December 2020 Update: 57% To Financial Independence

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I’m a little late for this December update, but who’s keeping track besides myself.

During my last update, I reduced the frequency of these reports from monthly to biannual to free up more time for my other projects. Well, I’m making another adjustment and decided to only write this update once a year. This is because I started a physical therapy private practice!

Why? You’ll have to read this to find out.

For now, let’s get to a summary discussing our progress towards financial independence.


Progress (%)


To Financial Independence

In the beginning of 2020, we were 33% on the way to financial independence. Now we’re over half way there!

This means that we have more than half of what we need to “retire early.”

It’s incredible that our net worth has increased more this year than any other year and it wasn’t because we were working in one of the technology companies that actually benefited from COVID-19.

With all the changes this year, I took home $52,000 after taxes and deductions from my full-time job. This is $10,000 less than last year despite myself hustling.

Regardless, I learned an important lesson this year. I learned that the sad reality is that physical therapists and occupational therapists, while essential, are certainly not urgent. This truth is made brutally clear across the industry as many of my colleagues are still no longer employed.

This motivated us to tighten our budget which will make us $30,000 richer. It helped us prevent being trapped by lifestyle inflation and allow us to continue to continue maxing out our retirement accounts.

In doing so, the money we invested in the stock market officially earned more than we did working for the first time! That’s when I finally felt the power of compounding interest.

Imagine by the end of the year, you realized that your investments brought in more money than you did all year. I’ll temper my expectations for future years though, in part, because this past year was a rarity for the stock market. It was one of the quickest and largest dips and recovery in history. In March, VTSAX, the primary fund we invest in bottomed at $54.50 per share and by the end of the year, it increased to $94.75 per share. That is a 75% return (nearly doubling your money) if you began buying in around that time.

Of course, I invested at the worst time last year. I front loaded my 401k and HSA to the max before the end of March 2020. Meaning, the 24,550 I contributed probably lost 20-30% of it’s value before increasing again. Ultimately, I could have had a much higher return if I just dollar cost average, but apparently, those who front load over time make a bigger return on their investments. That is because any given year, it is more likely for the stock market to increase than to decrease.

Regardless of your strategy, my progress is proof that someone, who doesn’t even having a 6-figure job, can begin to achieve wealth by investing consistently. If you haven’t begun investing yet, perhaps what you need to do is to break free from your fears of investing. If we can do it, so can you!

What are our plans to increase our net worth next year?

We plan on cutting our budget even further. Mainly by transitioning away from a traditional professionally monitored security system and implement a DIY self-monitoring system. This will make life so much easier for us and give us more options to monitor and secure our home while saving $430/year by our estimated calculations.

Of course, cutting our budget is only one side of the equation.

I plan to continue working at my full-time job until I can build up my referral sources and systems to grow my private practice.

I plan on making money online by developing personal development courses or finance based courses and products.

I would also like to grow my current monthly page views on Flexcents from 1,000 to 10,000 by the end of the year.

If you’d like to help me do that. Check out my archives (every article I’ve written) and share something with a friend or family member.

Learn More About Financial Independence

Toggle through to learn what Financial Independence (FI) means and the VITAL role it plays in allowing you to live your best life.

Financial independence (FI) is described as when your assets generate enough passive income to pay for your necessary and discretionary expenses without having to be employed or dependent on others.

These assets are usually in the form of stocks, bonds, real estate or other businesses

FI allows you enough financial security where you can retire and have your expenses covered by the income generated by your assets.

If you’re like most people, you are planning to retire or semi-retire at some point in your life, but even if you plan to work for as long as you can, I am sure you would prefer to do so out of enjoyment rather than necessity. Nearly everyone is working towards financial independence whether they know it or not.

Ultimately, FI allows you to have more options and freedom. It allows you to be free from worry about how you would pay for your bills if you lost your job, got injured, or needed to care for your family.

It would also allow you to travel, spend more time with loved ones, explore hobbies, give back to your community, or sit on the beach without worrying about needing to go back to work.


Now, what if I told you you could have this level of freedom before you are too old and wrinkly to enjoy it?

Most people wait until they can claim social security because they haven’t saved enough money, but there is a community of individuals who are way ahead of the curve. They have achieved financial independence decades ahead of their peers.

If you want to learn how to do the same, keep on reading!

If you haven’t heard of the 4% rule, you will today. It is a popular method to determine how large your portfolio needs to before you retire. Nearly everyone in the FI community starts at the 4% rule to determine their FI number.

The 4rule is a rule of thumb used to determine how much a retiree should withdraw from a retirement account each year. This rule seeks to provide a steady income stream to the retiree while also maintaining an account balance that keeps income flowing through retirement.


For Instance, if you have $1,000,000 properly invested, you should be able to withdraw $40,000 ( inflation-adjusted) per year without drawing down from your principal.

That means your lifestyle does not exceed $40,000 during the first year of retirement.

After the first year, you adjust for inflation each subsequent year.

If we assume a 3% inflation rate, you can withdraw $41,200 ($40,000 * 1.03) in the 2nd year and $42,436 ($41,200 *1.03) for the 3rd year.

To calculate your FI number we need to use the inverse of 4%, which is 25.

It took me a while to get it, so here is the math:

4% = 4/100 , Inverse = 100/4 = 25

Now let’s say you’re a nerd and kept a budget for the last year. You know exactly how much you spent in each category and you add up the total to be $60,000.

Use the inverse of 4% (25) to calculate how much you need by the time you retire.

$60,000 x 25 = $1,500,000

So you need $1.5 million to retire based on the above example.

All of the above comes from research called the Trinity study.

Our plan:

For us, the 4% rule was a great place to start, but everyone is a little different and we wanted to be more conservative.

Therefore, we are now using a 3% safe withdrawal rate (SWR) which means we have to save 33x our projected annual expenses. Some may argue this is too conservative, but we’re comfortable working a little longer for some extra security.

Using this method is not perfect, but it is a great place to start.

If your number looks TOO HIGH and you believe there is no possible way you can accumulate that amount of money even if you invested aggressively:

  • Check if you included recurring expenses that you do not plan to keep during retirement. These are typically any debts you owe or children that you will no longer need to support. If you find them, remove them from your FI number as you do not need to draw down from your portfolio to fund these expenses.
  • Maybe you’re just getting around to saving your first $1,000, $10,000, or even $100,000. It gets easier and more possible the more you save. Don’t let your belief’s limit your potential.
  • Maybe your current lifestyle is way too inflated and you do not intend to downgrade during retirement. If so, you need to be realistic about what is possible. It’s likely you either have to cut back now or cut back later.

If your number looks TOO LOW and you feel it is not enough for retirement:

  • This may be the case depending on where you are in life. This equation becomes more accurate the closer you are to retirement because you have a better idea of your current and projected expenses.
  • Maybe you’re used to seeing results from those retirement calculators that estimate how much you’ll need based on a percentage of your income. Those are usually pretty inflated because they usually aim for you to need 70% of your income to live. For instance, if you make $100,000, they will project your retirement to need 70k per year. For me, that is much more than I need to live on per year, but to each their own.

If you want to start your own path towards financial independence, sign up for my resource list so you don’t have to spend months doing your own deep dive and potentially get overwhelmed or turned off some life-changing information.

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