Monday, March 2, 2015

Financial Independence in 10 Years

My goal is to be financial independent in 10 years. Think that’s crazy? Maybe it is. But I have a plan to do it and I’m going to lay it out for you AND you can follow my monthly and yearly progress by subscribing to the newsletter. I share all the juicy details there including income, expenses, net worth, etc.

Why am I doing this?

I think it’s beneficial for both you and me.

Our society tells us how we should live our working life. Get a job, work a 9-5 job, get 'things' that will make us happy, go into debt, pay off that debt and work until you are 70. We are put in chains and don't have the freedom to do what we want to. Don't be a sheep. Change your paradigm and do something different!
Financial Independence in 10 years
Going with the Crowd

You’ll get to follow along to see what is possible in terms of saving, investing, spending, and earning side income. My hope is that it will motive someone to be inspired to succeed financially. 

It will help me by keeping myself accountable and give me motivation to meet my goals…I don’t want to look stupid in front of you after all. I will make mistakes and do things that I regret, but hopefully I can keep that to a minimum. This also helps me as to write out my goals and to periodically review them to see how I am doing.

How do I define ‘financial independence’ and how is it different then ‘retirement’?

For me financial independence is described as having enough assets saved up to the point that I don’t have to work if I didn’t want to.  Basically, it’s having enough money for the rest of my life.

This is different from retirement. Retirement is not working in a certain career. Do I want to stop working for the rest of my life at age 39? Absolutely not. I would go crazy. I do want more time to focus on other things besides making money.

Financial independence = freedom. Freedom to work as much or as little as you want. Freedome to go and do what you want. Freedom to help and serve others.

10 Year Financial Independence Plan

So my plan to reach financial independence is based on 2 core factors:

  1. Saving  50%-70% of my income
  2. Investing and getting a return of 10% from investible assests

I will have little control over getting a return of 10% of my investments, but the first factor I should have a lot of control over. The idea is simply to earn as much as possible and to minimize spending…And this can be done while having kids, having a good life-style, and giving to others.

Let me start by giving you a snapshot of my finances at the beginning of 2015.

  • Estimated Home Value:     $170k
  • Cash:                                  $25k
  • IRA’s, Stocks, HSA:           $28k

  • Mortage:                            $76k
  • Loans:                                $4k

Total Net Worth:                       $143k

I don’t have any credit card debt, car payments, or any other loans. I’m not including my 2 cars, computers, TV, or other stuff as assets because I don’t view them as assets. They are too depreciable and it’s not worth tracking their value.

So for never having had a job that’s paid me more than entry level income, I’m in a pretty good spot. I’m finishing up my 4th and last year of dental school so I’ll be starting my career off this summer.

I don’t have any student loans (besides the interest free 4k) because I’m on an Army Scholarship and I will be working in the Army as a dentist for 4 years in return.

Current Income:
  1. $2100/month stipend from the Army as part of the scholarship
  2. $150-$200/month from this blog
  3. $100-$700/month from credit card bonuses and manufactured spend. In my monthly newsletter emails I describe in detail how I get this extra income.

My income will increase this year as I actually start working in the summer.

So with that, here is a basic timetable of my goals year-by-year to become financially independent. For simplicity, I will round numbers to the nearest thousand.

  • Estimated Income: 70k (save 50% = 35k)
  • 10% Investment return: 5k
  • Total Net Worth End of 2015:  143k + 35k + $5k = 183K

  • Estimated Income: 100k (save 60% = $60k)
  • 10% Investment return: 10k
  • Total Net Worth End of 2016: 183k + 60k + 10k = 253k

  • Estimated Income: 100k (save 60% = $60k)
  • 10% Investment return: 17k
  • Total Net Worth End of 2016: 253k + 60k + 17k = 330k

  • Estimated Income: 110k (save 60% = $66k)
  • 10% Investment return: 25k
  • Total Net Worth End of 2016: 330k + 66k + 25k = 421k

2019 (Transition year from Army to civilian career)
  • Estimated Income: 200k (save 50% = 100k)
  • 10% Investment return: 34k
  • Total Net Worth End of 2016: 421k + 100k + 34k = 555k

  • Estimated Income: 300k (save 50% = 150k)
  • 10% Investment return: 48k
  • Total Net Worth End of 2016: $555k + $150k + $48k = 753k

  • Estimated Income: 300k (save 50% = 150k)
  • 10% Investment return: 67k
  • Total Net Worth End of 2016: 753k + 150k + 67k = 970k 

