The 4-Year Potential

Two weeks ago, we did some recalculations and came up with three potential plans. The two plans that would allow us both money AND freedom would take significantly longer than four years. The really lofty goal date on our blog is 2022, which is 6 years away. So what’s the big deal with 4 years? As the school year wraps up, the temporary state of Penny’s childhood is weighing heavy on my mind. In 4 years, Penny will be done with elementary school. Based strictly on our calculations, by the end of May 2020, we expect to find ourselves with a paid-off house and $321,000 in investments. Those numbers won’t get us close to financial independence. And freedom in that plan would mean continuing on our current path for the next four years and then just quitting to be irresponsible for a bit! But looking back on our historical 4-year accomplishments, in all likelihood, stagnation isn’t an option.

A LOOK AT 4-YEAR SEGMENTS:

• Ages 0-4 – The Baby Years – That’s right. We’re starting at the beginning. The growth during this period of time is probably the largest of all the 4-year periods, so we can’t skip over it. You start this period literally incapable of eating, breathing, sleeping, and pooping. These are things you have to learn. Some come almost immediately (breathing and pooping, obviously). Others take training. And that’s just the first year! Then you have to learn how to walk, talk, etc. By 4, you have enough skills to be nearly ready for school. Penny got a passport at 6 months old that was valid for 5 years. She never used it at age 5, but how much do you think she looked like that bald, smiley baby at age 5? Not much. Money is kept away from you for most all of this period–primarily to keep you from eating it. 
• Ages 5-8 – Kid Years – Maybe you can read at age 4, but if so, it’s probably not very well. And you certainly can’t write much more than your name in legible English. You can count at 4, but can’t translate that into basic addition. By 8, you’ve mastered nearly three years of school (and multiplication!). You can read what you want. You can write things that make sense. You’ve learned physical tasks like the monkey bars and bike riding. Socialization has become important. For the very first time, it’s clear that some things are “cool” and some things are not. Along with this, it starts becoming clear that some people always seem to have all of those cool things and some people don’t have any of them. Some kids live in big houses and wear fancy clothes to school while others live in apartments or condos and may not have quite the same assortment of clothes. It’s clear that money buys cool things and getting money has the potential to get you there.
• Ages 9-12 – Tween Years –  Or the age where you think you have actually learned enough to compete with parents. I would argue this is among the least productive 4-year period in our lives because most of it is spent attempting to navigate weird social rules. Socioeconomic classes become integral to these weird social rules. If you don’t have the very specific pair of shoes that are cool, you are NOT COOL. Financially, you get your first taste of making money with babysitting and mowing lawns. You may not get paid well, but you realize that you have potential to make money and buy more stuff. You even have the ability to buy those cool shoes!
• Ages 13-16 – Teenage Years – During these years, you move from being obsessed with boy bands (just guessing – *ahem*) to having real boyfriends. From 13 through 16, you enter high school, learn to drive, taste a glimpse of independence, and start to figure out what YOU want to do after high school. You move from babysitting to minimum wage jobs with real expectations, schedules, and paychecks. These are the years where you are practicing adulthood with the safety net of still living with your parents and going to school. You don’t think it’s a practice because you obviously think you’re an adult already. Real money means real responsibility and the potential for real mistakes. This is the period of time where the financial habits of your parents start to impact you the most. If your parents are financially responsible, you will learn how to balance an account, save money, and only buy what you can pay for with cash. If you aren’t taught these things, the money will go out as fast or faster than it comes in.
• Ages 17-20 – Adulting – Congrats! You’re an adult! In these four years, you graduate high school and venture into your own life. Now you can go do stupid things without the safety net. The average age to get a first credit card in the United States is 20.8, so this period may be the beginning of consumer debt for you. This is also the first time in your life you decide what you want to do and who you want to be and you take the steps to do that. You can go to college. You can either work hard to pay for college, get help from family members, and/or you can take out large student loans. These will drop into your bank account in amounts larger than you’ve ever seen and don’t have to be repaid until you’re done with school! You also make decisions that will impact your future finances: what will you study? What career options are available in that field? What is the average salary?
• Ages 21-24 – Real Life – For us, these four years were very productive. We married, graduated college (and graduate school for me), had our first child, survived our year of unemployment, moved to Alaska, and got our first real jobs. During this stage, you decide what your first leap will be. More schooling? A job? For probably the first time, you experience having a “Salary” and “benefits” and figuring out what those things mean.
• Ages 25-28 – Settling? – The median amount of time a 25-34 year-old college graduate stays at an employer in the U.S. is only 2.9 years, so chances are you’re on at least your second job by the end of this period. And the median marriage age in the U.S. is 27 for women and 29 for men, so maybe you’ve gotten married. The average age of a first time mom in the U.S. is 26.3, so maybe you’ve got a kid. Big things are still happening, so you’re not quite settled, but you’re definitely heading more in that direction.
• Ages 29-32 – Settled Yet? – AND… here we are. I’m currently 30 and Mr. T is 33. The average home buyer in the U.S. is 33, so maybe you’ve bought a house by now or will in the next year or so. We have. With a home and a family, changing jobs gets less rare and moving locations even more so. But look back on our lives; this is the very first time there’s ever been an expectation to settle down. Our lives up until this point involve major life decisions in every phase! No wonder there’s a restlessness that hits in your 30s! It doesn’t make sense to go from such a great amount of growth in every 4-year phase to working the same job (or few jobs) for the next 35!

Now let’s look back to 4 years ago and see how far we’ve really come:

• Movies released in 2012 include: The first Avengers, The first Hunger Games, the first Hobbit, the first Pitch Perfect, and The Dark Knight Rises
• Whitney Houston, Neil Armstrong, Dick Clark, and Andy Griffith all died in 2012 and Steve Jobs died at the end of 2011 (4.5 years ago).

I know, you’re thinking those seem like yesterday, but you guys, 2012 was also the year that:

• Barack Obama won the re-election
• The 2012 London Olympics were held (with the Spice Girls reuniting for the closing ceremonies!)
• Chart toppers in 2012: One Direction’s “What Makes You Beautiful,” Adele’s “Set Fire to the Rain,” fun’s “We Are Young”, and Carly Rae Jepsen’s “Call Me Maybe”
• In Business News: Facebook held it’s IPO in May 2012 and acquired Instagram, AirBNB had only 200,000 listings (now there over 2,000,000!), and Uber only operated in 8 cities (now it has cities all over all 6 inhabited continents!).

A lot can happen in four years! Mr. T and I could have 4 more children (no thanks) or start (and maybe fail at) 4 startups! Our income could increase dramatically and markets could shoot through the roof (or tank) for a solid 4 years! And in 2020, it’s actually possible that we might have successfully set up a situation where we are doing what we enjoy and can do it from anywhere. There’s so much hope in the potential of 4 years! That’s why our recalculations haven’t gotten us down (and why we haven’t changed our sidebar graphs or goal dates). Everything can change in 4 years! Here’s a toast to 2020! Anything is Possible. Where do you hope to be?