Defining financial independence – for me

Defining financial independence…for me.

There are a ton of blogs that will define FI for you. Below is my formula for FI.  This might work for you…it might not. Everyone and every family is different. That’s ok.

Variable definition:

CI = Corporate Income. Monthly income from the job I do. My primary income source.

FIN = Financial Independence Number. The amount of monthly income I need to be financially independent.

II = Independent Income. Total monthly income from everything exceptCI

NCI = Non corporate income. This can be side jobs, a side gig, whatever. Stuff I or my wife or my kids work on outside of my real job I do  that brings us income.

PI = Passive income. Monthly income I receive from investments. Examples of investments include dividends, rental income, income from a website,  etc. Not that I have all of these right now.

E = Expenses. The stuff that costs my family money every month. How much we need to live.

EFI = Expenses of Financial Independence. These are extra monthly expenses I will have if I ever decide to quit my job. This includes things like insurance..

M = Margin. This is the multiplier on my expenses that I want to have covered by Independent Income.

Formulas:

II = NCI + PI

FIN = E + EFI + (E + EFI) x M

My formula for determining when I am FI (note: this is not when I quit my job, but when I am eligible to quit my job because I am FI)

NCI + PI > E + EFI + (E + EFI) x M

Real life example:

I don’t have a great grip on my monthly expenses, but I am starting to track them to get an accurate view of my month over month expenses.

I think they are around $3200. That’s E.

If I quit my job I have to pay independent health insurance of around $1200 for my family. That’s EFI.

I’m comfortable with a 20% cushion. That’s M

As of 9/25, my FIN is $5280. Calculation: $3200 + $1200 + ($3200 + $1200) x .2

My wife Beth and my boys earned $120 in dog sitting in September. That’s NCI.

We earned $0 other income. That’s PI.

As of 9/25, my II for September is $120.

$120 is not greater than $5280, so I am not financially independent. That’s ok. The goal is to be FI by September 25, 2019.

Tony

 

Writing style and personality

I’m not a great author.

I don’t come up with pithy, engaging quips to draw you in.

I’m raw.

I tell the truth.

I’m boring.

My hypothesis  is that the key to becoming financially independent is creating a plan and doing the same thing over and over for a long time. Tweaking as you go, of course, but minor tweaks.

We’ll see.

Hopefully this journey will help someone else.

Why do I want to be financially independent?

Time.

Ways to earn consistent, residual, passive income

Consistent, predictable residual income sources:

  1. Rental property
  2. Dividends
  3. Interest
  4. Licensing fees (websites, insurance premiums, etc)
  5. Network marketing

What else?

Hello, my name is…

tonybeth

What? My name is…what…my name is…slim shady.

Ok, not really. My name is Tony and that’s my wife Beth.

We live in Woodstock Ga – a suburb about 35 miles north of Atlanta. We drive two cars, own a house in a neighborhood with an HOA, have two sons – Ryan and Adam. Ryan is 10 and Adam is 7 as of the date of this post. I work a full time job as a technology consultant. Beth stays home. We attend a local church. Ryan and Adam play tennis and are in scouts.

That’s our life.

And it’s great. I am blessed. My family is blessed. We really want for nothing.

Except time.

Probably like you.

That’s what this blog is about. I want to escape from the need to work a full time job for someone else. That’s called financial independence. I want to be able to go on a mountain bike ride at 10am on a Tuesday or take my kids hiking on a Thursday after school and not have to worry how it affects my career or my family’s future financial position.

What I promise is brutal transparency as we go through the journey. Hopefully there will be something you find useful.

I don’t promise anything substantial or mind blowing.

I do promise to share everything openly and be open to differing opinions and changing direction.

The goal: Financial Independence. Time.

 

 

 

 

Starting out

Today is the starting point.

November 3, 2014.