Planning For My Ultimate Goal

You should have found out from About the Blog and About Me that I am still captive to a 40 hour work week. Although that probably doesn’t sound too inspirational to most readers, let me reassure you that I have big plans in place and I shall share my Ultimate Goal with you.

I should have the option of cruising into a 15 hour work week by 35

“Semi-retired by 35? That’s really some lofty dream this guy is fantasizing about. He’s probably earning some big money or had some big inheritance. Otherwise he’s going to regret it because he has not accounted for future expenses like escalating medical costs, insurance, raising children, travel, the amazing new iPhone 6 and hair loss treatments!”

I hear you loud and clear. Yes, even though I do not see the glass half empty (I am not seeing the glass half full either. I am instead learning how to rejoice at even having a glass in the first place), let me reassure you that I am making some very conservative estimates here. My Ultimate Goal can actually be rendered very achievable due to the 3 reasons below.

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1. Lower expenses than the typical Singaporean household 

I still regard $40,000 as a lot of money to be spent in a single year. However, my wife is adament that it’s perfectly reasonable since we are including every single cent. The mortgage, token allowance to parents, income and property taxes, best friend’s wedding ang bao, the $9 monthly NTUC membership fee and the 20 cents I accidentally dropped into the drain will be accounted for in this target. As of now, just my wife’s income alone will be able to cover this estimate, meaning that we save >50% of our income (Yup, from this fact, you should realise that I earn more and I am proud to be the MAIN breadwinner)

Contrary to your expectations, we are not sacrificing FUN and HAPPINESS here. A middle-class, comfortable and fulfilling lifestyle will still be easily within our grasp. Together with you readers, we will explore how this can be done with a change of the average consumer mindset in many other subsequent articles. For now, you just need to know that $40,000 is our target expenditure (our current expenditure is closer to $50,000).

2. Fund half of our expenses with passive income, primarily from dividends

Two of the smartest people I know, Keynes and Buffett, made their fortunes owning companies and a capitalist will rarely find a more conducive place than Singapore to conduct his business (no tax on captial gains). Therefore, beginning from a few years ago, I periodically used some of my own capital to purchase stocks of local companies that I had “good faith” in.

Since I only made the decision to exit the Rat Race early recently, most of my holdings are geared towards growth rather than dividend stocks. (To prove my point, I do not own any Reits at this point in time) My dividends provide around $4,000 a year currently and I intend to use more savings to purchase businesses that regularly reward minority shareholders like me. The portfolio should hopefully churn out $20,000 a year by 2020. I love nice round figures. =)

3. Earn a reasonable hourly wage to cover the remaining needs

With half of my expenses settled by dividends, WE (wife and I) will need to earn another $20,000 from part-time work. Dividing it equally, each of us will have to bring home $800 worth of bacon every month, which doesn’t appear too demanding. I mean, even earning $10/hour would easily get us $600 on the 15 hour work week. And if push comes to shove, we could extend the work week to 20 hours instead.

Nonetheless, it’s highly unlikely that my wife and I will only be valued at $10/hour. We are both nice and smart (that’s why we married each other) and the likelihood is that I can command >$30/hour in my part time vocation (something I might even be willing to do for free under certain conditions), which should easily contribute the remaining half of our expenses. The lady could then stay home with the kids and cook/bake the entire day away.

In all reality, we are expecting to earn >$30,000/year during our semi-retirement to build a greater buffer in case we ever want/need to spend more. Otherwise, investing this excess would increase our passive income and potentially reduce the 15 HWW to 10 hours or maybe even 5 over time (if that’s desirable). Inevitably, we will be saying Hello to Financial Independence in the not too far away future.

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To end off, this is the blueprint to my early semi-retirement, when I reach the stage to live like the Fisherman for the rest of my life.