Greetings, today we’re going to talk about a topic that has conflicting views – if our personal interactions with other people has any bearing on the general populations outlook.
This topic is why you can (or might be able to) retire earlier than you think.
To get us started we’re going to use a picture here off of the famous Mr.MoneyMoustache site (although there are several other similar calculators). This picture shows the amount of time you would need to work based on your savings rate.
Now, with our personal situation we aim to save ~50% of our income which indicates 17 years until retirement. Given that we’ve been doing this savings rate for a few years now we’ll say we’re ~15 years away. There. Done. But not so fast.
This calculator assumes you’ll be living off of the same budget that you had in your working years and we would like to highlight a few instances of why this may not actually be the case.
Some of the expenses in our personal lives that we fully intend to cut back on or eliminate entirely are the following:
-Cell Phones: After our FIRE date, we fully expect to not need as much data on our phones due to us being around wifi more often than not and the urgency of us needing to get online should be significantly reduced. In Canada since our data is so expensive this will likely produce a savings of at least $50 per month to our phone plan.
-Cable: We currently only use cable sparingly and keep it due to the fact that our renters really enjoy it so its a very easy trade off in order to keep our awesome renters happy. In the future we will cut this out and save ~$60 per month.
-Vehicles: Both of us currently have lengthy commutes, and though we do try and carpool as much as possible there is currently no real getting around the fact that we need to have 2 vehicles especially since we work such drastically different shifts (Mr.FIC works shift work, 12 hour. Mrs.FIC works Monday-Friday 9-5). We definitely expect to cut back to one vehicle between us post FIRE and will look to establish a life suitable to having the one car. This exact savings amount is hard to pinpoint but between car depreciation and insurance it could easily be upwards of $400 per month.
-Working: That’s right, did you know that working actually costs you money? Post FIRE we will no longer be putting a combined 2.5 hours of driving per day on our cars, we’ll call that a conservative $15 per working day spent in fuel x 20 working days per month = $300 per month. What’s more is in Mrs.FIC’s case she has an office job that requires more frequent wardrobe updates and social lunches etc. that can add over time but we won’t add these at this time, we’re just aware that they are higher expenses than what we’ll face in the future – maybe we can allocate these funds to date nights!
-Travel: Have you ever gone onto a budget travel site that sources flight costs from all over the world and just searched “cheapest month”? or randomly found the cheapest day out of a given month to travel? We’ve done a few trips now to Las Vegas and because we have some flexibility with our work schedules we can do a trip from say Tuesday – Friday and pay a fraction of what others might have to pay if they can only escape for weekends. In the future we fully expect that the scheduling flexibility of being free will allow us to capitalize on last minute deals and taking the less desirable flight times and save hundreds of dollars per trip. Again, we won’t put an exact number on this one but if you’ve ever done much looking into booking trips you’ll know that great deals can be found last minute as well as flying on odd days of the week/month that most Mon-Fri employees can’t necessarily take advantage of.
-Location: This one receives the most flack in conversation, and we get it but one of the absolute most expensive things in your life is your home and the location that you choose to live. We currently live in Northern Alberta and while the wages make up for it, it is easily one of the most expensive places to live in Canada and probably world wide. So in our case we already know that whenever it is we decide to move on we can buy a house elsewhere easily for $100k-$200k less – which is what we intend to do. If we don’t buy when we move then we know that our future rent will likely be 60% of our current mortgage/house expenses. If you live in say Toronto or Vancouver and you just have to be there, then this could be difficult but if you’re acclimated to those prices and you move to a more affordable market an hour or two away you will notice a whole bunch of freedom in your budget easily upwards of $500 per month.
There are a handful of the ways we plan to live off less post FIRE, and why we feel like we’re actually a few years closer to FIRE than what the calculator shows us. These numbers will vary for everyone but for us it’s clear to see that by removing even one or two of these items from your expenses you’re actually YEARS closer to FIRE than what you may currently think.
Thoughts? Questions? Feedback? Leave them in the comments below and we’ll get back to you.
Thanks,
FIC