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What We’d Do Differently If We Were Just Starting to Save Now

We had the good fortune of saving for early retirement almost entirely during one of the best bull markets in history. Sure, we may be on the precipice of a correction (or worse) now, making me feel justified for thinking so much about sequence of returns risk for all these years. But we absolutely enjoyed more or less unmitigated growth during all those years we were socking funds away like squirrels preparing for winter.

And the fact is that what we did may not be easily replicable by someone starting now, just because of how the market cycles go, and the fact that none of this stuff is predictable.

On the plus side, while I’d never root for a recession because recessions hurt real people who don’t have safety nets, the next correction or recession that comes will provide an interesting and different perspective in financial independence blogs, most of which have only existed during economic good times.


But that’s not what we’re here to talk about today.

Today we’re talking about what we – Mark and I – would do differently if we were just starting to save today, and not six years ago.

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OurNextLife.com // What we'd do differently if we were just starting to save for early retirement or financial independence

Our savings plan was pretty simple, based around an early retirement phase and a traditional retirement phase: keep maxing out our 401(k)s, even though our “phase 2” funds were already in pretty good shape, pay off the mortgage and throw everything additional into “phase 1” index funds that we could sell off without tax restrictions in the first 18ish years of our retirement. We were super fortunate in earning high incomes that provided much more than we needed to live, so we could still afford to pay off the mortgage aggressively and save in index funds even after saving $18,000 a year in 401(k)s. That kind of saving is only possible with a high income, and anyone who says it’s normal or easy for anyone is out of touch with reality.

Income Over Time

Income over time, in throwback all lowercase font and blog pseudonyms!

Though we hadn’t planned to include a rental property into the mix, when it became clear that we could help a relative in need, we decided to tweak our plan and buy a house that we now rent out to the world’s best tenant. We also made sure to retire with three years of living expenses in cash, to allow us to avoid selling shares in an extended market downturn (this is standard retirement advice given to traditional retirees, and not something we made up on our own) and stockpiled much of that cash in our final year of saving.

Related post: The Income Streams Our Early Retirement Is (Now) Built On

What We’d Do the Same Way

Backload Cash Savings – Though we always maintained an emergency fund, even after we reached a basic level of financial independence and no longer would have panicked if we’d lost one or even both of our jobs, we knew we wanted to have that big cash cushion when we left work so we could minimize the likelihood that we’d ever be forced to sell shares when they were significantly depressed. We knew we wanted to build up multiple years worth of cash, but we didn’t want to do it too soon and miss out on time in the markets for our money to grow. So we saved the cash cushion for last and put nearly all our save- or investable money into our mortgage and taxable index funds until we had the house paid off and the index funds well stocked. That way the index funds could keep growing in value on their own while we piled up the cash cushion. If we’d done it in the opposite order, the cash would have barely grown but we would have lost out on market growth time for the investments.

Pay Off the House – For anyone on the fence, I can now affirm more than a year after paying off the house that it still feels amazing to know that we own all of this. We don’t lose sleep worrying that we missed out on gains. We locked in a guaranteed return, we freed up more money to save and invest in our last year of work and we know that we can live suuuuuuper cheap if we need to with property tax and utilities as our only housing expenses. We’d do this again in a heartbeat. Sure, we could have potentially gotten larger, though unguaranteed, gains if we’d invested that money instead of paying off the house, but we also would have had to save more to do so because we’d need enough passive income each month to make a mortgage payment. Plus, not having that debt hanging over us makes us feel lighter every day. You can’t put a price tag on that, but it’s worth a lot.

Do the Two Phases – Assuming that we were starting to save now with some assets already saved up, we’d for sure plan for two phases again. If we were 22 and had no 401(k) savings, perhaps we’d save everything as one big pool of money, but we were in our early 30s when we started really saving and we already had some home equity and retirement savings by that point, and it made sense to save for the early part of our retirement as its own thing. Nothing has changed in our thinking to make us wish we could redo that part of our plan.

Related post: When the Crash Comes // Recession-Proofing Our Retirement Plans

What We’d Do Differently If We Were Starting to Save for Early Retirement Now

Hold Cash for Special Purposes – If we were starting right this moment, nine years into a historically long bull market, with valuations and CAPE ratios way out of whack, market volatility growing by the day and the potential for a trade war looming, we’d probably be tempted to go against everything we’ve ever read and try to time the markets. Which, in this case, would really mean holding back for a while and stockpiling cash to avoid buying high and then spending all of our accumulation years trying to crawl back to the starting line. And as for what we’d do with that cash, we’d either sink it into the markets after the crash hit, or…

