 All right. Thank you all for coming. This is something new for the Bogleheads, this accumulator track. And I think we really want to grow this part of the conference. So tell all your friends how great the conference is and get them all to come. Because this is really important for us to grow this part of the Bogleheads. You are all the future. I am the past. Anyway, today I am very happy to have Chris Mamula with us. Chris is the lead author of the ChooseFI book, which is a great book. I did a podcast with Chris on the book. There's a lot of great information on the ChooseFI book. He's a financial writer for Can I Retire Yet? And personally, I have to pour experiences with the financial industry in his professional life. Chris educated himself on investing in tax planning and now draws on his life experience to write about wealth building, do-it-yourself investing, financial planning, early retirement, and lifestyle design. And of course, my screen just went out. So ladies and gentlemen, let me introduce Chris Mamula. Thanks, Rick. Thanks for all. Thank you for coming to listen. And I want to just start by thanking Rick and also Christine Benz for having me on their podcast to kind of talk about fire and to bring me here to share the message of fire with the Bogleheads. Because I think it's important to be able to share this message because in general in the personal finance community, as far as prestige and respect, I think fire is somewhere around the GameStop people and this guy who's on making TikTok videos on how to get rich in three easy steps. So don't let the Hyatt hear this, but he tells you still your hotel soap. Step two, it's going to save you $45 a month, which you can then invest in the S&P 500 and you will be a millionaire. There is a lot of bad ideas and always new ideas in finance and in personal finance in particular and many of them can be dismissed and some of them should even be laughed at, but it is important to note that occasionally there is an idea that's based on really sound solid principles and those ideas do tend to stick around. And I was kind of thinking, what would be an idea that may resonate with Bogleheads that I could use as a parallel example to how I look at fire? An idea that maybe was initially laughed off and ridiculed and it stood the test of time. And if you take a look at the headline, if you're not familiar with the history of John Bogle and Vanguard and index funds, this kind of gives you the Cliff's Notes version, but it says, 40 years ago, the thought of buying a stock index fund was ridiculed. Why would anyone be satisfied with an investment that promised nothing more than the return, than the same return as the market? Well, I think the reason that this stuck around, there was a number of reasons, but I think the biggest one is this whole Bogleheads philosophy and the things that John Bogle taught, it was based on sound principles. It was based on just simple math. And something that I kind of learned after reading the, this is the first book I ever read about investing was the Little Book of Common Sense Investing. And something I learned after reading this is I started to find other people in this Bogleheads community. And I found that it was this organic community that grew up just cause the ideas were so sound and it was impacting people's lives. So it wasn't like he had to go hire a marketing team. This community grew around him. And I think there's a lot of parallels between this community and the fire community. And that's what I wanna share today. So I really have two goals. The first is I wanna challenge some misconceptions of fire and really change that perception of what it means to pursue it, how it applies to people who embrace the Bogleheads investment philosophy. And I think it applies to a bigger group than many people think. And then I wanna demonstrate just the common sense principles and the simple math that back up fire and why I think this is an idea that has the potential to still be around in another 40 or 50 years as well. So I'm gonna start with a couple of misconceptions cause I really think it's important to make people understand the why of fire because if you don't start there, the how is really not very hard but nobody's gonna ever try it. So I think we need to address some of these misconceptions. So the first myth that I came up with is it requires an extreme lifestyle. And there's a couple of versions of this. One is sure you can achieve fire but you have to have a massive income or better yet just be born into wealth and have your parents give it to you. The second is you have to deprive yourself and then practice extreme frugality and you see this term thrown around everywhere. And for whatever reason, this one really rubs me the wrong way cause I just don't feel that that represents it at all. And then the third one is you must have some kind of special investing prowess or maybe you just got lucky with investing. And so that's how you would get there. But it's really not for the average everyday person. What's the reality? I can share my reality. My wife and I, we were both first generation college graduates in our family. For my family, I did at least have, my parents gave me a solid foundation. My mom was able to stretch a dollar and she gave me that sense of thrift. For my wife's family, money was really a source of stress and anxiety growing up. And I think having talked to many people in the fire community and knowing a lot of them, I