We’re supposed to save 2 times our salary by age 35, or is it 25 times our expenses to retire early? We’re supposed to ignore Social Security, but also claim it at 62 to hedge against market risk. We should try to get out of debt as quickly as possible, but also paying off a mortgage early is missing out on potential market gains. There is so much “truth” out there, so many “right” answers, and many of them conflict. How to make sense of them and decide which are actually true? Start by tossing out the whole notion that financial truth exists in the first place.
A topic we don’t discuss often enough as a society is how to help our parents as they age — what’s expected of us as adult children, what the emotional toll might feel like and how much time it will all require. But those things are real, and they’re crucial to incorporate into your early retirement planning.
If we know we can’t achieve something the way someone else did, or the way we might have originally have envisioned for ourselves, it’s easy to throw up our hands and decide that it’s not even worth trying. Here’s how I let go of the idea of perfection to get on a better financial path, and some tips for how you can stop letting notions of perfection and imperfection hold you back.
We’re diving deep into the geekiness today, friends! We’re talking gaming (the video game kind, not gambling) and all the lessons we can apply from gaming to level up our finances on the epic quest to FIRE. Plus a giveaway of Kristin Wong’s new book Get Money, which is all about gamification!
Our early retirement might be right around the corner, but we still have a lot to do before the year is up to make sure that we’re truly ready to make the big leap. Then after we pull the plug, we have a different set of things to do. Here are our big lists of things to do before we retire early, and right after, as well as things we’ve already checked off the list this year. Are we missing anything? Let us know!
Today I’m on the Mad Fientist podcast! To celebrate the occasion, we’ve got a monster post with the full rundown on every aspect of our financial plan and financial philosophy, so new readers can get a better sense of us, and long-time followers can see everything all in one place.
Today’s a biggie: the culmination of so many discussions and decisions! Will we pay down the mortgage or pad our taxable accounts? How did our 2016 look in the end? When will we retire in 2017? It’s all here! (Plus, happy holidays! Sending lots of holiday love!)
We’re thinking a lot lately about asking for more — asking for the compensation we deserve at work, and asking more of ourselves. And now, it’s official: in 2016, we successfully did both. Today, the story of how I negotiated for more money at work, and how we rose to the higher challenges we’d set for ourselves this year. Do we consider 2016 an unqualified success? Read on!
It’s year-end bonus time! And ordinarily we’d be following the plan: allocating part of our bonuses to paying down the mortgage and part to our investments. But this year, with retirement on the horizon, and our savings ahead of schedule for the year, we have some tougher decisions to make.
Today we’re reflecting on comparison — when it can be good, when it crosses the line, and if it’s even possible to know when you’ve crossed that line. We work hard to share our story in a positive way that encourages others, but lately we’ve been wondering if some of what we share inadvertently creates an arbitrary standard that begs comparison.
As we get closer and closer to our retirement date, the idea that we are actually going to retire early is becoming real. And as we get closer, we’re creating a different kind of to do list — one less focused on saving, and more focused on mapping out everything we need to do before we pull the plug on our careers next year.
We’ve talked a little bit about upping our savings game, but we’ve only talked about it in general terms. Today, we’re going to get specific about how exactly we’re raising the bar, and especially what that looks like for non-budgeters like us.
It’s so easy to second-guess our past decisions, or to blame ourselves when things don’t turn out as we’d hoped. We’ve recently had a reminder in real life of why it’s so much better to let that stuff go and focus on the future instead.
Today we’re kicking off a new periodic series called The Retirement Lie. We recognize every day how lucky/fortunate/privileged/rare we are for being able to pursue early retirement, primarily because we also recognize that just being able to retire at all is becoming increasingly unlikely for a large majority of people. In this series, we’re delving into the forces that are keeping people from retiring confidently and securely, beginning with the way media talk about retirement savings.
We’re huge believers that there’s no one “right way” to do personal finance. Your own finance philosophy should follow out of what makes you truly happy. But we all have those quirky habits that don’t jive with our own philosophy, and today we’re fessing up to some of ours!
