Cash Money Life is challenging people to write about their ideas for their own financial independence day and what it means to them. I am or may not submit this to the carnival (am I brave enough?), but it's worth putting in writing even if it's just for me.
Part A of my financial independence day should be coming on or about December 31, 2009. By that time, my van will be paid in full, I should be out of credit card debt, have a $1000 emergency fund and be ready to pay off the mortgage within 3 months, if it's not already paid. That will be an incredible feeling. Between credit cards, a student loan, mortgages and auto loans, I have not been debt-free since I was 18 years old. Right now I can't imagine what it will be like when that first month comes that the only bills I have are utilities and food, but I'm ready to try it at any time!
Part B of my independence day is harder to put a time line on. I rely heavily on my yearly income tax refund and child support. Even though I have no taxes taken out of my paycheck, I still get a major tax refund because of the kids' deductions. Next year alone, this refund will take care of my property tax, home and auto insurance premiums, pay for painting the trim of my house (which needs done desperately) and make a large dent in the debt repayment schedule. But, in 5-6 year, that refund and child support will be gone. I will still be financially supporting 2 kids in college, but I know I cannot count on being able to take them as dependents with the IRS, and I KNOW I won't be able to count on their father for financial aid for them. So in the next 5 years, I need to get a major emergency fund (enough to cover 6 months, preferrably a year's expenses) AND get in the habit of not relying on that refund and child support. Ideally, my retirement plan will be fully funded and I will be able to put aside a little bit more for college, although with my income, my kids should be eligible for a lot of need-based aid. So, after the debt is paid off and the savings is in place, being able to support me and the 2 kids on my own, without the refund and the child support, THAT will be financial independence to me. Having my debt gone will be a big boost, but learning not to splurge with that extra money and continuing to be focused on the future will be financial independence. Sending my kids off to college and not having to get a second job myself will be financial independence. Not having to worry about my kids supporting me in 30 years will be financial independence.
For now, looking forward to celebrating part A of my financial independence day is exciting. I know that day will be here in 18 months. But maybe I do need to set a concrete date for part B. June 1, 2013. There. That's it. That's the day I need to be independent, to do this all on my own, to not rely on anyone else. Sounds like a plan.