Invest In More Real Estate – We used to own a condo in LA, and we thought long and hard about whether we wanted to rent it out or sell it. We decided we didn’t want to be landlords, especially long distance landlords, in part because it just sounded annoying, but also because with condos you hear a lot more complaints from people who think anything happening in the building is their business. It wouldn’t matter if we hired a property manager, we’d still hear from some of the nosier residents who knew us when we lived there if our tenants so much as sneezed too loudly. (I am exaggerating a little, but not joking – when we sold the condo, for months the downstairs neighbor kept texting Mark asking him to pass info along to the new owner. Whom we didn’t know and hadn’t met. Instead of just going up to talk to him herself.) I don’t really regret selling that condo because the capitalization rate (ratio of rent to mortgage cost) wouldn’t have been favorable enough in the short term, but turns out we were wrong about landlording. We actually don’t mind it at all, and sometimes lament that we should have bought more properties before real estate markets went on their current tear. We especially wish we’d bought a multifamily unit or two. So if we were starting now and were piling up cash, we’d be waiting for the next opportunity to get some bargains, and then grab a few rental properties to provide us with long-term passive income, as well as some insulation from market volatility. Who knows? We might even do that in our real plan if the right opportunity comes along.

Skip the Dollar Cost Averaging — True dollar cost averaging assumes you already have a chunk of cash on hand that you dole out to the markets bit by bit, and doesn’t include regular automatic investing each month or each pay period. That latter kind of investing is good and necessary for an automated investing plan. But for a lot of years, we dollar cost averaged our year-end bonuses, and one year even stretched a bonus out into enough investment installments to take six months. We’ve since been persuaded by research that that was an understandable choice but not the best one financially, and we should have given that money as much time to grow as possible, which it most certainly did not do sitting in savings, waiting to be invested. In our last few years of work, we put bonuses into the markets right away, but we’d start doing that sooner if we were starting now.

Create Another Passive Income Stream – Our investing strategy of buying broad index funds automatically makes our portfolio diversified, at least in terms of the markets. But it would be nice to be even more diversified in the long run, and to do that, we’d need to create another stream of passive income outside of market investing and outside of real estate. Maybe we’d get excited about microlending. Perhaps we’d try to find a way to do small scale venture capital (doubt it, though – so risky!). Maybe I’d be writing and self-publishing lots of e-books to try to create a stream of royalties. Or who knows – maybe we’d even buy a local business and pay others to run it. Regardless of what that looked like, we’d absolutely be looking to create at least one other passive income stream if we were just starting to save now.

Buy BitcoinJust kidding. ;-)

What Do You Think?

Is there anything you wish you’d done differently in your savings journey? Or anything that you’re happy with but that you’d do differently if you were starting now? Wouldn’t change a thing? Got questions for those ahead of you on the journey? Share your experiences, ask your questions or tell your favorite joke. We’re all ears… er, eyes. ;-)

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80 replies »

  1. We are still saving up for retirement, and so it was a good read.

    We are also paying off our mortgage, but timing it so that it will finish around the time we retire. But our property taxes are too high, and we may have to sell the house in a few years after retirement.

    We also hold some cash – in online CDs. When we retire, the plan is to have enough to cover two or three years expenses worth of cash.

    • Yes, a good plan – my wife and I are in the throes of starting our third business and things do get challenging to say the least! Having a solid property buffer certainly helps!
      Thank YOu

  2. Honestly, I don’t think I’d change a thing about how I reached financial independence. Some years I only managed to save a couple thousand dollars, but it wasn’t for lack of trying. I had a much lower income than most ‘FI’ers, and a unstable income at that.

    People make plans, and then life has a way messing them up. You do the best you can along the way, and occasionally you learn important lessons about investing.

    • Well, the first thing I would do is be born white so that I could keep the higher income jobs instead of being the first to be laid off every year while being told that I’m outperforming coworkers.

    • I agree with you. Do the best you can and save and invest what you can put aside. Try to be balanced and diversified. Rebalance as needed to maintain that balance and portfolio diversification. Beyond that, the rest is outside your control. And don’t worry about future returns. What comes will come whether you try to exert control over it or not. Who knows. Maybe the next 10 years will provide better returns than the last 10 years and then again, it may not.

      I now look at my portfolio and it’s flat this year but I’ve cone to accept that sometimes, things don’t move or they go down. It’s ok. The only thing I would change was how militant I was over the last 20 years about getting to 7 figures. Now that I’m there since last year, it’s like this massive weight has come off my shoulders. Looking back, I can now see that that financial militancy was not necessary. I am grateful though as this whole process has brought me to where I now am which is someone who doesn’t sweat about money anymore.

      • Hmmm. Just clarify, my response is regarding Mr. Tako’s comment, not Cru. Cru’s comment is just sad.

