You Need a Bit of Faith

***NOTE:  This post discusses faith in a general context.  Not specific to God/gods/other divine beings.  Please note the difference while reading it.

Faith might strike you as an odd topic for a blog that mostly deals with money, but I’m not referring to your faith in God, but rather the faith you have in your retirement plan.  Realistically speaking there is no way I should be even considering retiring at age 45.  I have bills to pay, family to feed and I could easy spend the money on vacations, a new couch and a new car instead of all of this saving.  I don’t even really know if things will work out.  There could be a period of stagflation that has low investment returns and high inflation that kills off my dream or a change in tax policy from the government.  There are so many ways to fail at this plan it isn’t even funny.  So why do I keep trying to get there?  I believe I can do it despite everything that can go wrong in the next decade.  That to me is the classic definition of faith: believing in something without proof.

I believe in my plan because I think it is reasonable to me.  Others might think my inflation projects are too low, my return assumptions are too high, or that I’m just crazy for wanting to live on about $25,000 to $30,000 a year when I can easy make three times that doing something else.   Yet I still work towards this dream of mine.

Faith in your plan keeps you going in those low spots when you envy the spending of others or you doubt the wisdom of your choices.  It’s what keeps you explaining to people that you can’t go out for lunch because I already decided to to buy a DVD this week.  They might not understand not trying to have everything with credit, but I keep explaining anyways.

Without faith in your plan you will fail.  That I can tell you for sure.  You can’t do something that takes decades to achieve with a half-hearted commitment.  You have to believe with every fiber of your being that you can make it.  That despite everything that will go wrong in your life that enough things will also go right that you can still get close to your dream even if the date is off by a few years.

Yet faith won’t create the impossible, you still have to work towards that dream every day.  So think careful on your plan and create one that you can believe in.  Use returns that are less than 10% a year, unless you have a track record to the contrary.  Research what you don’t know to understand better.  But above all, you must believe or have faith in your plan.

So you do you believe in your plan?

7 thoughts on “You Need a Bit of Faith”

  1. Amen! Yes I have a similar plan to retire and I keep pressing forward. Occassionaly my mind will get briefly side tracked with the “what ifs” and I just snap right out of it. A favorite saying is “he who fails to plan, should plan to fail”. Sounds like you have a great plan and lots of faith. You’ll make it.

  2. I have faith in my path to financial freedom. I know that if I can pay my house off as quickly as possible I can live off of minimum wage if I need or choose to.

    I am skeptically optimistic that I can get the returns I want from dividends to provide enough income to live off of when I start heavily investing in approximately 5 years. That is essentially my plan (simplified) – I think it will work. Barring something large coming, I should be done working by age 45 (or at least at a point where I no longer need to work).

  3. I have to have faith in my plan… it makes getting up at 5 am everyday much easier…

    Like so many, our plan hinges on paying the mortgage off… that will be right around my 40th birthday. We will go from saving 60k per year to almost 80k. Every scenario I’ve run, even with moderate 3% returns on investments says we will be good to go at 45.

  4. As the pieces were falling into place in 2008 before I retired at the end of October that year, I saw it would take a bit of a “leap of faith” to actually resign from my company and not have any more wage income. For months, if not years before I retired, I was not able to pull the trigger and leave because all the big pieces had not yet fallen into place and I was beginning to wonder if they ever would. But they did.

    I had to have faith that my financial plan would actually work. For a month or two in early 2009 when the bond market was bottoming out and the monthly bond fund dividends took a hit, I got a little nervous. But that bounced back to normal and everything is going fine with the financial plan.

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