May Update//Revisiting Our Financial Independence Day
Our investments as a multiple of our annual spending number continues to creep up. We reached another all time high this month at 19.7X up from 19.4X last month. The asset side of the equation continues to be bolstered by the ongoing bull market and automated monthly contributions, pushing asset values up 1.7%.
On the spending side, we broke our trend of seeing our expenses steadily decreasing. Our annual spending was up .4% due to a few unusual expenses. The biggest was having to meet a deductible for Mrs. EE to have finger surgery. We also had to replace the brakes on one of our cars and spent some money on landscaping to give the house some curb appeal. On the fun side, we bought our annual pool pass.
Add it up and we spent more this May than last, keeping us just shy of our goal of achieving investments at least 20X our annual expenses by May of 2017 as was our goal when starting the blog.
Our Financial Independence Day
Two years ago I wrote the post “Our Financial Independence Day”, inspired by the idea of blogger Even Steven Money. Our FI Day, May 1, 2017, occurred in the past month. The date was pretty arbitrary. I had always had this idea in my head that I would retire by 40. My 41st birthday was this past month, thus I wanted to be done before then.
Over the past two years, we have changed our plans and thoughts on retirement quite a bit. As I shared earlier this year, we are now working towards our true goals. Despite not quite hitting our original financial goal, we are extremely close and comfortable with where we are financially. This past February I quit my job to start this next phase of our lives.
The Impact of Expectations
Over Memorial day weekend we spent a day hiking with new friends Jared and Whitney who write the travel physical therapy/ early retirement blog Fifth Wheel Physical Therapist. Jared and I discussed his intense path to FIRE, from 6-figure debt to FI in 5 years.
Something in our talk led me to ask him if the intensity that he was approaching his goal with was worth it, or if he should slow down just a little bit in order to enjoy life more now.
He still plans to stick with his original plan, but admitted the whole idea to be FI in 5 years was chosen because it “sounded kind of cool”. About two years in, he is on pace to meet or exceed that goal and he still wants to finish it. I’m not betting against him.
I have been reflecting on my own arbitrary goal to “retire by age 40” and Jared’s goal to “achieve FI in 5 years”. I can not help but realize the power of our own expectations.
On the flip side, the night before our hike we sat down to have dinner with a close friend. He is going through a very hard time in his career which is affecting all areas of his life. We were trying to encourage him to try something different to change things up. His response was basically “I’m sure that if I try something new I won’t like that either so why even bother trying”.
Unfortunately, negative expectations are equally if not more powerful than positive ones. We shifted the conversation to weather, sports, etc. knowing that we were going down a dead end street. It is impossible to help someone who is not yet ready for help.
What Is Realistic?
I think back to the first money/personal development book that I ever read, “Think and Grow Rich” by Napoleon Hill. My dad encouraged me to read it over one of my Christmas breaks in college, and I have developed the habit of re-reading it in January of each year. The book contains a quote that has stuck with me. “Whatever the mind can conceive and believe, it can achieve”.
More recently I read Tim Ferriss’ “Tools of Titans”. In it, he has a quote from his interview with Peter Theil that also stuck with me. “So if you’re planning to do something with your life, if you have a 10-year plan of how to get there, you should ask: Why can’t you do this in 6 months?” I do not take that quote literally to mean that faster is always better, but rather to use it as a prompt to question my assumptions.
I am not suggesting you can read an inspirational book, memorize a magic quote, listen to some guru, or pray that “God will provide” and expect magic to just happen. What I am suggesting is that the mind is incredibly powerful.
If you fill your brain with positive (or negative) thoughts and expectations you begin to accept them as truth. This belief and expectation causes implementation of daily habits and actions consistent with your beliefs. Your habits and actions will carry you to your anticipated destination.
Guard Your Expectations
As a big Tim Ferris fan, I listen to pretty much every one of his podcast episodes. One of the “Rapid Fire” questions that he asks almost all of his guests is “What advice would you give your X (20, 30, 40) year old self?”
When I started this blog, I used to think about what advice I would give a young person trying to figure out how to become financially independent and retire early. If you look at the first year of this blog, I was basically answering that question. I would teach people to do what we did right. Save 50% of your salary, avoid debt, etc. I would teach people to avoid our mistakes. Learn to invest, learn to understand the tax code, etc.
Thinking about where we find ourselves now, Mrs. EE and I are 39 and 41 years old and transitioning to our version of early retirement. Jared is right on pace, a couple of years into his 5 year FI plan. Our friend has no plan and little hope. We are all finding ourselves pretty much right where we expect to be.
Now I understand that I was missing the most important part. The best advice that I can give any
young person is to guard your expectations as though your life depends on it. It literally does.
What do you think? Am I overstating the mental part of achieving FI (or any other goal)? Should people focus on the mental or technical side first? Is this all a chicken or egg argument? Chime in with your thoughts below.