    • I make plans then life happens so I replan. And replan. And replan… (can you tell I’m a planner???) Besides, what good is a plan unless you replan it a gazillion times???? ;)

  3. I would have avoided the following: penny stocks, buying silver shortly after the 2011 peak all the way down to $16, and my foray into Peer-to-Peer lending. All cost me thousands or paid me less than a high yield savings account, but introduced a lot more risk! I’m happily divesting most of the silver and Lending Club loans now, and considering the accounts as a sort of back-up emergency fund.

  4. I’m a big proponent of making sure our personal finances line up with our personal feelings and situations (not the “rules”). To that end, I have always really liked your strategy to have a large cash buffer, a paid off house and a two-phase retirement before you left your jobs. It seems like this gives you the comfort and the footing to move forward confidently, without stressing over needing that extra income stream or LA rental condo (though I’m sure those would be nice ;) ).

    In my financial journey so far, I think I would have been a bit less trigger-happy on a particular investment that should have gone through more scrutiny, but the past is past and in the grand scheme, we are doing well. Have a great week!

  5. This is an interesting perspective, particularly for folks like my wife and I who still feel like we’re just starting out. Granted we’ve got several years of saving under our belts already, but we’re just kicking it into high gear as of about a year ago.

    I love what you said about the house – not surprising there. I’ve never heard anyone say “Damn, wish I had that mortgage back.” Mathematically prudent? Maybe not, but you can ONLY know that in retrospect, and like you said there are benefits that are hard to put a number on. It’s part of the reason we’re paying down the mortgage early, too…just not at the expense of what else we’d like to save. :) It’s basically taken the bond allocation of our investments for the moment, and we’re happy with that.

    Interesting to me that you guys DCA’d bonuses and such. What I find the most fascinating about it is that I also feared DCA but for basically the opposite reason as you guys did…I feared that if I DCA’d any bonus money I’d get, I’d just end up spending it instead. The losses in the market never bugged me…it’s the losses to SPENDING that you can’t undo, and I know that I’d have done that with any bonus money.

    Thanks for sharing, hopefully this helps some folks just starting out!

  6. Fun first chart! I know I don’t fit the mold of white male FIRE blog, but I did launch Financial Samurai in June 2009. It’s been fun to diversify away from just talking about early retirement to other subjects.

    I think I would have spent more.. maybe. But I used all my savings to buy SF property, and that has worked out well.


  7. Totally agree with you on the house being paid off! It feels great:)
    I only became a landlord in my 40’s and I wish I did it much earlier. For some reason trying to beat the market seemed easier than becoming a landlord! I was so wrong. Landlord business can be tough but it can be financially very rewarding.

  8. I’m all for many different income streams as a hedge against the future. You make a darn good argument for paying off the house… but I just can’t bring myself to do it. Even in the 7 years we’ve owned our home, inflation and increased incomes has made our home payment feel smaller and smaller each year. And not quite the same hedge as having it paid off, but we’d be open to renting to more people for income if we ever needed it (though we’re very happy with just our one roommate).

  9. I would have paid more attention to allocation in tax-advantaged versus taxable accounts. Like you, we’re doing a two-phase retirement, but I have been lax about maintaining our target allocation, mostly by buying the lagging asset classes, and not selling to move to the laggards. Also, I put more bonds into the taxable accounts, and I should have more heavily weighted the bonds into the 401Ks. Mostly I tried to keep the allocation the same in all accounts, and we’ve paid more in taxes on bond dividends that we should have.

    I really can’t complain though, since we got to the finish line early without really trying or planning to. I didn’t even know early retirement was a thing, but we are not big spenders and I liked the security of extra savings and investments. I’ve always had a very ecological focus, and money felt like another resource that should not be wasted on things that don’t leave the world better.

  10. I think I’d do everything the same, though I also got lucky getting most of my money into the markets during the recession (rather than before it!) and so I have a lot of paper gains that help buoy my emotions whenever there are larger drops.

    I’ve thought about getting more into real estate, through the crowdfunding platforms rather than investments in real estate around me. I don’t want to be a landlord (it might be different if I had your situation though, I probably would’ve done the same) and deal with other people’s problems. :)

  11. If I had it to do over I would have front loaded more emergency cash savings before a downturn to include six months to a year of all expenses including employer paid perks plus full deductibles for all insurance plans and something for child care. During the Great Recession I neglected my health in order to continue a 60+ hour week job because my husband lost his, jobs in our area were scarce, and those hours are standard in my industry. I felt trapped with no options except to get patched up and sent back into the fray. I hate that we debated multiple times whether or not symptoms REALLY warranted an emergency room visit for me or the kids because the full high deductible would wipe out much of the expert recommended 3-6 months of basic expenses savings we had at a time we needed it for other things like replacing the full cost of employer provided health insurance that no expert reminded me to include in my calculation of basic monthly expenses. I feel so much more secure heading into the next downturn whenever it comes even if we are losing some market returns. Very similar to how you describe the feeling of a paid off house. ACA subsidies may also help if the job loss is all in the same calendar year so our income is low enough to qualify. I’m not sure though since my very small business employer technically offers health insurance but subsidizes none of the cost so the monthly premiums for family coverage are not what I would call affordable even if the letter from them says it is.

