Progress to Financial Independence- May 2016

May was an awesome month for multiple reasons. Whitney and I were offered an extension to our current contracts for an additional nine weeks, which means that we will be able to spend the summer in the northeast like we planned! We took several weekend trips including: Boston, NYC, Maine/New Hampshire, and Cape Cod. Most of these trips were mostly free using credit card rewards which we will write about soon. Even with credit card points, traveling to see new things every weekend can be pretty costly from gas and eating out alone. Although I am trying to save as much as possible for financial independence, I am not willing to sacrifice taking advantage of all the northeast has to offer while we are here. Celebrating Whitney’s birthday in NYC while staying at the Plaza Hotel was amazing and worth the extra expense.

This past weekend we also finalized our plans for a trip to Jamaica in September and paid for our plane tickets and hotel stays, also with points. With all of this travel and future vacation plans, I was expecting that I may fall behind in my savings, but to my surprise that was not the case. This is likely in part due to a surge in stock prices, and subsequently my investment portfolio, in the days leading up to Memorial Day weekend. That boost was very helpful but I would have most likely still reached my target without it.

In any case, my savings grew and is now able to sustain my annual spending rate for almost five years without accounting for any investment growth! This excites me but is still no where close to my ultimate goal of 25 times my annual expenses. Despite overshooting on my savings goal this month, my calculations still put at reaching this goal in September, 2020.

Path to 4% May 2016

We will likely only have one or two more weekend trips planned before leaving the northeast in the middle of August which should benefit my savings rate significantly. I’m hoping to overshoot my goal again in June but it will be more difficult as we are going to be moving to a new campground with higher expenses in the middle of the month.

Only time will tell how the future will play out. I’ll check back in at the end of June! How are you guys progressing toward your financial goals?

Our Experience with Finding Travel Jobs

Arguably the two worst parts of being a travel physical therapist include: finding new jobs and applying for PT licenses in new states. Many other travelers would likely include finding housing on that list, but that has not been much of a hassle for us to this point due to choosing to live and travel in a fifth wheel camper. We do still have some difficulty finding campgrounds that will accept monthly renters, but since this is much more common than finding an apartment for three months, it usually isn’t so bad. I will be writing a post soon about our experience with finding and living at campgrounds.

We dread having to constantly look for new jobs and do several phone interviews every few months, but a good recruiter makes that much easier. For a single traveler, finding a job would not be very difficult, and it would be more about finding the best fit. But for us, we are limited in our selection due to having to find two jobs within driving distance of each other, as well as within driving distance of a campground. Whitney and I have both interviewed for jobs that sounded great but we ultimately had to turn down because there were no other openings close by for the other. There are two ways that we have done our best to combat the difficulty finding two jobs near each other. those include: being flexible on the state that we choose and being flexible in the settings that we will accept jobs in. This is why I have made a general outline of our travel plan but have some wiggle room as the exact state and setting.

An good example of being flexible on the state that we choose involves our current contracts. We decided that we would like to see the northeastern United States in the spring/summer. We heard amazing things about how beautiful Maine is this time of year and began looking for jobs there. Unfortunately, Maine had a grand total of six travel jobs available when we began looking, and four of those jobs were home health, which we are not comfortable accepting at this point in our careers. We were really set on going to Maine, but it just wasn’t feasible. Instead we began looking at the jobs available in all of the surrounding states, and to our surprise, Massachusetts had a total of over 45 jobs available, with nine of those being outpatient! Massachusetts is well within “weekend trip” distance from Maine, so we could take jobs there and still explore Maine where we wanted to be originally. We easily found two outpatient jobs in Massachusetts (in the same clinic) and actually had other offers as well.

Although Massachusetts started out as not being our first choice, we are now really glad that we took jobs here. We have been able to take trips to: Cape Cod, Boston, Plymouth, New York City, New Hampshire, and Maine so far in the past nine weeks here. That would have been much more difficult from Maine since it is not as centrally located as Massachusetts. Since this is partially a finance blog, I also want to mention that most of the expenses from these trips (including staying in 5-star hotels) were afforded using credit card sign-up bonuses!

