Back when I was working, (I now stay at home with my 16 month old son), I spent half of my daily commute dreaming about retirement. Traffic in the Washington, DC area is among the worst in the country and every day as I sat sandwiched between thousands of cars on the beltway I would dream about the morning when I woke up and no longer had to go to work.
I thought of all of the exotic places I’d love to visit. How I could waste the days away reading my favorite books and volunteering at the local elementary school. As I sat behind the steering wheel of my twelve year old Toyota Camry I would dream of a life without a daily commute.
During those three hour drives, (one and a half hours each way), I actually tried to calculate how long I needed to continue working. What could I do to reach that goal faster?
I contributed the maximum amount to my Roth 401(k) and also set money aside in non-deductible IRAs. My husband and I earned too much to contribute to Roth IRAs but we knew that the tax code would change in 2010 so we opened new accounts and waited for the day when we could roll them. We also invested heavily in stocks. At 35 years of age we can ride out the markets. It’s been painful to watch them fall at times, but hopefully with time on our sides the risk will be worth the reward.
We repeatedly refinanced our mortgage to lower both the rate and the term. Our mortgage is our biggest monthly bill and the rest pale in comparison. I figured once our house was paid off we could live on a much smaller income.
I stopped buying unnecessary stuff. I started to limit the number of times I stepped inside a clothing store and greatly limited my purchases. When I took a hard look at my closet I realized I was only wearing a subset of these items anyway. I stopped buying household items that weren’t necessities. This saved us money and freed up time and space for us to be together.
I also sold stuff we no longer needed. I registered for a bunch of kitchen appliances we rarely used and received gifts I never wanted in the first place. I listed these all on eBay and moved the money I earned straight to the bank. I used to feel guilty about getting rid of gifts others bought me, but I no longer let these feelings burden me.
I also turned to the Internet and read every article I could find on the subject. There is a lot of good information out there with tips and tricks to help you reach your goals faster. CNNMoney recently published 10 things you need to know as you plan for retirement.
I agree wholeheartedly with tip #2: set realistic goals. Start tracking your monthly expenses to get a better idea of just how much you spend each month. The fixed expenses, like electricity and natural gas are the most important, but don’t forget to track those expenses that change from month to month.
One day, a few years from now, when my son starts preschool or first grade I will return to work. Hopefully this time around I’ll be able to find a more enjoyable job, but even if I don’t I hope that the steps I take now will lead to a closer retirement date.