The following is a guest post by Corey from Passive Income to Retire, where he keeps track of his progress to retire by the age of 27.
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With the economy in the current state that it is, it isn’t too uncommon for family members to spend more time working in order to either make more money or keep from getting fired. While I don’t have any major statistics to prove it, it only makes sense that families are struggling in this current economic environment. For example, I know several families where one of the spouses was forced to take a job that is multiple hours away from their home. They either choose to take a long commute or live close to the new job (away from the family) during the week. The economic downturn actually coincides with my current shift in my career plans that resulted partially from a desire to spend more time with my wife.
My Old Career Track
I am currently in Graduate School (and working full-time to pay for school) pursuing a masters degree. Up until recently, my plan was to continue on to Ph.D. work and later get a job teaching at a university. If you are unfamiliar with the academic lifestyle, it is quite rigorous. It requires you to not only prepare for your classes that you are teaching (usually 2-3 hours of prep for each class, if not more), but there is also a pressure to publish scholarly work.
Between all of the meetings, grading, teaching, and prepping, it is not uncommon for a college professor to work 60+ hours each week. Many people see this as the ideal job. I know that I did. The most often mentioned perk is the annual summer break. Who wouldn’t want 10+ weeks of summer vacation each year? At first glance, it seems that it would be worth the long hours during the school year. Yet, when you add in the constant need to research and stay up-to-date with the most recent scholarly conversations, the summer is also not much of a vacation. It makes you wonder if it is really worth it.
Why I Changed Career Paths
If it is not already obvious, I changed my mind about wanting to follow the track to become a professor. When I realized how much more work it would require to even be eligible for these positions, I was forced to reconsider. In addition to this, there were two major factors that turned me away. First, the fact that I would be constantly busy until late at night throughout the school year did not sound appealing. I want to spend time with my wife and live life with her. I can’t imagine working my life away and missing out on all of the shared opportunities. Secondly, I realized that professorship positions in the Humanities field are few and far between. This means that in order to get a job, I would have to be willing to move anywhere and I am just not sure I am willing to do that.
My New Plan
After I became quite successful (financially) with my first blog in only a short period, I began to think of the possibilities that the internet gives me. After giving it some thought, I developed an early retirement plan. My plan is to expand my online efforts to the point that it replaces day job. Once this happens, I plan to work on creating truly passive income streams that can be managed in less than 3 days each week. I plan to incorporate real estate and dividend stocks to complement my online business. Since my wife plans to continue working, we won’t need my income. This will keep me from overworking and stay committed to my working 3 days each week regulation.
Not only will this provide an excellent alternative to my previous career track, but will give me much more time to spend with family and friends. I will no longer be forced to spend entire weekends working on school work, but instead have time to enjoy life now (instead of waiting for the traditional retirement age). Overall, I am excited about the change in career path. While some may think that I gave up my dreams for my wife, I see it as understanding what is truly valuable.
Have you had a similar experience of realizing what is most important?
[Kevin] Corey is aiming for a very ambitious yet awesome goal of being free of the rat race by age 27. I think I would disagree with the term “retirement” because it’s really about financial freedom and having the freedom to decide when to work and how much, and retirement makes me think of someone sipping pina coladas all day. I wish him the best of luck on his journey, and I can’t wait to hear more!
This was a guest post written by Corey from Passive Income to Retire, where he keeps track of his progress to retire by the age of 27.
Nelson over at Financial Uproar discussed this trend to retire early, but still be working and calling it “passive” (when it isn’t truly passive if you are working in retirement – retirement means NOT working, right?).
Anyhow, being a bit older than yourself, perhaps wiser (perhaps not) – what happens if the online thing doesn’t continue to build the way you think it might? For example, late 90s, dot com blew up. What if the internet advertising / money making gets too diluted to make a decent wage? Or blows up entirely? Then what?
