My husband and I plan to retire from the corporate world of 9-to-5’s and be financially independent by 40. Why 40? Well a couple big things will happen before we’re 40. My husband’s daughter will be 18, so child support payments will end. Our son will also be out of daycare, so that’s another huge expense we won’t have to worry about. My husband will also retire from the Marine Corps, which will give us a small pension and affordable health care for the rest of our lives. (Honestly, the health care alone is enough of a reason for him to stay in until retirement).
How do we plan to do it? First and foremost, we know our numbers. We know exactly how much we’ll need on a monthly basis to not only survive, but thrive. (We know those survive numbers too, but plan on thriving after 40).
Because we know our numbers, we know our goals or our end game. We know exactly how much we need to make a month to live the lifestyle we’re comfortable with. Because we’re both frugal, and aim for self-sufficiency, the lifestyle we’re comfortable with doesn’t cost very much.
Passive Income
Someone once said the key to financial independence was to spend less than you earn and invest the rest. The more frugal and self-sufficient you are, the less you spend, and the more you can invest. Our primary investment plan is Lending Club. Lending Club is an online peer-to-peer lending platform. It might sound odd, but it’s legit. Lending Club creates a platform so that you can act as the bank.
As a bank, I can pick and choose different loans to back. Lending Club gathers all the information a brick-and-mortar bank would: income, FICO score, rent or own, any late payments, etc. and assigns a rating to each individually borrower with an appropriate interest rate attached. If the borrower is risky, they have to borrow at a higher interest rate, but you – as the bank – also make more on your money if you choose to invest in this person.
The best part about it is that you’re only ever invested in a single loan for $25. Banks spread around their risk by lending to lots of different borrowers. You do the same with Lending Club. So if someone defaults on their loan (which is bound to happen), you only ever lose $25 – not the $4,000 they borrowed.
The bester (ok – not really a word) part about Lending Club is that you can set up automatic investments. Say I only want to back borrowers who own their own homes, haven’t missed a payment in 5 years, have FICO scores of above 650, and are asking for 60 month loans. I can set up Lending Club so that whenever I have $25 in my account (from invest I’ve accrued from other loans) it will go out and purchase the note for a loan that fits my criteria.
This may sound like an ad but it’s not. I rave about Lending Club to everyone I meet. I can rely on a 6-7% return from Lending Club that the stock market certainly won’t give me. Assuming a 6% return, we know exactly how much money we’ll need to have in Lending Club to use the interest we earn to pay the bills. And that’s just our passive income.
Retirement Doesn’t Mean Not Working
Just because we’ll be “retired”, doesn’t mean we won’t be working. Starting this Spring we’ll be starting a hop yard. The microbrewery industry around us has simply skyrocketed, and starting a hopyard now means we’ll be well established by the time we retire. A lot of people are skeptical about hops being profitable in Virginia, but starting now mean we’ll be able to make a decision on that later.
I will also have my blog and books for a little side income. Writing and photography have always been great passions of mine, and blogging is a fun way to combine the two and get paid for it!
Chicken and the Egg
So the question occurred me: is homesteading the chicken or the egg? Is self-sufficiency the means by which we’re going to be able to retire early (the chicken), or is it the ultimate end goal (the egg)? I think, in our case, it’s both. Being self-sufficient now will not only allow us to save more money for our retirement goal, but will teach us the skills we need to live a simple, frugal lifestyle. Being self-sufficient in retirement means we’ll need less money than most to be able to fully retire. It’s an interesting concept.
I didn’t write this to show you how to retire by 40, but hopefully inspire someone to shoot for (what seems like) crazy goals. Life doesn’t happen behind a cubicle.
If you’re interested in checking out Lending Club, I could get a small referral fee if you use this link: Lending Club. If you do sign up, let me know and I’ll throw a couple Steem Dollars your way.
If you want to follow our journey and read more about how we're becoming self-sufficient, check out my blog: