I, for one, have not felt mislead, possibly because I’ve been paying more attention than most?

>In terms of withdrawal rates I am solidly
>under 3% and I am approaching 2%.

Isn’t a market recovery a splendid thing? 🙂

Without straining too hard, I know your expenses could be covered with a $100k portfolio by picking on securities with yields over 7%. My own portfolio has an average yield of 7.1%, so it depends on research and risk tolerance.

Would be nice if my personal expenses weren’t 6x yours (house, spouse, and cars), but that’s what comes of choices!

Hello Jacob,

Great blog, I started 12 years ago reading “Your Money or Your Life” by Dominiquez. Instead of holding strong, I went right out and bought too much of everything (twice I cashed out of my homes). I have read so many great books along the way although I could not seem to implement them. Then I came across your blog and the timing could not have been better. Everything aligned and we are slowly getting off the debt train and heading toward a life of simple pleasures. Good thing too, because my beloved husband is becoming weary of working all the time and not seeing the kids much. We have a 2.2 year exit strategy and we are well on our way. We will always work, but not to turn around and pay creditors and bankers. Thanks so much for your work here.

I do have a favor to ask. I understand you do not have kids, but we do …4 of them…all darling. Two of them are exceptional in activities that are expensive. I would love to hear from your readers with kids or get input from you on how to handle investing in their activity vs. investing for us.

Thanks again for everything.

Want-to-Want-Less

I was wondering the same thing as Seth.

@Christopher – I could see it both ways. You’re independent in that you don’t need anyone else to pay you for work to have funds to live on. On the other hand, you still owe the banks for the mortgage, so you’re not totally independent yet, if that’s even possible.

Christopher, I’ve seen someone define financial independence as having a job and no longer living with their parents. So a wide range of situations can fit in this term. I’d say you’re financially independent now, but if you suddenly lose all your tenants (unlikely), you’re in trouble. Similarly, if Jacob’s investments all plummet to zero (a little more unlikely), he’s in trouble. I’d still say getting out of debt is a good next step, and this will happen automatically as you pay off your mortgages.

@want to want less, i have 3 children as well – one still at home – the others adults. we also read YMOYL in the 90’s. our steps were:

1. build an emergency fund.

2. get out of all debt – no payments – no mortgage.

3. start investing in income producing securities.

this is a slooooow process. took a couple of decades with the kids. One child slows financial independence down by years. without the babies we could have done it much faster but then we would have missed the joys of parenthood. warren buffett says you need a snowball and a long hill. discipline + time = the key.

I still work (in my late 40’s now). But there is nice passive income from the investments and work is a lot easier now.

Pat yourself on the back. You are a great example to your children as they see you making good decisions. they will do much better as adults thanks to you (my adult children are amazing at this – they got a fast head start and they save money at a stunning rate much like jacob)

Rent is 475/month incl. water.

@dogatemyfinances – No and no. I got my own HDHP with an HSA. (Wifey is insured through her employer.) It’s $71 a month. Someone 20 years older than me would be paying $155 a month. For anyone who isn’t medicated and is willing to go with a high deductible, health insurance is not that expensive. See

http://earlyretirementextreme.com/2009/01/my-hdhp-hsa-and-some-comments-on-health-care.html

He said about so give or take. The rent is split between his wife and him. I scan see jacob spending 7k given this. You are very smart to do this. I dont get why people work to drive their expensive car there and back.

@Wolfman: If the RV rent is split between Jacob and wife, then Rent + Health Insurance = $3702/ year, so Jacob would have $3300 left, which is ample: A 25kg bag of quality rice lasts you a year and costs about $40; buy onions in 10kg bags at $5-10 maybe 6-8 times a year; that’s $50 per year, say. Likewise, buy flour in bulk and bake your own bread – it’s so cheap and tastes so much better than factory bread. A few months ago, I found a bargain on 3kg cans of jalapenos for $2(!) and bought three; they are already gone now, so I should have bought far more 🙂 Seasonal fruit bought in bulk, like oranges or apples, are super-cheap too. Clothes are almost free; repair torn clothes and buy second hand clothes if at all (here in Sydney, my $10 thongs are super-comfortable, last a year, and are great for walking, running, bushwalking, and even ok for easy rock climbing). Etc. It’s like living the student life, but sensibly, without indebting yourself on alcohol, clothes, gadgets, and all other frills that mostly just give you brief pleasure of satiated lust and thereafter leave you with less money, less space, and less peace of mind.