  12. I’ve owned three houses with my wife. The first was held only for five years. It would have been better to rent during those years and save more.

    From the purchase of our first house to our final mortgage payment on the third house was 27 years. Looking back, I should have paid the mortgage off even faster. During the child-rearing years, there is a strong nesting instinct that results in buying too much house. I have an average house in a great area. Looking back, I should have bought a smaller-than-average house in a great area.

    Most of our savings went into 401(k)s and IRAs. I would have invested more (maybe 20%) in regular taxable accounts. When I realized I could retire before 59-1/2, I had to scramble to put enough savings into non-retirement accounts.

  13. It’s interesting to us that you say you’d want to invest more in real estate. We have been considering buying a second property in a ski town as a mix of personal and vacation rental use. We actually like summers in mountain towns the best–hiking, no mosquitos, etc.–so that would free up most of the high-rent ski months for others. One thing that’s really holding us back is that our last real estate purchase (our current condo) was a terrible investment. As we hear more about others who succeeded in real estate investing, maybe we’ll contemplate this more seriously…

    • My husband and I are also considering a mixed use personal/vacation-rental property in the next few years. I know all of the arguments against it, but the location is where we plan to retire and that is a huge perk. Glad to see we aren’t the only nuts considering this :)

  14. Though I understand everyone’s personal situation is different, the backload cash savings-hold cash for special purposes-skip dollar cost averaging sections could probably use more explanation. On the surface, they can seem contradictory, so a deeper differentiation or guidance would be beneficial.

  15. Did you really say “tempted … and try to time the market”? And then after that “skip the dollar cost averaging”? I’m certainly a fan of skipping the dollar cost averaging with a cash windfall, but the two concepts … timing and putting it to work immediately are at odds. If there is one thing I’ve learned, it is to stay consistent with our investment policy statement and take the most dangerous person in the room (me) out of any timing of Mr. Market.

    Can you elaborate about the 3 years of living expenses in cash (which I agree with BTW and we keep even more). After 1 year of living off this bucket, do you replenish the account to continue to have the 3 year amount?

    As for another stream of income, I think you are on a pretty good path with the blog if you ever decide to monetize it in a meaningful way.

  16. As I’m at the relative beginning of my savings journey, right now I am maxing out all my tax beneficial accounts (401K, Roth IRA, HSA) but I am holding off on putting more into taxable accounts given all the market and future uncertainty.. Instead I’m going to save up for a rental property or an individual property! Given all the uncertainty ahead I agree and think that’s a good plan to be ready to invest it if I find a good deal!

  17. Great post. We are now at 4 rentals, 3 in Europe on a bull market, 1 in the USA. All paid by cash. We own our house, paid off mortgage. We start to max out the 401k for my husband who earns in $.

    We are going to stop fueling the real estate market and move into the index funds, waiting for the “correction” to come.

    We also invested in solar panels for our roof, at 8% ROI it’s one of our Best Buy’s. If only I could own a farm field full of those babies and cash in the sun harvest daily!

    • Agata, we meet again! :) I did the opposite – index funds in my 20s (start that compounding!) and a primary residence purchase in my early 30’s. Th next goal is hoarding cash to buy a pure rental property in my 30’s.. I’m very lightly considering Toulouse/Montpellier area; but it’s all TBD and a lot of research and reflection will need to go into those decisions so it’s a few years off!

  18. This is really interesting, and I think there will definitely be a big shift in the FIRE narrative of people who FIREd pre-any impending recession, and those who are FIREing after. I’d love to be maxing out my tax-advantaged accounts but that’s not feasible, so I’ll just continue keeping on with the amount I’m throwing in them. I definitely feel like it’s time to have more cash on hand, so I’ve been working on beefing up my emergency fund instead of throwing it at my taxable account. I’m so close to paying off my student loans, so I can’t wait to have that $110 every month staying in my account, too.

    Alas, rental properties and other passive income streams will have to wait. I’ll just continue to work my second job for as long as I can and make bank that way during the weekend until I’m in a position to be able to afford investing in something that’ll make me (relatively) passive income.

