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You can join the FIRE movement and still have debt — here’s proof

Posted: 4 November 2020 9:44 am

Katie Oelker with her family

“My dad died before he really got to enjoy his retirement, and it was a huge wakeup call as to how I want to live my life.”

Our new series highlights stories from real people who’ve joined the financial independence, retire early (FIRE) movement. Some have successfully reached FIRE, while others are on track to do so over the next few years. Answers are edited for length and clarity.

  • Name: Katie Oelker
  • Profession: Financial coach and personal finance blogger
  • Current age: 33
  • Time in FIRE movement: 2 years
  • Age you hope to retire by: 50 years old
  • Retirement investment goal: $1 million

The reason I fell in love with the financial independence, retire early (FIRE) movement is that my dad died before he really got to enjoy his retirement, and it was a huge wakeup call as to how I want to live my life.

My dad was laid off unexpectedly at the age of 53, and then he discovered he had terminal liver cancer shortly after. He didn’t return to work, as he was given only six to eight months to live.

Although he moved to Ireland and ended up living four years past his original timeline, it still wasn’t long enough to enjoy a lifetime of hard work.

This in and of itself has inspired me to balance living for and enjoying today, and also planning for a future where we can enjoy more time with our family as soon as possible.

I would love for our family to have more flexibility to do the things we love together, especially travel the world, while we are in good health.

How much debt do you have right now and how do you plan to aggressively pay it off?

Currently, we just have our mortgage to pay off, which is at roughly $280,000. Our current plan is to throw an extra $1,000 per month toward our mortgage so that we can have it paid off in approximately 12 years.

What’s your investment strategy while you pay off this debt?

Right now, we have approximately $125,000 between our Roth IRAs, my husband’s 401(k) plan, a traditional IRA and stock options.

Our current strategy is to max out his 401(k) each year, as well as fully fund my Roth IRA. In addition, we buy a small amount of stock through his company’s stock purchasing program and will continue to increase that percentage over time.

My goal this year is to increase the amount we invest by 1% every 90 days. Once we pay off the mortgage, we will accelerate our investing and start using that extra $1,000 to purchase index funds.

How much do you plan on having invested before you retire?

Ideally, I’d like to have $1 million invested. If you run the numbers based on our projected expenses at retirement, the amount needed to retire varies from $750,000 to more than $1 million. I also don’t think that my husband and I will ever completely stop working and will always have income coming in from side hustles, businesses or future real estate — so at this time I am shooting for $1 million.

Around what age are you and your husband hoping to retire by?

My goal is that we could retire by the age of 50. If we continue on our current strategy, it is possible we could retire a few years earlier than that, however.

What are your post-retirement plans?

Post-retirement, our plan will be to pursue projects that we are passionate about without worrying about how to make money from them. We also love to travel and will continue to do so with our family. Ideally, I’d love to purchase a home some place warmer for us to spend the winters at.

3 pieces of advice for people interested in joining the FIRE movement

  • Determine what your end goal is and work backwards. For example, we are working to pay off our new mortgage in 12 years versus the standard 30, so we can then start to aggressively invest more.
  • Balance enjoying life now and sacrificing for the future. FIRE doesn’t mean you can’t travel, dine out or enjoy your time today.
  • Know that it doesn’t have to be all or nothing. Having no debt and ample savings can buy you lots of freedom without officially retiring early. In addition, most people that retire early actually find other work — oftentimes for themselves — that they are more passionate about. Try to integrate that passion into your life now.

Photo credit: Katie Oelker

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