Being lenient on setting has allowed us to keep from having large gaps between jobs. For my first travel job, I accepted a contract at a small hospital in Virginia working in acute care and skilled nursing. I was extremely nervous about this decision since I had never worked in either of these settings before. The reason I accepted this job was because Whitney interviewed for a SNF job nearby that she really liked and decided to accept. The hospital job was one of my only options at that point since we were locked into that particular location. Although I was very hesitant to accept that job, I ended up really enjoying it and actually stayed for nine months (eventually moving to the outpatient department) while Whitney did not like her assignment and left after three months. This was ironic due to the fact that she got her first choice while I had to take what was available nearby. Since I enjoyed my assignment so much and decided to stay, Whitney was then forced into a situation where she had to compromise and move to another SNF that was not ideal, but was about 45 minutes from the clinic where I was working.

So far neither Whitney nor I have had to take a single unpaid day off of work because of not being able to find a contract. Many other travelers choose to take a week or two off of work between contracts for vacation or to move to a new location, but we have chosen not to do this so that we can reach our financial independence goals sooner. That being said, obviously it is not just all work and no play for us. In addition to all of the weekend trips mentioned above, we are also planning a trip to Jamaica in August or September (also almost all free from credit card sign-up bonuses). I think that one week of vacation every year is ideal while trying to accumulate as much wealth as possible since when don’t have the luxury of paid vacation days.

As for applying for new licenses as mentioned above, there is not much way around this inconvenience. Each state is different, but there is almost always some guaranteed hassle involved. One positive in the process is that most, if not all, travel companies will reimburse for license expenses once you start a contract in the new state. For us in Massachusetts, that meant a $318 reimbursement from our travel company, so it was just the paperwork and time that we lost on filling it all out.

Even though finding new jobs so often can be a hassle, it is far surpassed  by the benefits of increased pay, exploring the country, and adventure. We plan to continue along this path for at least another four years to see the country and get closer to financial independence. Thanks for reading and let me know if you have any questions in the comments below!

Travel PT Plan for the Next Four Years

Whitney and I have been discussing our plans for future travel assignments over the past couple of weeks. We have several areas throughout the country that we would like to explore, but we know that our options will be limited by the fact that we are both trying to find outpatient physical therapy jobs. We will be further limited by the fact that it will be in our best interest to avoid extreme climates while living in the camper (very cold temperatures are not fun as we found out this past January, and I imagine very hot would be just as bad). We also want to minimize the distance between assignments so that we can make the trip in a weekend and avoid taking extra unpaid time off of work if at all possible. Less importantly, we would like to try to visit all 50 states before we finish traveling. Cost of living in different areas of the country is also a factor that we (mostly I) like to consider, but in the grand scheme of things is not very important. I try to value experience more than finances, even though I forget that occasionally. I decided to try to sit down and make a rough outline of our plan based on all of these things. Here’s what we have so far:

  • Massachusetts then Virginia: Now-September 2016
  • Georgia or Florida: September/October 2016-April 2017
  • Michigan, Wisconsin, or Minnesota: April 2017-September 2017
  • Texas, New Mexico, or Arizona: September 2017 -April 2018
  • Montana, Wyoming, or Idaho: April 2018 -September 2018
  • Arizona, Southern California: September 2018-April 2019
  • Washington or Oregon: April 2019 -September 2019
  • Arizona,Southern CA, or Hawaii: September 2019 -April 2020
  • Alaska, Washington, or Oregon: April 2020-September 2020

This list is purposefully vague due to the fact that ultimately where we go will depend on job availability in the states at that time. We will have to be as flexible on location as possible in order to accommodate our needs for outpatient jobs and two jobs within driving distance of each other. So far we have gotten pretty lucky with our assignments, but we realize that at some point we both may have to take jobs in settings that we are less comfortable in. Whitney worked in a skilled nursing facility for about six months while we were in Virginia which was not her first choice. We are both open to this if need be due to the fact that we know that this will broaden our knowledge base and experiences and ultimately lead to being better physical therapists overall.

You may notice that I have done my best to plan to go to warm climates in the winter and cold climates in the summer. This is probably the most important factor for us, so we are going to base everything else off of that.

You may also notice that our end date coincides with the date that is projected to be when I reach financial independence based on my recent estimates. Believe it or not, this was not planned. We have intended to travel for five years since we graduated, but only recently did I really decide that I wanted to aggressively pursue financial independence. It happens to work out very nicely since this should be a transition in my life anyway. Although Whitney isn’t as focused on achieving FI as I am, she will undoubtedly be in a very good financial situation at that point as well and will have a wide array of options in how she wants to continue her career. It’s also at that point that kids may be an option (I’ll be almost 32, Whitney will be 30). But we’ll see  where I’m at then- I’m skeptical since I can still barely take care of myself, ha.

We are very excited to make our way across the country and see what the future has in store for us. So far we have only taken assignments in Virginia and Massachusetts and we will be coming up on one year of traveling in June. Still a lot of ground to cover, especially if we want to try to see all 50 states. We have already been able to see so many cool things while being in the Northeast; it’s hard to imagine all that the rest of the country has to offer. Part of our interest in travel was to determine where in the country that we want to settle down and spend our lives. We are strongly biased toward Virginia since both of our families are there, but we are also both open to change.

What do you think of our plan? Is there an area in the country that you would recommend? Thanks for reading!

Travel PT: Getting Our Feet Wet

-by Whitney-

Jared and I are both from Roanoke, Virginia, which is the largest city in the southwest region of Virginia. I went to PT school in Norfolk, Virginia at Old Dominion University (near Virginia Beach), and Jared went to school at Radford University, whose PT school is located right in our hometown of Roanoke. We both graduated on the same day at our different schools in May of 2015. We wanted to start traveling immediately after graduation (well, right after our graduation vacation– a cruise to the Bahamas). We chose to start our Travel PT journey relatively locally to “get our feet wet.” This gave us an opportunity to decide if it was really what we wanted to do, be close to family/friends over the summer while there were weddings to attend, and save up money while planning to buy our RV. Also it was just a lot more convenient to get started ASAP in Virginia, because we both already had our Virginia PT licenses, and we wouldn’t have to deal with big start-up costs by moving across the country (at this time, we really didn’t have a lot of money saved, since we were fresh out of school without income).

Starting out, we realized how tough it was going to be to find two travel PT jobs in the same area, with the same start date,  where there was going to be housing, and also where they would accept New Grads. So we weren’t picky at all about the setting or the part of Virginia we were going to be in. We initially both had several phone interviews with different SNFs (Skilled Nursing Facilities, aka nursing homes) throughout Virginia, mostly located in rural areas. These are very abundant in any state. Quite often, however, the SNFs will have lots of PTAs (Physical Therapist Assistants) and 1 or no PTs. So, we found out from our phone interviews that at many of the SNFs, the one of us who would be taking the job would be the only PT at that location. We decided that for our first job, we definitely didn’t want to go somewhere that one of us would be the only PT. So this was where we had to be firm and turn down these offers. My first pretty good offer was in Charlottesville, Virginia at a very nice retirement community, but I had to turn it down because there was no job available in that area for Jared. Then, I got an offer at a large retirement community in Blacksburg, Virginia (home of Virginia Tech), which is just ~45 minutes from home (more later regarding travel rules and proximity to home). My phone interview went really well, and we were getting pretty antsy to start at this point, so I went ahead and accepted this job offer despite the fact that Jared didn’t have a job yet. This was a tricky time for us as we were scrambling to find Jared a job in the same area. Jared had a couple offers at local SNFs, one of which he turned down because he had heard bad things about that facility (one pro, or con possibly, about this being an area relatively close to home for us). Finally Jared received a job offer at a facility in Pulaski, Virginia which is a very small town even further into Southwest VA than Roanoke and Blacksburg. At first Jared wasn’t even going to consider this job, because it was “Acute Care” (hospital), where Jared had no prior experience. However, the manager convinced him that this hospital was very small and more like a SNF than a true acute care environment. Jared took a leap of faith and decided to take this job because it was really getting down to the wire for us.