  • Estimated Income: 350k (save 50% = $175k)
  • 10% Investment return: 89k
  • Total Net Worth End of 2016: 970k + $175 + 89k = 1,234k

  • Estimated Income: 350k (save 50% = $175k)
  • 10% Investment return: 110k
  • Total Net Worth End of 2016: 1,234k + $175k + $110k = 1,519k

  • Estimated Income: 350k (save 50% = 175k)
  • 10% Investment return: 144k
  • Total Net Worth End of 2016: 1,519k + $175k + 144k = 1,838k

  • Estimated Income: 350k (save 50% = $175k)
  • 10% Investment return: $176k
  • Total Net Worth End of 2016: 1,838k + 175k + 176k = $2,189,000

NOTE: I’m excluding 80k  in my annual 10% investment return to account for money tied up in a home and an emergency fund or savings account that will not be earning return. This helps my numbers be a little more conservative.

So the year 2025 will put me at 10 years. I'll be 39 at that time. At this point I feel having 2.2 mil will be enough to consider myself financial independent. I think this could last the rest of my life if needed. I want to continue to work as a dentist, but maybe I'll work less, venture into other business, pick up some hobbies, give service, or whatever I want to do. 

I figure I can reach financial independence by using the 4% rule. The 4% rule basically says if you can live off less then 4% of your net worth, your money will grow faster then what you spend.

So for 2.2 mil, the 4% rule would give me $87k/year or less to spend. 

There are many ways to calculate how much you need in order to be financial independent, but I won’t go over those right now(later post!). Many financial advisors want to calculate how much money you will need for retirement based on your income. I believe that is wrong. It should be based on your expenses.

Yes, these goals do not take into account a lot of variables like inflation, unexpected emergencies, etc.. For now, I’m making this as simple as possible. I’m also not taking into account pay raises and possible side ventures that can generate income. So I feel this is a fair goal and hopefully conservative.

What do you think? Think it's possible? Have you set any goals to retire or reach financial independence?


  1. Congrats on coming to the realization that its possible and planning ahead! We are planning the same thing - but we didn't get serious about it until last year, in our later 30s with 2 kids. Really, the kids spurred the idea of retiring early, just so we could spend more time with them! I wish I had thought about it all in my 20s, I would've wasted so much less money!

  2. The best time to start is yesterday, the second best time is today! Spending more time with family is a huge reason for me too. I have 2 kids and one on the way.

  3. I need to hire you as my financial adviser.

    1. Hire me so you can fire me?!? I can get you a good discount since we have the same name.

  4. What are your ideas for investing and getting that 10% return?

    1. I'm actually wanting to be fairly conservative and put most of my money in index funds. Over years, index funds will probably average 7-8% return. Some years may be +20% or more and some years will be -20% or more, but if you have a good strategy then you can expect a 7-8% return over the long run. How will I increase that to 10%? I'm hoping opportunities in real estate (residential or commercial, such as dental practice?), or other special opportunities will arise that can help make up the difference. 10% is definitely a stretch goal and I understand that may be too high. I feel like I can make up the short comings with extra side income. I also wanted to make the goals and math simple.

  5. Christian...I have to acknowledge you your planning and just doing it. Bravo!

    But...from my perspective, nearing age 80 in less than two years, "Man plans, God laughs."

    There are so many pitfalls along the road in everyday life, that it is really about the journey ... as you will soon find out. Kids, healthcare costs, school costs, relationship challenges, death of loved ones, stock market disasters, housing crises, delation, inflation,war, peace, etc. etc. If you live long enough you see it all.

    A 7% return on the average of all your investments would be awesome if left to compound over 20-30-40 years. No doubt, your job at first will pay the big money to fund your investments. But...if you stay in the military for 20 years, the real payoff is in retirement. It's hard to compete with the solid returns of a government pension and the many perks. I can't emphasize the importance of diversification enough. Having at least one fool proof investment can make all of the difference.

    In my case it was I-Bonds (Treasury Bonds indexed to inflation) which keep giving us a minimum of 5% no matter what for 30 years. That balances out some of the financial disaters along the way. Too bad the interest rates are so low that I Bonds are not worth the trouble today. So...Dividend Paying Stocks are my favorite vehicle presently. Buy them, forget them, and become a millionaire in 20-30 years. Live off the proceeds forever. Thanks for sharing on your blog!

    1. I need to look more into some dividend stocks. I love hearing feedback from people who have so much experience. Especially since I'm just starting to save/invest. I'll try and mentally prepare myself for the fact that my plans won't work out. But having a plan is better than no plan!


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