2014 was a great year for my family. Our net worth had a healthy increase. We are ready to launch the second phase of our long term strategy in 2015.
2015 will mark the beginning of significant changes in our life. My wife and I had significant changes at this level only a handful of times in the last 20 some odd years: the year we came to the US, the year we finished our education, the year we bought our home, and the year I took my current job. 2015 will be another year we will remember for a long time.
We are expecting to take a voluntary 1/3 cut of our income in 2015, another cut in 2016, and another cut in 2017. We expect our income in 2017 to be about 1/3 of our income in 2014, maybe even less. Naturally the income cuts will directly reduce what we save each year, and our taxes. We will move from aggressively saving and accumulating toward living paycheck to paycheck, eventually to spending more than we make.
We are not calling it retirement. It really isn’t retirement. We give up a large chunk of our income for more freedom, but we will still earn money from our labor, just not as much as before. This blog will still continue.
It’s not financial independence either. We still need the money from our labor. If we completely stop, we won’t be able to withdraw as much as we’d like. It’s also our way to deal with the sequence of returns risk. We minimize the sequence of returns risk when we don’t withdraw from our portfolio. I may even take a chance at a startup-type company to satisfy some personal aspirations. If I win the startup lottery, great. If not, it won’t affect our long term plan. Many options open up when you only need to break even on cash flow.
The new life path is unfamiliar to us. It will require many adjustments. We are nervous, but we are also excited. After all these years we feel we are finally charting our own course. If you already went through a similar transition, from saving to not saving and to spending, please share your experience and wisdom. Thank you.