038 | The Why of FI

038 - The Why of FI

In today's podcast we discuss one of our most important topics: The Why of FI. Why we pursue this path, why we think it's a life ‘superpower' and how it can help you escape the hamster wheel of life decades earlier than most people could ever dream.

Not a good time for a podcast? You can read the article inspired by this episode here.

In Today’s Podcast we cover:

  • Discussion of the Why of FI as an introduction to the concept of Financial Independence and why we’ve chosen this path and this community
  • Jonathan’s explanation of the “hamster wheel” and what the normal ‘American dream’ looks like and why this will keep you chained to this treadmill for decades to come
  • This is not a pursuit of freedom, but a pursuit of “stuff”
  • You’re working full-time to afford these things that you can’t use because you’re working all the time
  • The important thing to focus on is what makes you happy
  • Time is your most important resource
  • This is not about liking or hating your job. This is about freedom and taking the power back in your life
  • The concept of drifting and Jonathan’s questions that can help you highlight this feeling in your life
  • It is so hard for most people to find a way out of this life because they don’t have the time, energy or resources to figure a way out. But FI is the path out!
  • FI is a truly optimistic message where everyone can make a difference going forward in their lives
  • Instead of buying stuff, we’re looking to buy our magic ‘perpetual money making machine’
  • We try to keep our savings rate as high as possible and investing in low cost index funds
  • This is not a get rich quick scheme.
  • You need to learn what you don’t know to get on the path to Financial Independence
  • FI is about math and your savings rate
  • FI is not about deprivation through frugality, but about making smart choices and optimizing things in life
  • How Brad saves a significant amount of money by being smart about a handful of things like house, car, cell phone, cable and food
  • Jonathan is a ‘reluctant frugalist’ but he has seen the value in pursuing FI
  • FI gives you the power to choose what you do with your time and if you intend to work going forward
  • You can start tomorrow to save money and pursue this path
  • Now you can focus on what you actually want to do with your time in the future
  • Most people’s lives would collapse within 3 months if they lost their jobs, but pursuing FI changes that entirely and gives you power to choose what you do
  • You also have flexibility that would have been previously impossible

Links from the show:

Books Mentioned in the Show:

037R | The Friday Roundup

037.Slow Travel

Today we discuss Episode 37 with Scott Rieckens, the filmmaker behind the FI documentary Playing with FIRE, plus emails and voicemails from the community and a discussion of reaching FI in a high cost of living area.


In Today’s Podcast we cover:

  • Discussion of Episode 37 with Scott Rieckens, the documentary filmmaker behind the upcoming FI documentary called Playing With FIRE
  • The great American Eclipse and our viewing
  • Brad’s vacation and how they spent $0 on hotels for 16 nights
  • The value of slow travel and why it makes vacation dramatically better. Vacation doesn’t have to be stressful
  • How expectations management is so crucial to life and on vacation
  • Time is such a crucial tool
  • Scott’s slow travel with his family and the yearlong adventure they are on visiting family and friends while filming the documentary
  • There should be creativity and excitement in your future and your decisions
  • The list of things that made Scott’s wife happy on a weekly basis and how this was an inspired decision by Scott
  • Sell your value first and then grow your network. How Scott did a masterful job at this by creating a network and even leaning on our network
  • How Brad connected instantly with Scott and wanted to help him
  • This documentary can help take the concept of FI to the mainstream
  • Email from Paige on limiting beliefs and how it isn’t “impossible” to live in a high cost of living area for under $50,000 per year
  • Paige thinks that you may need to be a “little more intense” to hit FI on a low income, but that it is certainly possible and it is all about savings rate
  • How we all have limiting beliefs that we need to work through to “think about a problem a little bit differently”
  • Brad’s decision to leave Long Island, and how that helped the path to FI. But could they have been more intense and stayed and still reached FI?
  • You can be on the path to FI moving forward no matter where you’ve been or what “bad” decisions you’ve made in the past
  • There’s no perfect person or situation for FI – just try to be a little better going forward to make positive changes
  • Email from Art Vandelay and how they love the show and have made a lot of positive changes since listening. Should we stop the FIRE from spreading?
  • We need local leaders for ChooseFI local meetups so please reach out to us
  • Voicemail from James about his successful trip from Nashville to Europe using travel rewards points
  • Voicemail from Rachel about how to hack your TSP to save money on your student loans
  • Itunes reviews and giveaways for Camp ticket plus books

Links from the show:

Books Mentioned in the Show:

037 | Playing With FIRE | Documentary | Scott Rieckens

PlayingwithFIRE.cp

In today's podcast we speak with Scott Rieckens, the creative force behind the upcoming FI documentary called ‘Playing With Fire' and we learn about his FI journey and this exciting project.