So, we both had jobs, me in Blacksburg, and Jared in Pulaski. Now it was time to find housing. This was the one and only time we had to find housing this way, and it really was stressful trying to find a place to rent that was relatively “in the middle” of the two jobs which were located about 45 mins apart. In fact, we really started looking at the housing before we even accepted any jobs, because with there being two of us, we didn’t want to accept a job if there was no chance of finding somewhere to live in the middle. We figured there were a few decent sized towns in between these two jobs, so we were hopeful of finding housing. However, it was particularly difficult to try to find somewhere that would rent for 3 months (the duration of our contracts), especially because the area in the middle was a college town. Nobody wanted to rent for less than 6 months or a year. Also, we had the difficulty of choosing between somewhere that was furnished vs. unfurnished. Most of the furnished ones were either sublets from college students, that usually didn’t line up with the dates we needed, or were in a house full of other college students (not ideal). The furnished ones were usually a furnished bedroom in someone’s house (also not ideal for 2 of us). If we had found somewhere unfurnished, we would’ve had to move furniture in (for just the 3 month period), setup our own utilities, etc. Another option that we looked into was an extended stay motel, which was furnished, but was $1200 a month which was pretty pricey for the small accommodations and in a rural area (I can’t imagine the prices for an extended stay in a city). Finally, as we were scouring Craigslist, we lucked into a furnished, 1 bedroom, above-garage apartment with its own private bathroom, located on the property of someone’s large home/farm, which was only $700/month and offered month-to-month stays. This was the perfect option for us and just happened to work out. Fortunately too with the month-to-month, this gave us the flexibility to stay longer if we wanted to extend our contracts at our jobs (more on this later).

This was our initial experience with finding our first travel PT jobs and setting up housing. Stay tuned for the next post about our experiences at our first jobs.

The Simple Way to Determine Your Retirement Date

Early retirement and financial independence sound pretty amazing, right? Stop working full time and pursue other interests, spend more time with family, travel to new places, or just continue working while having the peace of mind to know that you can stop whenever you want. What’s not to like? At this point, you may be wondering how long it would take you to achieve this kind of freedom. Before you can set a goal date, it is important to know how much you will need to officially announce that you are financially independent. The answer to that question may seem complex to figure out, but it’s really pretty simple. This is due to what is known as the “four percent rule.” Basically the four percent rule states that if you have your money in a well diversified portfolio going into “retirement,” you will be able to withdraw four percent of your beginning investment each year without ever running out of money. The calculations that were used to determine this rule are based on historic stock and bond returns. For example, you will need $1,000,000 invested in a well diversified portfolio in order to withdraw $40,000 per year for the rest of your life without ending up in the poor house.

This is somewhat of a worst-case scenario though. Considering the average market return of 7-9% per year over long periods of time, four percent may seem pretty low to you. You’re right, it is low. It is much more likely that you could withdraw a significant amount more than four percent each year and still be fine, but better safe than sorry when your financial future is at stake. I don’t know about you, but I would much rather overestimate and have too much money at the end of my life than to underestimate and end up eating cat food for my last few years on earth.

Figuring out how much money you will need in order to live off of four percent can lead to difficult calculations for some. But, never fear, we have the power of elementary school math to help us out. Working backwards, you can determine how much your current yearly expenses are, and then multiply that number by 25. As with the previous example, if you add up your expenses and determine that you will need $40,000 per year to maintain the lifestyle that you wish to have, $40,000 x 25 = you guessed it, one million dollars (please imagine me saying this in a Dr. Evil voice).

In order to determine what your yearly expenses will be in retirement, you will need to make some educated guesses. Will you be spending less money on gas when you don’t have to drive to work each day, or will your gas bill increase because you plan on driving around the country several times? Will you be living in the same house for the rest of your life, or is it likely that you will upgrade or downgrade? Will your health insurance costs increase after you retire? Will you  be spending your extra time cooking more meals at home or will you go out to dinner more often? Only you are able to answer these questions for yourself, but I would suggest being conservative on the estimates.