honestly think her experience is even more representative of mine. And I think honestly, if you came from wealth and you are, that's what you knew growing up. It's actually harder and the key of fire is to live below your means, whatever that means for you and to develop a high savings rate. And so if you're used to, you know, growing up in a certain lifestyle and you have to take a step back, that can actually make it harder. So I think that's a big misconception and it's available to many people who are natural savers. The second, as far as income, my wife started working at about $35,000 a year and I started a year after her at $40,000. And at those salaries, we started living off of her salary and banking mind just because again, it gave us a feeling of security. Neither of us ever made $100,000 in a single year. To be clear, we did grow our salaries over time and I think we would have hit that. But when my wife had our daughter, she was 35 years old and she decided she didn't wanna go back to full-time work so she never has. And at 41, I left my career as a physical therapist. So we never really made it to that point where we were entering our peak earning years. So you don't have to have a massive salary. And as far as being a genius investor, the reason I'm standing here is because I had a horrible experience with the financial industry, as Rick alluded to in my introduction. And just after doing a deep dive, I got into fire blogs and these fire bloggers really helped me and through them I found the Bogleheads and the Bogleheads helped me. And it was just a lot of people who weren't in the industry, who weren't necessarily experts, who were just giving freely of their time. And so I started writing as a way that I thought maybe I could give back and pay that forward. So again, I think all of those myths are just that, they're myths. And so how did we get to this point where we achieve financial independence and we achieve fire? I like the term being a valueless and you might look at that term and say you never heard of that before and that's cause I'm pretty sure we made it up. When I was writing the book, we crowdsourced it from the fire community and I wrote this book in conjunction with two guys that do the ChooseFI podcast and somebody sent this in as a voicemail and I really resonated with me cause it really made it, it really felt like what we were doing even though I'd never heard the term. It really felt exactly what my wife and I were doing. And so throughout our accumulation phase we were actually and in my opinion and contrast the idea of suffering and sacrificing and extreme frugality. I felt that we were living better than most of our peers cause we were spending money really freely on the things that mattered but at the same time the reason we were able to save so much is we were cutting pretty relentlessly on the things that didn't matter. So I've shared my story in a bunch of podcast interviews and print interviews and some things kind of raised people's eyebrows that could be perceived as extreme frugality. Even among the fire community we are extremely anti-debt in our house. So like I said, we started living off my wife's salary whenever she was only making $35,000 a year and she had about 25,000 from putting herself through school and a small car loan. And so we managed to do that in about 18 months. We wanted to be debt free before we were married. And since that time, the only debt that we've ever had in our lives is a small mortgage and we pay that off in eight years and we've never had debt again and we still don't. Never had a car payment, never paid a penny of credit card interest in our whole life. Part of the reason we didn't have car payments is cause we kind of drove crappy cars. We just don't care about that. And so that was what we did. Clothing and jewelry, I mean, I'm not a great dresser by any means. I don't even own like a watch or a wedding ring. Presence, this one really raises people's eyebrows but my wife and I, we just decided one year that, you know, shopping and for like birthday and Christmas presents, it was more of a pain in the butt and we didn't enjoy and we had everything we truly wanted. So we just made an agreement to not exchange gifts and networks for us and technology. I don't care about that stuff. So I don't have the newest phone or any of those types of things I never have and probably never will. So that slide might turn you off a little bit and say, well, maybe this does sound like extreme frugality, but there's other areas where we were absolutely, we're not frugal. We always chose to live where we wanted and our first year out of school, we were living in the Pittsburgh, Pennsylvania area and we kind of moved to the suburbs and bought the house and do the things like you're supposed to do. And so my wife was commuting into downtown Pittsburgh. It was about a 40 minute commute every day. For me, being a physical therapist, it made sense to get away from the city. It was better work opportunities but it was about a 50 minute one way commute every day and within a year, like, I think like we were living the American dream or like we had the degree and the nice house and everything that you were supposed to want and we just realized like, this is not our dream. So we kind of blew it up and we sold our house after only 18 months, which is not a great financial move, but it was great for us. We focused on that next phase of our life of what do we want it to look