  19. We are already in early retirement (almost 4 years). But if we were still in the heavy savings phase (in addition to my regular savings) I would focus on increasing my monthly savings when the market is undergoing a correction. For example, if one had been able to significantly increase the amount of their monthly savings starting in December 2008, and continuing through the end of 2010, you would have been able to purchase many stocks or funds at significantly lower valuations. In our case, this would have meant going on a frugal budget for those months, to free up the extra dollars for investments. This is one reason why it might be a good idea to have a couple of sets of budgets – including a “super frugal” budget, so you are able to make the needed spending cuts.

  20. I would have put my Roth in Vanguard sooner, not a bank CD (lolz). I also think I waited a while at optimizing some things like cell phone plans and Internet/cable. Accelerating that would be good. Otherwise, I’m pretty happy with our slow and steady path.

    And you know I’m ALL ABOUT that mortgage payoff. One day. One day :)

  21. I really like the S&P 500 chart w/ FIRE blog dates. However, you should include Thomas Stanley’s book written in 1996, The Millionaire Next Door. Obviously, it’s not a blog, but it is one of the first FIRE type publications of any kind. It also happened to be published in the midst of a gigantic bull market. Coincidence? I think not.

  22. There were a lot of very popular personal finance bloggers before and around the time of JD and Get Rich Slowly. You’ve even had one, Jim Wang, as a guest poster. I think JD would agree that he was in the second wave of personal finance bloggers (like myself).

    I love ERE and he has great blog. However, there were literally hundreds of bloggers (some extremely popular) around that time.

    Many of my fellow bloggers were getting burned out by blogging around the time that Mr. Money Mustache started his blog. I think JD sold Get Rich Slowly before or around that time. I had written so much about person finance that I started to cover MLM scams. I don’t know the exact timing, but FinCon might be older than MMM.

    I understand the importance of touchstones, but I hope we aren’t boiling down the personal finance blogosphere this way.

    The “everybody else” group feels like recency bias. That “everyone else” will be a different set of blogs 5 years from now just like it was the 5 years before and the 5 years before that.

    • Janet… you can make any excuse you wish: race, privileged upbringing, a early win fall, etc. But, at the end of a life (hopefully much sooner) you either have the $$$ or you don’t. Someone will ALWAYS have had it easier than you. The point is even if some of us do have advantages, we are all still working towards bettering our lives. Our hard work isn’t any less real because we happen to be born white or maybe had some good fortune. We are not going to apologize for being born a certain way. Sound familiar?

  23. This was sooooooo very helpful and something I’ve been hoping you’d write. I feel like I’m a hybrid. I have been aggressively saving in my 403b, ROTH and cash accounts for about 4 years now (though I’m early 40s) BUT all savings have gone to money markets within those accounts bc I have been fearing the downturn for so long (a deeeeeeply contrarian father scared me off market-entry.) I totally missed out on years of climbing markets (believe me, a VERY sore bum from all the self-kicking) and am now totally petrified. As you say, I don’t want to have worked this hard to save, then jump in and spend the next 10-12 years just trying to just get back to baseline (forget retiring a minute early.) All to say, I’m one of those “sitting on cash, trying to (gulp) time it, but will dump it all when it’s “time” or seems time enough rather than dollar cost averaging.” And the cash is earmarked for a rental though I live in one of the fastest growing cities in the US so that’s feeling more and more remote/ unlikely. More of these, please!!

  24. We started back in the fall of 2014 on the path of financial independence. I’m pretty happy with the choices we made: foremost, to snap up an additional 3 rentals before interest rates and property values got too high.

    We also started the mortgage pay down, for the same reasons you and Mark did. This biggest regret I have is turning down two promotions in one year. I felt that time with the kids at their age was more important.

    Maybe I could’ve pulled it off and still had a good work life balance? Tough to say, but I’m almost convinced those “declines” have prevented any new opportunities.

  25. Mmm, what I would have done differently.. I made a few questionable choices, but overall for savings and life experience, I’m pretty happy with my choices. I’m in the savings stage, and look forward to renting out my Boston condo one day so someone else can build up my equity! At 3.5% fixed, I’m happy to let the debt ride for a while and build up cash. I’m maxing out my Roth 401k (80% Roth; 20% Trad); Roth IRA, and HSA; and my taxable account is pretty big after a few years working abroad, so I want to stash cash.

    A few poor choices do come to mind…
    -I always had jobs in high school and college. I wish I’d figured out the Roth, instead of spending it all on starbucks and gas money to ride around town!
    -I was a contractor and didn’t realize just how important an emergency fund was. Luckily I always had enough cash on hand, but I was cutting it close a few times between gigs!
    -I was in my 20’s when I lived abroad and (fortunately) had no major medical, disability, or investment issues… I didn’t have access to any social safety net, and in hindsight, it was so precarious! Fortunately nothing went wrong to that extent that I couldn’t cover myself. I wonder what I would have done if my family needed to access my accounts to send me money since I didn’t have any DPOA set up on my accounts here in the US. I also hadn’t thought to get disability insurance, and sometimes went without health insurance, and would have been in dire financial straits if I had a disability/medical issue. Luckily nothing bad happened, but my 25 year old self was quite a risk taker who believed no bad could happen to me! (at 32, I’m probably not much wiser!)