Get ready, because we’ve unleashed the excitement in today’s update! 2016 has been good to us financially, and we’re even farther ahead of schedule toward early retirement than we were at the end of the first quarter. This is a big one!
Though we weren’t personally all that impacted by the 2008 financial crisis, we learned a lot of lessons from it second-hand. As we get closer to early retirement, we’re reminded of the biggest one: We can’t always bank on being able to go back to work if we need to.
I am definitely a planner by nature, which means that we have all kinds of contingency plans, emergency preparedness plans, you name it. But I recently realized that I tend to plan for the worst only, and not for the almost worst. Today we’re talking about what happens if any of those not-quite-worst-case scenarios happen.
Before we left the big city we used to call home, we felt like we’d never be able to afford an actual house, which made us feel “poor” even though we had money saved and earned a good living. And now, we feel comparatively “rich” despite earning about the same. Today we discuss the impact of where we live *and* its culture on how relatively wealthy we feel.
Today is a “clip show” post of sorts, putting together for the first time all of our money beliefs and actions that have gotten us where we are today. We spend a lot of time looking forward, and projecting future health care needs, where our income could come from and of course all the feelings. Today we’re sharing the master list, the grand compendium of everything that’s helped us get this far in our journey to early retirement.
Right now we have some issues in our house that need fixing. We want to DIY them, but haven’t had the time, which puts us in an uncomfortable spot: stay frugal and somehow magically find the time, or use common sense and hire people to fix the problems. Today we explore those times when frugality may not be the answer.
We’ve gotten a lot of money advice in our adult lives, and quite a lot of it seemed totally convincing… until we examined the philosophical question underlying that advice. How we learned to tell whether that reasonable-sounding advice is actually good or not.
We’ve spent more than a decade building up our savings and investments, all the while granting them a special status by not touching them. Even shelling out $8,000 for our tax bill this year felt painful. The pain of paying that bill made me wonder if I have “special occasion thinking” around our investments. And if, when it comes time for it next year, we’ll actually be able to spend our investments. Let’s explore…
There’s an issue that we’ve struggled to get our heads around, which we’ll call our optimal retirement income: a level at which we get a big Obamacare/ACA subsidy on our health insurance, we pay low taxes and we enjoy a comfortable standard of living. But calculating that number is not as straightforward as it seems. Enter the income vs. cashflow discrepancy!
We value our health pretty much above everything. If we had a such thing as a “health portfolio,” it’s safe to say we’d value that above its financial counterpart. Something we are thinking a lot about is how we’ll ensure that we always have access to good quality medical care at every stage of our lives. Here’s the rundown of options we’re currently considering as the landscape keeps shifting.
While we’re making fast progress toward FIRE, it’s not because we are especially gifted in the discipline department. We still slip up and make occasional impulse purchases, even now, multiple years into our FIRE journey. But, we’ve found a way to fake discipline, through the motivating power of streaks.
Something we get asked about semi-regularly is our two-tiered retirement plan, and why we aren’t thinking of our taxable and tax-deferred funds as all one pool. Here’s a breakdown of why.
We all tend to talk about saving money and reducing needs in ways that make us focus on the aspiration to be income-poor. But there are some important times when we should instead think like a rich person, since any aspiring FIer eventually becomes one!
We constantly come across new tips on how to get to “optimal frugality,” and while we think it’s great to continually try to optimize your spending, something that we now know to be true is that there’s never a point of ultimate optimization, a point when we have everything figured out perfectly. Rather, it’s an ongoing process of dropping habits and adding new ones. Here are some we’re happy we’ve dropped.
For a long time, we were big fans of dollar cost averaging, the notion that you hedge against market losses by not buying a whole bunch of shares at one time, but rather in smaller increments over time. There’s only one problem: Mathematically, it turns out dollar cost averaging is not that great a strategy after all.
