by As we approach the final stretch of our journey to financial independence and early retirement (FIRE), I can’t help but reflect on how far we’ve come. It’s been a whirlwind of emotions, calculations, and life-changing decisions. Today, I want to share our progress, our strategy shifts, and the excitement (mixed with a hint of nervousness) as we near our goal.
The Evolution of Our Freedom Fund
When we started this journey in 2012, the idea of retiring early seemed like a distant dream. We diligently built our Freedom Fund, a combination of index-based investments, rental property, and savings. Our initial goal was to cover a $35,000 annual spending budget, which we proudly achieved in January of this year.
But we didn’t stop there. Since our last update, our net worth has increased by nearly 10%—a number that still feels surreal when I see it on paper. While we’ve shifted our focus to saving for our future home (more on that later), we continue to contribute to our 401(k)s and Roth IRAs to optimize our tax situation.
Introducing: Nuestra Casa Fund!
As we’ve hit our initial FIRE target, we’ve created a new goal fund for our future home purchase. We’ve playfully named it the “Nuestra Casa Fund” to add a bit of flavor to our financial journey.
Why save for a house instead of buying one right away? For us, it made sense to fund our retirement first and then focus on homeownership. This approach allows our retirement funds to potentially provide income to help fund our future home, rather than a mortgage detracting from our retirement savings.
We’re currently 30% of the way to our Nuestra Casa Fund goal, with these funds earmarked specifically for our home purchase. As we near retirement, we’re opting for low-risk savings vehicles to ensure the money is readily available when we need it.
Setting the Date: Retirement in 2019
After careful consideration, we’ve set our retirement date for 2019. This timeline gives us enough runway to save for our house and accomplish a few more personal goals before we embark on this new chapter of our lives.
It’s hard to believe that in just two years, we’ll be leaving the “rat race” behind. When we started planning for FIRE in 2012, this moment seemed so far away. It’s a testament to the power of consistent saving, smart investing, and aligning our lifestyle with our values.
Shifting Gears: From Growth to Preservation
As we get closer to our retirement date, our investment strategy has evolved. We’re no longer the aggressive investors we once were, with a 90/10 or even 100/0 stock/bond allocation. Now, we’re focusing more on capital preservation and risk management.
We’ve reduced our stock exposure from 62% to 45% of our net worth, with a goal to keep it under 50% until retirement. After we retire, we aim to further reduce it to 35%. This shift reflects our changing risk tolerance and the need to protect the nest egg we’ve worked so hard to build.
Looking Ahead: Retirement on the Horizon
As we approach retirement, we’re excited about the new possibilities it will bring. We’re looking forward to exploring different investment options, like increasing our REIT holdings, which we can’t do through our current 401(k) plans.
The journey to FIRE has been transformative, teaching us valuable lessons about money, lifestyle, and what truly matters to us. While we’re eagerly anticipating this next chapter, we’re also trying to savor these final years of our working lives.
Everyone’s path to financial independence is unique. Our story is just one example of how it can be done. The most important thing is to start, stay consistent, and adjust your strategy as your life and goals evolve.