In Today’s Podcast we cover:

  • A discussion with Scott Rieckens, the creative force behind the upcoming FI documentary ‘Playing With Fire’ we’ve discussed on previous episodes
  • Scott is devoting the next year of his life to create this documentary about the FI community
  • Scott’s background story and how he found FI
  • How they were on the ‘hamster wheel’ just working to pay for the lifestyle they were living
  • The importance of a side hustle or entrepreneurship
  • Scott consumes a lot of media, including podcasts and found the Tim Ferriss show especially valuable
  • Lifestyle creep in their living arrangements in Coronado
  • How Scott found Mr. Money Mustache and the FI community through the Tim Ferriss podcast
  • Living a life of happiness while pursuing Financial Independence
  • You don’t need $10 million (or a similar amount) to retire early
  • How Scott enjoyed the positive nature of the FI community
  • How Scott presented the FI concept to his wife and the thought of ‘why isn’t everyone doing this?’
  • How Scott framed FI to his wife with the focus on happiness
  • Looking at expenses in the framework of a 10-year timeline
  • Scott’s wife’s list of the things that make her happy on a weekly basis
  • Considering moving out of Coronado and California generally: Geographic arbitrage
  • How your entire life costs less when you leave a high cost of living area
  • How they approached the decision to move out of Coronado and what that process looked like
  • How moving allowed Scott to take a year of his life to create the FI documentary Playing With Fire
  • Scott’s wife was not only on board with the decision, but she wanted to travel in a camper and go on an adventure
  • Pursuits that matter to them that they now can pursue on the journey to FI
  • The timeline behind Scott’s FI journey and decision to create the FI documentary
  • Scott’s surprise that no FI documentary already existed and his start approaching us at ChooseFI to discuss the project
  • How the idea of FI can be life-changing for so many people
  • How this documentary can help spread the message of FI
  • How he decided to call the documentary ‘Playing With Fire’
  • Hot seat questions
  • Scott’s biggest financial mistake was taking on too much student loan debt
  • Scott would have ‘house hacked’ to buy property in his college town if he could do it all over again

Links from the show:

Books Mentioned in the Show:

036R | The Friday Roundup

Friday Roundup 036R

In today's podcast we discuss the power of community and future meetups and events for the FI community, plus voicemails from the ChooseFI community and frugal wins of the week.


In Today’s Podcast we cover:

  • Discussion of the community aspect of Episode 36 with JL Collins
  • There is a yearning and desire for community meetups with other members of the Financial Independence community
  • The spread of these community meetups and longer Chautauqua and Camp events throughout the world
  • The ever growing FI community in the Richmond, VA area where Jonathan and Brad live
  • How much money could we all save if we had like-minded people in our communities?
  • Discussion of Millennial Revolution’s article The Five Types of People You’ll Meet on Your Way to FI
  • Spreading the concept of FI with people who may be predisposed to it who are already in your life
  • The new MMM Headquarters in Longmont, CO that Pete just opened and the value of that community
  • Voicemail from Chris from our community on how he has saved over $146,000 since listening to ChooseFI a few months ago just by making small changes in his life
  • Voicemail from Aaron in San Diego on VTSAX and potentially diversifying with other index funds for small and mid-cap funds
  • Hard L’s comment on the Vanguard Wellington fund and why he thinks it compares favorably to VTSAX and Jonathan’s response to this actively managed fund and why we don’t necessarily recommend it
  • Voicemail from Tinian from Life Outside the Box on using a daily journal each morning to set his intentions for the day and to express gratefulness
  • How to support ChooseFI
  • Travel Rewards voicemail from Marilyn on how travel rewards helped her imagine possibilities for her future
  • Explanation of the show notes for the ChooseFI podcast
  • Frugal Win of the Week from Gwen from Fiery Millennials
  • Frugal win of the week from Sara
  • Itunes Reviews of the Week and book winners

Links from the show:

Books Mentioned in the Show:

036 | Community, Chatauqua & AMA with JL Collins

036.Community Chatauqua

In today's podcast with Jim Collins from The Simple Path to Wealth and JL Collins NH, we discuss the Chautauquas, in-person events plus an ‘Ask Me Anything' series of questions from our ChooseFI community.


