How we became financially independent

This week, Brian finally did something he's been wanting to do for years: He quit his job. He is now officially retired, financially independent, a gentleman of leisure. Thirteen years after we officially set our sights on early retirement as a goal, we have now crossed that goal line.

How did we do it? Basically, by following the same plan that I outlined in that 2013 post and later expanded on in a 2016 article for Money Crashers: 

1. Cut your expenses as much as possible to maximize the amount you can sock away each month. (This step is what you've been reading about here for the past 13 years.)
2. Invest those savings in a mixed portfolio of low-fee funds. We've had some help with this step from a reliable finance guy who's sniffed out investments that earn us solid returns while minimizing what finance guys like to call "downside risk." (What exactly would be an upside risk?)
3. Stick with the plan until you've earned enough to retire. Technically, we reached this point a few years ago, but Brian needed a little time to get comfortable with the idea. Last year, he decided he was ready to take the plunge, and his official last day was Wednesday.

Before we could cross that finish line, though, there were a few t's to cross and i's to dot. The most obvious one: health insurance. Luckily for us, we live in New Jersey, which has a well-organized state health marketplace (Get Covered NJ) that makes it quite easy to shop for plans and compare costs. Even more luckily, New Jersey is one of the ten states that have stepped in to pick up the cost of the Obamacare subsidies Congress canceled last year. With our new, lower income (which is based on our taxable investment earnings, not the amount we withdraw each year to pay our bills), we qualified for a discount of over 80%, cutting our monthly premiums to just $318 per month for the two of us. Mind you, this is for a plan with a pretty hefty deductible ($2,100 per person per year), so we'll have to get used to paying out of pocket for a lot of costs that used to have only a nominal copay, such as prescription meds. But with all the practice we've had stretching our dollars over the past 22 years, I'm sure we can manage to keep those costs under control.

The health plan I bought doesn't cover dental or eye care (except for children, which we don't have). With a little searching, I was able to find a separate vision plan that wasn't too expensive (around $21 a month for both of us) and included our current eye doctor in its network. Based on our typical eye-care needs, which are a bit on the high side, it looks like this plan will save us around $300 a year. But dental coverage, at first blush, looked like a completely different story. There were dental plans available on Get Covered NJ, but most of them, once again, offered coverage for children only. The few plans I found that included adult care were not only expensive but had very low out-of-pocket maximums. (The worst of the lot capped payouts at a mere $1,000 per year, which was less than the annual cost of the premiums. In other words, it were guaranteed to cost us more out of pocket than it would ever pay back.) With such limited coverage, these plans would do little to nothing protect us from ruinous costs, which is what insurance is supposed to be for.

But after looking a little further, I found an alternative that looked much more cost-effective: a dental discount plan. This isn't technically the same as insurance, which pays your bills (or a portion of them) for you. Instead, for a nominal yearly fee (around $125), you get charged a reduced rate for all care from dentists in the plan's network. If the plan's estimated costs for services like cleanings, exams, and fillings were accurate, it looked like it would save us about 65 percent on our average yearly dental costs. The only catch was that it would require us to choose a new dentist, since the trusted dentist we've been seeing for years isn't part of this or any other dental network. But after a little research, I was able to find a dental office with very good reviews from customers that's not only in the network, but also within walking distance of our house. Given how much we stood to save, it seemed like we should at least give the new dentist a try. If we didn't like her, we could always go back to our old dentist, and the savings just on that one visit would be enough to offset the signup cost.

In addition to the health insurance, there was one other workplace benefit we had to replace: Brian's computer. The laptop he's been using for the past several years belongs to Rutgers, and we knew he'd have to surrender it when he left. The last time we bought a computer, we chose a mini PC, which combined a low price with ease of upgrading. But Brian prefers the portability of a laptop, which he can easily haul into the kitchen for a video chat with his folks, set on the coffee table to stream a show on the TV, or take with him on a trip. So I did a search on Craigslist and found a lightly used Lenovo ThinkPad, which gets high ratings for repairability, for just $200. It's pretty basic, but more than adequate for his modest needs (email, Web surfing, streaming video and audio).

Although Brian is now officially retired, there still are a few more retirement-related tasks we need to clear up. For one, I've scheduled a couple of doctor appointments to take advantage of our current health insurance before it switches over at the end of the month. (One of these is with a dermatologist to see if I can find a cheaper alternative to the cream I'm currently using for my rosacea, which I've just learned would cost me about $100 a month to buy out of pocket.) Then, once the new plan kicks in, we'll need to officially select our new doctor and dentist and arrange to have our health records transferred to these new providers. And there's a bit of paperwork I need to complete to roll over Brian's 403(b) to a new IRA under the care of our trusty finance guy. 

But within a few weeks, we'll be officially set up to live a life of leisure. I'm already more or less retired myself, as all my long-term clients have dropped me one by one over the past few years and I've had no luck finding new ones. I've spent quite a bit of time over the past year or two scouring freelancer job listings and applying for suitable-looking jobs with essentially no results, and since we don't really need the money, I've decided to stop bothering with it. I'm happy to accept a new assignment if it simply falls into my lap, but I'm not wasting any more of my time looking for work. I'll leave it to the younger freelancers who need it more than I do.

Having reached this major financial goal, we don't feel any need to set a new one. All we have to do at this point is make sure our nest egg can carry us through the next 40 years or so. (We'll still have smaller, shorter-term goals, like gradually electrifying our home and, eventually, our car. But we've got ample cash in the kitty to dip in for those expenses as needed without cutting into our income.) So basically, we just need to stick with the same plan we used to get here: keep our expenses low, keep our investments sound, and keep on trucking. Which means that the posts you'll be reading on this blog in the future will probably be along much the same lines as the ones you've read here in the past. We'll still be doing all the same things to save money and care for the environment as we've always done; we'll just have a lot more time now to do them.