My wife and I are about two years into our Financial Independence (FI) journey. We have done quite a bit to right our financial ship. We’ve laid the groundwork for a solid financial future.
But still, I find myself so anxious. I keep thinking, nay obsessing, about finding ways to shorten the time to FI. It seems, I’ve moved from one kind of money problems to another kind. I am going to take you inside my thought process as I weigh my options.
What is Driving Me?
I’ve calculated our time to FI at around 15 years. This would have us retiring in our early 50s, which is awesome, by any measure, but still feels so far away to me. I have a hard time seeing myself doing what I am doing now for that long.
There are so many things we want to do, and we aren’t getting younger. Are we going to be able to do things how we like when we are in our 50s, 60s and so on? On sunny warm spring days, it feels so depressing to be trapped in a cubicle.
Further, since our health isn’t guaranteed, I would love to develop more passive income and break the hamster wheel of trading time for money. This would free us up to spend our days as we see fit now, not just later, and maintain some income if our health worsened.
Lastly, while we’ve adopted frugal habits in our quest for FI, we are “reluctant frugalists” to this point in that we see frugalism as a means to an end, rather than a natural state. We both want to retire into a nice house and would like to travel more than we do. All that takes $$$$.
What am I trying to accomplish?
- Decrease the time to FI
- Develop passive income
- Limit additional hours worked
- Earn income from projects I am passionate about
Options Abound
We are blessed to have a handful of options to consider. It’s important to note that almost none of these options would be available if our financial house was not in order. Certainly not during our lost decade of money missteps. Below is a kind of pro/con analysis of the options I am pondering.
Buy In to My Company
Reportedly, my company will be extending an offer to senior employees to purchase shares of the company later this year. While it would take a sizable investment, the gains could be worth it.
Why it Appeals to Me
- A source of additional income, not 100% tied to additional hours worked.
- The potential for returns that outpace the stock market.
Why it Doesn’t
- I would essentially be “doubling down” on a career where I am tiptoeing with burnout.
- The opportunity will likely have some additional “strings attached” in the form of added duties and perhaps a “non compete” clause.
Dump Everything into the Stock Market
Probably the easiest option of the bunch. Save as much as possible and invest. Easy peasy… except for the need to have an iron stomach to ride out the market’s fluctuations.
Why it Appeals to Me
- Gains require almost zero effort on my behalf.
- Truly passive income.
Why it Doesn’t
- Performance is 100% correlated to the bulk of our current net worth. Meaning if the market tanks, most of our eggs are in one basket.
- Considering our approach of investing in only index funds, this option is super boring.
Change Jobs
I’ve had an opportunity presented to me to switch jobs to a competitor that could pay better.
Why it Appeals to Me
- Higher compensation
- Much greater control of my day to day
Why it Doesn’t
- Stability of this firm is questionable
- Would likely result in much more work to cover a wider range of responsibilities
- I like the people I work with now, so this would be a break even proposition at best
- My discomfort with my current occupation is more industry-specific, rather than company-specific, so I have a hard time buying the “grass is greener over there” line of thinking
Invest in the Blog
Why it Appeals to Me
- Probably the lowest financial barrier to entry
- I’m already doing it
- It’s a subject I am passionate about
Why it Doesn’t
- I haven’t made money in over a year
- Highly competitive market
- Large time demands
Turn to Real Estate
Why it Appeals to Me
- It allows me to capitalize on my DIY skills
- I could still make use of my engineering background and previous municipal experience
- We have experience with renting out our first home
- There is a potential for out sized gains (like with a house flip)
- Good potential for passive income with renting
- This income would not be as strongly correlated with the stock market, so it provides some diversification
Why it Doesn’t
- Real estate is very capital intensive and I don’t want to over-leverage ourselves
- There is a bad taste in our mouths from our first home where the property values plummeted after we purchased it and haven’t recovered in over a decade
- It “feels” like the riskiest option. Whether it truly is remains to be seen
So What’s Next?
Only one option laid out above could be available if we didn’t have our finances in order. That is switching jobs. And truthfully, it appeals the least to me. Namely, the likely increase in workload and duties may not be offset by the increased pay. I only keep this option under consideration in the event my current job goes south.
Investing more aggressively into the stock market is a sound approach, but doesn’t ignite any passion in me. Additionally, it doesn’t immediately start moving me away from my current day to day issues. This will likely serve as a default, or fallback approach, if the other options fall through.
The blog is really a two-edged sword. On one hand, there is a potential for income if the proper time and attention is paid to it. However, I struggle as it is to keep a weekly posting schedule. Part of me thinks (perhaps naively) that I should just keep posting and let the chips fall where they may. If I hit upon something the internet gods favor then so be it. Also, part of me feels that overtly trying to monetize the blog detracts from the expectations for honesty and transparency that I have for the content. Regardless of the route I choose, investing in the blog will remain an option that I continue to mull over.
Buying in to the company is very appealing to the financial side of my brain, and terrifying to the portion of my brain that seeks to reduce unneeded stress from my life. The potential returns are hard to ignore. This would purely be a play to shortcut the path to FI, with no respect to quality of life along the way.
That leaves me with real estate. This option stirs my emotions the most, so it has my heart’s vote. The thought of a work day of scouting properties and tackling renovation projects is very appealing to my DIY/spreadsheet addicted nature. But when I run analyses on properties and the up front monetary demands, my brain wants to vote no.
There is no clear cut winner in this race. The only thing I am certain of is that I will spend a great deal of time in the months to come continuing to debate these options. At this time the options that appeal the most to me are buying into the company or diving into real estate. They both also require the largest about of liquid cash. To that end, we have been stashing excess savings into a high yield bank account to shield the funds from stock market volatility.
In the end, I can’t help but look back and feel some pride in how we reworked our lives and put ourselves in the position to have this sort of problem to ponder. Truly, I am grateful we have these kinds of money problems to worry about!
Glad to hear you feel pride when looking at your current situation. Not knowing where to put excess money is a good problem to have. But it’s still a problem 🙂
Have you considered partnering with another real estate investor/flipper/whoever and doing a small project together? I say this because it might give you full insight into the process, with only half (or less) of the exposure and risk.
Eg. Last year instead of trying my own first ‘flip’ investment, I partnered with an experienced guy for the first project. What I realized is I didn’t like it at all. Trying myself would have sucked a lot more time and money into something I didn’t end up enjoying much.
Just a thought. Best of luck deciding which way to go!
Thanks Joel! Partnering with an established real estate investor is a great idea! In the past we’ve tried to leverage our property manager for our rental to find good deals, but the timing wasn’t right.
We have some connections that would be interested in helping share the load but they would be rookies as well. I will certainly keep an eye out for opportunities to partner with established investors!
Love the analysis of the different options. I was in the same boat about six years ago when I was feeling tapped out in my small business and considered going back to 9-5 for a bit or starting a new business or real estate, etc. In the end, I did a little bit of all of your options over time, but the first change I made was the real estate piece. All the options I looked at had pros and cons so I just picked what I felt most drawn to. It sounds like you are most drawn to real estate so I would look at how to make it happen. We picked a low entry point. I know others who have partnered. You can also look at crowdfunding sites like Patch of Land, which is more like stock investing but has a real estate focus. Good luck!