Monday, June 30, 2014

I am 1.21% retired! Read all about it!


Atlantic City, New Jersey

Everyone has their own methods of investing and saving. I also have my own ideas and goals, but they may not make much sense to someone else. Often times when I tell someone I plan on retiring earlier than the age of 55, they think I am lost in this world and that this notion of retiring early is impossible for someone like me. I may or may not be ahead of my peers that are about the same age but I feel like I have made some great strides in the right direction. I try not to compare myself to my peers because everyone has different goals in life. Some people want that family and big house with a pool lifestyle. This is actually what most Americans want in life. I on the other hand have never been materialistic. Do I drive a decent car and wear decent shoes? Well let’s see, I bought my 2002 Cadillac Deville for $3,500 from an older gentleman and I bought my Nike Air Max shoes on the clearance rack for $75. The point here is I don’t need the newest Cadillac or pair of Nike shoes. I am content with the 12 year old car with 100,000 miles on it and the pair of Nike shoes that nobody wears anymore.
                  I have made some serious life changes in the past year. For example, last year around this time, I only had $5,000 in my savings and a 1998 Ford Mustang to my name. This year I have over $20,000 in assets and a 2002 Cadillac Deville to my name. All I had to do was cut out my expenses. I still work the same $30,000/year job. It’s much easier to ditch the expensive car insurance, phone bill, and partying lifestyle than it is to work more hours or find a higher paying job. If my parents taught me how to invest at an early age I would probably be sitting pretty right now. However if you had a poster for the typical American family with a cottage, pool, deck, 2012 Ford F-150, Hyundai SUV, big yard, barn, doggie, boat, new kitchen, etc. Yes, that would probably be my parents on that poster. I don’t think there is anything wrong with this lifestyle and my parents are very happy, however I knew that I needed something different in my life. I don’t ever intend on being rich, but I would love to be sitting on a million one day. Some people might think having a million dollars is being rich however I would love to disagree.
                  So how does a low middle class worker making $30,000/year like myself plan on retiring at the age of 55? Well first of all I have 25 years to invest/save all the money that I earn. I have the power of compound interest and time on my side. I am excited to announce that I am officially 1.21% retired. Your probably wondering how I came up with this number. I came up with the simple formula while I was at work the other day. I currently receive a total of $302.63 of passive income every year. This includes all my dividends and interest for the year. I could live off of $20,000 for the year, but in order to retire comfortably I want to receive a total of $25,000 in passive income each year. So here is the formula (Percent Retired=Current Annual Passive Income/Future Retirement Passive Income) (302.63/25000=1.21%). I am only 1.21% retired at this point in my life. This is just a generic way of me knowing how close I am to retirement. So how far are you from retirement? 

9 comments:

  1. Hi DM,

    I think looking at that percentage is going to be a great encouragement over the coming years.Every year, every month you will see that number go up. Every cup of Starbucks coffee you don't take, every time you use the bike instead of the car, every time you go for a picknick instead of a lunch in a restaurant, that number is going up.

    Keep up the good work!

    Best,

    DW

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    1. Hey D&W,
      Thanks for the words of encouragement. It's a good way to keep me motivated. Last week my significant other and I refused to pay $20 to park at one of the beaches in Newport, RI. Instead we parked about a mile away and walked. I hate paying to get into the beach and will try to avoid this at all costs. Little changes like this will continue to bring my percentage closer to retirement. Best of luck to you!

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  2. lol Love your formula. I hope u continue to use it. Great turnaround from last year.

    Good Day and Grind On!

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    1. 2014 has been my best year in terms of saving. Before this year I have never been able to save more than $5,000 due to my spending habits. I am glad that I finally smartened up in my twenties before it was too late. Thanks for stopping by!

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  3. I can definitely relate to everything you've said. I hope you feel proud that you've taken control of your finances. I'm sure like me, you still have friends that don't even think about retiring or expenses, yet alone how to start covering them. I like what Dividend & Whiskey said and agree keeping track of this percentage will be super motivating for you, I'm excited to watch the number grow higher and higher.

    Have a great weekend :)
    ~Ryan

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    1. Hey Ryan,
      I still have friends that could use some of the tips from all the great bloggers out there. Some think having a 401k is enough for retirement, and some people rely on social security. Having multiple forms of passive income is so important, and I hope to own investment property in the future as another form of income. I think most of us don't really think of retirement in our twenties. But now is the time to invest, even if it is $20 a week. I wish I could get the message across to my friends and family but it's in one year and out the other. Lol Have a great weekend and 4th!

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  4. Like they say "a journey of a thousand miles starts with one step". Great job getting started because that's the most important part. The rest is easy and unfortunately just takes time. Keep at it and maybe with some more purchases and dividend increases you can get that pushed up to 2-3% by the end of the year.

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  5. Hey PIP,
    I was actually thinking of making it a goal to reach the 2% mark, however I have so many other goals right now. I think next year I might aim for a 5% goal by the end of the year. Many of my goals for this year are close to being met and the year is only half way done, so I might have to add a new goal. We will see how the next few months play out. Thanks for stopping by. Happy 4th !

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