There has been some criticism of the four percent rule for early retirees because it is usually based on a “normal” length retirement, not fifty or more years that are possible with early retirement. For my situation, I do not believe that this will be a concern. My reasoning for this is that I plan to continue to “work” on something for the rest of my life. It is highly likely that I will be able to monetize one or more of the hobbies that I pursue in the future. Even if this turns out to not be the case, I will have no problem working part time at any number of jobs to earn a little additional money if needed. It would take only a very minimal amount of income to supplement the returns from my investment portfolio, if any at all. In addition, I enjoy earning cashback and achieving now sign up bonuses on credit cards. It is very unlikely that these things will change in the future, and this will lead to some additional income (or at least reduced travel expenses) as well. I will feel completely comfortable declaring myself financially independent when I reach my target number based on the four percent rule.

So now that you have the actual amount that you will need in order to live off of (i.e. the $1,000,000.00 from the previous example), you can use a compound interest calculator to determine when you will be able to get to that number. The calculator is very easy to use and lets you choose all of the factors on which you choose to base your calculations. I use a conservative yearly savings amount as well as a 5% expected rate of return just to be safe.

Based on all of my projections, I am well on my way to being financially independent before my 33rd birthday. This would make my “working career” only about six years total, but again, I will likely continue to do some kind of “work” for the rest of my life. The difference being that it will just be exactly what I choose to do at that time. Do you have an estimate of when you will be financially independent? Do you believe that the four percent rule is sufficient or are you planning to have a bigger safety net? Do you enjoy living on the edge and/or love the taste of cat food, and choose to retire earlier? I’d love to hear other thoughts on the topic. Thanks for reading!

Camper Life

*Scroll to the bottom for more pictures*

-by Whitney-

Let me start by saying that I, nor Jared, would have ever imagined that we would be living in a camper. Neither of us are even “camping” people. I’ve been camping once in my life, and Jared just a few times. Sleeping outdoors in a tent isn’t really my idea of a good time, so traditional camping wasn’t for me. However, as many of you know, “camping” with an RV vs. a tent is like night and day. But I digress. Not only did we have zero experience with camping/RVs/campers, we were also not in any way drawn to the tiny house movement (at the time). That is not at all what started this. It was just business. We thought: travel PT is the way to go for us. Travel the country, have great experiences, make more money. Done. But when we started looking at the logistics of packing and moving all the time, we got a bit skeptical. It was a patient of mine at an internship that first gave us the idea. He said he and his wife traveled the country in an RV, and they had met many travel nurses who also traveled by RV. At first I thought, hmm that’s interesting, but I could never do that.  No way. Then we started thinking more and more about it, and realized there really wasn’t going to be another way. We both hate packing. I pack way, way… way too much. We both hate moving. Moving furniture? Forget about it. So, there we were, we were going  to get an RV.

We decided during our 3rd year of PT school that buying a camper was definitely going to be our plan. So we started looking, searching Craigslist, going to dealerships, going to RV shows, searching We learned about all the different types of RVs. We had to choose whether we would get a motorhome (that you drive) or a travel trailer (that you pull with a truck). We chose the latter. There are definitely pros and cons to both. One con is that now we have a truck that is one of our main vehicles we drive to work (Jared drives the truck, I drive my Trailblazer SUV). The truck is definitely costly on fuel (it’s a diesel). However, our biggest concern with having a motorhome was if we had to have maintenance on the engine or transmission, first it would be costly, second how would we put our whole home in the shop if it needed fixing? Overall it just seemed more complicated, so we picked the truck + trailer option.

