The Power of Choice
You make your own luck, I'm quite a believer in that.
I was reading a post on Retire By 40 recently, it was titled "How to Be Lucky in Life". The author of that post, Joe Udo, reckoned that he was lucky. But as I read through it, my view was that most of the good things that he described came about because of choices that he made. It wasn't all luck.
That got me thinking about my own life. We make tens, or perhaps even hundreds, of choices each day. Shall I have tea or coffee at breakfast, can I get away with wearing this shirt without ironing it, if I promise to go running later can I have another muffin?
OK, most of these don't matter too much, but some of our choices do make a big difference in our lives. I'm already retired early (at 47...I know there are others who got there quicker, but I still like saying it😆) and I'm still fascinated by the journey to financial independence and financial freedom, and then early retirement if that's what you want to do. And because of this, I'm interested in the choices we make that have an effect on how quickly we can reach these goals.
I guess there are some basics to consider. To have a good chance of making the right choices, it's more than useful to know where your destination is i.e. what are you trying to achieve? Some target or goal setting is therefore a good idea, a bit of a plan as to how and by when you think you can get to your goal, and some form of review or report card to help you check that you're moving in the right direction.
And remember not to stress if things don't always turn out how you hope. We get second and third chances. We make a choice, see how it's going, and if we figure that things aren't quite heading where we want, then we can make another choice to change or adjust, to bring things back on track.
This made me wonder, what have been the big choices in my life that have helped me retire early at a relatively young age? There have certainly been a few dubious choices along the way, but thankfully those are far outweighed by the good choices described below:
Invested in Real Estate early
I'm a real estate fan, so I might be a bit biased.
The first houses weren't really an investment, they were our home. But because we owned them, we weren't paying rent and so each month some of our mortgage payment went towards paying down the capital, so it wasn't all dead money as rent would have been. I bought my first house when I was 21, albeit with a 100% mortgage! There's a bit more on real estate later on.
Worked for the right companies
90% of my working life has been with just two companies. That's a lot of years. Finding a company that fits your culture and values is important. Getting it right makes it easier to work hard and be a success. And if you're successful then you'll most likely get paid more, letting you save more towards your financial independence and retire early fund.
Took a job transfer to Jamaica
I was just 24 at the time, and this accelerated my career. I was a bigger fish in a smaller pond, and I gained tons of experience. I got paid more for being away from home, and had accommodation provided. It wasn't a fortune, but it let us start to save some money. I didn't give up, even when homesick and out of my depth to start with. Credit to Sally for helping me through that part.
Had kids while I was still quite young
I was 26 when Rebecca was born, and 29 when Sam came along. That's not super young, but still reasonably young I think. Having kids helped us start to be financially responsible at a younger age. Both kids are now living away from home, so our living costs are now reduced while we're still quite young.
Changed jobs and moved to Dubai
This was a big one, because it coincided with my peak earning period. We moved in 2005, and the biggest savings towards our financial independence/retire early fund were made in this period. Perhaps we were fortunate with our timing as we moved just before a boom period. We're leaving next July (2018) to do some travelling.
Maintained a balanced life
A balanced life, not a frugal life, that was important for us. We had a group of friends who did a lot, so we wanted to be involved, but we kept it under control. This meant that we had fun, enjoyed our lives, but saved money too.
Saved windfall cash
Well, it wasn't really windfall cash, it was from incentive schemes at work, so I'd earned it. For some, this money is an extra, and therefore is easy to spend. We made sure that this "extra" money went into our financial independence/retire early fund.
Bought a house in Dubai
OMG, this gave me sleepless nights. It was a risk, the 2006 Dubai real estate market was a bit like the wild west, but we decided to take the plunge. We paid extra off the mortgage whenever we could. The day we cleared the mortgage was an awesome feeling!
The Global Financial Crisis hit, house prices crashed. It was scary, but we didn't panic and held on. We were rewarded for holding our nerve, there was a boom and prices rocketed. We sold and put the gains into our financial independence/retire early fund. House prices have dropped 20% since.
Started our property rental portfolio
When we moved to Dubai we rented out our family home. But it wasn't a good rental, so we sold it and bought a smaller rental property. That was at the end of 2011.
Since then, we bought a new rental property each year, using mortgages to start with, and latterly using cash from the sale of our Dubai property, and we've bought four low cost properties this year.
The income from these properties gives us sufficient passive income to support us. That's financial independence or financial freedom (still deciding which), and it let me retire early.
You can have a look at my post about building a rental property portfolio to fund retirement here.
Realised that you don't need to have so much money to be happy
This may turn out to be the best choice. Money doesn't buy happiness. We make happiness for ourselves through our choices, what we choose to do, the friendships we choose, and our relationships. It doesn't have to cost a lot of money. My budget now is less than when I was working, and I'm very happy with my life.
OK, at the time of some of these choices we didn't know what the outcome would be. But what we tried to do was make sensible choices at the time. Choices that suited us, the lifestyle that we wanted at the time, but with an eye on the lifestyle that we wanted in the future. Some of them had risk, but they were done at a time of our life where we could deal with that. There is no doubt that these choices played a major role in getting us to financial independence at a relatively young age, and then allowed me to choose to retire early.
And I still have choices to make now and into the future. I need to make sure that the investments we have are looked after so that they continue to give us sufficient passive income to support the lifestyle that we choose. And I want to make choices that give us an exciting and rewarding life. It's in our hands, so I'm pretty hopeful we'll find the right balance for us.
So, if you're wanting to get to financial independence/freedom, and possibly to retire early, the choices that you make will have a big bearing on how and when you get there. It's a good idea to set yourself some goals, and better still to write them down and periodically check your progress towards them. I hope that your choices will be good, but remember that you will make mistakes along the way, but that's fine because you know that you can make another choice to correct them and get back on track.