It’s that time again — when we share our quarterly stats and progress on the road to early retirement. Also in this update, something that’s got us so flipping excited — like party confetti emoji excited, you guys. Come check it out!
When you’re saving like crazy for early retirement, any money not going into the savings pool can feel like a setback. But there’s more to life than just future goals, and those goals should never trump your values or your joy in the present.
A lot of what we talk about here is specific to people on the early retirement path, but today’s topic is something every single one of us should have as an important part of our financial plan: an emergency fund. We think of our emergency fund not as a one-and-done kinda thing, but as something that has evolved upward and downward over time. And now, as we’re approaching early retirement, we’re once again rethinking how much we need to have saved in our e-fund when we hit our magical date.
Lately we’ve been wondering: How many of us who are saving for early retirement would happily spend more if we had more to spend? If spending more wouldn’t derail our plans?
We’ve noticed something surprising. We’re super happy to talk in detail about finances and our retirement plans with strangers… but we don’t do the same thing with people we know in real life. Why is it so much easier to spread the word about FIRE with strangers?
I have a super visceral memory related to taxes that I still carry around with me. My parents divorced when I was in high school. The divorce itself was fine, but what was not fine was watching them get audited post-divorce for a year in which they had been married. It was the worst I ever saw of my parents, but it was also an important lesson in dealing with accountants and the IRS.
We really aren’t frugal by any reasonable definition of the word. We never consider forgoing things we need. But I decided to look at our lives and see if there was any area in which we truly are frugal, and ask what that means for us. And there is one example: the thermostat. Here’s what keeping our house cold has taught us.
A tension we notice a lot in PF blogland is the question of whether to prepay the mortgage, or sink as much money as possible into market funds, and it’s a question we struggle with, too. In some imaginary world in which we could see into the future and see how the markets will perform, it would be an easy decision to make. Let’s dig into how we answer this question in reality.
it’s the most math ever! today we’re talking about how we calculated what we need to save for early retirement, since the 4 percent rule doesn’t exactly work as planned for all early retirees.
in honor of valentine’s day, we got to talking about how we’ve grown as a couple financially. neither of us started out as a financial role model. instead, we let ourselves figure out the money stuff together as we went along.
the last time we talked finances, we were riding the crest of a high and beautiful wave at the end of 2015, back when it appeared that we were ahead of schedule on our early retirement goals. but now we are now experiencing the financial hangover, the realization that actual reality may shake out differently than we’d hoped. all the more reason to keep our goals fluid!
we’ve mentioned several times over the past few months that we’ve been working on a monster post on health care, obamacare/aca coverage and how the subsidy limits are affecting our retirement budget projections. but we’ve realized that the more interesting topic is the moral catch-22 of the affordable care act subsidies.
while it’s easy to paint a pretty picture here in blogland, the truth is that, despite all that counseling, and reading that book and others, and even despite being in complete and total lockstep with regard to our early retirement and life goals, we aren’t always on the same page about every aspect of our finances. we think it’s important to acknowledge that. here’s how we’re dealing with our current disagreement.
we’re super excited for today’s post. we have been dreaming of early retirement for years, but didn’t really know how to plan out what we conceptually knew we wanted. so we vaguely “saved money” and daydreamed about how great it would be not to work until we’re old. […]
we’re here today with a post we’ve been hinting at for a while: the full rundown on why we decided to go against conventional wisdom (and the well-grounded advice of many of you!) to make a personal loan to a family member. we wanted to make sure we had everything squared away before sharing the details, but now that time has come.
we think it’s easy to feel a bit hopeless in the face of financial hurdles if you’re not a person for whom financial virtues comes easily. if you’re not a natural saver, you’re not doomed to a life of financial misery. but, you have to know what your weaknesses are, and develop a system to work around them. here’s how we’ve built a system that doesn’t rely on willpower at all.
we’re not really new year’s resolution people, but we have definitely been on a journey to see the best in situations — from appreciating beauty more of the time, to looking on the bright side at work, to enjoying the journey of early retirement instead of always focusing on the end goal. so we’re determined to ride that wave into 2016.