  26. A general rule of thumb is to keep about 6 months of expenses in cash and the balance in the best available asset class, which for long term investing is almost always going to be equities. While stock valuations are high and there is a potential for values to decline, it is also possible for slow growth over the next few years. I don’t think 2018 or 2019 will be a repeat of 2017 for US equities, but to say we’re near the end of a bull market or on the cusp of a correction is also speculation – no one really knows when the markets will turn and how deep a correction it will be. We did have a 10% correction already in February, who knows when the next one will be?

    Stockpiling cash now in the hope of buying equities at a lower price in the future is not a good recommendation in my view. Better to pay off debt or if you have no debt, continue to invest excess capital in low cost index funds each month. I’m also not sure that CAPE ratios are truly out of whack when also compared to the prevailing interest rates. That’s an important distinction that isn’t always factored into historical analysis. In 2000 we had a much higher risk free interest rate available (Fed Funds target was 6.5% in May 2000 vs 1.75% today) yet US equities were trading at higher average P/E ratios (28 vs 24). Equity index funds are certainly more expensive than five years ago, but not as bad as 2000 and I don’t think anyone knows when or if the price will drop such that it makes more sense to stockpile cash today.

    On the other hand, if you have financial goals such as debt/mortgage repayment that you’d like to accomplish in the next couple years, or another looming expense on the horizon, then it makes sense to save for that in cash rather than assuming the market will increase or hold its value in the relatively near term (that’s good advice anytime, not just when the consensus is that we’re in a late stage market cycle, as everyone is saying). So perhaps right now you might be better off taking lump sum windfalls (bonus etc.) and using to pay down mortgages or other debt, but if you are just starting saving out of your monthly paycheck, best to simply allocate as much as you can to equity index funds and not worry about short term market fluctuations.

  27. That first chart really puts things in perspective for me. I started working in the 80s and you can see how flat that line is until the mid 90s. Not only that, but at times there was double digit inflation! It’s so true what you said about possibly not being able to replicate your results due to different market cycles.

    I think I saved as much as I could, but it didn’t seem like I made much headway that first decade. We used to get out of cycle raises just to keep our salaries ahead of the new grads. Most companies still had pensions when I started, so you didn’t take anything with you if you left before 10 years. I didn’t even have a 401K until seven years in. I always put enough in my 401K to get the company match, but I would max it out now instead of putting that money in taxable investments. My first 401K only had 2 funds though: Fixed and Balanced, so not much choice. I’ve also probably kept too much money in cash over the years, but I’ve slept better knowing that getting laid off or a big market downturn wouldn’t impact me that much. I wish I’d discovered the FIRE community sooner, as I think it would’ve given me more focus on my savings and reaching my retirement goals.

  28. Figuring out multiple income streams is definitely a topic that occupies my mind. I’ve worked for a landlord in the past and don’t want to go that route myself based on the experience, but being the hard money lender for a real estate investor I respect is a future possibility.

  29. What I wish I’d done differently – many things!

    – Kept any property investments to my home country which I understood, rather than experimenting abroad. These purchases are quite easy to jump into, but can be really difficult to exit. And there’s a whole different set of laws, tax rules, local customs to negotiate. Keep it simple is probably the best policy

    – Educated myself about personal finance earlier. When I think of all that money just frittered away…..

    – If I had been a bit more switched on and realised early retirement was even a possibility for an ordinary Jo like me, I would have focussed on building up investments I can access earlier. Now I am in a race to get enough funds to bridge the gap for the early retirement years

    – Been stronger with my ex when he made “stupid” finance decisions. Like increasing our mortgage so he could buy a superior car to his colleagues…..sigh! One of the many reasons he’s my ex 😉

  30. That stock market graph with JD, ERE and MMM on it was a pretty cool infographic. That alone was my biggest take-away from this post for blog fun fact. Myself the biggest investment concern I have is my rental property, I barely cover costs and wish that was actually sitting in an RRSP. That being said it is a good savings diversity piece.

  31. I think my 30’s were just a series of poor financial decisions that resulted from acting in a way that I thought that I was supposed to act. Grown ups own houses, with furniture like a giant dining room set. I carted that stupid dining room set all over the country, leading me to find places to live that had a room that could hold a dining room set. Do you know how many times during that period I had enough people over where I needed a dining room table? 0. But in my mind, that’s what grownups did and what grownups had. So I ended up buying more house than I needed in California at the tippy top of the market. I lost my entire down payment plus some when I sold. And I was a long distance landlord during that time and lost money on it. Never again.

