Financial Freedom At 45

fireworksLet me start by clarifying that I am not retiring at 45. It is rather a goal of mine to achieve financial freedom at 45. My definition of financial freedom is simply about reaching a financial state where you are free from major financial obligations.

I came up with my financial freedom at 45 goals as I noticed I only had 10 years left on my mortgage. I started thinking of my goals and what it would mean once my mortgage is paid off. It felt good and it’s not all that far away …

Financial Freedom Goals

Having short and long term goals is good to have as it allows you to put plans together to achieve them. Everyone’s situation is different but my goals fall into a few categories that will apply to many.

  • Mortgage Free @ 45: As I mentioned, I have 10 years left on my mortgage and only 8 years to go. At some point, I’ll need to accelerate some payments but I feel it’s achievable. It’s important to have challenging goals while keeping them within the realm of achievable.
    [2014 Update] Only 5 years to go. I will have to add some money to achieve this goal. It’s still my target.

 

  • Loan Free @ 40: I currently have car loans and my goal is to have them paid off by the time I reach 40. I went through a bit of a lifestyle inflation with our primary vehicle and then a couple of years ago I needed to get a second car to commute. All is in good hand and I am targeting to be done in 3 years. One caveat is that I don’t include loans that are producing incomes. I don’t consider those a negative addition if they generate income. Sometimes, that’s how you can boost your future earnings.
    [2014 Update] No loans!!!

 

  • $25,000 Dividend Income @ 45: This is probably my most challenging goal. I expect to make $5K this year so I have a $20K gap to make up for in the next 8 years. I basically have to increase my dividend income by $5K every 2 years. With simple math, if you assume a 5% dividend yield (which can be generous), I would need to add $100K every 2 years to achieve that and that’s not something I can do. Yet, I still like it as a goal. Over the past 2 years, I manage to set myself up to earn $5K in dividends and I’d like to continue working on growing my dividend income as a true measure of my financial freedom.
    [2014 Update] I am 28% there with my dividend portfolio. I’ll make some progress this year with a transfer from my other RRSP account.
    Dividend Snapshot

 

  • Maintain a Sustainable Life Style: I have recently turned a page where I paid off a renovation line of credit (it felt good) and I needed to set challenging budgets for our family to achieve that. Considering we had some life style inflation slip up a number of years ago, I believe that maintaining a consistent life style cost is important to achieve financial freedom. No need to keep up with the Joneses.
    [2014 Update] That’s the easy part 🙂 We are keeping our life style pretty stable. Kids are starting to cost some more money as they get older so we can’t really over spent on ourselves.

These goals feel good and challenging enough. I feel it’s important to have challenging goals otherwise it’s just routine. I am not saying that routine is wrong but routine can also lead to a life style inflation if you aren’t careful. Your routine should be to save more as your income grows as opposed to spend more.

Readers: What are your Fianancial Freedom goals?

“Image courtesy of noppasinw / FreeDigitalPhotos.net”.

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