When I talk to people about my current hiking plans they sometimes reply, “It must be nice.” The implication is that I’m lucky to be able to go on a six-month hike. Undoubtedly, I am lucky to be physically and financially able to go on this hike. It isn’t all luck though. Being financially able to take this hike is a result of years of living frugally and saving money. I’ve also avoided debts or other obligations that would keep me from hiking. Too many people think that reaching a goal like this is just luck and is out of their control. If someone wants to take a hike they can do the same things I did. They may decide that the trade-offs aren’t worth it for them but they should realize that they can achieve this goal – it isn’t just luck.
My March investment income had a nice rise to $58.12 from $51.69 the month before. This was due to my stock portfolio rebounding nicely and allocating a little more of my savings to my emergency fund. The total would have been even better if the mutual fund in my Roth IRA would have participated in the March market rebound. Somehow this mutual fund managed to barely go up in value despite the rise in the stock market. I guess I should be happy it didn’t lose money like it has mostly been doing the past few months.
Disclaimer:This is not my actual investment income. To get this figure I first add up my retirement accounts, emergency fund, and any other money I consider permanent savings. What the total of my savings would earn at 6% interest for a month is my monthly investment income
Last month was not a good month for my retirement savings. I lost about $1000 in my Roth IRA which was a significant amount considering I only had $5500 in there. I managed to increase my monthly income but only because I added $3000 to my savings last month. Increasing my monthly investment income from $32.01 to $41.34 was good though. Unfortunately I won’t be able to add a large amount to my retirement savings until sometime next year. I’m rethinking my investment strategy for retirement and I’ll share that strategy in a post later today.
Disclaimer:This is not my actual investment income. To get this figure I first add up my retirement accounts, emergency fund, and any other money I consider permanent savings. What the total of my savings would earn at 6% interest for a month is my monthly investment income.
Judging from the response I got to my post “How Much Should You Save for Retirement?“, people are really interested in the subject of my retirement. In that post I mentioned my desire to retire at 50 and that I had some ideas on how to do that. I do need to make a plan in order to reach this goal.
When I was in my early 20’s I read a book titled How to Retire at 35. I decided that would be a good goal. I didn’t make much money then so my plan was to start saving big money as soon as I had a good-paying job. Of course, once I had a good-paying job I forgot all about my idea of retiring at 35 and spent money like crazy. When I turned 30 I made a goal of retiring at 40. That goal obviously didn’t happen either. The problem was I didn’t really have a plan and I kept getting sidetracked and putting other things ahead of saving for retirement. Whenever I saved a little money I’d go off on some adventure and then be broke again. I did have fun on my adventures but if I had just been disciplined I could be having adventures all the time now.
This time I’m going to do things differently. I’m already better off than before because I’ve already gotten in the habit of saving for retirement. This time I’m going to keep retirement as a priority. My goal is to have $1000 a month to live on at age 50. If I retired today I’d only have $34.87 a month to live on. That is a very large gap but it isn’t as bad as it looks. That is based on just living off the interest from my savings. Based on just living on the interest, at 6% I would need to have $200,000 saved. Since I have about $6000 saved now I’d need to save about $1200 a month to meet that goal if my savings had an 8% return. That seems like a large amount considering I don’t make that much total right now. After I finish school though that should be a reasonable amount and in the meantime I’m saving all I can afford.
My goal of living on $1000 a month might seem far-fetched to some but I’m confident that it is reasonable. I’ve lived long enough to see the effects of inflation but unless we have really high inflation the next nine years I don’t think it will be much of a factor. I live on about a $1000 a month now and I could live on considerably less. One way I could cut my cost of living would be to live in a van. I’ve already posted about that and I believe it is a feasible option and one that I would enjoy. Another way to cut my living expenses would be to live in a foreign country. I lived in Guatemala for 3 months on $450 and had a great time. The cost would be a little more now but it would still be dirt cheap. A third option would be to spend half the year hiking a long trail such as the Appalachian Trail. I’ve hiked about half the AT and I think with some planning I could hike the trail on a budget of $200-$300 a month. Those are just the ways I came up with off the top of my head on how to drastically cut my living expenses, I’m sure there are many more.
That is my plan for now. It might undergo some changes before I turn 50 but I’m going to keep my focus on the goal.
My August investment income rose to $34.87 from $29.44 the month before. This was due to a large contribution to my Roth IRA. It looks like a lot of that gain will be given back this month. I probably won’t contribute much to my Roth this month since I’m not certain of my future income right now.
Disclaimer:This is not my actual investment income. To get this figure I first add up my retirement accounts, emergency fund, and any other money I consider permanent savings. What the total of my savings would earn at 6% interest for a month is my monthly investment income.