like. So we focused on places where we could enjoy our work. We focused on optimizing our commutes. We weren't spending the whole day sitting in the car and kind of building the lifestyle we wanted. And then when we reached this point of where we were kind of reaching financial independence, we thought, what do we want our life to look like? And at this point, it wasn't built around work. It was built around the activities we wanted to do. So where is a place we can get outside and enjoy our life every day, which is what we like to do. And where was a great place to raise our daughter. So we up and moved across the country and we now live in Ogden, Utah. Other things that we really spent freely on is experiences, like we love outdoor adventure activities, sporting events, music, and we never skimped on any of that stuff and travel. And just to kind of give you a look at what our life looked like, this is a much younger me. We were in our 20s and we went to Australia. We climbed Kilimanjaro and we did an African safari. We got into mountaineering. This was us in Ecuador, the highest we've ever been, over 21,000 feet. I want to kind of pause on this one, because to me, this is the antithesis of extreme frugality, but growing up in Pittsburgh, it's a really religious community and the religion is stealer football. And so like every Sunday of my life, that's what we did. We watched the Steelers and like I was born as they were entering this dynasty phase of one of the greatest teams ever. Yeah, I don't remember it because I was too young. So what I remember is them stinking or being average for like a good decade. And so finally, when I was in college, they made the Super Bowl and I was a sophomore at the University of Pittsburgh and I was working at a pizza shop because I needed the money and that was about 60% of my calories and I also traded the extras for beer. So when I needed that job and when you work at a pizza shop in the host city of the Super Bowl on Super Bowl Sunday, everybody went off so they said nobody could have off. So after watching this all my life, I couldn't watch them. And I always said if they made the Super Bowl, it was something I was going to do. And fast forward 10 years, they did make the Super Bowl and they played in Detroit. So my wife and I drove up and scalped tickets in the bathroom of a bar in downtown Detroit for like $5,000 a couple of hours before the game. And we went to the Super Bowl was like a once in a lifetime experience. And if you notice the picture, that's not Detroit. So three years later, we ended up going again in Tampa and saw one of the greatest games in NFL history. So for some people that might sound frivolous, but to me it had meaning. And again, that's what being a valueless means. Fast forwarding again, we have our daughter. We kind of brought her into our active lifestyle. And it's not about dragging her to stuff that we like, but as a little kid, she's been on Disney cruises. Somehow during the pandemic, she's become the world's biggest Dolly Parton fan. So we managed to make it to Dollywood with her. But so what I would kind of just ask you to do is kind of reframe that idea of suffering and sacrifice and extreme frugality. Cause I find that it just does not ring true. And the question I would say is, are you a valueless? And are you lining up, you're spending with your money? Because just from a practical standpoint, most people, I mean, fire, yes, it's quick compared to a standard 40 to 50 year career. But you're still talking about 10 to 20 years of having to go to work every day. And if you're miserable, you're not going to stick with that. So you have to find a way to make it enjoyable for you. And it can't be sacrifice. And so for me, that's kind of what fire is all about. And that's how you're going to develop a savings rate and be able to stick with it. The second fire myth is that fire people don't really retire. It's kind of a Ponzi scheme. And we're all just selling the dream. So we can't really retire. We kind of aren't really financially independent. So we just sell the idea of the next person who then buys our books and listens to our podcasts and whatever, and then it keeps going down the line. I included a picture of Bertie Madoff. That's who I actually think of with a Ponzi scheme, but he's not in the fire community. My fire reality, I did quit my job on December 1st of 2017 and walked out the door and I'm no longer a physical therapist. I will say since then I've published a book. I've partnered on and taken over one of my favorite blogs. This past year I completed the CFP curriculum and I'm currently preparing to take the CFP exam in about a month. And as you can see I'm here, I'm publicly speaking and I've been on many podcasts to promote my ideas. So there is some truth, AKA I do still work, even though I say I retired. Also my fire reality though. My income's about 80% less than what it used to be. I also left behind paid vacation, sick leave and pretty nice healthcare benefits. These days instead of my schedule being controlled by an employer, I have complete control over my time. I rarely have ever worked more than three or four hours a day. Like I said, we moved to the mountains and I'm generally outside four or five days a week and I'm extremely involved in my daughter's life, volunteering at her school, I coach her soccer team. We typically travel five or six weeks a year as a family. But I think even maybe more important than the big things, the