Monday, January 07, 2008

Why I Want to Retire Early

One of my lifelong goals is to be able to exit the full time workforce early - in just 7 years at age 35. My husband and I are planning on having kids in a few years and I would like to have the freedom to stay home with them. In my opinion, how you were raised makes a big difference in how you want to raise your children. When I was growing up, I never felt like I had much support from my parents, despite the fact that neither worked the long hours that my husband and I work (they both normally got home by 6 pm). We even had the dinner together as a family most of the time. Of course, my parents were always there providing for my basic needs, I just felt like I didn't get to spend much time with them.

Thus it's very important for me to be able to spend time with my children. In order to do so, I'm trying my best to think about how I can sacrifice now to spend time with them in the future, when they exist.

I came up with a goal of having $25,000 in my early retirement account by the end of this year. Of course, I'll need much more than this to retire early. My husband and I estimate that we would need at least $60,000 in annual income in addition his salary coming from non-retirement accounts. The details are still fuzzy, but I know I need to acquire as many assets NOW. I came up with $25,000 since I thought that was a do-able goal without taking too much from the joint goals my husband and I have. My husband and I are still planning on saving as much as we can for our home down payment, contributing the max to our regular retirement accounts, and fully funding a Roth IRA, if we're eligible. There's a good chance that we may exceed the income threshold and be unable to contribute next year.

Here's where I'm hoping that $25K will come from:

$9,000 current balance (give or take a few hundred, depending on the market)
$1,200 salary contribution ($50 each paycheck)
$4,000 per diem contribution (Allowance when traveling, mentioned here
$2,000 from online endeavors
$1,000 investment gains (anyone have advice on where to put this? Right now it's in the S&P 500, which is not doing so hot)
$3,000 bonus (this is a stretch - my group is doing great, but my company is not)
$2,000 gym bonus (I have worked out a deal with my husband where he will give me bonuses for going to the gym more than twice a week - this dovetails nicely with my goal of running a 1/2 marathon)
$22,200 Total

The question for me is where is that other $2,800 going to come from? And if I don't get the $3,000 bonus, where is that $5,800 going to come from?

One potential source of additional funds is going to the gym more, but I need to be honest - I don't like to exercise that much. That's why my husband agreed to the incentive!

I'm hoping to increase my online income more than $2,000, but that's pretty difficult. This is an area where I think it takes a lot of effort in the beginning with little or no payoff. In the end it can really have a snowball effect. Right now I can imagine myself getting a tutoring job, knowing that I could probably clear $25-$45/hour. But that would really cut into my free time and it would require one of my most dreaded words "commitment". My job is somewhat unpredictable. Some weeks will be slow and I'll only work about 30 hours, but that's pretty rare. On average, I think I work 50-55 hours, so I don't want to commit myself to something that may impede my primary income.

Does anyone else have ideas of where I can come up with "additional" income? Be on the lookout for a future post on some of my ideas for online income (this is going to be pocket change for most of you, but I think starting small helps).


SavingDiva said...

I use MySurvey and Pinecone research for the occassional $10 check and $5 paypal payment.

I also used PPP for a while (and made about $500)...

thebaglady said...

yeah pinecone research is quite good but the join url is hard to find. It took me 3 years to find it. I've always thought about contracting out what I do at my job to various clients so I would have a more flexible schedule. My dad started to submit articles to newspapers for fun and two of his articles actually got selected and he got paid.

calgirlfinance said...

Somehow I got the pinecone link and I already do surveys for them. Thanks for the suggestions!

craigcastree said...

What you need is a passive/residual income that you get each and every month like I get. I was in a similar position to yourselves a while ago where I was so committed per week that I had no time nor energy left at the end of the week, all in the name of getting more money behind me, and I found that it was just too much of a burden of my life and for my family. I was telling a friend of mine about this and he told me about a business that he runs from home that he spends no more than 10 hours a week at that was earning him $6085.00 per month on top of what he was making at his primary source of income. He now does not work where he was and uses this as his income that is now at around $16,500.00 per month and growing. He spends 20 hours a week to earn this, the beauty is that if he decides not to work for a week or a month, his income remains the same but he still receives it. I have joined this Company in Direct sales, and No it is not in Sales! Have a look for yourself. It might be for you or not? Paste the link below into your browser and have a look.

retiredebt1 said...

I like to add a tip to save for retirement to your readers : Review your financial plan regularly. Some decisions you took may need to be reviewed. Maybe your investments are not growing the right way. Your standard of living has probably improved -- you first lived in a single bedroom flat, you have now shifted to a double bedroom flat, you will now have to set aside more money to maintain the same lifestyle at retirement. The review is best done under the guidance of your investment consultant since he is the one who helped you set a plan in the first place.

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