Emily: So, it is now March 2021. We have successfully paid off our student loans ($160,000) and our mortgage ($290,000 plus whatever we paid in interest). We are 33 years young. We did all of this in just over 8 years. We’ve hit a point many do not for several more decades. And we did so because we were laser focused on our long term goals, which we will expand upon more in our article titled, Our Why.
Joel: It was Feb. 12, 2021… Emily. Well, now what?
Emily: I did not really know what was going to be next, but I hoped we could ease up a little on the laser focus because at times, it was hard. I knew I did not want to spend frivolously or really change our lifestyle that much, but I had hoped this milestone would bring some more ease of mind. It did partly, but if I am being truthful, after a day or so of excitement, I was back to thinking, “OK, now what?” But also a, “OK let’s just breathe and be” feeling of wanting to take a break from the hyper focused mentality we had lived for so long.
Joel: I like goals. They keep me motivated. Once we paid our final payment it was kind of like a “what do I do with my hands” moment. It was awesome paying the house off, but it was also in a weird way kind of depressing. It took us 55 months to pay off our house. We were very focused on it and now that it was over, I didn't know what was next for us. Emily didn't really want a next. But, I did. A friend of mine referred me to an article on a blog called Mr. Money Mustache. He is like the R rated version of Dave Ramsey.
Emily: During this time, I did kind of get my break. We had been and continued to contribute to our retirement and to the kids’ 529 college savings plans, so I felt good about the path we were on. It was all I knew, so it seemed like we were doing it right. This is around the time when Joel began listening to podcasts while working out in our home gym (aka our garage which he affectionately calls “Muscle Beach” that he set up early in the COVID-19 pandemic times). We both workout separately, but at the same time, so I never really hear what he is listening to.
Joel: The article was called, “The Shockingly Simple Math Behind Early Retirement.” A new goal was born! After reading a number of articles on Mr. Money Mustache, I learned about FIRE (Financial Independence Retire Early). I started reading about anything I could find on FIRE. I started listening to podcasts… a lot of podcasts. I’ve never been a podcast guy. I thought they were kind of stupid. I was wrong! I became very driven… again. Emily might say obsessed. My favorite podcast during this time was ChooseFI.
Emily: He is now 100% a podcast guy. He began sharing little nuggets of information with me, which I thought was interesting. It was similar to when he read Dave Ramsey’s book - he would share the Cliff Notes version with me and that was all I cared to know. Some of the things he shared were things we were already doing actually, like marginal gains where you try to shave expenses through things like cutting grocery bills, not eating take out, buying used cars, etc. But retire early? That was new.
Joel: In order to FIRE, you need to know what your annual expenses are. Once you know that, you take your expenses multiplied by 25 to get your FIRE number. Our family lives on between $35,000-$40,000 a year.
Emily: I’m going to reinforce that our annual expenses are that low as a family of 6 because we are debt free, mortgage free, and car payment free.
Joel: To find our FIRE number, ($35,000-40,000x 25)= $875,000-$1,000,000 in investable assets. Challenge accepted.
Emily: Challenge NOT accepted. I had a million thoughts running through my head of why this did not need to happen, all of which were related to lifestyle and family needs and goals. I was no doubt proud of how far we had come financially over the past 8 years, but I was not excited, in fact I was pissed about the idea of jumping into another nearly decade plan.
Joel: We could reach FIRE within 7 years if we kept the same pace of investing our extra income. We weren’t starting from zero. We had just paid $300,000 for a house in 4 and a half years. We had also accidentally accumulated 401k and Roth worth around $100,000. In my view, let’s get it!