Jacob, thanks for sharing. You’ve made it very simple: average earnings and below average spending leads to early retirement. There is, in my case, an added element of luck. Our house value nearly doubled in the six years we’ve owned it (in Canada). We borrowed to invest (although not a lot) in the market crash. I plan to retire at age 35 in two years, after working for 7 or 8 years.

I’d like to add to the discussion in two ways. First, financial independence, to me, is what Nassim Taleb called F-You money. To paraphrase him, it means being able to say “F*ck you” to your boss before, instead of after, hanging up the phone. I’ll go back to work as a teacher because it’ll allow me to easily live and work overseas, and because I think I’ll love it. But I won’t have to put up with bureaucracy, because I won’t depend on a paycheck.

Second, I have three kids. My wife and I are both frugal, but definitely not extreme. We sacrificed and saved while we were young, before we had kids. But at this point, it’s important to us to eat fresh and healthy (not just rice, ground beef and canned tomatoes), allow the kids to participate in activities and to be comfortable. We don’t view our kids as investments, but we don’t see them as liabilities, either. They’ll have to put up with our wacky life plans, but they’ll never starve or go without and we even have education savings for them (although it’s funded with government money). I apply thinking similar to Jacob’s, when considering spending money on the kids. How far back will it set my goal of financial independence? Is it worth it? Often, it is.

I will soon be a first time father. Clearly there are some FI folks with kids who read this blog. Can anyone recommend a blogger writing on the issue of FI and children?

Curious, have you worked enough to qualify for Soc Sec down the road? Not that it will be anything like it is now in 20-30 yrs…. Or is that too mainstream 🙂

Hmm if you made $7000 from working, and your expenses are $7000, then why did you even had to make withdrawals from your portfolio?

Another thing that just doesn’t add up is that you claim to be “retired”, yet your wife keeps on working. Actually by your definition a lot of women who choose to be stay at home moms are actually retired as well…Their husbands simply provide money for them, so in reality and per my definition neither these women nor you are actually retired.

To me you would be considered retired only if both your wife and you stopped working and did only freelancing/living off your investments/pensions.

@Blogging Banks – Because some stocks got overvalued and had to be sold.

Retired-schmetired …I don’t really care what it’s called. How about “independently wealthy”? Would that work by your definition? DW does not provide money for me.

Jacob,

My definition does not matter. 😉
I understand stocks had to be sold, but the real question is whether you used any funds from your portfolio for living expenses or not. If you simply let the money sit in cash in your portfolio or checkign account then you haven’t made a withdrawal 😉

The SS payout is based on the best 35 years of earned income. It’s not clear what the exact formula is, but Jacob’s pretty correct in saying his earned income will average out to be terribly low even if he does qualify… unless he changes his mind and significantly increases his earned income in the future.

“I have enough money for the rest of my life.”

Probably. But one never knows. A child could change that scenario a lot.

$80,000? In grad school? Wow, well, that’s not going here, although I am also on stipend. Maybe $8000–but I’ll get cracking! =)

I find it a bit depressing that I have a higher net than people twice my age (looking at the median and including equity, though I don’t own a house). Scary to look at how much money people have when home equity is not included.

There are many places in the U.S. where $3000/mo can provide for a very comfortable life. If you don’t limit yourself to the U.S., $3000/mo can pay for a life of luxury.

Hence, I see no reason to go back to work.

Jacob,

No, the annuities are not inflation adjusted. They are immediate fixed annuities; $3,000.00/month for life. My expenses are covered under a frugal regime. Of course, next year I have access to early S.S. benefits (about $1,500.00/month). Health, sort of OK. Still responsible for my own health insurance until 65 (medicare!). The main thing is adjusting to a life without meaningful work and discretionary income. At least, I have a paid roof over my shoulders and a paid car. The reality is: it’s hard to find a good job (or any at all) at my age.

I marvel at your conviction, tenacity and maturity, to go for “the duration” retired! You sound like a very clever chap, but on top of that you seem to have the disposition and testicular fortitude to attempt what many others would consider just plain crazy.

I should follow your blog for “continuing education.” Thanks for any comments you may have down this road.