“Coasting” FI

I haven’t been blogging a whole lot recently as I have been trying to get out and enjoy life and be present in the moment.  Sometimes I spend a little too much time dreaming about the future that I forget to enjoy the present and what is right in front of me.  The past few months have been about improving myself, finding balance, and enjoying life.  After all, we need to make sure to enjoy life now and not wait until we hit our FI goals.

One of my many hikes this summer.

One thing I have been doing though when I have extra time is checking out the Financial Independence boards of Reddit.  A question that has been asked a lot recently is what if you want to leave your full time job but don’t mind working in some lesser capacity – what are your options?  This perfectly fits our lives and what we are striving for.  I hate being tied down to my desk 40 hours per week, often times bored out of my mind, but I don’t mind some work.  I actually think that working 3 days a week might actually be kinda nice as it would give me a little purpose, and also a little income.

I have discussed our plan previously but didn’t have any terminology for it.  “Coasting FI” or sometimes also called “Barista FI” at least in the Reddit world is often a term used to describe someone who has saved a bunch of money but doesn’t have quite enough to be fully financially independent.  The term Barista FI is often used as you can apparently get a job slinging coffee at Starbucks and still get health insurance.  I personally prefer Coasting FI as there are so many other job opportunities out there and you really don’t want to see me after drinking 2 cups of coffee (check out Hammy from Over the Hedge for an idea of me on caffeine).  Whatever term you use, the concept is a nice alternative to full retirement as your part time employment gives you some income to cover your basic expenses while you are able to let the rest of your money continue to grow.  I am not sure what my ideal part-time job would be but if it included some nice perks like discounts on gear (snowboards, hiking, etc) or even the coveted health insurance plan that would be great.  The primary goal of whatever job this is would be to have some fun or be in an interesting industry.

Our current plan is to leave our full time jobs in the first part of 2020.  To be more accurate I will leave my job but as Mr. SFF is self-employed and doesn’t work 40 hours at one place he will just shift things and drop some clients.  He will leave his 20 hour per week client but likely keep the other two parts of his work going.  One client is a flexible 7-10 hours per week and has an amazing hourly rate so it’s easy to keep this one around.  The third part of his income is his side business that he actually wants to grow.  Once we hit our “number” he will likely grow this business and I will help out as well.  Depending on how well he does with his business this income, in addition to our rental income, could cover the majority of our expenses.

If our side income and part time jobs don’t bring in quite enough to cover all of our expenses (which is very possible) our plan is to access our cash savings (Ally bank) and our taxable investments to cover any deficits.  This means we can leave all of our tax deferred 401(k) and IRA accounts until we are able to access them without penalty at 59 1/2.  We might start a Roth conversion ladder at some point but our success doesn’t depend on it.  Based on my spreadsheet estimates, we could drain our taxable accounts fully and still be fine for our long term retirement if we don’t have to access our tax deferred accounts or even if we have to pull out a small amount.

When it comes to this whole Financial Independence thing there are SO MANY variables that could drastically change our outcome.  The last thing I want to to reach our full retirement age and be destitute but unable to find jobs.  So although we are going towards this “Coasting” FI track, in reality we won’t jump ship until our assets hit somewhere between our Coasting number and full FI number.

I have a couple of different spreadsheets tracking our progress but the most recent one I created just this week has estimates for future account values by month with one column calculating when we hit our Coasting number with some part time income and one that tracks our full FI number without any part time income.  Right now the full FI date is a full 3 years after our Coasting FI date.  Not ideal as I am really not thrilled about working full time for another 4+ years.  Our Coasting estimate based on this spreadsheet is only 15 months away and just seems too soon to make such a drastic decision.  For this reason our target is in the middle, currently around 27 months away.  This seems totally doable!  It means we have a full 2+ years to save a bunch more money and also a couple more years to see what they markets are going to do, how the health care system might change, and also just to see how things go in the world in general as there is so much unrest nowadays.

So if you find yourself completely miserable in the 9-5 and feel like complete financial independence is just too far away, keep in mind that as long as you have a solid foundation, there is a middle ground.  You might be able to make things work with less than full time employment and coast through while still leaving your assets to grow for your eventual full retirement.

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