Welcome to Financially Free 2033! This post marks the first in our journey to financial independence.
While many aspects of financial independence were already ingrained in our lives prior to starting this blog, we needed a way to document our journey and hold ourselves accountable.
One of our key motivations for pursing financial independence is, well, freedom. After spending the first part of our adult lives building careers that provided stable incomes and a clear path to retirement, we started to question whether or not we could really stick with it for the rest of our lives.
Prior to starting this, we were already committed to saving and investing (thanks to a vague sense of not wanting to work forever). However, these feelings sparked a growing interest in the financial independence movement and inspired us to look at money in an entirely different way.
By tracking our spending and saving habits more closely, we've been able to map out a clear path. While financial independence is the ultimate goal, we plan to capitalize on the freedom gained each step of the way.
Financial independence can mean very different things to different people. For us, it means having the flexibility to spend our time how and where we want. While neither of us are opposed to working, we know that sticking with full-time careers from now until traditional retirement age won't make us happy. We also know that where we live will have a huge impact on our quality of life.
Although we met and currently live in Southwestern Ontario, we both have strong ties to Muskoka. And after purchasing a cottage there in 2019 - which we rent out the better part of the summer to cover expenses - we've become even more certain that this is where we want to live and eventually raise our children.
Unfortunately, the job market is not ideal for either of our careers and we'd have to give up a considerable portion of our income to make the move (which is the only reason we're not there already).
Our journey has two key steps. The first is to tackle the 'where we spend our time' part of the equation, and the second will take care of 'how we spend our time'.
Phase 1: Super Saver
The first 3 years of our financial independence journey will be spent in our 'Super Saver' phase. With two full-time incomes, we'll continue saving as much money as we can while we continue to pay down the mortgages on our house and cottage.
By 2024, we plan to sell our house and use the proceeds to pay off our remaining mortgages. Based on current real estate values, we should also be left with enough to top up our retirement savings accounts (RRSPs and TFSAs), taking advantage of any unused room.
When we move to our cottage, this will also trigger capital gains taxes as it becomes our primary residence. The tax credit from topping up our RRSP will go a long way towards reduced what we owe.
Living mortgage free will create the flexibility we need to feel comfortable moving north. While we both plan to keep working in at least some capacity, we expect our combined income to drop by about 40 percent.
Phase 2: Slower Pace
The remaining part of our financial independence journey will be our 'Slower Pace' phase. While living mortgage free will give us the flexibility to live comfortably on lower incomes, we'll need to keep working for another 8-10 years before we are reach complete financial independence.
While we could shorten this time frame by sticking it out in the city for a few more years, for us, the longer timeline is worth the tradeoff to move north sooner. And on top of that, the we really have no way of knowing what the real estate market will do. We'll feel more comfortable making the move as soon as we can.
After reaching financial independence, we plan to continue working in at least some capacity to continue building up our investments and creating room for all of the things we love in life (like travel).
However, we'll have the flexibility to shift to part-time work or even take a year off every now and then. And most importantly, we'll never feel trapped by a job again.
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