As a type-A personality, I have always been excited about setting goals; particularly the big long-term goal type of goals. It makes me feel like I’m achieving something to check off the boxes and secure these momentous things. When the day-to-day starts to feel a bit mundane and repetitive, big goals also keep me on track as they are my reason for staying the course.
Lately, though, I’ve started to feel a bit lackluster towards pursuing the goal of true financial independence. The concept excites me and I love seeing other people on the internet getting closer, achieving it, quitting their jobs — I eat it all up. But I also then think about how far along I am in terms of doing the things they’re doing, and that finish line feels pretty far (at least 10 years).
They say comparison is the thief of joy, and while this can certainly be true, I have always liked to look for examples of how other people are doing what I want to do. Have they struggled? Have they learned any tricks that could make my path easier? I like to consider observing others through this lens to have an idea about how to forge my own path (and maybe skip a few steps or mistakes with their guidance).
In the particular example of pursuing financial independence, I have studied others all over the internet and social media to try and uncover any secrets or loopholes to get there faster.
So far, it seems that in order to achieve financial independence (FIRE), you must
- have a high paying job, so that you can then:
- save/invest a high percentage (upwards of 60% of your income)
- do this for at least 5 years (usually more like 10-15, depending on income and savings rate)
My motivation for pursuing FIRE is that I feel kind of uninspired in my day to day life. My job is by all accounts: completely fine. For once, I actually like my direct boss (and her boss actually). I get to work remotely and beyond that, we have a somewhat flexible schedule to shift as necessary within a certain amount of reasonableness. I work in sales and so we also are offered pretty alluring incentives to achieve in various contests and programs, all of which are things I have wanted in previous jobs.
As it turns out, these things are great but not great enough to push down that persistent itch that this isn’t it. This doesn’t feel like living.
So then I decided to break down what it would take to pursue a life of living. What does that look like? The first thing I thought of was: three day weekends, and so my first specific FIRE goal was born.
In order to stay excited and motivated to pursue something as big and long-term as financial independence, it’s important to break it into specific smaller goal posts along the way that have a significance to them.
An ideal part-time work week for me looks like four days on and three days off. As soon as I had this thought, the next parts immediately clicked into place in my head.
A four day work week sounds like Barista Fire. Barista fire is covering a portion of your bills with passive income so that you can cut back your work load to still work but have a lot less to cover. Many people in the FIRE Community like to build up portfolios and will pursue their work optional lifestyle by utilizing the 4% rule, but I’ve decided to pursue Barista Fire with dividend stocks, specifically a portfolio built up of stocks that have a decent history of paying out dividends (at least 10 years+).
This is still somewhat of a long term project, but I have now reduced my 15 year full FIRE projections (and also 15 years chained to a full time job) to 2-3 years to reach Barista Fire.
This is how I did it:
- I wrote down all of my necessary monthly outgoing expenses (I did not include my miscellaneous spending fund that is part of my regular spending/bill set up)
- I chose 5 expenses to start with (approximately 25% of my expenses) and added them up to get a total of $498
- I will pursue this plan by investing in Altria Stock for the next 2-3 years until the dividends paid from this will cover my 5 chosen expenses.
Once I reach $500 in monthly dividend income, I will have cut my expenses down to $1350 per month. This is a moderate budget figure because I cut out miscellaneous spending that I use for spontaneous spending (gifts, donations, misc things that pop up [car tag renewals, surprise vet visits, etc.] or sometimes because I see something I like that I hadn’t planned for), but I have a more robust grocery figure than we will probably spend and still have a line for savings, investing, etc. It is not a truly bare bare bones survival budget (it could be cut down more if it was truly necessary). There should be leftover unused money in some of these budget lines and I can also always pick up gigs to cover any extra expenses that come up.
This is step one in my plan and ultimately the long-term goal is to create a portfolio of dividend-paying stocks, like a DIY dividend ETF full of Dividend Kings and Aristocrats for diversification and personal peace of mind.
What bills am I starting with?
Cell phones- $33 per month
We use Mint Mobile and pay for 4 gb of data for each phone for approximately $400 per year including taxes. —> This monthly expense is already covered!
Gas – $100 per month
I know this seems pretty low, but I work from home and my partner is also home full time. We share one car for the moment and plan to buy a hybrid in the foreseeable future. Currently, I fill the tank once per month and have leftover within this $100. With a hybrid being my primary vehicle, I do not anticipate paying much more than $100 even while driving more.
Dogs – $100
This includes dog food and joint supplements, primarily. Extras like heartworm/flea/tick are not included in this and are dealt with as it comes up.