In Today’s Podcast we cover:

  • Part 3 with JL Collins from JLCollinsNH, the Simple Path to Wealth and Stock Series fame
  • Jim’s discussion of Alan from PopUp Business School and how the UK Chautauqua came to be
  • The value of in-person events like Camp Mustache and the Chautauquas
  • Ask Me Anything segment with Jim with questions from our audience and private Facebook group
  • Question from Amber from our Facebook group about the value of annuities, reverse mortgages and fixed income items
  • Jim only recommends investing in stocks and bonds. The goals that Jonathan spoke of in the question can be balanced by allocating different percentages to stocks and bonds
  • Jim believes annuities and reverse mortgages are laden with fees that make them poor investment vehicles
  • Annuities pay a guaranteed income which appeals to many people, but since you are buying them from an insurance company you are buying this contract and you will never see your principal ever again. That is the annuity contract
  • The insurance company is betting on your death essentially based on actuarial tables for the annuity
  • Question from Emily on international equity allocation
  • Jim doesn’t see the need to hold international funds because VTSAX contains a significant international allocation with US multinationals, the expense ratios are higher and there is more risk because of lack of transparency in emerging economies
  • Question from Jeff on when to move from 100% equities to holding some bonds
  • Question from community member Brad on how to mechanically rebalance your funds
  • Jim does his rebalancing within his IRAs so there is no taxable event
  • He rebalances approximately once per year
  • Question from David on being too aggressive and Japan’s prior decades performance
  • Jim believes what Japan is going through is a “Black Swan” event and this is theoretically possible this will happen to the US
  • Questions from Felisa on Jim’s thoughts on inflation
  • Some inflation is normal and to be expected, but runaway inflation is extraordinarily scary
  • Question from Matt on why Jim is in a different bond fund than he recommends on his site
  • The Key to the Simple Path to Wealth is buying and holding for the long term
  • You always need to approach your life and FI journey with an open mind and be willing to be flexible and change as the facts change
  • Simplicity and flexibility

Links from the show:

035R | The 4% Rule | Friday Roundup

Friday Roundup 035R

In today's podcast we discuss our takeaways from Episode 35 with Big Ern from Early Retirement Now, plus paying off mortgages and student loans early and frugal wins of the week from the community.


In Today’s Podcast we cover:

  • The Friday Roundup after Episode 35 with Big Ern from Early Retirement Now
  • This episode was long awaited, but was necessary to wait for until we provided the background of FI for the audience
  • Ern’s information made us both feel more hopeful for the future of FI and sequence of returns risk
  • Both ‘savers’ and ‘early retirees’ can’t both simultaneously win with the sequence of returns risk
  • Savings rate is the most important part of living a FI lifestyle and succeeding with long-term savings
  • The concern with sequence of returns risk is only when you see a prolonged and significant drop in the markets. To the tune of 5+ years and 20%+ drop
  • Question from the audience to Big Ern about inflation being included in the safe withdrawal rate and Ern’s response
  • Ern does indeed take inflation into account when he performs his calculations
  • How does preserving your capital factor into “success” when looking at your FI plan? How does inflation factor into it?
  • Your personal look at what constitutes success – it always depends on “facts on the ground” for your personal situation
  • Should you pay off your mortgage early? How sequence of return risk factors into this decision
  • The math suggests you should always invest the money and not pay off your mortgage early
  • However, there is a great psychological allure to paying off your mortgage
  • What would have happened if Jonathan had invested his money in VTSAX instead of paying off his student loans?
  • Dollar cost averaging versus lump sum investing
  • Input from Danny from our Facebook group on flexibility and early retirement
  • The value of mentally rehearsing what would happen in a downturn to avoid selling at the bottom
  • How are people taking action in our ChooseFI Facebook community this week to improve their lives in one simple way
  • Travel Rewards voicemail from Andrew about his successful trip to Argentina
  • How to win with travel rewards: flexibility with your dates of travel, plus planning far enough in advance, being ready to pull the trigger when you find availability and then looking at all your options when booking with UR points
  • Frugal win of the week from Ashley: 300,000 miles on her Toyota in 18 years!
  • The value of finding a trustworthy mechanic
  • ChooseFI meetups are popping up across the country
  • Itunes reviews of the week

Links from the show:

035 | Sequence of Return Risk | Early Retirement Now

035.Sequence of Return Risk

In today's conversation with Big Ern from Early Retirement Now we discuss safe withdrawal rates, sequence of returns risk and much more.