Emily: In 2020, I changed jobs to be working full time again. I was technically working the same number of days as I did while part time. I was getting nights, weekends, holidays and summers off, which was a magical change from the first part of my career working in rural healthcare. But, the other times of the year seemed hectic, rushed, forced, and overflowing in an unhealth way. I was not ready to dive right back into a rigid, all-consuming plan that left me feeling like I was missing out on key moments with my kids due to needing to work full time to hit this milestone. March 2021 is also when we found out we were expecting our fourth baby and I desperately wanted to find a way to work part time or maybe not at all. The idea of being tied to a financial goal that required me to maintain my income was infuriating, defeating, and all sorts of emotions. It felt like we were worshiping money and prioritizing that over family, which is not my cup of tea. Throughout our previous journey to debt freedom, I did not feel like we were missing out, but there was this element of sacrifice that I justified as a means to an end. It was a short term sacrifice for long term gains. I was no longer OK with living a means to an ends lifestyle for another huge chunk of our child-rearing years. When we reached debt freedom again, with the goal of not changing our annual expenses, doors that were previously unavailable now were opened. The range of possibilities of how we could choose to live our lives expanded significantly. Another key thought I had was that in 7 years, our oldest at 15 years old. And then what? We’re going to quit our jobs when he’s in high school? We did not have the same vision and it was creating some major rifts. It was time to really start thinking of what this next stage could and should look like for our family.
Joel: Clearly, there were issues. We will discuss those more as the story gets flushed out.
Emily: Time out. Humans are emotional beings. I tend to share that side of our story. Joel goes into more of the logistics. My passions are more along the lines of human psychology, emotions, neurobiology, health, wellness, etc. His passions are money and fitness. I have been and will always be more of the “why” person, while he’s more of the “how” person.
Joel: Emily says I don't have emotions and would be friends with Dexter Morgan (this hurts my feelings every time).
Emily: Best friends. Both sociopaths. No feelings to hurt.
Joel: So I continue. I am more concerned about sharing some wealth building ideas. How on earth are we going to save a million bucks? Here is the bundle: W2 jobs (check), side hustle (check), stock market investing (check), real estate? We need to talk about the importance of side hustles and real estate in the future but for this article I want to focus on stock market investing.
Emily: This is where I say, “yep, I trust you,” and sign out to go to bed. I know enough to be on board, but I don’t know or care to know much more at this stage in life. I will someday set aside time to learn more, just not now. So with that, I say good night, y’all! Last note - this kind of feels like our late night college AOL Instant Messenger (AIM) days!
Joel: There are two areas in your life you don't want to suck at: fitness and finance. Suck at those two and everything else in life is harder. With that said, we have a goal of a million bucks. The greatest wealth building tool man has ever created is the stock market. During this time I did not know much about it but was doing what everyone else was… buying individual stocks on Robinhood! Don't buy individual stocks. It took me months to learn about investing in the stock market but here is the cliff notes version of the story. I stumbled across this guy by the name of JL Collins. He has a stock investing blog that literally changed the trajectory of our life. It is must read material if you want to win in the stock market (and in life). The basis of his message is invest in index funds. In particular, the ticker symbol VTSAX. VTSAX is the total US Stock Market. It consists of more than 3600 US companies. We own every publicly traded company in the United States.
Stock pickers cannot beat the market. Your financial advisor doesn't know what is going to happen in the market. Do not use a financial advisor because they are going to take a large portion of your money. Read JL’s blog, in a few articles you will know as much as the financial advisors claim to. No one cares about your money as much as you do so take a few minutes and READ! JL’s main thesis is spend less than you make and invest the difference early and often. Do this for 10-15 years, automate it and never stop. Don't check the balance if you can't handle the swings of the market. Don't listen to the news. The market will have short periods where it drops but it goes up relentlessly. To the tune of 8-10% After 15 years get ready to have a heart attack because you will have more money than you ever dreamed possible. After learning this, $1,000,000 not only seemed possible but plausible.
Key Takeaways:
Goals are good. Accomplishing them are fun but who you become along the way is what is important.
When can you retire? Figure out your fire number. Figure out ways to spend less so you don't have to save as much!
The best time to invest in the stock market is yesterday. The second best time is today.
Spend less than you make and invest the rest.
Invest in VTSAX.
Don’t listen to the news. Automate your investing and don’t look at the balance.