My financial goals have several time frames. The long-term goal is to be financially independent which means I will have a passive income stream each month greater than my monthly expenses. I have chosen December 31, 2027, (sixteen years) as my completion date.
Will I achieve it by then? I don’t know. Probably not…but I decided I may as well put it out there and try! If I am 80% of the way there by my target date, I will be very happy!
To achieve this goal, I have several underlying goals which are:
1. Finish my 12-month emergency fund of $20,000 by July 31, 2011. I have been working on this goal for awhile now so I already have $16,000 saved. Since I have several extra income sources this summer, saving $4,000 by then seems realistic.
2. Buy 5-6 duplexes, triplexes and/or 4-plexes and pay off the mortgages on each one by December 31, 2026. These properties will provide me with the passive income I need each month to allow me to retire early from full-time employment.
a. Save a 20% down payment for my first property by June 30, 2012. This property will probably be a duplex in which I will live in one unit and rent out the other. I am anticipating the amount will be $30,000 - $40,000. I plan to use a 15-year fixed rate mortgage to purchase the property.
b. Pay off the mortgage on the first property by December 31, 2016. This will require me to divert every available dollar I have towards paying the mortgage off early.
c. Save a 20% down payment for my second property by June 30, 2017. The actual dollar amount will depend on what real estate prices are at that time.
d. Pay off the mortgage on the second property by December 31, 2020. I will live in one unit of the second property and use income from both properties to pay this property off sooner than the first.
e. Purchase up to four additional properties with cash by December 31, 2026. The more properties I own mortgage-free, the faster I can accrue the cash to pay for the next one.
f. Establish funds for each property which will cover approximately 6 months worth of expenses by December 31, 2027. This may be $6,000-$8,000 per property.
In addition to these lofty goals, I would also like to travel a bit between now and 2027. I am estimating I will need a total of $10,000 to do this. My completion dates will vary depending on when I actually travel, but I will save up the cash before I go on any particular trip.
Writing down each goal, estimating dollar figures, and determining completion dates makes the magnitude of my main goal of financial independence seem nearly insurmountable! To say that I feel overwhelmed right now would be an understatement! This is going to take a tremendous amount of money and dedication on my part over a long period of time, but I also believe it will be worth it. Either way, the time is going to pass. I may as well have something to show for it when it’s over! Furthermore, who knows what opportunities might arise which could speed up the process?
Alright, now that I have completed step one in the financial planning process (check!), I will move on to step two which is to evaluate my current financial situation; however, seeing that this post is already a bit lengthy, I will postpone this discussion until next time. Stay tuned!
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