things you see in the pictures is just every day we eat breakfast together, we spend like that first hour of the day we talk to my parents on FaceTime because they're kind of shut in with everything going on in the world and my mom has some health issues. I would get everything I need to get done during the day and I pick her up and again, I'm present. And that's something that I think a lot of people they look back and they regret that they didn't have that time with their kids and that's something I'd never wanted to regret. So again, kind of lining up with my values. So I think I kind of retired. So the second question though, it really doesn't matter. Like when you read these fire stories and that's a common criticism and you know, they didn't really retire. It doesn't really matter if you think I retired or anybody else did. I think the second question that's really important is how do you want to define your retirement? And that was kind of a perfect segue and the last segment to bring us into here because the whole idea of retirement it's kind of a quaint and dated idea and retirement is evolving. So if you look at what happens to people when they do retire, many people do walk away. They view it as never working again and many people struggle with purpose and meaning and they end up with depression and anxiety. The rates increase significantly. Many people, they save money their whole life and they turn around and because they're such they become accustomed to being savers. It's hard for them to spend and if you look at the data many people spend way less than they could and they don't actually enjoy their retirement. Many people save for this time in the future where it's gonna be so great and they don't have their health to do the things they actually desire. And you know, they missed their kids growing up and their kids are gone and now they have all this free time but what are you gonna do with it? And so just remember, if you want a traditional retirement by all means do it but just because that's how most people picture retirement it doesn't mean what that's what it has to mean for you and so I really kind of write and like to talk a lot about the whole idea of just redefining what retirement means. And our third fire myth, this one you kind of hear a lot like when I talked to more sophisticated people in the financial industry and it says fire relies on the 4% rule which is either naive and or uninformed. And this is actually, I had a great conversation about this with Christine when I was on the Morningstar podcast. So if you're not aware of what the 4% rule is maybe we should start there and that's just a rule that tells you how much you can spend in retirement. And so basically the idea is if you have a portfolio on day one of your retirement you can take 4% of it and then you're gonna spend that same amount every year whether the market's up 50% or down 50% adjusting only for inflation so your lifestyle can stay the same forever and you're not gonna run out of money. This is a common rule we talk a lot about this in the fire community and we also talk about the inverse of that then is that if you can take 4% then you know that you need 25 times your annual spending to know if you're financially independent. What's the reality though? I don't follow the 4% rule. I know almost everybody in the fire community I don't know anybody that follows the 4% rule or traditional retirees for that matter and I don't even really know anybody that would argue that it's a rule. But what we do is we use it we call it the 4% rule of thumb or the 4% guideline and there's a couple reasons I think this is a great thing to learn and to understand. Number one is that it makes you kind of focus on what you're spending and many people don't pay any attention and most people don't budget or track their spending and so it's a requisite to know what 25 times your annual spending is you have to know what your annual spending is. So it gets you to start focusing on that and know where your money is going. And also it just gives you a place where you can create a goal and yesterday if you were at the Bugleheads University at something that Jim Doll talked about is having these smart goals and so if you have a defined goal what we found is people start to take action so people that weren't saving at all they learn this principle and it really turns things around and that's fine this goal is gonna change over time you're gonna discover that you may wanna spend more or less than you initially thought maybe healthcare is more expensive and you're gonna learn these things and adapt but at least you have a place that you're starting from and you have a goal in sight. But I think there might even be a bigger and more important point about the whole idea of the 4% rule and that's it in the fire community I think we're asking kind of hard questions and we're having big conversations that are kind of rare in our society where everything is just more and more and more bigger, bigger, bigger and it's a question I really hope resonates with a room full of Bugleheads especially if you've really kind of dove into all of John Bugle's work not just what he's written about investing and that's a question is enough and I think it's a question we don't ask enough is how much is enough for you and then once you have enough what comes next? So I wanted to really kind of start with the why but now I wanna kinda get into a little bit of the how because I do think fire is based on some pretty solid principles again just based in common sense and some very simple math. I will say and I kind of really appreciated the conversation again in the Bugleheads University yesterday I think Rick brought this up and you might not use the exact terminology but I always talk about tactics and principles and so again I think a lot of people they learn of fire because they read like one story of one blogger or one person that's featured in some article and they say well I could never do that and they missed the bigger picture that all the fire people we kind of are all following same the same basic common principles but the tactics are gonna look wildly different within that and so I wanna focus on the principles and that's what we kinda focused on when we wrote the book and that's what I wanna focus on in the talk. One thing I'll say is the Buglehead investment philosophy that we're gonna learn about here this weekend or this week it's really endorsed and embraced by almost everybody in the fire community. We talk about using that investment philosophy you can achieve fire reliably in 10 to 20 years if you follow these principles. If you look at a typical career it's gonna take you about 40 to 50 years till you reach financial independence and you're able to retire and if we're being honest most people in our society do not ever reach financial independence they're highly reliant on social security by the time they reach retirement age so I think it's worth looking at what does the fire community do so differently than most people and what can we learn from it even if we're not gonna go all out and be trying to say 50% and then retiring early. Well there's only three levers that any of us can pull in the world of personal finance if we wanna achieve financial independence quickly and we can spend less we can earn more and we can invest better and I think number three is kind of the sexy one that's the one we like to talk about is how do we invest better but if you want to achieve financial independence again it's about creating this large spread between what you earn and what you spend and so we really need to focus on numbers one and two spending less and earning more. The reason for that again this isn't my opinion this is just based on again simple math and the rules of arithmetic so there's only really three factors that impact your compounding so if we go back to our friend our soap-stealing TikToker friend at the beginning of the presentation he got a lot wrong in that in his little idea but one thing he did really well is he was obviously playing with a compounding or a time value of money calculator and it's something that I think I wish a lot more adults knew how to do let alone kids his age and we'd be a lot better off as a society but you know there's only three factors that impact compounding and again this is something Christine talked about yesterday but the first is the rate of return. If you are a Boglehead if you are a passive investor you know that you're gonna get the return that the market gives you we can maybe at the edges kind of tweak that a little bit with our asset allocation or whatever but essentially you're gonna get what the market gives you so there's not a whole lot you can do there the time to compound is a big factor so a traditional retirement you have 40 to 50 years for money to work for you by definition if you're pursuing fire you're cutting that down to one to two decades you're cutting that in half or less and so we actually have time working against us so that only leaves us one lever to pull and that's to focus on increasing the amount that we save and we add to our investments. So after the 4% row another favorite topic in the fire community we talk a lot about savings rate and savings rate is really simple it's just how much you save divided by how much you earn and so there's really only two things you can do if you want to improve your savings rate you can either spend less or you can earn more and either is valid and either is okay but in the fire community we talk about frugality a lot and I think that's maybe where some of the idea of this extreme frugality comes from but I do think it's worth starting with frugality for a couple reasons one, it just tends to be a little bit faster you tend to cut your spending quicker than increasing your earnings although it's fine and you should be working on both but I think there's a second reason and it's far less obvious why you should focus on your spending but if you can learn to be happy living on less then that just equates to needing less to be able to be financially independent and to retire if that's what you choose and so going back to that 4% rule and the inverse the rule of 25 if you want to live off $100,000 a year that's perfectly fine but that's gonna take as a starting point we'll say $2.5 million if you can learn to be happy living on half of that $50,000 a year then you need half of that to retire a million and a quarter so that's a much lower bar to save towards if you want to hit financial independence quickly a lot of these ideas when we talk about savings rate it comes from a really popular blog post from a really popular blog Mr. Money Mustache and the article's called The Shockingly Simple Math Behind Early Retirement and in that he uses some assumptions to kind of tie your savings rate to how long it's gonna take you to be financially independent and the assumption he uses that you're gonna