we’re just a little over a week away from the end of the year, and now that we know how our bonuses shook out (mine: better than my low expectations. mr. onl’s: better than our fairly high expectations. wohoo!), it’s a good time to look at how we did this year, and look ahead to our goals for 2016.
today we’re telling the story of the city condo we once owned, and which we’ve struggled to define as a “good” investment or a “bad” one. it’s a reminder that it’s not always easy to tell good decisions from bad decisions — or good investments from bad investments — but rather it’s about what those decisions do to your trajectory, and what other decisions they influence.
today’s post is a short one to share three little tidbits: 1. we are up with an fi interview on even steven money. 2. we have a slightly epic money fail to share. 3. an update on my bonus.
we’ve been thinking about entitlement, and the ways in which being entitled is actually good when planning for early retirement, and the ways in which it can be detrimental. please help us add to the list!
this week and next are scary weeks for us. these are the weeks when we’ll find out if we’ll be doing a happy dance that we hit our year-end goals, or making sad puppy faces at each other for the next few weeks because we missed the mark. yep, it’s bonus time.
one of the misconceptions we used to have about frugality was that frugal people were cheap at all costs. it’s easy to view frugality as all or nothing, or to see frugality as trumping other values. but it doesn’t have to. a breakthrough idea for us was reframing how we see frugality in terms of the business term triple bottom line.
wow, you guys. though time doesn’t fly when you’re trying hard to retire already, it feels like just yesterday that we started this little blog to chronicle our journey to early retirement (actually it was about 10 months ago), and here we are, 100 posts later! we thought we’d celebrate the day with a rundown on some of the other numbers we’ve racked up while writing these 100 posts.
we feel the sunday blues in a big way. and we know why: not only do we just not love having to work every day, we know that we’re in especially high pressure, stressful, occasionally soul-sucking jobs. but we didn’t just default into these golden handcuffs of ours, and we don’t stay in our jobs because we lack imagination. our choice to stay put in unsustainable jobs is a clear-eyed decision we’ve made, based on considering all of our options and deciding what’s most important to us. the most important thing? getting to our exit date as soon as we possibly can.
early retirement is a bfd. and it’s not for everyone. it’s a very different path from the one most people follow for a reason, and it’s not one we should go down without having our eyes wide open. early retirement won’t magically fix everything we wish was different about us or our lives, and it comes with its own set of pitfalls and stresses. to help sort this out, we’ve put together a list: the ten questions you should be able to answer before you retire early.
you know we love a good object lesson. recently we had one inexplicable morning when the fire just would. not. light. those days are a reminder that the definition of insanity is doing the same thing over and over but expecting different results. the answer: add kindling. the point of the kindling is not only to get us past those obstacles, and to get the fire going a little, but to get those flames to start spreading — and spreading fast.
we’ve both come across a seemingly frequent but also puzzling (to us) phenomenon while perusing new blogs. when aspiring early retirees are telling people in their lives about their plans to retire early, they’re getting negative responses. one of which has us utterly befuddled: the assertion that the accumulation of assets required to retire early constitutes pretty much the worst quality we can imagine: greed. here’s our response, in manifesto form.
today we’re sharing the clearest glimpse yet into where we are on our journey toward early retirement in money terms, along with a detailed breakdown of how we plan to fund both our early retirement and our full retirement. we’re talking percentages instead of absolute numbers, but are going into a lot more detail than we ever have before. that’s right: it’s all the charts.
we are as guilty as anyone of upsizing our spending at various times, mainly on restaurants and travel, but are thankful that several key factors have kept us from permanently inflating our lifestyle, namely our anchors, named for the anchoring effect or anchoring bias in psychology.
we have a clear vision for the life we want to lead when we retire, and that means living in the mountains and having a permanent home base, which don’t come cheap. we’re okay with those expenses, but have given up lots of other things to make our early retirement dreams a reality.
this weekend we visited mono lake, an ancient and super salty lake. all that salt means that swimmers in the lake float easily. which got us thinking: it’s easy to think that swimming is swimming, but it’s not. we can make swimming hard for ourselves or easy for ourselves, and the same goes for our finances.
one of the things that’s different about us, compared to lots of bloggers in the pf community, is that we are not frugal by nature. at some point, we realized that all of that spending, even if it wasn’t on stuff, was still locking us into needing our jobs, and needing them for a long, long time. and since we value time more than anything, and were in a position to make early retirement a reality, we knew we’d regret not changing our ways. but it hasn’t always been easy. here’s how we lived to tell the tale.
we hope we live super long lives. but we can’t predict everything. so while we enthusiastically plan for a long future, we also make sure that we have everything in order should the unthinkable happen, and something tragic befall one or both of us.
we’ve been tracking our numbers for years now, and have always set annual goals for ourselves in terms of savings and mortgage paydown. but crazy as it may sound for us to say this, we’ve never defined those goals in terms of strictly what we would contribute. we’ve only defined our goals in terms of total balance. but with only goals about total balances, we now feel like we’re failing in the current market landscape, when the truth is that we’re saving more than ever. here’s how we’re adjusting our goals.
one of our earliest posts on this blog was about how we don’t share our numbers. it’s mostly because, one day not too far off in the distance, we will drop this whole anonymous charade, and we don’t want all the details of our finances attached to our names and faces. in our culture, money comes with meaning and prejudgments. having x amount means you’re supposed to behave a certain way, dress a certain way, spend a certain way. we don’t want those expectations to precede us.
Gifts are on our minds because we just celebrated a birthday. Not spending money on gifts is something aspiring early retirees are big fans of, but right-sizing pseudo-minimalists also aren’t into acquiring more stuff. Here’s how we cope come gift time.
it’s easy to get frustrated, wishing we’d figured out our early retirement plan at a younger age. but what would that get us? it sure wouldn’t make us retirees at this moment! we’d much rather go with the “better late than never” way of thinking, and be grateful that we found this path at all.
looking at things big picture, we’re astonished at how far we’ve come in a short time, aided in large part by jobs that overpay us. since we bought the house four years ago, our net worth has tripled, and the year-over-year gains are pretty big, owing to us getting serious about saving and about paying off the house quickly, as well as growth in the markets since 2009.
we have always loved doing things ourselves. what’s funny in retrospect is how little the money piece has mattered to us in questions of diy, at least with the small stuff. but of course that was then. and this is our running-like-hell-toward-early-retirement now. money matters. especially the saving of it. so now when we diy things, it’s just as much about saving money as it is about the joy of making something.
we never hide that we are not frugal by nature, we’re not budgeters, and we’ve really only succeeded at retirement saving by employing a pay ourselves first approach that is essentially tricking ourselves into thinking we have far less to spend than we actually do. that is all well and good for now, but things will definitely have to change once we quit our jobs at the end of 2017.
don’t let any of our more philosophical posts fool you — we’re still total nerds, and we love tracking every possible aspect of our early retirement plan as much as the next guy. but, we don’t share our numbers here, which has sometimes made it tough to explain some of our more unique circumstances, like our need for a two-part retirement.
this was our sliding doors weekend. you know the concept: you rush into a train station, and just barely catch the train. but then in an alternate reality or parallel universe, you rush for the same train, but the doors close before you can hop on. that triggers a sequence of events that leads you to a completely different future.
lots of being healthy is absolutely free: getting outside to exercise in the fresh air, choosing not to smoke, maintaining a healthy weight, avoiding toxic people. and we do all of that stuff. but we also spend out on our health in some big ways, and plan to do even more when we’re retired. some of these expenditures may not seem health-related, but we see them that way, and that makes them worth it to us.
despite not following a budget, we have still learned how to trick ourselves into saving a ton and staying on track with our ambitious financial goals without much struggle, and today we’re sharing how we do that. our strategy: paying ourselves first.
