Sunday, April 29, 2018

My Five Year Retirement Plan

Today I told someone I wanted to retire in five years. That's the first time I have said it out loud. Actually for many years I knew I wanted to retire by fifty five and I feel like I am on my way to doing that, but I've been on this track for seven years now. Now don't get me wrong retirement for me does not mean not working it means not having to work and choosing my work. By nature I am a creative entrepreneurial type person. Since I was a teenager I've been working as a contractor or doing my own business. Early on at the age of 15 I was doing contract modeling jobs  and bartering hair cuts and color for pictures in those hair magazines. In my early twenties I started a pet sitting, plant watering, check the mail business and then went on to have an essential oil blending company before it was cool back in the early nineties. I served over fourteen stores with that little business making bath salts and oils in my kitchen.
As my kids became toddlers I had to let that go and cleaned houses, something I had done off and on since I was fourteen. Until I sat down to write this I didn't really realize that I've pretty much always had a side gig, or what we used to call a second job! At thirty I started teaching yoga as a contractor, at thirty seven I opened a yoga school (back in 2008) and today, ten years later,  I still own that business. During all of this I was often an employee for long stretches of time (part time usually) and always had my own business. I ceased being an employee in 2012. For the past six years I've been solely self employed. Why am I giving you all this information? Because my point is that there is always a way to make extra money. Look around at what people need and match your talents with that or simply find something you don't mind doing or you are good at and do it on the side. The hard part is being self motivated when you don't feel like working. If this is you then you might need to actually find a second job for a while as an employee. Making money usually happens more so when you are not the employee but the owner.

So my five year plan is actually a plan I've had since I was forty and I'm now 47, so it's more like a 12 year plan. At age forty, broke, divorced and the mother of four surly teens I decided "I am going to retire at 55" or at least I will be able to choose the work I do and when I do it.

Before I go any further I would like you to know that I started this plan when I was making less than $17,000 a year, and my now husband wasn't making much more. We both were going through divorces and job changes. I paid off all my debts prior to marriage (except my home) with less than $40,000 a year in income.

The plan is simple.
1. Pay off all debts including the house.
2. Have plenty saved and live off some of the interest and side work as I choose.
3. Now that I am married my timeline has gotten smaller, my husband retires in five years and we will live mostly on his retirement which should be around $3000 a month. Not much for some people I know but let me tell you how that will work here in a few...stay with me.
4. Upgrade to two newer cars with low mileage within the next five years that will last a good long time.

1. Now we will have the car and tractor paid off by this fall when we sell my house in town.
Our income varies greatly but we have been working hard and have both grown our businesses at a good rate and based on the past three years we should be able to pay the farm off in 2 to 4 years. We borrowed only what we needed and paid for cash as we built it as much as we could, therefor we have a lot of equity right now. We also got it to bank satisfaction and closed the loan. We could have borrowed more but we chose to pay for finishing the farm as we worked and had cash. So six months after we moved in we just got a driveway! Next is staining the outside, then hopefully landscaping, we will pay cash.

2. We should be able to save one years income within the next two years (I have a good start on it) and still pay off everything.  We live on about 1/2 our income the rest goes to savings and debt.

3. I have a decent IRA and Jim has retirement and Social Security. I put about $1200 to $1500 a year in my IRA (my focus is more on debt freedom than the IRA).

4.  We should be able to save enough to buy two newer cars within five years.

I'm not going to give all the figures here but suffice it to say that Jim and I make less than $85,000 a year with two incomes. I drive a three year old Subaru and he drives a 14 year old Ford.
We live within our means and don't spend a lot of money.
It's really simple, we just don't spend. We always ask ourselves "Is this a need or a want?". Sometimes we allow ourselves a want but we keep our goal in mind.
We rarely buy new clothes, jewelry, or much of anything else.
Most of our money goes to taking care of our farm and our animals and food. Some goes to medical expenses as needed.
We have a gym membership and use if often, it's only $45 a month for both of us.
We have satellite T.V. and I hope to convince him to do an antenna and ROKU once our contract is up, at that our satellite is only $60 a month.
We often choose our spending around tax deductions since we own businesses. If we need to travel we try to make it around something we can do for business so we can take a deduction.
We also pay for many of our expenses out of our deductions like a large part of miles we drive (by combining trips with work trips). Need to go to Office Depot for work, get personal stuff done there too.


So by the time Jim is 65 and I am 53 we should be debt free and have a good savings with a couple of years of income in the bank plus and IRA and retirement.
He will get approx $3000 a month.
Interest on the savings will sit there and accrue we shouldn't need it.
I'll likely go to part time and still earn about $1500 a month (I am a contractor so I can pick and choose but I'll be pickier) If I need off I'll take off. My book sales (I am an author of one published book at this time and several others in the works) should generate some income and I'm working now on passive income with online material (building a store with my many years of materials from my work). This will allow me to still contribute to Social Security.


Income when we turn 65/ 53: Cowboy and Me = $4500

Utilities (Electric, Propane, Water) $175
Wifi and TV = 170 (We live in the country wifi is ridiculous)
Health Insurance = $675 *Hoping I can get cheaper when Jim goes on Medicare.
Homeowners Insurance and Taxes = $200 a month (we will pay yearly)
Car insurance = $150 a month (we pay twice a year)
Total = $1370

We also currently have
House cleaner = $200 per month (I may do this myself)
Food at home =$600  I hope to grow more and can and freeze
Fun and Food out = $200 (I am not sure we spend this much now)
Gas $300 (should be even less if we are not working)
Total = $1300

Total is $2670 a month for everything.
If we want clothes or anything else this shouldn't be a problem. I like to figure out ways to save money.
This will leave us with a surplus of $1730 a month (We will likely save so that I can eventually not need to make an income by age 59.5 when I can draw off my IRA).
Saving money is like a sport/ hobby to me. I get a thrill out of finding ways to do things frugally. It's especially exciting to me to get something of high quality at a thrift store or save for it and buy it on sale. I know it's geeky but being free of debt is pretty cool.

In the event something happened to one of us we would have the option of selling part of our 40 acre farm and having a much smaller home (Right now we are at about 1700 sq feet).
With a surplus of $1730 a month this should allow us to save enough to replace appliances, repair cars and make repairs on the house. When I turn 62 If we need it I can draw off my SS and IRA.
I will continue to put money into my IRA for as long as we have extra money. My hope is to max it out over the five years so that when I turn 59.5 I can draw off of it and that should give me an extra $1500 a month or so.


I would like to add here some ways I save money and intend to save more money.

1. Go to the library instead of buying more books.
2. Cook from scratch at home.
3. Be happy with less stuff.
4. Buy quality and make it last.
5. Clean up and reuse what I already have (like fixing a pair of shoes or painting a lawn chair).
6. Buying a good clean used car with very low miles when we upgrade.
7. Taking care of what we own.
8. Keeping things clean.
9. Utilize deals like gift cards, coupons, and discounts (when you are in a hurry you often don't do this).
10. Grow more of our own food.

Hope my plan helps some of you all. I would like to add that we would like to do some travel, though we live on a beautiful farm and truthfully don't like leaving to often. If we travel we will save and pay cash and most likely we will travel about two weeks at a time three to four times a year.

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