I don’t mean to be a downer but if this happens you are stuck. Behind in your education, not a lot of marketable skills and in trouble. Early Retirement Extreme comes to mind of those who tried to retire super young and are right back in the work force just a few years later.
On the other hand, having a PhD in hand, working like normal folks do – perhaps getting health benefits and a pension down the road +++ your online ventures, you could be very wealthy, keep busy, good time off (and money to enjoy the time off).
I guess like Nelson, I fear that a lot of younger folks see this online pot of gold and are putting all of their eggs in this one basket, which, IMO (having been using the Internet since 1988) is a bit short sited. Diversification of income is key – getting it all online is not diversified.
@SustainablePF Thanks for the detailed reply. I too, am worried that the online income will not be a long term income maker. However, I do plan to transition my online income into real estate. For example, I plan to save a down payment for my first rental property from my online income from 2012. By investing in the right location, I should be able to purchase a great property that will generate a decent cash flow.
I imagine my online income will continue to increase over the next couple of years. Even if it isn’t long term, I should have enough income (just from online) that I can buy multiple properties that will provide me with enough income to sustain my lifestyle.
Also, the thing I keep in mind is that my wife’s career is taking off. She is doing really well in her job and I don’t see it out of reach for her to be in a high level executive position at a non-profit in a few years. She already makes enough for both of us to live off of, so I already have a safety net. (or two).
OK that makes a bit more sense – you have a sugar momma 😉
So you won’t really be “retiring” – the online work is WORK and we who do it know as much. Plus, it looks like your wife will be working for quite some time, so it is not like the two of you can go galavanting across the world for 3 years, truly living off of passive income.
Still I do envy your situation. IIW and I discussed this a bit last week – leaving the rat race. Unfortunately I have a gold plate pension, which my old mentor, rightly put it, “has me by the balls” at this point. Plus, my income is very good for a 36 yr old living in a small (70k pop) city.
Best of luck!
@SustainablePF Thanks!
Indeed I do – and she enjoys being the bread winner. :)Yes, I recognize that it won’t be truly passive or true “retirement” (I don’t just want to sit around all day, all week). But, I will be outsourcing more of the tasks associated with blogging to make it as close to that as possible. I know this reducing my profit, but it increases my free time to do other things.
In some aspects, a pension sounds great- but you’re right… you seem to be stuck. It would be hard to turn that down.
@Corey PITR@SustainablePF
I think even if the online advertising dollars dry up, there will be other ways to make money online in the future. Once you know how to make money online, you are already ahead of the game. We’ll be the first to learn how to make money online in other ways and I’m sure there will be many more ways in the future.
Thanks! I know it sounds crazy, but I think I can get there.
SPF covered all of what I was going to say. You do have a prime situation and I hope it works out for you. For me, I am like SPF. I work for the government and have an amazing pension and great health benefits. I would never be able make up the cost of both of those privately. For me, I will use my online income to supplement and provide more opportunity. I don’t see myself retiring on it for the reasons I mentioned.
@prairieecothrif That’s certainly a great point. Thanks Miss T.
Wow, definitely an ambitious goal, yet it should be achievable in the next few years. Personally, i sent a great deal of time and money getting my graduate degree and really enjoy that field. If, and that is a big if, I can make enough to be able to take a few years off from working, I would like to finish my PHd and shift my career path completely.
Online income seems like the new pot of gold, and I, too, worry that it might “dry” up soon. However, it seems like you have your ducks in a row with real estate.
All the best with this, Corey. I am excited to see your progress.
@Thirtysixmonths Thanks so much! It is ambitious, but we’ll see if I get there!
I , too, once wanted to be a college professor. But then I realized it didn’t seem as appealing as it sounds, and it’s a ton of work! (I also settled for the Master’s degree instead).
I’m on a similar trajectory to you now, Corey. I don’t think I’ll be “retiring” at age 27, but I’m looking forward to doing more of what I enjoy by that age.
