As young newlyweds we knew we wanted to fulfill my husband’s life long dream of military retirement. At the same time, I knew that after 20 years of the Navy telling us what to do, I wanted control over our destiny.
Our dream to retire early began. We wanted to be able to retire at the ages of 42 and 44. Like anything else, you need a plan. We called our plan to retire early the Baby-Step Approach, and it includes five main steps.
5 Steps to Retire Early
Step 1: Increase Earning Potential
As a military wife, I had a lot of trouble getting a job. No one would hire a military wife in South Texas, so I had to do something to change that. I decided to go back to school and get a master’s degree. This did two things:
- It made me more marketable. Texas A&M Corpus was cheap because they allowed military to get in-state tuition. A lot of schools are doing that now, so check your local school no matter your duty station or location. Having a master’s degree made me more marketable for finding a job.
- It gave me experience. The first quarter of school, I was able to get a job as a teacher’s assistant. The next semester, I had a job at a local oil company through the school’s career fair.
Having a master’s degree increased my earning potential by opening up more job opportunities including higher paying jobs.
Step 2: Save Money
In order to retire early, we needed to reduce our expenses and increase our income. We reduced our expenses two ways:
- Shared Housing – We shared a house with awesome roommates. This drastically lowered our expenses so we could save more.
- Cheap Travel – Other than visiting family, we stayed home instead of traveling.
Side note: We tried to invest in stocks and mutual funds, but it didn’t work well for us. Even though the stock market was recovering in leaps and bounds at the time, we felt none of the growth. We even used an advisor. This is when we realized that stocks/mutual funds were not for us!
Step 3: Buy a Home
We bought a house in Virignia Beach using our VA Loan. We knew it was a good time. Since we knew we could get orders at any time, we wanted it to be a good rental (Read How to Pick a Good Rental). The house that met our criteria was a foreclosure and needed a lot of work, so we gutted it.
Step 4: Full-Time Job
After buying our first house, I was hooked. We loved our experience (
laundry room flooding on our first night, master bathroom taking 3 months to finish, never ending painting). Well, maybe not everything, but as a whole it was amazing! However, we needed money to pay for all of these improvements, so off to work I went at my first full-time professional job — seasonal taxes. Since I loved real estate taxes, I was able to play and learn about IRS rules while getting paid.
Two months later, I got a full-time job as a project analyst. I started out as an executive assistant and eight months later started working for a senior business analyst. The company that I worked for owned commercial real estate and 1,600 apartments over six complexes. I wound up being the “oh shoot girl.” I learned the company from the ground up working on all their problems. This gave me so much experience and taught me a lot.
Step 5: Buy First Investment
Since we saved my salary and lived off my husband’s income, we had a nice amount ready to invest. Unfortunately, Virginia Beach did not make sense. The houses were very expensive compared to other areas. On a fluke, we found Charleston through a friend of ours. (Thanks Stephanie!) We put an offer on two short sales. We closed our first one in August 2012 and the second one in November 2012.
I was sold on our strategy! I loved managing properties. Since I managed the Charleston properties myself, the importance of strong self-management quickly became apparent and an integral part of our strategy.
We are now fully committed to our baby-step strategy. We now have a strong rental portfolio and high hopes for the future. I am so glad that you are along with me for the ride — I love sharing my personal experiences, so maybe you can learn from my mistakes and successes!
Do you plan to retire early? What is your strategy for getting there?3