miles and needed electrical work and two, a Ford truck that had 140K on it and was developing engine issues. Both had to go and I love the Subaru’s, but I do not like the debt that came with them. So my plan is to get them paid off asap. I plan to have the first one paid off by April and the second by year end.
2. Fund our Roth Ira’s to the maximum level. $13K must go in the accounts.
3. Finish repositioning our portfolio out of some rather expensive investments into lower cost options. The portfolio model is designed to pay dividends that we will use as a retirement income source.
4. Increase our Net Worth. The goal this year is to break the $1M level. I think it can be done.
5. Move the Dividend Meter to $15k in annual dividends.
6. Finish the kitchen project without pulling out my hair.

I think that we can accomplish all these if we stick to the plan and try not to do to much. I am hearing about a European trip and maybe a Colorado excursion but I have to see how all this can fit into the budget and the plan. I am trying not to be the guy that doesn’t live today while saving for a future that may not happen.

Year in Review – 2017

2017 ended really well here at the Free household. Goals were met, a plan was put in place, action was taken on the plan, and in the end,we are in better place at the end of the year than the beginning.

The plan that I put in place calls for repositioning much of our portfolio into dividend paying stocks and EFT’s to generate the income needed to transition away from the daily grind. The Dividend Meter took a healthy move in 2017 and is now at just over $10K. So 20% of the goal has been attained and so, for 2018 the goal is to continue the march to $50k.

I had been posting the portfolio but I have decided to just keep the foldings private and just review the totals moving forward. My call.

For 2018 the plan is to continue trying to move the needle forward. Now that the research has been completed and the list in place all I need to do is make the buys when funds move into the accounts and monitor the holdings. That should be the easy part.The other major part of the plan is to stop worrying so much about money, in the end it will work out. I do not want to spend as much time as I did in 2017 focusing on money. I know that I needed to do research and get the plan in place but now I think it will be more of a monthly updating and monitoring. I have seen how obsessing about money can be a bad thing, taking on a life of its own, and I do not want that to happen to me.

2018 will be a great year for us at here at the Free household and I hope it is for you as well.I plan to write about many different topics other than money and it should be a lot of fun.

HST

Hunter Thompson is one of my favorite authors. While he was a pretty wacked out guy, he had a way of putting things into perspective that is very timely for the FIRE movement.

And so it begins…

I began reading some financial blogs late last year and really took an interest in them. Not that I was looking for the hot stock tip but looking for hot tips on life. I found some great blogs and it has really made a significant change to my life.

Looking back, I thought that I was really on track for a great retirement. The only problem was that I had no real clear picture of what retirement meant and what my future vision was. Hell, I found that I had no real vision about what my present life was all about. In retrospect I was just really existing, not really living and that got me depressed, but after reading blogs like Mr.1500, the Minimalists and many others it shook me out of my false sense of security and made me come alive.

Today, I have a clear vision of what it is I want out of life, a plan in place to make it happen and a new sense of excitement about what my life will become. For the first time in a long while I am happy. Now does that mean every part of my life is great, no. There are some aspects that need to change, and I am working on that, but there is a light and for that alone I am very thankful.

What is the plan you may ask. Very simple, transition into the next phase of life in 7 years or less, with $50k in income from dividends in my portfolio, primarily in ROTH IRA’s and with other income sources be able to have an income stream of $10K per month net. It will take some work but it will happen.