My first year of working on early retirement: how is it going?

It has now been almost exactly a year since I discovered the early retirement community on the internet when I was immediately hooked.

I found that early retirement was the next logical step to pursue, for a minimalist who seldomly has found a job that he truly enjoyed.

Early retirement is not something I aim for because I dream about laying on the couch all day. It is something I fantasize about because there are many things I want to do in life, that won’t necessarily earn me any money, and so I just need a lot of time.

If there is anything you want to accomplish in life, you must track your own progress, in order to stay on course and fully optimize for success.

So as you might have read about in an earlier post , I keep track of my overall progress in a spreadsheet, on how far I have come in my journey to financial independence.

The basic idea is that I calculate how much of monthly expenses can be covered by the passive income I generate, and so I can either cut back on expenses or generate more passive income to make progress on this goal.

Currently, I only have 2 passive sources of income:

  1. I put aside money every month, and invest them in either stocks, mutual funds or index funds. The basic assumption in almost all early retirement plans is that you should be able to withdraw 4% of your total investment every year and still leave room for continual growth of your nest egg.
  2. Income from this and other blogs, which is comprised of Google Adsense ads and Amazon affiliate links.

At the moment, the majority of my passive income stems from the investments, but as I see and up-trending tendency in my blog income, I hope this might not be the case within the next few years.

 

Getting to the point

So as you can see in the graph below, I have been able to generate enough passive income recently, that it corresponds to about 7% of my total expenses.

skaermbillede-2017-01-10-kl-07-25-55

(The only setback that is visible in the graph, is explained by me cashing out some of my investments, in preparation for quitting my job in the fall of 2016)

This might not seem like a lot, but then again, this actually means that I am retired 2 days out of every month, which is a little uplifting to think about ?

Where do we go from here

It is important to understand, that I don’t actually take these 2 days off every month, and I don’t withdraw the 4% from the investments every year (yet), which means all of my passive income gets reinvested.

This way, I should see even faster and faster progress every month from here on out, which should result in a more exponentially shaped continuation of the graph above – especially if stock prices keeps going up.

One of my goals for 2017 is to make that graph reach 20% by December, and I will, of course, keep you updated on whether I reach this goal or not.

This first year of working on this goal has made me optimistic about the possibility of reaching retirement within 10 years (max) from when I began, which means I should be able to leave the rat race once I get to the age of 37. Let’s see 🙂

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Max Micheelsen

I'm a simplifier, Love efficiency in all forms, Beleive in a slow lifestyle, enabled via smart solutions

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