A lot went in to picking the right travel trailer that fit our needs. After searching hundreds, maybe thousands, of them, we started to compile a list of things we liked and didn’t like. For example, the layout, amount of storage (drawers, cabinets, hideaway spaces, closet), size of the kitchen, dining room table/chairs vs. booth (yes this was near the top of my list, ha), open vs. closed bathroom (yes some of them aren’t fully enclosed), etc. We also had to pick between the style of travel trailer: standard “pull behind” type with a regular hitch, or a 5th wheel travel trailer. We ultimately ended up choosing a 5th wheel, because they typically offer more space since the bedroom is “upstairs” and are easier to tow without risk of jack-knifing. After searching for a long time, it all really boiled down to trying to get most of what was on our wish list within the price range we had set for ourselves. Just like with any big purchase, we had to sacrifice some things in order to fit the budget. Why the budget? Because we wanted to own it and we wanted to pay in full, not lease or finance it. (Refer back to any number of Jared’s posts on finance). In the end, we ended up with a 2009 Coachman Chapparal 278DS, which was of course used (and also repainted a funky color scheme which wouldn’t have been our first choice haha), and we found it from at a dealership in Concord, NC. After we finally found our camper, we then had to find our truck. Similarly, we scoured the internet searching for a truck that fit our needs and our budget. The primary objective and our key phrase during our searches was: “Will it HAUL?”. We had to do our research on how heavy duty of a truck we needed to pull this 10,000lb+ trailer. We ended up with a 2005 Ford F-250 Diesel.

Overall, we have been very pleased with both the camper and the truck. We have found that we actually have a lot more space than we anticipated. It’s just like a small apartment, and there is so much hidden storage. And believe me, I have a lot of stuff. The thing I love most about living in the camper is that everything has its place and it all comes along with us from assignment to assignment. I don’t have to worry about packing and unpacking everything. It’s all just there in its normal spot and it’s perfect. I did have to downsize and get rid some of my clothes, but that was honestly for the better. I had so many things that I really don’t even wear. In fact, I probably still have too much even in the camper. Five days out of the week I wear the same things, work clothes. I get 2 days a week where I can wear fun clothes, and half the time I’m just wearing workout clothes/pajamas then anyway. A big help for storing all my clothes has been space bags. I keep whatever season of clothes I’m not wearing in space bags stored under the bed and plan to switch them out as needed. We also only brought along a few dishes and the minimum stuff we needed for the kitchen. But really, we’re 2 people. 4 plates, 4 bowls, 4 cups, 2 wine glasses (both for me–ha). What else do we need? Living in a small space definitely makes you think about all your belongings and what you actually use or don’t use. I think we’re having some of the same revelations that the Tiny House folks do, and we’re loving it.

Now, I won’t lie and act like living in a camper is always butterflies and rainbows. There was a lot to learn about RV/travel trailer living (connecting/disconnecting truck & trailer, the water/sewage tanks, slide outs, electric vs. propane, leveling, etc). Some of these things are a hassle, but it has been a cool learning experience. In addition, it’s a very small space. The fortunate thing is that we are at work a lot of the time, so it’s not like we are together 24/7 in this small space. Cooking at night can definitely make us testy, though. One thing we did sacrifice on in choosing our camper is that the kitchen space isn’t very big. Besides space issues, the camper itself comes with some mechanical issues. Like water freezing. That happens a lot more easily than it does in a regular house. Winter in Virginia was tough at times with the water hose outside freezing several times and leaving us without running water until it could thaw out. Also it can get cold in there. We were fortunate to stay at a campground where they didn’t monitor/charge extra for the amount of electricity you use, so we ran 2 space heaters all winter long. Otherwise, you have to use central heat which runs off propane, which can get costly. Running 2 heaters all the time can have its cons as well, like the circuit blowing. Don’t dare think you can have 2 heaters plugged in and also cook dinner using the toaster oven or microwave. Not a chance. We learned that far too many times. We’ve had some other mechanical issues too such as water leaks, birds nesting, cabinets breaking, etc. But, living in an apartment or house you may have to deal with similar problems. Overall, the camper has been great, and we just can’t imagine our Travel PT journey any other way.

Check out the pictures to get a peek into our camper life!