we frequently read blog posts outlining people’s grocery spending and practically have to pick our jaws up off the floor afterward. you’re spending only $30 a week for groceries?!?! you’re feeding a family of four for $70 a week?!?! we even read one post talking about how the […]
Today: our reasons for being optimistic about our vision for early retirement, and for making things work in spite of the inherent risks.
this independence day, we’re sending some gratitude out to all those in the history of this great nation who’ve made it possible for us to pursue our financial independence.
that impulse buy was a reminder that, even if we’re living way below our means, we still have to improve our habits if we’re going to be able to live within our early retirement allocations in a very short two and a half years’ time.
today we’re sharing the story of some very, very bad money decisions we made once upon a time. some very bad money decisions that we couldn’t be happier about.
people in the pf world talk a lot about the power of compounding over time, and we want to talk about how this power has been made evident to us most of all: in our incomes.
once we started planning in earnest for early retirement, we quickly realized: financial calculators all take a one-size-fits all approach. but what if your finances don’t fit neatly into this one-size-fits-all box?
the whole idea of early retirement of course feels like a risky proposition. but here’s the thing, to misquote the princess bride: life is risk. anyone who says differently is selling something.
we started this blog because we crave that connection with other folks who are doing what we’re doing. what we didn’t expect is how much blogging would change our finances, and our hearts.
for us, trying to follow a line-by-line budget feels both overly restrictive, and too much like a diet in which you’re tracking calories. it’s not sustainable. following a budget makes us constantly want to cheat, or wonder when the diet is over. but we’re doing just fine without a budget!
the word “badass” gets thrown around a lot in personal finance/financial independence circles. that’s not the full story. all of us who are working toward or have achieved financial independence have one big thing in common. we’re lucky.
we frequently see articles about great places to retire based on cost of living, and we think to ourselves, “wow, if we sold our house and moved to one of those places, we could retire now.” but we decide again and again to stay put.
we like to remind ourselves that early retirement is a marathon, not a sprint, and the worst thing we could do is burn ourselves out early in the process by being too strict or restrictive. the key is knowing yourself, and what you need to be successful and stick with something.
in planning for our early retirement, we often think about the question of whether the best decision on paper is also the best decision for our souls, or whether the two might be different.
it’s pretty amazing how much motivation a goal can provide, and the chart is proof that having a goal — even if it was abstract back in 2011 — has worked mightily well for us.
in retirement, our income will go way down. we’ve budgeted and planned and made a slew of spreadsheets, and in theory we are okay with that. but will money become something that stresses us out, or — worse — that gets between us?
some of the ways we’ve saved what is by any measure a lot of money. not enough to retire yet, even at the modest level we’re shooting for, but still objectively a lot.
everything in our house that needs fixing or replacing means fewer dollars into our retirement savings and is, in other words, a direct assault on our escape plan, our freedom. but now, we’re trying to think of this as a lesson in impermanence.
one of our favorite personal finance sites keeps a running tally of bloggers’ net worths. while we love seeing how others are doing, we don’t share our numbers, and we have a few good reasons why we don’t.
we’re going to live like cheapskates for the first 18 years of our retirement, and then if the markets cooperate, we’ll live a little larger in our later years, once we can tap our 401(k)s. for us, this plan is perfect. live cheaply when you’re young and resilient.
we advocate taking a fanatical approach to banking airline miles. most airlines require five coast-to-coast roundtrips to earn a free domestic ticket. if you take those trips on different airlines, they add up to essentially nothing. it’s only by concentrating your travel on one airline that you get the benefit.
we realized that in order to earn that money, we had to restrict travel for work, which restricted how much we could commit to projects, which restricted our upward mobility and earning potential.
at least one of us is not a gambler by nature, preferring things to be predictable, controllable and known (even if those concepts are themselves just illusions). but this is, for us, that rare thing in life that’s so worth doing that it’s also worth a pretty substantial risk.
we value time over money. we value people over money. we value experiences over things. we’re willing to live on a whole lot less than we currently earn.