Internet – $70
We have a higher speed of internet because I was previously teaching online predominately and used ALOT of the allotted bandwidth in our previous plan. Now that I work from home as an employee, having a strong internet connection is still important and I don’t have to worry about streaming/too many video calls, etc.
ACA marketplace plan – $150
I currently have health insurance through my employer and pay about $120 per month. This comes out of my paycheck automatically and I never see it, though, so it feels like I don’t actually have to pay for this. When I do decide to switch to a part time work schedule, it’s likely that I will have to get an insurance plan from the marketplace and I have estimated this expense at $150. If I am able to work part time doing something that includes a health plan, I will allot this for something else and have even less to cover! Wouldn’t that be grand?
Household items – $45
I split our household item needs from our grocery food needs. I used to group all of these together (they usually all come from the same place since we grocery shop at Walmart mostly), but I found that if we needed both toilet paper and paper towels, it nearly wiped out our monthly $45 budget and would bleed over into the food side. I have since separated them and buy household items in bulk now quarterly. It is much easier to have $135 to buy 3 months worth than try to fit a month’s worth into $45.
Since I will still need about $75,000 worth of Altria stock to achieve the $500 monthly dividends to cover these expenses, I have further broken this down into the progress I hope to make each month.
It is likely that I will begin aggressively pursuing this specific plan in 2023 after I save enough money to put a sizeable down payment towards a hybrid vehicle. We could possibly forego a second car for several more months, but I think having a new hybrid car allows me to pick up additional money making gigs on the fly (deliveries) and gives us some ease of mind at only having a 13-year-old car as our only vehicle. I currently have a deposit down on one but wasn’t able to get a specific timeline on when I can expect it to hit the lot. So, in the meantime I will save as much money towards that as I can and adjust when it comes time to finish that buying process.
My investment schedule
My plan is to invest $2500 per month into Altria stock each month. This feels doable based on my current job because I make a base salary that covers my bills but also a commission since it is a sales position. On average, my after (high) tax commission checks are $2000-2500. In addition to this, I continue to work gigs on the side and average about $500 per month on top of my regular job. This does not consider gigs like doordashing, since I have pretty much stopped doing that since we went down to one car.
$2500 buys about 55 shares of Altria stock (based on a share price of $45). 55 shares generates $49.50 in dividends per quarter, or about $16.50 per month. To project this conservatively, I will consider dividend growth based on $15 per month and not include this amount as available money in my calculations to purchase additional shares. I will use the funds spun off in dividends to purchase new stocks to accelerate the growth, just not count it in the calculations so that if the stock price rises, I should still be on track.
$2500 producing $15 per month of passive income doesn’t seem that exciting, but this $15 is truly passive and is per month, every month, FOREVER (as long as dividends don’t get cut, of course).
I also wanted to consider the power of smaller amounts of money. If I decide to work a Friday night delivering people’s Doordash and Uber Eats orders, what could that mean in terms of passive income?
Based on a price of $45 per share and a $0.90 dividend payout per share, it will take 4 shares of Altria to equal an extra $1.20 per month in dividend payouts. 4 shares x $0.90= $3.60, which is then divided by 3 months because Altria dividends are paid out quarterly. $3.60/3 months=$1.20 per month.
4 shares x $45 = $180, or conservatively every $200 equals another $1 of passive income each month.
To break it down even further, I will likely utilize a chart like the one below to track the progress of one of the selected bills to make this feel manageable and like it has movement.
Of course, it is impossible to plan 100% certainly long term into the future. I could get a different job paying differently, could move, etc., but I’ll just have to deal with those things as they come and pivot as necessary. This is a good starting point that feels challenging but attainable and I wanted to share in case you are also looking for a jumping off point to pursue a work optional or at least a work-alot-less kind of life that feels actionable.
Another possibility is that these bill amounts will increase and no longer be fully covered by dividends. I will probably always continue throwing extra dollars into dividend funds to create a buffer for that concern, but dividend stocks also raise their dividends from time to time as well, so I’m not that worried about their ability to cover future expenses.
If you made it all the way through this, thank you! This was a lot of words but hopefully you can see the path I’m trying to forge here. I hope it inspires you to go after ways to create the life you’ve always dreamed of too!
2 thoughts on “Setting Goals: How to Stay Motivated for Big Long-Term Goals like FIRE”
I love the idea of linking the dividend producing stock or ETF with taking care of a specific expense. The example you gave with your internet bill is brilliant.
Hi Samuel, thanks so much for taking the time to comment! Crossing off one bill at a time makes this whole endeavor feel like something I could actually accomplish. It’s very exciting!