Our Truck and Fifth Wheel Trailer! Why the 80’s colorful racing stripes? Who knows!
Living room with huge couch, reclining stadium seat chairs, ottoman, and cabinet storage
Living room once we put all of our stuff in!
Living room/kitchen/dining room area. All of the parts to the right are in a slide-out.
Recliners and dining room table/chairs in the slide-out portion. When it’s not slid out, everything is compressed and you can’t walk through to the “upstairs”.
At one point, we rearranged the chairs to give us more space for the heater and sitting at the table. We’ve since moved it back.
Modified dining room sitting area and the stairs to go up into the bedroom/bathroom.
Empty kitchen/entertainment area when we first got the RV
Kitchen/entertainment area with all of our belongings in place!
Kitchen with all of our stuff in place
Bathroom: standing shower, sink, cabinets
Bathroom: toilet/hanging space
Empty bedroom with the bed slide-out (when not slid out, the bed touches the dresser). The mattress lifts up and there is storage underneath.
Moved in bedroom, closet, and my 3 large drawers
Dresser area, Jared’s 4 smaller drawers and my storage cabinets beside the closet
Dresser area in the bedroom (mostly my stuff on top), plastic storage drawers (mine- yes I have a lot of stuff), laundry basket
We love snuggling on our huge couch! Jared is 6’3″ and we both fit!
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Selfie stick action on a snow day at the camper!

Progress to Financial Independence- April 2016

I’m planning to do monthly updates on my progress to financial independence. If nothing else, it will be an awesome way to look back on the journey in the future. I’ll also be able to look back on the change in value of my investments each month. I only recently began to experiment with Excel so I am by no means an expert with the graphs that are produced but I’ll do my best.

For the time being, I am going to avoid posting specific numbers but I may reveal more specifics later but I haven’t decided yet. It feels a little personal and unsafe to me to discuss my exact net worth and expenses in dollar amounts. Instead of specific numbers, I will track my progress to financial independence based on the “4% rule.” It you are unfamiliar with this concept, I will be publishing a post about it in the very near future. It basically states that, in a well diversified portfolio, you will be able to withdraw 4% of your net worth every year and never run out of money. This means that when my yearly expenses are 4% or less of my net worth, then I will consider myself financially independent. Here is a graph of how I estimate that my progress to 4% will look over the next four and half years.

Path to 4% April 2016

As you  can see on this graph, my current yearly expenses are approximately 24% of my net worth as of today. This means that I have quite a ways to go in order to get to that safe withdrawal rate of 4%. Since I have only been out of school for less than a year at this point, I feel that my progress has been pretty good so far. I could technically take at least 4 years off of work and not run out of money as long as I continued my current spending each month. That’s exciting for me to think about but not even close to the ultimate goal.

The really exciting part is on the right side of the graph. This shows that I should reach my financial independence goal around September, 2020. In reality, that is not that far away. If that estimate holds up, that will mean that it will have only taken five years and three months of working, after finishing school to reach financial independence. Pretty crazy, right?

Now, let me explain some of the assumptions that I used to create this graph. I’m estimating an average growth rate of 6% per year of my investment portfolio. Over the history of the stock market, this would be considered a conservative estimate but I believe that with the current valuations in the market it is probably realistic. I assume that my savings rate will be, on average, a little less than it has been over the past year. This is because I have been working overtime most of this year, as well as making extra money working a PRN job and completing credit card, bank account, and brokerage account sign-up bonuses. I don’t expect to be able to continue this for the next four and a half years, at least not to the same extent, so I estimated a little lower. I also estimated that my expenses will increase about 25% over time, especially since I plan to eventually have kids. If the numbers were based on my current expenses, I would be reaching the goal much sooner.

I am optimistic that my projections are conservative and that I will actually be able to reach financial independence sooner than September, 2020 but I would rather be more conservative since the future is unknown. I’m going to work as hard as I can to be able to get to the goal three months earlier so that I will be able to say that my “working career” was only five years. That sounds pretty awesome in my opinion. What do you guys think? How long until you reach FI?