In Today’s Podcast we cover:

  • A wide ranging discussion with Big ERN from Early Retirement Now on sequence of return risk and safe withdrawal rates
  • This is Big Ern’s first podcast! And a thank you to him for helping with Paul’s case study
  • Ern’s thoughts on social security
  • Ern’s origin story and his thoughts on early retirement
  • He had a student loan that he invested since he went to college for free. So he ended up with a positive net worth after graduation
  • Why do we need to be concerned with sequence of return risk?
  • Ern says that sequence of returns risk is the “reason why people run out of money in retirement” from getting unlucky with low returns in the first 5-10 years
  • What are “real returns”? Adjusted for inflation
  • The years to worry about having poor returns are the first 5 to 10 years and it has to be prolonged and significant
  • Hypothetical example of the 4% rule and what Ern thinks about it
  • Resources to game out your chances of success
  • Example of sequence of returns risk for an early retiree who is withdrawing money from the portfolio
  • How sequence of return risk impacts the saver and buy-and-hold investor
  • If you’re a saver during downturns, you benefit significantly
  • Buy and hold investors should not be impacted as long as they didn’t sell during the downturn
  • Talking through the ‘stubborn’ 4% withdrawals and the impact on success of early retirement.
  • Ern’s look at the real-world ramifications of a market drop and withdrawals
  • ‘If you’re unlucky, you can get screwed twice by sequence of return risk’ example
  • How to alleviate sequence of return risk
  • Mortgaging your future contributions by buying on margin and front-loading
  • Spreading out your contributions to the equities market over years lowers your sequence of returns risk
  • Ern’s thoughts on front-loading and a description of his investments
  • Thoughts on Bogle’s prediction that 4% returns can be expected in the near future
  • The “4% rule of thumb”
  • What worries Ern about someone retiring early in the next 10 years?
  • What do you do if you inherit $100,000?
  • Ern’s thoughts on 30x expenses saved up and what his safest safe withdrawal rate would be
  • Hot Seat Questions
  • Benefits of geographic arbitrage
  • Ern feels he was complacent with his savings rate earlier in life
  • Becoming wealthy is a long-term process of small, regular investments and staying the course when the equity market is down

Links from the show:

034R | What’s Your Risk Tolerance | The Friday Roundup

034R | Risk Tolerance & Asset Allocation

In today's podcast we discuss our thoughts on Part 2 of the Stock Series conversation with JL Collins, risk tolerance, doomsday scenarios and rebalancing.


In Today’s Podcast we cover:

  • The Friday Roundup and the episode Part 2 of our discussion with JL Collins from The Simple Path to Wealth and JLCollinsNH
  • What do you do when there’s a large crash in the stock market? Big takeaway from Jim’s episode
  • You can’t sell at the bottom, so you need to steel yourself mentally beforehand
  • If you’re starting investing, one of the best thing that can happen to you is a market crash
  • You can’t time the market
  • There are doomsday scenarios, but since they are so rare it is silly to plan for the absolute worst case and ignore the other 99.9% likelihood
  • Follow the math when making the best decision with the information at hand
  • Question from Kevin about when to “take all your chips off the table”
  • That event would have to be extraordinary and destructive for our country and economy
  • Spend less than you earn and invest in broad based index funds
  • Feedback from Nancy on asset allocation and comfort with volatility and her belief that you shouldn’t take a lot of risk if you don’t need to
  • Jonathan’s example of rebalancing and a hypothetical $1,000,000 portfolio and a 50% market crash
  • Equities will return significantly higher than bonds over the long term. Bonds do “smooth the ride” but lower long-term returns
  • You want to rebalance in accounts like IRAs, 401ks that won’t trigger a taxable event
  • Brad’s example of his parents investing strategy
  • Over the long term which option is truly riskier? Investing in stocks and facing volatility or lowering your expected return by investing in cash or bonds
  • The 4% rule is based on getting a return while pulling out money each year, so you can’t just stick it in cash and expect the money to last forever
  • The power of the ‘perpetual money making machine’ to last forever
  • ChooseFI was mentioned on Forbes as one of three financial podcasts for people of all ages to listen to
  • We need panelists to select the finalists for the business building contest with Alan Donegan
  • Lance on our Facebook group pulled the trigger on FI today – congrats!
  • What did Brad and Jonathan put into place this week as one life optimization?
  • Jonathan’s salad hacks
  • Jonathan is now saying “stimulus and response” out loud when finding something habitual in his life
  • ChooseFI is not just limited to finances. It is a life optimization project
  • Voicemail from Scott (Brad’s brother)
  • Frugal wins of the weeks
  • Itunes reviews of the week

Links from the show:

Books Mentioned in the Show: