Finally, some money stuff!
I originally wrote this way back when I was working for Global Co, that shiny prestigious multinational monolith company. After that, a shit load of stuff happened - including me quitting the job cold turkey without a plan and then there's that little pandemic called COVID-19.
I promise to regale with the six-month career break that I took that was both awesome and terrorising at the same time. But first, here's my plan to Barista FIRE - I call it my RIPS system (Retirement, Investments, Portfolio career and Self-sufficiency:
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| The corporate drone stage is an important step of my Barista FIRE plans, alas. |
1. Retirement - bump up my retirement funds to $500k by end of 2021.
This is how the retirement fund in my country works: My company contributes up to 12% of my salary into my retirement funds. About 11% is also taken out of my salary to add to that figure. I am now adding an extra 15% to that number, every month.
My original goal was for my retirement savings to reach $400k by end of 2021. However, I was so focused on the government retirement fund, that I forgot to factor in my other investments (like, duh).
Current retirement fund:
Govt retirement fund: $329,000
Mutual funds: $60,000
Cash (high-interest savings account): 80,000*
Total investments: $469,000
* I totally know I need to invest this soon. I'm planning to invest it in ETFs and REITs.
My new goal is to reach $500,000 by end of 2021. I need to save $31,000 to make that happen. That's why I feel that Job X is important right now. I'm so close to realising this goal it itches.
Using the magic of compound interest, if I add just $5000 yearly to my retirement accounts and my investments earn a moderate 5%, I would have about $880,481 in 10 years.
Why 10 years? That's the time when I can withdraw funds from my government retirement account. I'll be 55.
During my retirement years, I will be living off the fund by withdrawing 4% yearly. That's about $35,219 annually and about $2,934 a month.
3. Portfolio career
a) A business that will give me "extra money"
I know myself. Uncertainty doesn't sit well with me. So that's why I'm going to depend on my passive income derived from investments and rent to cover my basic living expenses, and to have my business/part-time job, whatever it may be, give me my "extra money".
The business would be a mix of these tasks:
I've also adopted a minimalist lifestyle. I've scaled down my life significantly that living on just $2000 a month or less is quite doable.
So there you have it, my RIPS plan to Barista FIRE. It's not a perfect plan by any stretch of the imagination, and my math is ... terrible, so I'd appreciate any tips to help me along the way :)
Why 10 years? That's the time when I can withdraw funds from my government retirement account. I'll be 55.
During my retirement years, I will be living off the fund by withdrawing 4% yearly. That's about $35,219 annually and about $2,934 a month.
Would that amount be enough for my retirement? Sure, it'll be great to have more, but my house is paid off, I live relatively frugally, and I hope to be mostly self-sustainable then.
So technically, if all goes well, I should feel "safe" enough to Barista FIRE in 2022, aged 46.
2. Investments - Start building other investments
Not all my savings will be funelled into my retirement accounts, however. Half of it will also go into investments that I can access anytime I want. I'm still a little hesitant in this area as I don't know much about investing yet.
2. Investments - Start building other investments
Not all my savings will be funelled into my retirement accounts, however. Half of it will also go into investments that I can access anytime I want. I'm still a little hesitant in this area as I don't know much about investing yet.
I know some folks count their houses as an investment, but I don't. Unless someone give me an extra home, I'll probably be living in it one day. It's a bit of a bummer - if I sell off my home I'll be able to retire straight away, but I'm the sort of person that likes the security of owning my own home, so.
My hope is that I'll build my portfolio to a point where I can live off the dividends or interest one day (see No.1). But it'll take a huuuge amount of savings and I'm not sure if I can wait that long for it to happen. It'll be great to Barista FIRE when I have about $500 per month in passive income from dividends and high-interest savings accounts, but I'm not sure if that's going to happen in two years. Probably not.
I had, I repeat, had rental income of about $1.7k. When COVID-19 hit, that income fell to $700 as one by one, my tenants left. It's tough finding tenants now. There's a glut of properties in my area, and no one's renting. At least, not my apartment.
I know everyone hates landlords, but I can't imagine being a landlord and having a mortgage to pay right now.
3. Portfolio careera) A business that will give me "extra money"
I know myself. Uncertainty doesn't sit well with me. So that's why I'm going to depend on my passive income derived from investments and rent to cover my basic living expenses, and to have my business/part-time job, whatever it may be, give me my "extra money".
The business would be a mix of these tasks:
- Writing fiction and non-fiction ebooks - hopefully this will eventually give me some form of monthly income
- Freelance writing & editing
- Training or coaching
- Community care work or pet sitting jobs are something I'm considering too
b) Get a "barista" part-time job
I hope to have a part-time job that allows me to top up my basic living expenses so that it can cover my basic expenses - in case the rental income doesn't pan out like now, during COVID-19 time. I have no idea what it'll be as these part-time jobs are a rarity in my part of the world,. Alternatively, I could ask for part-time hours from my current employer in ... a year? Not holding out for hope on that. Most companies would rather hire full time to squeeze the life out of the worker in my country. In my part of the world, job sharing is unheard of.
4. Self-sufficiency: Live a low-cost, sustainable lifestyle, learn to grow my own food
A big part of my plan is to be self-sufficient, and that's why I'm learning how to grow my own vegetables right now. The plan is to have a garden full of vegetables - and who knows, maybe one day chickens, which I can live off from. (The eggs! Not the chickens! I don't think I can kill em.) This will cut down on my food expenses, hopefully, but I largely adore tending animals and gardening so it'll be a fun hobby at least.
To get around, I use mostly use public transport (we have a $100 monthly transit pass) or use my feet. I'm a homebody in general and have no great desire to travel abroad. (Did that in my 20s and 30s, and even lived abroad for years, so I've satisfied that thirst.) My car is paid off, and I usually only spend about $50 a month on petrol.
During the lockdown, that $50 lasted ... months! I realise that if I have a remote job, I can save so much more.
I have low-cost hobbies: I garden (free), read (about $50 a month) and write (free).
As I practise intermittent fasting, I only eat once or twice a day - that saves me a whole bunch of money.
I also live in a very cheap place. I only pay $250 for my room a month. It's a decent place with a swimming pool and a gym, not a dive - the reason why it's so cheap is really because my dad owns the place, and my brother and I share the place and maintain it for him. The money I'm paying goes to utilities and management fees. So, I have a significant amount of privilege in that sense and I'm very grateful for that.
So there you have it, my RIPS plan to Barista FIRE. It's not a perfect plan by any stretch of the imagination, and my math is ... terrible, so I'd appreciate any tips to help me along the way :)
