Welcome to interview #5 in the FIRE With Kids interview series!
Meet Stef, a 33-year-old accountant, who lives in Ontario, Canada with her husband and two kids.
Stef recently achieved “Coast FIRE” and has decided to slow things down after giving birth to her second child so she could spend more time with family and dip her toes into entrepreneurship.
She and her husband are building a variety of income streams to help fund a more enjoyable life today, while still enabling them to retire early in their 50’s.
I really enjoyed learning more about Stef and her family during this interview! I hope you also appreciate this inside look at their financial independence journey.
About the FIRE with Kids interview series
I designed this interview series to connect with and share the stories of other families with kids (or dependents) who are pursuing financial independence, with or without early retirement.
Reaching financial independence is a huge feat regardless of your circumstances. However, adding kids into the mix provides another layer of nuance and additional challenges.
I hope that by sharing different stories and voices, more people will find an example that they can connect with and feel empowered to begin their own FIRE journey.
We believe that families come in all different shapes and sizes, and all are welcome here. If you’d like to share your family’s story, please read my interview series intro post for further details and contact me.
Now on to Stef’s interview…
BACKGROUND
Tell us about your family
Hi I’m Stef, a 33 year old Chartered Professional Accountant and Mom to a chatty daughter (3 years) and a smiley infant son (3 months). My husband (40 years) and I have been married for seven years. We live in Ontario, Canada.
Our favorite things to do are eat, travel, and spend time outdoors.
I’m the dreamer, investor, and risk taker in the family, which always keeps things interesting when planning for the future. My husband is the laid back one, who holds down the fort, no matter what craziness I’m up to!
We are currently living in a shared household on a one-acre piece of land on the outskirts of the Greater Toronto Area. This property was purchased with my parents and has two self-contained units, so we can live as independently as possible.
With this investment we hope to achieve peaceful country living, the potential to homestead, house-hacking by sharing expenses, family support through child rearing and aging, estate planning and building generation wealth.
FINANCES
Do you budget and/or regularly track your expenses?
Although I regularly budget for our family, we don’t necessarily track all our expenses.
We have a household budget, where we track income sources, major fixed expenses (mortgage, daycare, savings) and major variable expenses (taxes, utilities, TV/Internet, insurance, annual memberships, groceries).
I also have a forecast of what I expect these expenses to be monthly.
We’ve set up automatic transfers that move this money into a joint account as we earn income for when I do the bills at the end of the month. We manage individually non-recurring joint and individual purchases, typically on our Visa. Any money left over remains in our individual accounts and can be spent however we choose.
I review the household budget monthly for any expected changes. This method has allowed us to make sure we always have money for the important expenses, while still giving each person autonomy on how they’d like to spend any excess funds.
What are your average annual household expenses?
Our average household expenses, which includes our major fixed and variable expenses mentioned above, are around $50,000 per year. This excludes any savings towards retirement, emergency or sinking funds. It also excludes non-recurring joint and individual expenses.
Besides taxes, where do you typically spend the most money each year?
We spend the most amount of money on our mortgage payments for our principle residence. Unfortunately, this amount is steadily increasing due to rising interest rates.
As much as we’re feeling pressure of having a floating variable rate mortgage, we are not stretching out our amortization timeline. We just need to hunker down and make it through this section of the cycle. It’s given us further incentive to create additional income streams to help support payments now and into the future.
We love “value-spending” … what do you happily splurge on?
We happily spend our money on food, vacations, and family outings.
Prior to starting our family, we really enjoyed eating out and vacationing every year. Since having our first child and being hit with the pandemic, we haven’t travelled as much as we would like. We’ve been enjoying exposing her to different ethnic foods and taking her on day trips in Ontario, Canada.
We’re currently tucking away some money for a potential trip later in the year!
What’s your annual household income and/or typical savings rate?
Our gross household income is between $150,000 – $250,000 per year, which includes all our major income sources.
My husband and I chose quite different career paths and selected different working environments. As such, we agreed early on that all our expenses would be split 50/50 and our personal savings goals would be determined individually.
