Hello and Welcome back to Ease Your Financial Payne. There are some major misconceptions that to achieve Financial Independence and/or Retire Early, you need have a household income of $100,000+ and no kids, but I am here to tell you that is totally false. Obviously, if you have a higher income is it easier, but it is still not impossible if you make only $30,000/year. I understand there are factors that complicate this, such as having children. If you have kid(s) and think that F.I.R.E. is unattainable, please read Mr. Money Mustache’s blog post about how much it cost for him to raise his son (while retiring very early). It is from 2011, but is still very relevant. I plan on following his advice once I have a child.
My Husband & I’s Income:
We bring in $4,800 a month, after taxes. -$3,050 for our expenses ($1,200 Mortgage Payment, $340 Car Payment, $400 for food, etc.) -$750 put into savings for short term goals, and finally, -$1,000 invested every month. Together, we make less than $60,000/year after taxes, we do not have high earning jobs by any means, yet we are still on track to be financially independent by 2034 at the latest (we will be 36 & 38 years old then). This is with us just rounding up our monthly debt payments by a tiny amount & not putting ANY other extra money towards our debts. If our income goes up and/or we put additional money towards our house & car, we will get there even faster. 2034 is when our debt will be paid off & we will have $600,000 invested so we can safely withdraw 4% a year to cover our expenses, if we just keep doing what we are currently doing & don’t make any more money.
Now some of you may be thinking, “Well I’m not married, so I am in a single income household.” Here are what my expenses/income/debt would be like if I were single:
Income: $2,700/month. Debt: $0 because I wouldn’t own a home & my husbands car is the one we owe on. My Monthly Expenses: $350 Rent, $200 food, $120 energy bill, $70 Car Insurance, etc. I’m not going to list out everything, the total would be approximately: $1,000/month. I would live in a small, one bedroom apartment or a two bedroom with a roommate. We live in a cheap town where that is the average rent for a decent apartment, and what we were paying before we bought our house. So I would still have $1,700 left over that I would be investing on my own. I would actually achieve financial independence twice as fast this way, because I would have less debt & much lower expenses. Now obviously, there are people out there who probably have an income that is similar to mine, but they have kid(s) to take care of as well. Again, I highly suggest you check out Mr. Money Mustache’s blog. I will also link a post where The MadFientist interviewed a couple who have 13 kids, yes you read that right & how they manage their expenses. I’m redirecting you to these folks because I do not have a child & don’t want to pretend I know what I’m talking about.
(Update, that couple now has 14 kids & are retiring later this year (2021) at 53 & 57 years old!)
A good place to start with all of this is: I challenge you to go through every charge in your online banking for the last 3 months, evaluate where your money is going, and see what you can cut out/cut back on.
So as you can see, even if you are single, have kid(s), make only about $30,000/year after taxes, you can still do it. I believe in you! Now if you don’t have any kids or have a higher household income, you have a major advantage. It is never too late to start!