My Get Rich Slow Scheme
By Jeremy C. Wright | Related entries in Financial Management, Financial PlanningSince we’re all being open and honest here, I thought it’d be good for me to lay out where I’m at and where I’m heading. I have a family (2 little boys). I am self-employed (I co-founded InsideBlogging). Currently my net worth, including everything, is around 10000$ which puts me above more than 80% of north Americans (sadly).
My ultimate goal is to be completely financially independent, and able to retire at around 30-35. I probably won’t, but I want to have the assets to do just that. I’m currently 25, so I’m giving myself roughly a decade to do that.
What would I consider a “retirable” state of income? Long term savings of 1 million dollars, and 10,000$ per month in regular diversified income beyond that.
The idea for this post came from a fantastic blog: Neville’s Financial Blog, where he talks about his goals.
I’m not yet at the stage where I can declare my goals so succinctly, however I think I can offer a reasonable state of play of where I’m at now, income-wise, and where I’d like to be (generally speaking) by the end of the year.
Year 1 Goals
Monthly Income: 5,000$
Consumer Debt: 0$
Student Loans: 0$
Income Protection Savings: 7500$
Long term savings: 5000$
Savings for house: 10,000$ (or bought one with this money)
RRSP: 5,000$
Current Status
Monthly Income: 3000$
Consumer Debt: 2500$
Student Loans: 3000$
Income Protection Savings: 4000$
Long term savings: 2000$
Savings for house: 0$
RRSP: 2000$
As you can see, I have a ways to go. Specifically, our income savings has dwindled of late (from 8000$), which scares me a little bit.
In getting to my goal, there are a few things I’m planning on doing, and there are also some reasonable cheques coming in. Over the next 6 months, here are my expected income and expense figures:
Income
Write book: 15,000$
Prepare courseware: 3000$
InsideBlogging Income: 12,000$
Programming income: 5,000$
Contract writing income: 3,000$
Consulting income: 10,000$
Online advertising: 3,000$
Expenses
Typically speaking our monthly expenses are about 2500$, however there are some other expenses to keep in mind as well.
Regular monthly expenses: 15,000$
Taxes: 5,000$
Company-related expenses: 3,000$
Which leaves me with roughly 28,000$ in “extra” cash. Assuming we manage to actually ferret away 75% of that, that leaves us with 21,000$ in extra cash. Enough to actually hit my targets.
What’s the point of this? Well, from my perspective there is a process to becoming financially independent (beyond setting achievable goals):
1. Pay off consumer debt
2. Meet fundamental long-term needs (estate planning, low-risk savings, RRSP, life insurance)
3. Balance income and expenses
4. Grow your income
5. Begin investing
6. Expand your number of income streams
7. Grow your income, while reducing your personal work requirements
8. Continue investing
9. Grow your assets (liquidable and fixed)
10. Reduce your work requirements to a minimum while keeping your income steady
At that point, to me, I’d be “retired”. At least, I could choose to retire with no real penalty to myself, my family or my income. Because I love to do things with my mind, though, I’d likely keep working. But I’d be financially independent as well as financially free from responsibility.
How realistic is this in the next 5-10 years? I don’t know. I’m no money expert (yet). Obviously part of this process is a hell of a lot of learning. But, I should be able to hit points 1-5 this year. Next year I can focus on growing my income and my investments, as well as expanding my income streams. The 2 years after that I can continue to focus on those, while reducing my work requirements. At that point I’m effectively financially independent. And that’s only 5 years away.
The million dollars in savings seems unattainable right now. But, then, so does finishing my book. Maybe finishing my book will give me the perspective I need to actually plan out my path to financial independence and freedom.
I welcome all perspectives on this. I happily acknowledge that I’m not an expert in this. I’ve learned a lot, both through books and friends as well as life. But, I’m sure there are better ways to hit my goals (heck, maybe my goals are just plain wrong).
I’d love to hear feedback. This is me being more open than normal, perhaps even more open than is wise. But, I believe you learn by being open - even if it’s hard. So, here’s me. Like a book.
This entry was posted on Thursday, March 24th, 2005 and is filed under Financial Management, Financial Planning. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
March 24th, 2005 at 9:59 am
Thanks for the kind words Jeremy,
Don’t worry about your current inablility to articulate your goals yet, writing your thoughts in the blog will help you do that. I was in your exact same place when I started my site!
My attention was just drawn to your site today, and I will be sure to come back and read all of your previous entries in the next day or so (This week just keeps getting busier and busier).
Keep up the good work, it seems to me you really know what you are doing in the financial world. Looking forward to more.
P.S. I have linked your site on mine.
March 24th, 2005 at 5:47 pm
Thanks for posting this! It’s so unusual to get a picture of someone else’s financial state and goals, especially in the early-mid20s set. I’m 23, and it seems like most of my peers are still attending school or working at jobs that barely pay the rent (while waiting for their talent in the arts to be discovered). I’m lucky enough to have a well-paying job that I enjoy, but my plans to fully fund my IRA and get started in mutual funds in 2004 were sidetracked by the desire for a new (used) car and a condo. I’ve locked down my budget in the last 2 months as I prepare to move, but now I need to look forward to meeting my own goals. I don’t anticipate becoming solvent before probably my 40s, but that’s mostly because I want to use money in a balanced way… live a thrifty but enjoyable lifestyle, help others, and then plan for the future.
I’m not a big fan of Suze, but I read Get a Financial Life by Beth Kobliner a few months ago, and it had some solid general ideas. Pay off consumer debt, maintain an emergency fund, use the Roth IRA and get started in no-load mutual funds. Each step seems so *big*, though! I really appreciate the targeted research you and other PF bloggers are doing to fill in the gaps between day-to-day life and long-term financial success.
March 24th, 2005 at 5:48 pm
Ack! I apologize for the comment spam, there’s a very odd internet slowdown happening here.
March 29th, 2005 at 4:45 pm
RRSP would be what?
March 29th, 2005 at 4:57 pm
It’s like a Canadian IRA
RRSP - Registered Retirement Savings Plan
http://www.investopedia.com/university/retirement/retirement2.asp
March 29th, 2005 at 4:59 pm
Thanks for the link, because we don’t have Canadian IRA over here either ;o)
April 4th, 2005 at 2:00 am
Awesome stuff Jeremy!
I read a post on your other blog today and posted a reply there. Then i discovered this new blog site of yours and see you are in a different place than what I originally thought.
My comments: Brave move posting your money figures out in the open but it shows you are committed to your goals. Too often people are secretive about their money matters because they think it is a measure of their own self worth. It is not true. A Poor man is no lesser a person than a Rich man.
Posting your goals is also a great move. It shows you HAVE goals. So many people have no goals and thats what they achieve in their life. Nothing.
We will hold you to your word.
Also, get a hold of the game called Cashflow by Robert Kiyosaki. It will teach you how to get out of the ratrace, which is what you want to do (by being in a situation where you dont have to work.)
Get a copy of the book called “The Richest Man in Babylon” and read it. many times.
Good luck with causing your goals.
Stephen
November 9th, 2005 at 4:41 am
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November 25th, 2005 at 8:19 am
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May 3rd, 2006 at 5:14 am
Great article, that was interesting