As an accountant in corporate finance, I have climbed the “corporate ladder” aggressively over the past 8 years. This decision has come with plenty of stress and long hours. I knew I didn’t want to do it for a long time. So, I made the personal choice to save aggressively, achieving a savings rate around 50%. My husband opted for a more flexible work arrangement and plans to work and save on an extended timeline.
Do you have any income streams in addition to your primary job?
Yes! In addition to our employment income we also have rental income, interest income from private lending, dividend income from stocks and partnership income.
We currently have two investment properties, excluding our principle residence. The first is a duplex near Toronto, while the other is a four-door housing unit in Ottawa (joint venture).
In addition, we continue to utilize equity from our properties to further invest. We have taken part in private lending with other real estate investors who pay out interest monthly. We’ve also purchased dividend paying stocks. Most recently, we expanded our real estate investments to be a limited partner in an apartment building acquisition on the east coast of Canada.
We hope to further expand our income streams in the years to come through self-employment, passive businesses, and short-term rentals.
Do you have any debt? If so, what is your paydown strategy?
We have quite the truck load of debt!
However, we believe all of it is good debt, as it’s tied to either assets that are appreciating in value or investments that are generating additional income over and above the debt costs.
All our debt is in the form of mortgages or HELOCs (Home Equity Line of Credits). Our tenants are effectively our paydown strategy. We currently don’t have any plans to pay off debt beyond the regular mortgage/interest payments.
From time to time, especially right now, we are tempted to sell a property to pay off the mortgage on our primary residence and be mortgage free. But, so far, we haven’t come close to pulling the trigger!
What’s your current investment strategy?
Diversification is one of our top priorities.
We want to create diversified income streams, as well as diversified investments. We continue to look for varying opportunities where we may invest passively and collect money in our sleep.
The more we can replace active income with passive income, the more time freedom we’ll have. which is the ultimate goal.
Financial Independence / Retire Early (FIRE) with Kids
When did you discover the FIRE Movement, and why did it appeal to you?
I discovered the FIRE movement about a year ago, but have had the FIRE mindset for as long as I can remember.
On the first day of work after university, I remember looking at the building I was going to be working in and feeling like it was a jail! I knew that I didn’t want to be working like this up until the regular retirement age, and was determined to shorten the timeline as much as possible. So, I focused on increasing my income, saving, and investing.
When I officially found FIRE last year, I was doing some intense soul searching. I returned to work from my first maternity leave, and it was a very hard transition for me. It didn’t feel like I belonged there anymore. Motherhood had changed me. It gave me so much perspective on life. I was able to be fully present with my family, partake in activities that brought me joy, and be in the moment on a day-to-day basis. I didn’t want to return to the rat race of running through life with my head buried in work.
Finding FIRE was like finding myself again. It became clear why I wasn’t happy, what I truly wanted and where I wanted to go. I was going to build a life that I could enjoy every single day. One where I could be present with the people that mattered to me most. And that meant attaining financial freedom.
Where are you currently at on your financial independence journey?
When I first found FIRE I was determined to reach full FIRE by the age of 45.
However, as work continued to ramp up and I got pulled further and further away from my family, I realized the target was too far out. I wanted the time freedom NOW, while we are healthy and our kids are young.
So, I shifted gears to focus on Coast FIRE. Thanks to my consistent savings rate for years now, I hit this milestone at the end of 2021.
Now that I’m on a second maternity leave, my focus is not only on my family, but also on entrepreneurship. I’m so grateful that Canada has a long maternity leave. While on my 18-month break, I hope to start a business that could cover my monthly expenses, so I don’t have to return to my corporate finance job.
It has been a great motivation to connect with other people pursuing slow FI or semi-retirement. This is the lifestyle I am now aiming for. I’d like to work part-time running a remote business, so I have the flexibility to be with my family, travel ,and experience/enjoy life!
Is there a target “FIRE Number” or safe withdrawal rate you are working towards?
I’m no longer working towards a specific FIRE number.