get a 5% real return during your accumulation and you're gonna utilize the 4% rule on early retirement and we can argue around the edges about that but I think it's a really good place to start he came up with this slide that shows like in 5% increments your savings rate and how long it's gonna take you and that's obviously a really busy slide so I'm gonna zoom in so standard financial advice is you save 10 to 20% of your income and standard career is about 40 to 50 years like we talked about and if you look at that that lines up really nicely with that so if you want a standard career follow standard advice and that should get you there the problem I think for a lot of people people say well saving 10% is hard well I think the how am I gonna say 50% and I think a lot of this is a psychological game so I think a lot of the reason saving 10% is hard is because you're gonna see results really slowly and you're not gonna notice any progress for a long time cause it takes a while to get compounding working for you and so a lot of people get frustrated and they end up not saving anything at all whereas again if you have this goal and you have this plan to work towards your goal it's actually not all that hard for many people and so in the fire community we talk about starting thinking about a 50% savings rate and again that can seem drastic if you don't have these other things in line first but if you have a 50% savings rate or in that ballpark there now you see where we're getting down to that one to two decades that we talk about that you can reliably achieve fire following these principles I think before we move on from that I think it's important to zoom in and again we talk about with John Bogle he always talked about the relentless roles of humble arithmetic and I kind of am even more simple when I say just say the math is the math and so a lot of people they'll maybe hear my story and say you know that's kind of cool I wish I would have thought of that when I was 25 or 30 but I'm already 45 or 50 but guess what the math is exactly the same if you're saving aggressively for one decade early in your career or one decade late in your career or 15 years early or 15 years late and so this is a message that could help a lot of people who are late savers in behind the game and why is that important? Well we see that there's a lot of people behind the game so this is a very recent study from Vanguard's How America Saves 2022 I'd say these balances are probably pretty bloated being from the end of 2021 compared to what we have today but if we look at people there's last two lines as what I want you to zoom in on the 55 to 64 and the 65 plus this is a kind of a skewed sample because it's people that have retirement accounts with Vanguard so they're probably better than the average person many people don't have any retirement accounts and some that do have with ridiculous fees they're not maybe getting the same advice but even in this crew at that retirement age we're looking at about a quarter of a million dollars so if we go back to that 4% rule these people can take about $10,000 from their portfolio in retirement less than $1,000 a month so they really need help catching up to if they want to do anything more than just supplement social security and live on a pretty bare bones existence and the average tends to be skewed up because you're gonna have people with two or three million dollars in their account so if we look at the median that's even more representative I think of the average person and again this is already a kind of a privileged sample like above average sample compared to the general society and we're looking at people that have less than $100,000 if you look at the median so again if you're looking at 100,004% you're talking people can take $4,000 for the entire year to supplement their social security and that's what you have to live on so again people need a lot of help now while the math is the same what's really important to understand is if you're a late saver or if you know somebody that's a late saver and you can get them to kind of buy into some of these principles and take them to heart there's actually a lot of advantages that you have if you're saving late versus the typical fire person I would say I'm gonna acknowledge off the top the one big disadvantage if you haven't been saving at all or haven't been saving much for 20 or 30 years it may be challenging to change that habit but if you can accept these principles and you can start down this path there's a lot of advantages if you're early in your career if you just think about where you're at in the life cycle you tend to be early in your career where you're making less money maybe you're forming your family so you're still paying for diapers and daycare and saving for college when you're later in your life you tend to be entering your peak earning years like we talked about my wife and I we left before we ever got there you may have a mature family that's you have all these expenses in the rear view mirror or the kids are starting to go to college and moving out and you can redirect that money to retirement savings and if you have kids moving out there might be a time to downsize and one of the biggest ways you can save when you're spending is to cut your housing costs and this could be a perfect time to do it there's also greater tax advantages one of the best simplest things you can do Mike Piper talked about this yesterday is just utilize your