If you think money is the goal of us FI bloggers, you’d be wrong. Well, I concede that there may be some of us who have a shallow goal, like accumulating a certain amount of money in a certain amount of days.
***looks in mirror, shakes head, sighs***
On the surface, money is the goal. But deep down, living right is really what we’re trying to accomplish.
And Ms. Montana is someone who knows how to live, so I asked her to guest post. She did and included all kinds of wonderful one-liners like this:
We are people who’s life is bigger than their 9-5 job.
Or how about this:
I think that low expenses is the jet fuel to custom design your life.
I like these two as well:
Low expenses give you a lot of options
We are in our 30’s and while not really “early retirees” we are Work Optional
Time to turn the show over to Ms. Montana!
Living Right with Montana Money Adventures
Last year my husband and I took a year off of work. Even though it was our 4th time taking a work gap to pursue big dreams and goals, we got a lot of questions. (Well, really 2 questions, over and over again!)
1. Who does that??!!
2. How can you afford to do that?
Life is More than Work
Maybe it freaked people out because we have 5 little kids? Maybe it’s the fact we have never been high income earners? Maybe it’s because we own a 4 bedroom home and minivan and just seem so… normal? But the answer is rather straightforward: We are people who’s life is bigger than their 9-5 job. Those of us with awesome families. Passions. Goals and dreams. We want things on our highlight reel that can’t fit into an occasional 4 day weekend. We want epic road trips with friends. We want to travel overseas. We want to build or renovate a home. We want to launch a new business. And life is short. So we took a year off. We did all sorts of things we just wouldn’t have been able to do any other way.
Work can be amazing. But so are other things. Big things that don’t fit into 4 day weekends and 2 week vacations.
- Hiking the Pacific Crest Trail
- Biking across Croatia
- Building a home
- Launching a business
- Writing a book
- RV’ing across the US with your kids for a year
- Visiting every national park
- Starting a non-profit animal shelter
- Test owning a food truck
And the Money Part
But back to the other question…
How can you afford to do that?
That is actually rather simple. I can boil the whole thing down to 6 steps. If you want to do a 6 week trip or take a full year, it’s the same 6 steps. I have a handy (and FREE) PDF if you want to grab a copy. I outlined the whole process step by step to help people figure out the dollar and cents of it. Because Mr. 1500 and I share a love of real estate, I wanted to share how that has factored into us creating more financial freedom. And what is possible using just 2 of the steps (step 4 and step 6).
Step 4: A Little Passive Income Goes a LONG Way….
Before completely renovating our home, we had never owned a home before. Meaning, we had zilch for renovation experience. So we watched a LOT of YouTube instructional videos. Because we handled most of the renovation ourselves, we had little cash left, and were able to buy our first rental property 6 months later. Which meant more renovation. More nights and weekends. 18 month after that, we used the rental income from our first rental to help buy our 3rd property. Those choices paid off. We don’t have a mortgage and we bring in $1,000 a month in passive income.
Not many places offer pensions these days, but the military is one notable exception (for now). Mr. Montana was able to walk away with a military pension of $1,450 a month. For most people retiring from the military, that means finding another job ASAP. $1450 a month is a nice benefit, but does not a comfortable retirement make for the average soldier.
Our investments sit at about $180,000. So with a 4% withdrawal we could pull about $600 a month. I consider this a backup plan, because I would love to see them grow for the next 10 years.
Passive income: $2450 in pocket or $3050 with investments
Step 6: Power of Low Expenses
We rented for the first 10 years we were married. After an awful lot of saving, we paid cash for our very first home! It was a fixer upper to be sure! But that meant we have never had a mortgage payment. Shortly after we married we paid off our $35,000 in student loans. $10,000+ in credit card debt and $10,000 in hospital bills.
I think that low expenses is the jet fuel to custom design your life.
Our fixed expenses are under $650 a month (property tax, home insurance, life insurance, dental, car insurance, cell phones, utilities, internet, gym, etc.). In 2016, during our year off, our spending for the year landed right at $30,000 for our family of 7 or $2,500 per month. And that is with the cost of having a baby, a 6 week road trip, building out our master bath, replacing our upright freezer, dental work, major car repair, you know…normal life.
Low expenses give you a lot of options. If you want to take a year off, frequently sprinkle in mini-retirements, take a year of two to build a new business or even go full-blown early retired: low expenses will be the key to making that happen sooner rather than later. As you can pay down each debt, cut out unneeded expenses and reduce others, not only will it give you more financial freedom but also open up more cash to spend on things you really do care about.
Our monthly expenses are $2,500. Rental income plus pension= $2,450 or $3,050 including investment income. We also saved up $50,000 in cash sitting in our checking account to buffer the gap. Even if we don’t earn another dollar, we could easily take off 5-10 years before we would need to tap our investments.
Incredible Outcomes from Minimal Inputs
You know what I love about our story? All the elements are rather unimpressive, but the outcome has been life changing. We never earned high incomes (our combined income averaged between $30k-$70k a year.) We started with a ton of debt. Our expenses are low, but we have a big family, so not crazy low. Our rental income is moderate. Our pension on the small side. Our investments paltry ($180k). But the outcome is amazing. We are in our 30’s and while not really “early retirees” we are Work Optional . As in, we don’t do work that sucks anymore. We don’t worry about paying our bills. We can take as much time off as we want or need, from a few months to a few years at a time. We only take on projects that we are legit excited about whether they pay or not. We might never work the 9-5 again (it would have to be a seriously amazing gig!).
Buying fixer uppers and learning to do the renovations has been the key factor for us. It means we don’t pay the average rent or mortgage for our area ($1,100 a month), plus it puts $1,000 in our pocket. We could have just as easily bought a nicer home for our first home and used the cash we had saved as a down payment with none left over to buy rentals (actually that would have been MUCH easier!). But we wanted something different. We wanted financial freedom.
Every season of life brings different opportunities, and sometimes if we are just keeping our head down to push through, they will pass us by. By following these 6 steps, we can create the financial freedom to lean into each season of our lives. Mr. Montana and I have worked these 6 steps over and over during the last 15 years. It’s allowed us to travel through 27 countries, live abroad, adopt 4 kids, pay cash for our house, travel the US a few times over, and custom create a lifestyle that fit us and can flex each year as our needs change.
We had planned to just take a year off this time, then dutifully head back to the 9-5. But…. honestly, we just have too much going on. We are traveling more, gardening more, spending more time with our kids. I’m writing more for my site and a really cool start-up company. Mr. Montana is taking welding and electrical classes at the community college, and doing more renovations on our properties. I’m coaching and mentoring people on creating more financial freedom and custom-creating their ideal lifestyle (is there anything more fun than talking with people about their money and dreams? I think not.) We are hiking more, at the lake more, camping more, drinking more coffee, and I get to speak (for free!) to awesome organizations at lot more. All because of a little passive income + low expenses. I’m not going to say it was easy, but it was rather simple. If you are looking for an extended vacation, year off, flexible lifestyle or early retirement, these two steps will take you 80% of the way there.
Thanks you Ms. Montana for you words of wisdom!
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