Having reached Coast FI, and wanting time freedom NOW while my family is young, I’m going to let time and compound interest take care of growing my retirement nest egg. I’ll continue to reinvest dividends and will top up retirement savings only if I have additional money to contribute.
Right now, I am tracking towards achieving full FIRE at the age of 55. Assuming a safe withdrawal rate of 4%, this is when the income from my investments will cover my expected expenses.
Are you planning to retire early? If so, what do you envision early retirement will look like? Do you plan on working after reaching financial independence… will you make any changes?
At an expected retirement age of 55, this still would be considered early retirement.
Right now, I don’t expect my life to be much different once I retire. I’m hoping to build a life that I don’t want to retire from.
Being off on maternity leave, I’ve realized that as much as I do enjoy a slower paced life with time to enjoy the full day the way I want, I still very much like being mentally stimulated. My hope is that having my own business will help fulfill that desire and I’ll continue to work on a part time basis until I am ready to fully retire.
What additional challenges does having kids add to the pursuit of financial independence and early retirement?
The additional challenges I see are simply the additional funds required to support and raise a child in the way you envision.
For example, everyone tells us we have built in babysitters at home, with my parents sharing a property with us. However, my husband and I always saw value in balance, so we still put our daughter in part-time daycare at 18 months. We also chose to send her to a Montessori, as it aligned with our values at home.
In addition, we have been saving for both kid’s post-secondary education in a Registered Education Savings Plan (RESP), and will have them enrolled in extracurricular activities. These are all additional costs that could have been allocated to the pursuit of financial independence. However, just like any other costs in life, you allocate money towards things you see as valuable.
Every family will operate differently in this aspect, so it really depends how you choose to allocate your funds. I have found many ways to reduce costs by planning ahead and being frugal. We buy used items as much as possible, take advantage of loyalty programs and points, and bulk buy items we use frequently.
At the end of the day, the joy and happiness our kids have brought to our lives is completely priceless.
In your opinion, are there any negatives to pursuing FIRE with kids?
I don’t see any negatives to pursuing FIRE with kids. In fact, kids can be the incentive to pursue FIRE.
I never understood the concept of working so hard and long while your kids are young, and need you, but then having all the time freedom of retirement later… after they’ve moved out and have their own lives. It’s those precious years when they’re young that you don’t want to miss out on.
There are also so many different forms of FIRE. You can pick which one works best for you and your family. You can pivot in various directions and change your mind along the way.
Ultimately, if you are clear on the type of life you’re looking to live, just keep pushing forward to make it a reality.
How do you plan to teach your kids about money?
Currently our teachings on money are more conversation based.
We are upfront about products and services costing money and how we currently work to earn money. Teaching that money is not an unlimited resource. We are also trying to instill an awareness around saving, delayed gratification, and caring for what you own.
At this time, we haven’t decided how we’ll handle allowances/money management but hope to involve them in the decision-making process when the time is right.
WRAPPING UP
What advice would you give to families just starting out on their FIRE journey?
Expand your income streams. Don’t rely solely on one source of income to support your family.
Having multiple income streams can help to cover the various expenses in your life. For example, our private lending is currently paying for our daughter’s schooling. And our rental properties have supported me throughout my maternity leaves.
Our goal is to one day have payments from our rental properties cover our principle residence mortgage. We will continue to invest and expand out our income streams so we can scale back on actively working and be more present with our kids.
Where can readers learn more about you and follow your journey?
I have an Instagram account @roadmaptofire where I anonymously share my FIRE journey, frugal life hacks and thoughts on parenting and intentional living.
If this sounds like something you’re interested in, give me a follow, and send me a message! I love to connect with like-minded people.
Is there anything else that you’d like to share?
For those interested in the new business I’ll be building in the new year…I have plans to offer bookkeeping services to the real estate investing community.
I’m excited to bring together two passions of mine, money management & real estate, to help other investors gain insight and clarity in managing their bottom line. Feel free to connect with me for more information on this service!
Stef, thank you again for sharing your family’s FIRE story!
Are you ready to share YOUR family’s story?
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