I think I’m probably spitting out more articles this past month than I have in the last year. Why this sudden blogging interest? Especially curious since my readership is only about 500 views a month (on a great month). Call it an experiment to see if by writing and sharing more, readership will go up or not. Call it an itch that just wants to be scratched some more. This morning, on the way to work I was thinking again about this quest of financial independence (FI) and also how much is enough? I had a similar conversation with a friend over the weekend.
My dilemma seems to be the following :
6 years ago, I calculated exactly how much I needed to retire or to reach Financial Independence (FI). I also projected that this would occur around the age of 45. I actually reached the number 2 years ahead of schedule but then a few things happened in between:
- The family and I decided to move from a house we had finished renovating (after 7 years) and which was just outside Paris, into a new apartment next to the Eiffel tower. The house was almost paid off and the apartment cost 3x what the house had cost.
- Then we decided to buy a beach house on a little island off the coast of France. Beautiful place with some great beaches, but it needs to be renovated in-depth and that costs money.
- I also changed jobs recently.
So why do these 3 things cause me to face a dilemma? 3 reasons to help understand:
Firstly, the mortgage on the apartment, while being slightly higher than the house (the house upside had enabled us to buy into something bigger and in a better location) is over a longer period than the house (which was almost paid off). So my time to pay off went from being in the immediate short-term to the medium term now. This effectively pushes my FI out by about 2 years.
Secondly, the beach house was a great lifestyle investment and we negotiated the price down 30%, which means when the renovation is completed, we’ll have some financial upside (even though the investment was not about making a profit in the short-term). This pushes my FI out another year or so.
Thirdly, I changed jobs as I needed a new challenge and as FI had taken a little stroll ahead of me, I thought the new role could better bridge the gap between my old level of FI and my new level of FI.
Ok, so your FI is pushed out a few years, so what; it seems like you have a plan?
Yes, but I already had a plan and achieved the number only to see it grow further based on the decisions we made. What’s going to stop me from making similar decisions in the future and seeing my FI stroll further ahead of me on the path?
How do you draw a line in the sand?
1. Share your goal with your Partner and keep track of your progress towards that goal
The last FI target was something I diligently worked toward (with my wife) but with her unaware of the target and the goal. I think I felt it silly to want to reach FI and then potentially take an early retirement or do something different. That’s no longer an option – she needs to be a player in the game.
2. Think long and hard before taking another financial investment decision that pushes out FI
Analyze the impact (best case, probable case and worst case) of future investment decisions and their impact on FI. Does it give us more comfort or more stress?
3. Be bold and take the leap when FI target is reached
Don’t suddenly start questioning the 4% rule – should it be 3.5% or is 5% adequate? Take a range and once Inside it, go for it. Keep repeating that life doesn’t stop with a step away from the corporate world and maybe the decision won’t be to retire early (RE) but to keep on driving forward
After all, I’ve been a CFO of a listed company for a number of years. I’ve been involved in multibillion dollar projects and I’ve thrived in this environment. I’m anxious to keep challenging myself, and I’m certain my FI objective will just be another target I will reach with a bit of determination and focus.
After all I already achieved it once.
We’ll see about the early retirement once we get the FI.