    I think that if I had it to do all over again, I would have taken a better look at who I was and structured my life and spending more accordingly. I’d definitely be closer to FI if I had. But I guess that’s a lesson only learned with time. Here’s to better financial decisions in this decade. :)

  32. Thanks for triggering a little self-reflection. As we slow down our work life not nearly as young as you, its oddly fun to look back at the big financial decisions we made and realize how the practical circumstances of life caused us to make decisions that we knew were dumb when we made them. Fortunately, a little blind luck and an incredible bull market made everything work out just fine for us, just as I’m sure it did for a lot of others. Early in our careers, we did no saving or planning other than making maximum 401(k) contributions to a recommended investment portfolio that we paid no attention to. Quarterly statements were tossed in a box of things to be gone through on a rainy weekend and never opened. When we left those jobs after a decade, we were advised to roll over the accounts and make sure they were invested well. We did nothing, which we understood was dumb, but it just wasn’t a priority. In fact, those accounts still sit in our original employers’ plans (in my case actually the plan of the firm that acquired the firm that acquired my firm) and I have no idea what my funds are invested in or what the fees are. And yet, after 25 years of blissful ignorance, the accounts have gotten astonishingly large. As young associates, we bought a modest house in a nice community with easy access to the T into Boston, despite our mentor partners insisting the right way to go was to buy as much house as we could convince a bank to lend. We agonized over a decision between houses that had a $40K price difference in the early 90s and went with the cheaper one because we felt stressed by student loans. As the RE market skyrocketed in our area, we felt like that was the dumbest decision ever. But we never moved and now are in a great neighborhood with great neighbors close to things we want to be close to in a house that is just right for our retirement. With kids and big work hours/stress, we decided to give up partnership opportunities to start our own firm and take back control of our lives. We knew at the time it was another dumb financial decision and it most definitely cost us a lot of money. We dutifully set up a SEP-IRA account for our new business at the local Fidelity office and deposited a check each April when the accountant gave us the number we could contribute. It sat there for years in the default money market account earning virtually nothing. An assigned account manager repeatedly harassed me to meet with him and do something, but I was too busy and a little nervous about how high the stock market was. Another dumb mistake. We finally started investing the SEP monies in 2008 when the market no longer seemed inflated and that worked out pretty well, though overall I’m sure our laziness cost us. We come home to Amazon boxes just about every day, go on ridiculously expensive vacations, put our kids through private schools and colleges, eat out a lot more than we should, and have saved far less than we could have other than in our tax-deferred retirement accounts. We certainly made some mistakes financially. On the other hand, this reflection helped us realize that we also made some really good life decisions that may have led to those financial mistakes, which makes us on balance decide we wouldn’t change anything.

  33. Oh goodness. This is fun to think about, though the list of things I would do differently is quite long. But the top 6 in no particular order would be: 1) Never hire a financial advisor, invest in index funds . 2) Don’t stock pick, ever. 3) Don’t be afraid to buy a fixer upper for the first house (I was soooo scared that something would break – stuff breaks all the time, it’s not a big deal). 4) Also on that first house, look for a duplex or triplex so I could rent it out down the road. 5) And finally, real estate, location, location, location. Though I was able to parlay my 1st property into my 2nd with a lot of equity, I lived for a 4 years in a suburb with a horrible commute for 18 months before I worked from home. Think about where you work and where you have your social and other extracurricular activities and buy something close to that even if you get “less house” or spend a little bit more than you want to spend (though don’t spend as much as your mortgage company approves you for). 6) Vacation house? What was I thinking? It’s not a vacation if you have to take care of stuff wrong with your house every time you visit!

    Easier to pick the things you would do differently than the ones you did right. But, I did a good job of living within my means at all times, and focused on spending money on things that made me happy instead of trying to follow the herd.

  34. I don’t think I would have done anything different. I’ve been holding gold and silver bullion for a long time now and while the movement on the prices have been minor, I’m happy to still hold for a long time as it’s only a very small portion of my investment portfolio.

  35. Hmm…. I think everyone I know wishes they owned more real estate! Like you, I don’t believe in dollar cost averaging. That technique is not where I’m looking to make my investment gains.

  36. Just like you guys, wish I could’ve invested more in real estate. But I guess it’s not too late. I invested in a condo unit in 2010, and it’s been an excellent investment so far. I was very fortunate to have great tenants (only two in 7 years). Would love to purchase another one if given the opportunity.

  37. i chased yield a couple of times and got burned with an MLP. i wish i had subscribed to motley fool stock adviser sooner. it costs a little but the advice has been very sound. having a paid off house is da bomb. i’ve often said it the way you did: you might have done better in the market but you can’t measure the value in your psyche that it provides.

