From Bankruptcy to Financial Independence
Our Journey with FI/RE - Somewhere in the Middle
Bankruptcy was perhaps the best thing that ever happened to my husband and me. During the real estate heyday, we got ourselves two rental properties and lived in a third house we owned. But we were young and stupid and ignored basic investment rules. Soon, we ended up upside down in the homes and the tenants, as if aware of that fact, chose just that moment to move out.
At that point, we had three mortgages and negative equity. The payments were bleeding us dry and the upgrades we had made on the houses were gathering interest on our credit cards. Looking back now, I wish we had just dropped the rent, kept the houses, and did whatever we could to make the mortgage payments, but that’s hindsight. At the time, bankruptcy seemed the only answer.
I remember sitting in court, six months pregnant, my husband beside me, my baby daughter at a friend’s house. It was probably the worst day of my life. We were failures; we were admitting it - officially - and throwing ourselves at the mercy of the court to give us a fresh start. I even remember what I was wearing - that moment is seared into my memory, sharp with edges that cut every time I think about it.
Our bankruptcy was finalized the day our second baby was born. We knew what we had to do. We had to do the old fashioned thing that always works: put our heads down and work and save as much as we could because for the next ten years, our credit would be shot. So we did. I stayed home with the babies and homeschooled them. My husband got a better job.
13 years later, we’re almost millionaires.
But I’ve learned something: it’s important to set another goal after achieving one, preferably quickly. Because if you don’t, lifestyle creep sets in. To some degree, it already has. We have a comfortable life now. And it has gotten easier and easier to justify higher expenses with the higher income.
As with the rental properties, we have no exit strategy.
Intriguing as exit strategies sound, I’ve never been good at having one. Most of the time, I get so excited about jumping in feet first into something new, I never consider how and when I’m going to get out.
Enter FI/RE.
I had been reading Mr. Money Mustache’s blog off and on, but it didn’t strike me as something I wanted to do. Besides, we lived frugally, I said to myself. (Never mind lifestyle creep - I didn’t notice.) Then I recently came across the subreddit FI/RE and was intrigued. After a few weeks on it, I wanted to learn more.
That was when I found the book Playing with Fire by Scott Rieckens and I was immediately hooked. I played around with some calculators, created my own spreadsheet for how we can save money, put off the sports car I thought I wanted and jumped in feet first - after talking about it with my husband, of course.
While this technically wouldn’t count as early retirement for him - our FI/RE date is set for when he turns (a young!) 61, my goal is to get there by the time he’s 60. That’s a mere 6 years from today.
While my husband is not fully convinced - we live in a 100-year-old home that will need repairs, our three children are growing up fast and we want to have fun with them, they’re going to want things to get set up as they grow into adulthood - he’s not sure we can save as much as I think we can - I have the excitement of an eight-year-old waiting for Christmas.
I cannot explain how the FI/RE bug has caught me. Every day that he complains about his stressful job, every day that I work that I don’t want to, every dollar we throw into Vanguard makes me hungrier and simultaneously more excited to achieve FI/RE. I know we can do it. We already have a unique story and experience living beneath our means.
I know we can do it.