retirement accounts to the max and utilize your HSA and get as much tax advantage from your investments as you can well as you get older you have catch up contributions so those contributions get even bigger and it gives you a little more space to work with there and then you just have less it's just less hard to plan for a traditional retirement still not an easy task still 30 years and a lot of uncertainty but compared to 60 years it's a lot easier to plan for that you also have a floor under you with your social security income so you may not need to save 25 times because you have that social security supplying some of your spending and you also have Medicare which it's not free and it's not perfect by any means but compared to what we have to deal with to bridge that gap from working to traditional retirement like for somebody like myself I have 25 years and there's the laws change every couple of years and it's really hard to plan when you don't know what the rules are so I want to kind of leave some time for questions so I want to kind of go through fairly quickly we talked about spending less earning more and investing better and so I want to kind of close on that and so what are the things you can do to develop a high savings rate so probably our third big topic that we love to talk about in the fire community is the big three so we always start by focusing on housing, transportation and food and this isn't because fire bloggers love to tell you what to do again it comes down to simple math okay so for the average American household 50% of your expenses is going to come from these big three housing, cars and food so I kind of like to picture this as like a big pie chart and if it's a big circle and you just cut it down the middle and on one side you have housing, cars and food and on one side you have everything else and some people will say well I don't want to cut on my housing, cars and food and if you want to have a high savings rate that means you essentially cut everything else and I don't think that's a good idea that to me that's the definition of extreme frugality but if you can optimize on those big three and develop a reasonable savings rate that sets you on your way and that's where you want to focus your energy to start and again for some people this is going to feel like this is going to feel like frugality and sacrifice because I think we've been sold that the American dream is to have the biggest house you can have and the most expensive car you can drive and a lot of people have bought into that dream and so it does require a mindset shift if that's how I got you down I think everything gets a lot easier when you once you have a pretty decent savings rate because now you're just throwing gasoline on the fire I have never met anybody who said my life would be so much better if I could just pay a few more dollars in investment fees if I could pay a little bit more in taxes if I can pay some extra insurance premiums or I love to travel but if I could just spend more on it but all those things once you master your finances you can really cut dramatically a lot of people and again in the Bogleheads this is something we talk about a lot is investment fees but it really doesn't matter if you don't have much invested but as your investments grow if you have a million dollars and you cut that from a 1% fee to a 0.05% fee you're talking about saving almost $10,000 a year I mean that's massive taxes Mike Piper talked about this a little bit yesterday some of the simplest things you can do are also the most effective just max out your retirement accounts and defer those taxes in your high earning years and by definition you have a high savings rate and you have a lower cost of living and if you retire early or even semi-retire or whatever and you can spread that out over 20 or 30 years you can pay much lower taxes early retirement lifestyle and this whole financial independence lifestyle is just generally very tax friendly if you kind of like again I'm not really truly fully retired we still have some income but our income is low enough where now our capital gains are tax free so we don't have any of that tax drag even on our taxable accounts just having a lower consumption lifestyle you cut out all those sales taxes if you don't live in as big and expensive a house you tend to have less property taxes so if you don't like paying taxes this is a great way to cut them all these things again insurance if you don't have any savings every little thing that happens can kind of be an emergency and so you need a lot of insurance in your life but as you have a couple of years of savings paying for a short term disability policy maybe doesn't make sense anymore if you're getting to 20 or 30 years of savings having a long term disability and having a life insurance doesn't make much sense anymore if you have enough money to cover expenses you can start raising your deductibles and lowering your premiums on everything from auto and house and healthcare insurance and so again insurance gets a lot cheaper and then travel expenses I kind of put this at the end this is kind of one that excites people and again this is something in the fire community we like to talk about but using travel credit cards and their credit card companies know that they charge an outrageous fee and most people are not gonna benefit by that and so they're willing to give some pretty outrageous bonuses to sign up for their cards because most people are gonna