My Updated Retirement Plan

Months ago, I started this journey to quit my day job and work part-time on my online business. I was shooting for the stars, by saying that I would like to retire by the age of 27. I will be turning 25 next week, so my time is running out fast! As it turns out, a lot has changed in the past 6-7 months – some good, some not so good. As with any retirement plan, things change and you must alter your plan accordingly.

My Original Plan

For those of you who don’t want to re-visit my retirement plan in detail that I established months ago, here’s a brief synopsis of what I WAS planning. I would quit my day job by the beginning of 2013. This would be just after I finished my master’s degree and no longer needed to stay employed for tuition benefits. This extra time would allow me to devote more time and energy into my blogging business and therefore grow a lot faster. Then, in the year and a half (before my 27th birth day), I was planning on making enough to hire out some of the things that managing multiple blogs at once takes. During this time, I would also make the leap into real estate investing. This would supplement my blog income and provide me with some basic diversification. The move away from full-time blogging would free up my time and allow me two extra days each week (ideally for the rest of my life) to do whatever I want. My main goal in retiring early was just to replace my day job income while also getting to do the things in the community that I have been unable to do.

What Changed

As things started out, I was making pretty good money with blogging. Yet, one thing I failed to adequately take into consideration is self-employment tax. Considering other details about our family finances, about 1/3 of all the income I make blogging is sent to good ol’ Uncle Sam. That’s right, self-employment tax sucks! In order to match my day job income, I need more money to match my after-tax income from the day-job. In addition to this, I am losing the benefits that come with my mediocre day job income.

In addition to this, the security that I thought I had in online income is now gone. What I thought would be a long-term thing is no longer a viable option, or so it seems. This has caused me to re-focus my energy on building sustainable income from my websites, which takes a lot longer. Years, instead of months. I was also planning on investing in real estate as well. Yet, in conversation with my wife, we plan to move out of the area that we are currently living in the next 2-3 years (as long as she secures a great job elsewhere). Investing in real estate before moving would not make the most sense. While I could hire a property manager if we do move, when I consider the cost of taxes and property value in NJ, it doesn’t make any sense to make the leap in the next 2-3 years.

My New Early “Retirement” Plan

My new plan is just slightly different. I still hope to make the leap to quit my day job and replace that income with blogging income. Yet, I realize that it will take more than the rest of 2012 to complete this goal. In order to feel secure, I will need sizable sustainable income and that just isn’t here yet. Instead of quitting my day job at the end of 2012, I plan to keep working there as long as we are in the area (or somewhere else if I can find a better job).

Working and blogging will allow me to save more money for future investments. In fact, one viable option will be to save money for a sizable down payment on a duplex (or multiplex) when we move. We would live in one unit while renting out the others. With a large enough down-payment, we would guarantee ourselves a positive cash flow. Between that, my blogging income, and my wife’s salary, we should be in a great position.

This means that in the next 2-3 years, I will be still working hard to save money while building up an online presence. It won’t be as quick and easy, but I will feel more secure with my switch to the online world. I still think I can meet my target age of getting out of the rat race, but it will mean a little more work over the next two years. Hopefully, this time in 2014 (if not sooner), I will be announcing some exciting news. Stay tuned for progress updates!