Starting the Journey to FI in Your 40s
Brian wrote in with a story that I wanted to share in its entirety since it’s so relatable and shows how anyone can get started on the path to FI at any point by making small 1% decisions that add up to something extraordinary.
Brian in his own words:
“My 1% feels like one million percent! In September 2020, I decided to address $45k in debt. I committed to a more frugal lifestyle, applied almost every dollar possible towards the debt, and paid it off by May 2022. This freed up about $1,000 in monthly cash flow to reallocate to savings and investments.
After wrapping up the debts, I revisited my financial plan, and I could hear echoes of words heard on the Choose FI podcast episodes, “After you reduce your monthly spending, you may need to increase your income to accelerate FI progress.”
Well, I am happy to say, just one month after I paid off the debt, my employer notified me of a job promotion — including a $10k raise AND a $3k bonus. I am so excited as I have even more dollars to put towards the next step in this FI journey.
Previously, I had been depressed because I am 45 years old, was weighted with debt, and doubted that I could recover financially to achieve FI. I am so happy for the doable steps shared by the Choose FI community, JL Collins, and others who have shared ideas.
I still have a loooooooooooong way to go for my midlife financial reset; however, I’m happy to say I now have much more hope that I can remedy the financial missteps of my early adult years, achieve financial independence, and enjoy the lifestyle I’ve always envisioned!”
The Tail End ‘On How Short Life Is’
I’ve repeatedly mentioned Wait But Why’s article ‘The Tail End’ here in the FI Weekly, and if you haven’t read it (or it has been a while), I think it provides a needed perspective on the timeline of your life.
It’s extremely sobering, but I think the perspective it gives allows you to live a better life in the moment, because you realize how fleeting time truly is.
Let’s consider a 40-year-old expecting a 90-year lifespan:
- If you read 5 books a year, that means you’ll only read 250 more books in your life.
- If you go in the ocean once a year, you’ll only step foot in the ocean 50 more times.
- If your parents are 70 and you only see them 10 days a year, you’ll only spend 200 more days with them ever in your life. That’s slightly more than ½ of any year you spent with them from 0-18.
The best follow-up I’ve ever seen to ‘The Tail End’ is this astounding Twitter thread from Punk6529 entitled ‘On How Short Life Is.’
We don’t have all the time in the world…so use it wisely.
Twelve Lessons from 12 Great Books
I saw this fabulous thread on Twitter from Library Mindset called ‘12 lessons from my 12 favorite books’ that I wanted to link to here in the FI Weekly.
This is a short 5-minute read, but well worth your time. Some that jumped out to me:
- From Morgan Housel’s ‘The Psychology of Money’: “Spending money to show people how much money you have is the fastest way to have less money.”
- From Victor Frankl’s ‘Man’s Search for Meaning’: “He who has a Why to live for can bear almost any How.”
- From ‘The Almanack of Naval Ravikant’: “Happiness is what’s there when you remove the sense that something is missing in your life.”
ChooseFI Community Taking Action This Week
- Sophia said, “My 1% better was starting a 3 month mini-retirement in Spain this week. I have reached FI and was able to take a sabbatical from work to do some slow travel. I will be living in Barcelona and traveling around Spain and other European countries throughout the summer. I have several groups of friends that will be meeting up with me for these travels. Now I can have a little taste of FIRE to see if I am ready to disconnect a bit from my job in medicine.”
- Joel said, “Important lesson from ChooseFI podcast, you are in control of your tax rate. With this knowledge, my wife and I maxed our 401Ks in 2021 and on pace to do so in 2022, maxed out our family HSA and flex spending dependent care. We also maxed our ROTHs but that doesn’t impact our tax liability. Because we did this, it drastically lowered our AGI for 2021. So far in fact we qualified for state health insurance for our kids. In Iowa, children up to the age of 19 can be covered by HAWKI health insurance. It is a Cadillac plan that does not have deductibles or copays, just a monthly premium of $40 a month (for all 4 of them). This allowed my wife to take her single high deductible plan ($2600) coverage for just $9.66/month. I will be on my company’s single plan for $250 a month. In premium savings alone, this accounts to $540 a month! If we include the liability of our kids’ healthcare costs now being locked in at just $40 a month, we are conservatively projecting a health care savings of $9800 in 2022! $9800 is drastically more than 1% for two adults working in education (one in a private school). Thank you guys for inspiring me to level up in everything!”
- Amy said, “My husband and I are 100% debt free and are on the road to FI and are enjoying everything we are learning through ChooseFI and other resources. I’m proud to say that I was able to leave my job last October to be a stay at home mom to our two young children and I have been so grateful and happy to have the opportunity. My income was one third of our household income, but we were comfortable enough financially for me to leave work. We’ve still been able to maintain at least a 50% savings rate even after I left the workforce. Additionally, my husband recently did some research and changed our primary credit card to the Fidelity 2% cash back card. I know it’s not travel rewards, but it does contribute 2% cash back on ALL purchases into our investment account. Previously, we just cashed out our rewards (1% cash back on our AmEx) once a year and used them to lower our monthly bills. Now we have double the cash back rate and it’s automatically getting invested!”
- Greg said, “Our 1% better was turning down a high paying CFO position 5 hours away. It’s a role I have been working for for my entire career, but given our financial foundation, I was able to say no to it. Our kids currently have 3 grandmas within a 10 minute drive and that help is invaluable. Had we not been in this position we would have been almost forced to make the move. Even though we’re not FI yet, our financial situation is already giving us options!”
- Elizabeth said, “Our 1% change has been in the making for some time now. We realized that we had slightly more house than we actually needed for just the two of us and it was taking up a lot of our time maintaining the interior and exterior (in addition to all of the extra expenses). We have renovated houses as a side-hustle/hobby over the years and wanted to take advantage of selling a live-in-flip in this hot real estate market. After a year and a half of looking, we got super lucky and were able to score our ideal smaller (900 square foot) fixer upper only half a mile away in the same area that we love. We had paid off the mortgage on our old home and it ended up selling for way more than we thought it would. With the proceeds, we’re able to not only have no mortgage on the new house, but also make a large contribution to our investments and pay off our rental property (which accounts for about 30% of our planned retirement income). This one (literal) move has essentially given us two paid-off houses for the price of one, shaved off over three years from our financial independence timeline, and ultimately gives us time back now (way less weekend yard work!) and for our future. So grateful for this community!”
- Kevin said, “Our 1% better this week was “cutting the cord” on cable! I’ve had cable my entire adult life but after listening to ChooseFI, my wife and I decided it was something we really didn’t need or even use very much. We kept only internet. With Netflix and Amazon Prime, we have plenty to watch. Our bill went from $115/month to $42/month!”