In 2018, I had been running side hustles for four years that were bringing in $5,000 a month, and I was always looking for ways to grow my financial literacy. I started listening to money podcasts like "The FI Show" and "Journey To Launch," and began to learn about the FIRE movement.
If you're not familiar, FIRE stands for Financial Independence Retire Early. The concept involves typically saving 50% or more of your income, living within your means. and investing in low-cost index funds.
At first I wasn't quite sure what to make of the idea. Barring some miracle like winning the lottery, I figured that I would be working until I was 65 or older. I didn't realize I could make deliberate choices that could allow me to retire early.
But as I began to learn more, I knew it was something that I wanted to pursue. As a result of some major changes I've made to my life and my budget, I am now on track to be a millionaire by 2025 and completely FIRE by 2030, when I'll be 45.
Here are the steps I've taken to pursue financial independence and early retirement.
When I started my FIRE journey, I owned a $439,000 home and had about $39,000 in student loans along with $10,000 of credit card debt. This debt level was not going to work with my FIRE plans, so I sold the home and used my side hustles to accelerate my student loan and credit card debt payoff.
I paid off my student loans and credit card debt in 18 months by using thousands of extra dollars I earned through my food blog, Delish D'Lites. I also built up a six month emergency fund, in order to avoid having to get into credit card debt again in the future.
In 2018, my husband and I decided to move from New Jersey, which has a high cost of living, to Florida, which has a lower one. Our mortgage in New Jersey was over $3,200 a month. Now we are renting a house in the Tampa Bay area for $1,500 a month.
Being able to save $1,700 a month on housing costs helped me accelerate my student loan debt payoff.
Video by Stephen Parkhurst
We no longer pay expensive natural gas bills to heat our home, so we're saving over $500 a month on utilities. We also save thousands of dollars a year on vacations, because we now live a 10-minute drive away from some of the world's most beautiful beaches: We don't have to spend money on expensive flights to get away for some R&R.
We both successfully negotiated job transfers with our current employers as part of the move. I would definitely recommend talking to your manager or HR department, especially if you work for an employer that offers remote work opportunities. My husband and I discussed moving out of state for years before we did it, so we actively pursued careers with companies that have offices throughout the U.S. and would allow us to move to different locations.
As a result, we were able to keep our salaries even though we were moving to a much lower cost of living area. This move also gave us both what was essentially a salary raise, since Florida doesn't impose a state income tax.
When we moved to Florida, we decided not to use the extra money in our pockets to splurge on high-cost items, like a waterfront apartment or an expensive vehicle. We spend less than 10% of our annual income on our rental home, and we drive used cars that are reliable and affordable.
We cook at home most nights, and have dedicated funds set aside for dinners out and vacations. We have that six month emergency fund in a high-yield savings account so that we can avoid taking on debt if something unexpected happens.
Lifestyle inflation is the enemy of FIRE, so we make conscious decisions to avoid keeping up with the Joneses.
Video by Stephen Parkhurst
Before discovering FIRE, I was only investing about 8 to 10% of my income into my workplace 401(k) plan. Many experts recommend at least 15% if you want to retire comfortably by age 65, but people who are pursuing FIRE typically invest 50% or more of their income.
I increased my retirement contributions in order to max out my workplace 401(k), which is capped at $19,500 in 2020. I also maxed out my 2019 and 2020 IRA contributions, as well as my health savings account (HSA).
In order to put even more money in tax-deferred accounts, I opened a solo 401(k) since I also own a business. The solo 401(k) account allows me to contribute to my retirement both as an employee and employer, allowing me to save and invest more pretax money while reducing my tax liability from my extra side hustle income.
I also invest in a taxable brokerage account and real estate investment trusts (REITs) with the firm Fundrise.
It can be hard for those who aren't pursuing FIRE to understand why you won't spend thousands of dollars to go on a random unplanned trip, or why you prefer cooking at home instead of spending hundreds of dollars on a restaurant meal. I'm OK with saying no to the things that don't serve my goals of becoming financially independent and retiring early.
I've found that the more you lead by example, the more you inspire others to do the same. There's an amazing FIRE community to be found on the internet and social media, and as a woman of color, I've really enjoyed finding my own FIRE tribe of Latinas on Instagram who are also pursuing financial independence and early retirement. We share tips and motivation to keep each other inspired about our FIRE goals.
Pursuing FIRE isn't for everyone. The reality is that if your income is on the lower end of the spectrum, it can be really difficult to save and invest 50% or more of your pay. So if you're in that position, you should definitely focus on increasing your income first through job changes or side hustles.
You can only cut so much out of your budget, but you can always earn more.
And when you do start making more, you can put that income to work by paying down debt, saving, and investing. Even if FIRE isn't for you, the principles of paying down your debt, keeping your cost of living low, and building wealth through investing are principles that will serve your financial future no matter what your goals are.
Jannese Torres-Rodriguez is a certified financial education instructor (CFEI) through the National Financial Educators Council (NFEC) and a first generation Puerto Rican blogger and business coach who built a $50,000+ side hustle and is pursuing financial independence. She became an accidental entrepreneur after a job loss led her to create a successful Latin food blog, Delish D'Lites, that reaches over 250,000 visitors per month. After becoming a successful business owner, Jannese became passionate about financial literacy and is on a mission to educate Latinas on topics like entrepreneurship, investing, and building generational wealth through her new podcast, "Yo Quiero Dinero."