2702: Trading Financial Freedom for Mini-Retirement by Chris of Keep Thifty on FIRE Lifestyle & Sabbaticals

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[00:00:40] This is Optimal Finance Daily, Episode 2702, Trading Financial Freedom for Mini-Retirement

[00:00:47] by Chris of KeepThrifty.com. And I'm your host and personal finance enthusiast, Dianna Merriam.

[00:00:54] Now let's get right to today's post and continue optimizing your life.

[00:00:59] Good Sleep

[00:01:02] Trading Financial Freedom for Mini-Retirement by Chris of KeepThrifty.com

[00:01:09] Who doesn't want financial freedom? Getting to the point that your passive income can cover

[00:01:14] your expenses buys you opportunities and time in a way that most people can't imagine.

[00:01:20] Despite the allure, I took an active step away from financial freedom this year,

[00:01:25] choosing to delay my freedom date by over two years. What siren could have pulled me away

[00:01:31] from my destination? An even better one, a mini-retirement. A Vision for Financial Freedom

[00:01:39] Like many others, I discovered the concept of financial freedom from Mr. Money Mustache back

[00:01:44] in 2012. The concept is simple. You've reached the point where you have enough income from

[00:01:50] passive investments to cover your expenses. Once you're at this point, you can choose

[00:01:54] to be relatively indifferent about money. For some, this means early retirement.

[00:01:59] For others that love their work, it means working without concern for the financial influences.

[00:02:05] Since learning about financial freedom, we've been working on diligently saving,

[00:02:10] maxing out our 401k, prepaying our mortgage, and looking to improve our financial situation to

[00:02:15] invest even more. As of this past June, we were on track to reach financial freedom in

[00:02:21] February of 2028. At that point, I'd be 46 and could have chosen to push for a reduced work

[00:02:27] schedule, either part-time or lots of vacation, or even retire. Doesn't that sound awesome?

[00:02:34] Why I'm Trading Financial Freedom for a Mini-Retirement

[00:02:38] While financial freedom in my mid-40s would be an amazing accomplishment and would give me a

[00:02:42] ton more time to pursue whatever my heart desires, there was a big problem with the

[00:02:47] timing. Upon reaching financial freedom in February of 2028, I'd have a high school senior

[00:02:54] and two high school juniors. As soon as you become a parent, you start hearing the same

[00:02:58] phrase from every other parent out there. Enjoy these moments, they grow up so fast.

[00:03:04] Before you know it, they'll be all grown up and you'll wonder where the time went.

[00:03:08] There's a reason every parent says this, because it's true. We have a 7-year-old and

[00:03:14] 5-year-old twins, and I feel like they were all just babies yesterday. The years have flown by.

[00:03:21] So if I pushed hard over the next few years and achieved financial freedom in February of 2028,

[00:03:27] I'd be gaining freedom right at the time that my kids are least available,

[00:03:32] due to school activities, coursework, and hanging with friends.

[00:03:35] I hope my kids still want to make time to hang out with me when they're teenagers,

[00:03:39] but there's at least a small chance that being seen with me will be considered embarrassing.

[00:03:45] My kids are more important to me than just about anything in this world,

[00:03:48] and they aren't going to stay little forever. So I chose to push out my financial freedom date

[00:03:54] by over two years in order to get more time with my kids now by taking a one-year mini

[00:04:00] retirement. A vision for a one-year mini retirement. My last day of work was June 30th,

[00:04:07] and I'm planning on staying mini-retired through the end of next summer. So technically,

[00:04:12] my current plan is 14 months of being intentionally unemployed. My plan this year

[00:04:18] is to make the most of the time I have with my kids. Here's what my mini retirement is buying me.

[00:04:24] In August, we took our summer road trip without worries about the work that would pile up

[00:04:28] while I was gone. During the school year, I walk them to school and home every day.

[00:04:33] On days off, we have fun adventures. Yesterday, we went for a two-hour hike at Devils Lake

[00:04:39] State Park. As the school year progresses, I'll attend field trips and volunteer in each of our

[00:04:44] kids' classrooms. In addition, when my kids are at school, I'll be busy working on my passion

[00:04:50] projects, this blog, and my app for the financial freedom community, Thrifty. It may

[00:04:56] not sound as exciting as a 40-country tour around the world, but I'm excited to focus

[00:05:01] on being a really awesome parent. So as awesome as my vision of financial freedom is,

[00:05:07] it can't beat my vision for the next year, soaking up life with my wife and kids.

[00:05:12] The exchange rate of my mini retirement for financial freedom.

[00:05:17] Taking this mini retirement comes at a cost though. Because we're drawing from our savings

[00:05:22] and I won't be making new contributions to our investment accounts this year,

[00:05:26] our net worth is going to be going down. The good news is that we've got more than enough

[00:05:31] savings to make this work, and the investments I do have will still earn some interest. As a

[00:05:36] result, I'm still on the path to financial freedom. I'm just pushing it out a bit.

[00:05:41] 27 months to be exact. Trading 27 months of financial freedom for 14 months of a mini

[00:05:48] retirement now seems like a pretty good deal when you put our life situation in context.

[00:05:54] I'm usually one of the first people in the room to prioritize the long term over the short,

[00:05:58] but in this case, it's pretty clear we're making the right call.

[00:06:02] Factoring in my mini retirement, my new projected financial freedom date is May of 2030,

[00:06:08] just before our twins graduate from high school and we become empty nesters.

[00:06:12] A small delay for a big payoff now. And hey, that's right when the twins will be starting

[00:06:18] college. How perfect! I'll have the free time to walk them to and from class every day

[00:06:23] and volunteer in their classrooms. I'm sure two college freshmen couldn't hope for anything

[00:06:28] more. You just listened to the post titled Trading Financial Freedom for a Mini Retirement

[00:06:38] by Chris of KeepThrifty.com and I'll be right back with my commentary.

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[00:08:36] retirements and sabbaticals. I did this in 2017 when I took two months off work to walk

[00:08:41] the Camino, which is a 500 mile trek across northern Spain. It took me 38 days to walk

[00:08:47] across an entire country and it was an incredible life experience. I'm really glad that I didn't

[00:08:52] wait until reaching FI to do this. In fact, my goal to walk the Camino was a big motivator

[00:08:58] for me in my late twenties to get out of debt and clean up my finances. Not only do

[00:09:03] many retirements allow you to test drive what full retirement might look like, but it can also

[00:09:09] help you mentally disconnect your identity from your profession. Sabbaticals also help us test

[00:09:15] our assumptions on what we actually want in retirement. For example, I used to think that

[00:09:20] I wanted to be a digital nomad traveling the world with no home base. While I do enjoy traveling,

[00:09:26] the experience of the Camino showed me that I really do enjoy having a place to come home

[00:09:31] to that feels like mine. So when I got back, I bought a house. I imagine it would have been

[00:09:37] pretty disorienting to work 10 more years towards this goal of being a nomad,

[00:09:42] only to discover it's not a good fit for me. But that should do it for today. Have a happy

[00:09:47] rest of your day and I'll see you on the Thursday show tomorrow where your optimal life awaits.