2021 Financial Goals Check-In: How I figured out my FIRE number and made a decision to invest in Real Estate
Happy August!
I figured this would be a great time to check in on how you are either excelling (or not) on your money and career goals this year. Personally, my student loan goal to get my debt under six figures is going kind of “meh.” I’m about $9k away from hitting that goal, and you may recall I failed this goal in 2020 (but you know the panorama made everything hard last year).
However, when Jan’2021 came around, I wanted to focus on two primary goals in my personal finance journey. One was to figure out my FIRE (financial independence retirement early) number if I chose to step away from working full time when I turn 40. So I used my account over at Wealthfront (link to my referral code) to calculate what I would need from a savings and investment perspective, given all things remain the same (i.e., my current expenses and spending, plus the ridiculous cost of living in NYC).
According to the screengrab below, I would need $1M to retire early, and that would be a “stretch” goal at best. However, I’ve seen other personal finance experts like A Purple Life retire with $500K and see accounts grow post-retirement and during the pandemic. So, while I think the math portion of this exercise is solid in giving you a range of where you should work towards financially, I think the science part is figuring out what you need from a lifestyle perspective in retirement. Also, I have noticed some people in the FIRE community decide to work part-time or spend their renewed time on passion projects that generate some form of income.
Lastly, if you don’t want to use a calculator as I did from Wealthfront, the general rule of thumb to find your FIRE number is to take the following calculation:
Annual per month x 12 months x 25= FIRE
So if your expenses are $5,000 a month * 12 months x 25= $1.5M (FIRE number)
Moral of the story: Do you boo!
My second goal this year was to invest in a rental property. Now I started this journey looking into (what I thought would be) affordable houses in my hometown back in Ohio last year. But you may not know this, but the housing market started to experience a significant boom! For the first time in almost 40 years, inventory was down year over year. And then add to it the record low mortgage rates, as set by the Federal government, and you have a spike in housing demand for buying. I did make it as far as putting an offer on the table. Still, after receiving the inspection report, the house that I was interested in had too many (costly) variables that didn’t make any return feasible in my given time frame.
So I decided to partner with two other investors on a different property in a bigger city and currently waiting through the (most extended) closing process known to man. #woosah
Both of these goals are challenging in their own right, and I’m terrified at all of the unknowns, but the longer I’m on this journey, the more I understand a few critical principles.
Money is freedom and gives you the power of choice…
No one ever got wealthy, placing all their money in a savings account…
How are your money goals going this year? Drop a comment below
-Ashley