‘Never having to work again’ is something that sounds very appealing to many people. At the same time, to most of those people, it also seems completely unachievable. However, according to the FIRE movement, it’s not! FIRE stands for Financial Independence & Retiring Early and the term appears more and more in mainstream media. It’s definitely not for everyone, but it sparked something inside of me and to me, it’s the framework for achieving my next dream.
I’ve always said that I wanted to move abroad and six years ago, I fell in love with Spain. I knew I had to move there, but without speaking any Spanish and later a falling Spanish economy, I had to figure out a way to get there on my own. In January 2016 I started working as a remote freelancer. With all my work being online and me being an EU citizen, it was a matter of picking up my laptop, flying to Spain, and continuing working there. So I built up my client base and in the fall of 2017, my dream of living in sunny Southern Europe came true.
Working as a freelancer has been nothing but great for me. Sure, it was hard work getting started and building up that client base (and I mean HARD work!), but I’ve enjoyed it from the very start. Now, just 2.5 years later, work is going very well. I have my main base of stable clients each month and additional smaller projects now and then. Earlier this year, revenues were higher than ever before, and after allowing myself to relax a bit during the summer, things are now picking up again (with September expected to surpass August by quite a bit).
So what role does FIRE play in this story? Am I already fed up with work and do I want to quit a.s.a.p.? Absolutely not!
But the truth is, being a freelancer does have one big, fat issue to worry about: retirement. Nobody is going to help you with that. You’re not saving via an employer, no 401K. You have to figure everything out on your own. Last month, all of a sudden I felt like it was time to get serious about this. I’m now 30 years old, work is going well enough that I should be able to save money, and after having a very relaxed summer, and I was ready to face the facts.
Those facts? I don’t have any emergency savings and I have a €30k student debt. Yikes!
Then I started to look into ‘investing for dummies’. I found the websites of Mr. Money Mustache, GetRichSlowly, and BudgetsAreSexy. For several days, I was glued to my iPad and read through all their archives. That’s where I learned about FIRE, about ‘The 4% rule‘, and the fact that I really shouldn’t bother with learning how to invest in individual companies and timing the stock market, but that I can start with something simple and should probably stick to that.
And that was it! Encouraged by everything I had read, I wrote my own numbers down and realized just how much I could save. I lowered my expenses by cancelling some subscriptions and other things (who needs an insurance on a 3-year-old iPhone?) and I made an effort to sign some new clients and increase my monthly revenue.
Then I wrote down my goals and created a plan around it. A very ambitious plan, but not impossible.
- I have money put aside to pay my income tax over 2017. I have no idea when I need to pay it; I’m waiting on my accountant to tell me how much it is. It may take months, even a year. However, I’ve been ‘borrowing’ money from that account and it needs to be back in there before I hear from the accountant. I will probably have to pay around €8k, but just to be sure, I want to have €10k. Everything that turns out to be too much, I can then put towards my next goal.
- I want €10k of emergency savings. It’s always wise to have a buffer and even more so as a freelancer.
- Then I want to pay off my student debt, which is just over €30k.
- After that, I want to save €30-€40k as a downpayment for an apartment. With that, hopefully, I’ll be able to buy a €100k-120k place. I would really like to get into real estate in the next 3-5 years.
How I’m gonna get there? By saving. A lot.
For the rest of this year, I want to save €1k each month. Every 3rd month, I estimate that I’ll be able to save €1k extra because I put money aside for my taxes and that’s usually around €1k more than I actually have to pay each quarter. Next year, I’d like to increase my income so that I can save €1.5k each month, going up later in the year to €2k. From the second half of 2020, I want to save €2.5k monthly. If I make it, I’ll achieve goal #1 early next year (although I’m hoping to beat myself by getting there before the end of the year. No idea yet how though!). Goal #2, the emergency savings, should be achieved by next summer. Then I’ll have a full year to pay off my student debt, and another year for the down payment. In 3.5 years, by the end of 2021, I should be able to own a home!
When I think about it, it actually scares me. Is this really possible..? But I think it is. When I keep working on my client base, have some cool side hustles, and don’t increase or even decrease my expenses, it’s definitely possible. The point is not to get to that point and quit working. The point is to work towards a place where I can stop working if I need to. I don’t know till what age I’ll stay healthy and to be completely honest with you, I also don’t know if my job will even exist in 20 years! So I’d rather work to a level where I could stop and decide to keep on working than to wake up one day and realize I’m in big trouble.
Are you intrigued, but do you feel like your situation is very different? It doesn’t matter. Just start where you are and go from there.
Got any thoughts to share? The comment section is just below!