Ah…I love Independence Day! This is my favorite holiday this year. Mrs. RB40 and our son love Christmas, but 4Th July is better. This time of year, the weather in Portland is perfect and I can sell it all weekend around the house.
I think my attachment to Christmas is not the same as most people. Christmas feels so commercial now. It's all about spending money and it's cold and wet. I can't barbecue in this weather! Independence Day is also the time to celebrate my personal financial independence day. After the weekend of July 4, 2012, I handed over the 2-week notice. This was one of the best moments of my life.
2025 has been a tough year for us. The economy is full of uncertainty, but the stock market has reached new heights. Very strange. We tried to stay frugal as Mrs. RB40 retired earlier this year. Unfortunately, my positive income also quickly disappeared. We must have withdrawn from savings earlier than I expected. However, since I retired in 2012, our savings have increased significantly. We should be fine. Recently, our net assets have reached new heights along with the stock market. This gives me confidence that the fire is going as planned. Financial independence is the best. I can handle anything I want anytime, anywhere. What are you waiting for? Declare you Financial Independence Day And live your own way.
Announce your financial independence day
What does it mean to announce your financial independence day? In short, this means you aim to achieve financial independence.
Financial independence (FI) is a concept that many people desire, but only a few people realize it. FI is difficult because it can only be achieved through deliberation and perseverance. This is a simple idea, but it can take years to execute. Here are three basic steps in financial independence (more in-depth articles via this link).
- Track your financial situation – Most people don't know what salary they've spent. Money flows through their hands like water. The first step towards financial independence is to reduce unnecessary expenses. This can be done by carefully tracking your spending and getting rid of expenses that won’t add happiness to your life. The goal is Less than you. Do this and your financial situation will gradually improve. Once you have taken care of your spending, you need to increase your income. This is also a key step. If you have a good income, the journey to fire will be much easier.
- Save and invest as much as possible – The next step is to save and invest as much as possible. You need to take Step 1 to the next level. You need to spend Much less More than you do. This will determine how fast you can reach FI. If you save 10% of your income, it will take 50 years to achieve FI, i.e. a lifetime. If you save 50% of your total revenue, you can contact FI within a more reasonable time frame. This does not mean you have to live below the poverty line. Start at 10%, increase it every year. Ultimately, you will reach 50%. As your passive income grows, it will become easier.
- keep going – Financial independence is a long game. You need to save and invest in a consistent manner. The market can tilt up and down, but you need to continue to increase your investment. Ultimately, your passive income will exceed your expenses. That is financial independence. There are other ways to define financial independence, but this is the safest. If your passive income covers your cost of living, you will never run out of money. Of course, it is best to set up within a small range. Your spending will inevitably increase over time.
Our Financial Independence Journey
Now, I will share our location on our FI journey. My goal is to generate enough passive income to exceed our expenses by 2022. We did and kept this fee. Over the past few years, our passive income has exceeded our annual expenses. it's great. This gave Mrs. RB40 the confidence needed to retire early.
Coincidentally, July 4Th It's half of the calendar year. Now is a good time to take stock and see if we are normal. I did this by checking our FI ratio*.
FI comparison = Passive income/fee
Passive income report
Our passive income has performed well over the past few years.
- 2017 It is the first year when our passive income exceeds our expenses. Very good.
- 2018 It was a high year for us. We spent more time on our trip than usual and got a new HVAC. Fortunately, our passive income is also very good. We're really close to 99%.
- 2019 It was a wonderful year for us. Our passive income has dropped slightly, but our spending has dropped significantly. This is mainly due to the reduced housing costs in our case. We moved in duplex and we could share a lot of housing costs with our tenants.
- 2020 It's very good for us. Our passive income is lower than in previous years, but our annual fees are also much lower. The FI ratio is 120%.
- 2021 It was a wonderful year financially. We spent very little time because we were stuck at home. The FI ratio is 140%.
- 2022 It's another great year for us. One of our real estate crowdfunding projects has been completed and we have received huge payments. We spent a lot of money on our trip, but it worked. We had a great time and our annual fee was pretty good. The FI ratio is 146%, a new high.
- 2023 It was tight, but we crossed the line.
- 2024 very good.
- 2025 It looks really good at the half-year mark. However, we have some huge bills. The RB40JR's cochlear implant program was rejected, with the bill nearly six figures. We will have to work with the hospital to figure out some of the issues. We are also remodeling the kitchen. That's also very expensive. Cash flow will be ugly this year.
Let's go into each line item in detail.
- Real estate crowdfunding – Our investments are done well. However, I am not willing to invest more at the moment. It is best to wait until the interest rate drops. Overall, I'm happy with crowdfunding. This is much more passive than becoming a landlord. You can read more details on my real estate crowdfunding page.
- rent – We merged it to two rentals in 2019. They are all rented and the tenants are great. I plan to sell it when my son is in college in 2029. Being a landlord is financially beneficial, but I want to go for more. A unit is vacant for 4 months. That's why we have negative cash flow in this line. By the end of the year, we should be positive.
- Dividend Income – Our dividend income target is $15,000 per year. I don't want to invest more in dividend income because we want to lower the AGI of FAFSA.
- interest– This is the benefit of our bank account.
- Retirement Account– Our retirement accounts are primarily invested in low-cost Pioneer Index funds.
you can Register with Crowdstreet If you are interested in real estate crowdfunding, please go through this link. My experience in crowdsourcing has been great so far, but your mileage may vary. They have a lot of interesting projects now. Check it out.
FI comparison
What about the FI ratio? How are we doing so far?
FI comparison = Passive income/fee
2025 FI ratio = $26,786 / $35,240 = 131.6%
So far, our FI ratio looks good in 2025. We haven't spent much money yet. Fortunately, our fixed costs are very low. You can read more about how we can minimize 3 major spendings here. Big bills will increase our expenses, so I don't know how the FI ratio will look before the end of the year. We'll see how things are going.
Recording and projection
Let's take a look at the FI ratios over the past few years.
- 2015: 54% ($28,415/$53,037)
- 2016: 71% ($38,222/$54,000)
- 2017: 109% ($53,664/$49,131)
- 2018: 99% ($56,918/$56,638)
- 2019: 122% ($56,204/$45,896)
- 2020: 120% ($48,200/$40,030)
- 2021: 140% ($60,469/$43,261)
- 2022: 146% ($82,086/$54,607)
- 2023: 103% ($66,806/$65,063)
- 2024: 121% ($63,086/$76,523)
- 2025😕
OK, what are you waiting for? Announce your financial independence day and keep moving forward! Financial independence can take a long time. The sooner you start, the more you will get there. Don't wait.
Do you track passive income and expenses? If you want to achieve financial independence, the annual rate should be increased.
If you plan to track your passive income, consider signing up with Empower to help manage your investment account. They are very useful and I can get all the passive income data from one site. This is much easier than logging in to each brokerage, bank and retirement account separately. This is a great website for DIY investors.
Enjoy a long weekend!
Please follow and like us:
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects all over the United States, so check it out!
Joe also strongly recommends providing personal capital to DIY investors. They have many useful tools that can help you achieve financial independence.