@Jeffrey Trull Yes, it’s interesting how it doesn’t seem as appealing when you get down to the details. And when you factor in what you really want from life.
I have to agree with you. I used to think about getting into wall street or something similar but after learning about the 70+ hours a week I realized that it would be a most strenuous use of my time. Now I’m hoping to do some online work and some real estate on the side to make enough to enjoy more of my week.
@bluesauger Yes, making the most of life is one of the things that I look forward to. Thanks.
Great point Beating the Index – Yes, I tend to stretch the definition of retirement a bit, but I like to think that retirement isn’t just about not working. It is more about the financial freedom without being stuck in a job that you don’t like.
How older you are now? And by the time you reach 27, which I don’t think has many more years left, would you have enough passive income? I guess in retirement you’d stop blogging as well (otherwise no retirement, as SPF said) how much do you think you would have accumulated in rental property, dividend stock etc? Or, are you counting on your mrs’s income too much? Don’t find this sarcastic, I pray for your success. But, not seems normal to me.
@One Cent at a Time Thanks for the encouragement. I am 24 right now – so about 2.5 years to go.
Lots of great discussions on this post, Corey! As you probably know, I also found the term “retirement” to be a bit of a misnomer because what you are really talking about is financial freedom, and having the side income to work on what you love.
In my view the only truly passive income stream is that from selling a bit of an index fund every month, as it takes up very little time to do that, so I also wouldn’t call working 3 days a week truly passive, but it is certainly better than 5 days a week in a job that you don’t like or that doesn’t fit your lifestyle.
I would only say: Ensure you have enough diversification of income. In my view financial independence is about having varied sources of income as well as having low and easily maintainable expenses. Also, it’s good that you have the support of your wife, but personally I would look at that as like the emergency parachute since you never know how she might feel about that down the line when it becomes a reality.
With that said, I like your optimism, Corey, and I think you can do it! I am looking forward to seeing how we progress as the challenge moves on. 🙂
@InvestItWisely Thanks for the encouragement. I, too, am glad for the discussions. Yes, perhaps it is somewhat confusing and I am probably stretching it too far (but that’s what makes it an interesting conversation worth having). Although there are lots of people who ‘retire’ from their jobs and continue to work part-time for their employer. Also, when I used to think of retirement, it was sitting on a beach or watching TV all day. It was doing nothing! Yet, I think we all know that this isn’t enjoyable or the case in most situations – you are still actively doing something. If we understand this, retirement seems to be about quitting what you don’t want to do because you are financially secure. It’s not just about the lack of working. I guess that is what I am trying to get at, if that makes sense. With that said, you are probably right. Either way – working 3 days a week to do something that is enjoyable seems a lot better than waiting 40 years to finally do what I want. Thanks for the feedback – very helpful.
Thanks Youngandthrifty. Yes, I agree that it is loosely defined. Also, yes I expect to make at least 30k this year from blogging related stuff.
Corey, we’ll be following your progress as you grow your internet empire. Best wishes and best of luck!
@101centavos Thanks! I’m excited about the possibilities!
Lively discussion. Your passion to grow your passive income streams is impressive. I’m sure you will achieve your goal! Doesn’t hurt that you have a sugar momma and plans to get into real estate and dividend investing. Good luck and will be cheering you on!
@buckinspire Thanks so much for your support. Yes, I wouldn’t be able to do it without her. 🙂
Just
Just want to drop a note on my experience is building a dividend stock portfolio. When I was doing this I was a busy working single mom. I spent shocking little time on my investments.
I did buy good, blue chip dividend paying stock. I did read the financial statements and took a very good look at what I was buying. There was no internet at that time and the only place to get financial statements was the library. So I had to spend a few hours every once in a while in the library. I also ignored my investments for 6 months at a time. This was not very aggressive, but it got the job done.
Susan
@SPBrunner Thanks Susan for your thoughts. I will be sure to take that into consideration when I start aggressively investing.