02 March 2019

$24k Net to "Structural Financial Independence" and the Test Drive I Took in January

One thing that never ceased in my absence from blogging over the past year is my efforts toward getting myself to the point where passive income sources could sustain me. That is, my annual household budget funded without working.

I keep track of all of that stuff and plan my strategies for getting there with the aid of several spreadsheets I've built. Basically, I have them set up to show me where I am now versus where I would be if I were to cash out of everything that is a) not already in my dividend income portfolio (excluding retirement accounts and real estate), and then b) move all of the resulting funds into that portfolio and plug it in.

This gives me a running tally on where my assets stand in terms of their value versus their yield potential, such that I can pursue non-income investments while still aiming for a passive income goal.

To bring it all down to a simple bottom line, the spreadsheet culminates in the net amount I need to earn from work each week, assuming I've moved everything into my income portfolio. When that number reaches zero or goes negative, it means I have hit what I call "structural financial independence," the point at which I am positioned to flip that switch and make it happen, even if I have not.

At that point, radically changing my financial life (my entire life, really) becomes "when I want to" rather than "when I can afford it."

As of this morning (while I type here and use my blog to procrastinate a bit before I do my weekly business and personal accounting...), I am $24.3k net away from hitting that "zero point" (precisely, as of this moment it would flip to -$1.68 per week that I would need to earn). The source of this income will be my business; thus, achieving structural financial independence later this year is practically a fait accompli as my existing book of business is worth far more.

I doubt that I'll drop everything and stop working once I reach this point. There's still a lot of things I can and should do to make my passive income machine robust, and continuing to operate my business is the best source of income with which to do that.

However, it will become optional rather than necessary, and the metric by which I decide how to use my time will change dramatically: it will be about what I'd enjoy doing more, rather than what I need to do.

Keeping track of everything as I have has made it possible to see the light at the end of the tunnel and know where I stand in relation to it, and as such, I took advantage of that knowledge and went off the path early this year for a little bit of play: in late December and into the middle of January, I was in Brazil.

Hanging out on the island of Ilha Grande, Brazil

One of the general outline, "fuzzy" goals I have for my financial independence is to stop putting up with winter. I hate the cold, I hate the snow, I hate the ice. I hate the added danger they bring to everyday activities. I get zapped by static electricity all the time. I can't keep the skin on my hands from drying out to the point that it cracks and bleeds. The endless gray days just suck the life out of me.

Fuck winter. Bottom line: Fuck. Winter.

So, knowing that I'm reaching the point where I can ease back on the work throttle a bit, I did. Last summer a friend invited me along on this approximately three week trip, so I jumped at the chance. It was the first time I've gone overseas in a non-military capacity (other than Canada and Mexico, that is), giving me the opportunity and the necessity to get my passport, finally.

And so a bit more than a month ago, there I was, in the southern hemisphere, experiencing summer in January. I was also there secure and relaxed in the knowledge that everything was paid for, that my affairs were continuing to run and fund themselves without me needing to be at work or looking in on them every single day, and that I had earned it. I finally experienced a dream, escaping from winter, and I was able to enjoy doing it, to be there basically without worries about how to sustain it.

And then something more happened, something that I haven't experienced in decades: I lost track of time. I'd find myself forgetting what day of the week it was, and other than where the sun was in the sky, not entirely sure of what time of day it was. Where I was and what I was experiencing began to take on a feeling of stretching out forever, and it was awesome!

This is the best of what I could have hoped for with this little test, that I could break away from work, not financially, but mentally. For a number of years I've been worried that when I get to this point that I'd be so addicted to working that I wouldn't be able to let myself stop. I'm aware of a "workaholic" tendency within myself, but I feel like this little test went so well that I may just be a bit over-pessimistic about that topic, and maybe it's just a case of not knowing myself as well as I think I do. Now, I think I'm going to do just fine.

And I think that very soon, not only will I be working if I choose to, but I'll also be cold if I choose to... :)

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