Financial Remodel
Rebuilding our framework for financial independence
A year and a half ago, we took a leap of faith and pulled the trigger on our financial freedom plans well ahead of schedule. Since then, a lot has changed.
Our original plan involved two distinct phases. The first would be our “Super Saver” phase, where we would stash away as much as possible working full-time jobs (with lots of overtime).
The second would be our “Slower Pace” phase, which involved relocating and scaling back on work. We would continue saving during this time, but at a more moderate rate.
We wanted to boost our savings at the start of our journey and then scale back to enjoy life as much as possible while still working steadily towards financial independence by our mid-forties.
We had originally planned to continue our Super Saver phase until 2025, but jumped at an opportunity to start the second phase of our journey two years early when Mr. Financially Free was offered a job in our dream location that promised fewer hours and less stress (along with a significant pay cut).
While things were happening ahead of schedule, financially, it would be a relatively minor change to our plan. However, and a few unexpected twists threw our plans off course.
The first came with Mr. FF’s new job. While it was, in fact, less money, it didn’t come with the work-life balance and lower stress levels that were promised. This was a definite non-negotiable for us. Getting out of the rat race was the primary motivation for our move and we had sacrificed a significant amount of income to make that happen.
The second was much more exciting — a few months after moving, we had a baby on the way! This wasn’t really much of a surprise, but it changed how we felt about our living arrangements more than we anticipated. We suddenly found ourselves eager to be much closer to town (and other people). With Mr. FF’s work situation and baby FF’s looming arrival, we had to move quickly to reevaluate our options and make things work for “right now”. We needed a financial remodel.
We had maintained enough flexibility in our financial plans to make a change if needed, so it was back to the drawing board — and quickly!
Goals:
· Live closer to town
· Reduce work-related stress
· Maintain FI timeline (as much as possible)
Option 1
Sell the cottage and buy a house close to town with the equity (no mortgage). Quit Mr. FF’s job and find a new one as soon as possible.
Option 2
Rent the cottage to generate additional income and buy a house close to town (mortgage required). Mr. FF stays at his job but finds a new one as soon as possible.
In the end, we landed on Option 2. While nothing in life is certain, we weren’t ready to reduce our stake in the real estate market just yet. Yes, prices could go down, but they could also go up. Yes, we could put more money into other investments if we sold, but we’d lose out on rental income and potential real estate returns.
There are so many variables and we’ll only know what the best decision would have been when we’re looking back on it in a few years. So we’re giving this a shot and keeping an open mind. If things don’t go as planned, we’ll reconsider selling the cottage.
In terms of numbers, we’re letting the dust settle before doing the math on our new FI timeline. We want to see how things go with the cottage rental, and we’re still getting used to life with baby FF.
On a positive note, Mr. FF was able to start a new job a few months ago and it’s turning out to be a perfect fit!
Thanks for reading! To learn more about our journey, visit Financially Free 2033.