  38. Tanja, I’m curious if you and Mark have plans to make any changes with your 3 year cash cushion considering in previous posts you mentioned having side jobs that bring in enough to cover annual expenses?

  39. Hi. (Former lurker) I have found this FI blog to be the most friendly and welcoming, and has financially realistic discussions. This post was great! And to repeat what MeganG said: I should have “realized sooner to look at who I am and structure my life accordingly”. I’ve just in the last month realized that simpler is better and have moved most of my money into asset-allocated mutual funds. Before that I tried to invest in individual mutual funds and “actively mange” them myself. I should have got real with myself a while ago with how much time I would actually spend doing that (not enough to make more gains than letting the professionals do it). I’ve also finally realized that living in a small space close to the things you do has all kinds of economy of scale.

    Other personal pitfalls: Investing in individual stocks is not a good idea if you buy on a gut feeling and a couple hours research. I also wish I had saved a higher % of income since the outset of my working life and wish I hadn’t filled a house with new furniture. When the market tanked in 2008 -and I moved to where the work was- I had to downsize and just couldn’t keep all that furniture. Money out the window. Though I haven’t regretted buying a car new. Getting stranded (a while ago) on a desolate stretch of freeway made me appreciate the peace-of-mind of a new (reliable) car and paying for regular maintenance. The airplane rebuild project and the empty commercial lot purchase, now those were big expensive lessons I’ll remember for a long time. Have an actual thought out plan… and ideally a mentor that’s financed something like it before… and FULLY understand how you’re going to get the money to pay for it! That was just before the crash when using home equity lines of credit was oh so popular. Needless to say, my eventual home sale didn’t make much profit.

    Live and learn! While my FI will likely be around age 60, at least it’s not 67!

  40. You seem to have some very strong opinions for someone who couldn’t even be bothered to look up how long I’ve been blogging. Please do your homework before making accusations like this.

    • ?? I’m hoping this comment was misplaced. Otherwise, my apologies if something came out as some sort of accusation. I was just trying to get in the conversation and share my personal financial mistakes that I wish I could have told the younger me. I like your blog. -dubjen

  41. I agree that now it’s not the time to go full in the market. I’m pilling cash in short term CDs/Treasures meanwhile.
    Your DCA item suggest going full in now..which I don’t like
    I also don’t like buying house and paying mortgage..this is not smart. Invest in REITs now that the valuation is very favorable and you’re in real estate for real them not just owning an liability that is your house.

  42. I’m the oddball, in that I don’t want to pay off my mortgage early. But my mortgage is held by my parents, and we’ve done it as much for them as for me. I don’t recommend that for everyone, don’t misunderstand. I’m an only child, which makes it a TON easier. I’m also very particular about making sure that the payments are made, which not everyone would. We have a very tight extended family, so it works for us. (I bought my house to move my grandmother in to, because I didn’t want her to have to live by herself. That’s how close our family is.) Unfortunately, that also means that planning has to be done a lot differently. I have a chunk in index funds, a combination of pre and post tax. And I continue to save enough to get the company match. But I don’t over-save any more. That’s banked in cash, because I may have to supplement nursing facilities. 15 years ago when I started, that would have never been a thought. I was putting money in my 401k, to make sure I earned the company match, and paying cash for my master’s degree. But now…things change. I think the biggest thing is to make sure you have flexibility built in. It’s easy to have a plan, but it’s equally easy for that plan to get turned upside down. :)

  43. Well your FIRE blog is the first one I’ve read where the author seemed even aware that their timing of savings from dual high incomes and longest bull market lined up perfectly, not to be easily duplicated with the same incredible results. That’s a breath of fresh air that you are intelligent and aware enough to not only notice, but to also admit it in writing. Maybe all the other FIRE bloggers are just too young to have that perspective, but as you point out, that perspective will be coming to them soon! This perspective is what sets your blog head and shoulders above the rest. You have great perspective and display humility with intelligence.

    Anyway, good stuff. We think alike on the financial planning and strategy things. I have much to learn about planning for contingencies. It is always great to be thinking ahead and planning for the most likely scenarios.

  44. Awesome post! As someone just beginning the journey, I enjoyed hearing your differing opinions from the standard FI religion. Although the standard advice is typically gold, I have to agree that ignoring macroeconomic conditions can be reckless in risk mitigation for the the short run. I sold my car last week, and have been debating the decision of aggressive lump sum investing (100% of sale into VTI) vs. holding a liquid asset cushion (50% of sale) for opportunity. I think I’m going to take your advice, and pray for average inflation…

    Keep up the good work!

  45. This post is my new bible. I’m in year 3 of saving for FI and I have slow initial progress. I want to diversify. This post is everything.