end up paying 15 or 20% but if you can master your finances you get in a position where even if you have to put things on a card you have the money to easily pay it off and you're not gonna be paying these fees you can collect a lot of rewards and I typically, our family just signing up for four or five cards a year we collect about four to $5,000 of free travel on a course of every year the other side of the equation again we talk a lot about spending less but it is important to earn more and again I think it's just it all comes down to that still it's a value proposition so yes a lot of people say everybody should go to college at any cost and there's no other investment in the world that we say that about we wouldn't say as a house a good investment we would say at what price is a stock a good investment we were talking today about valuations everything is what price but with college we just kind of throw our brain out and just take these big loans on and then this ends up in the position that we're stuck in as a country right now so in the fire community we've talked a lot about different ways to get your education for less and I can tell you in my story again my wife and I between us we have six college degrees and plus a bunch of different certifications we're like education junkies and again we've never had any debt except for my wife's initial bachelors so it is possible and it is doable then you want to kind of just grow your earning power through your career and build a network and all these things just to kind of allow you to make more and then the final step so once you grow your savings rate you do have to do something to grow your investments and how do you invest better I would say on this whole panel of speakers at this conference this weekend I am the least qualified person the other people here speaking are the people whose books I read their blogs I read their podcasts I listen to so what I would say is just enjoy the rest of this conference suck up as much as you can and then take it out and pay it forward to your community and help people out and that's really what this is all about and I wish you your best on I wish you all the best on your journey to financial independence and if anybody has questions I'm happy to stay and talk as long as you need A slide you put on at the end about earning more I see a lot of people in the fire community fire bloggers, authors, et cetera that are just crazy about saving, saving, saving, saving and very rarely do they ever talk about earning more and in my experience people dramatically overestimate the difficulty of doubling their income why doesn't the fire community talk about earning more more than they do? You know that's a good question I can't speak for other people but it is something that I mean in the book we devoted a section to each of those three levers of spending less earning more so in my own personal story I do focus on that and again in my own personal story like it would be hypocritical like I know a lot of people get anti-college or whatever I absolutely benefited from having three degrees and my wife has three degrees but again you have to look at the cost benefit and so even when you are focusing on earning more it's all kind of the same thing you have to look at the value proposition and you still have to look at what you're spending but I absolutely agree with you and I wouldn't argue with you I think maybe the only thing I would argue is I think a lot of people think that if you earn more it'll get easier to save and in theory I agree with that but if you look at the data what most people do is they earn more and they just inflate their income and their spending grows right with their earnings so most people don't save more and you can look at like professional athletes you know very well with doctors you know the statistics so that's just the reality so there is a practical reason too I think but I think it's worth working on both but that's why we focus on spending first at least I do Hello, hello, yes my question is regarding how do you know emotionally transition from accumulation to spending your portfolio my wife and I we were thinking we reach our FI number this year and but we don't know we were now scouting where to retire where to go but inside of us we are a little bit afraid if this doesn't work and what we are going to do we still have about 25, 30 years until we get hit our social security benefit so how was in your experience that transition from working and just to living the FI, the fire life yeah that's a great question in my personal situation it really wasn't a question of like we didn't look at did we hit some target number and were we ready to retire my wife and I we kind of always wanted to move west and just do something different I'm from Pennsylvania but like I said we live in Utah now so we had a daughter and she was turning five and she was starting kindergarten and for us it was really a lifestyle decision of once she starts school and making her friends and getting involved in activities it's going to be a lot harder to shift gears and to change to that so that was kind of our initial decision and we always I mean originally I think just like most people I had that same vision of retire is don't work at all you live off your investments but then as you kind of get closer and you start thinking about it what are you going to do for purpose what are you going to do to just fill your time like my daughter is in school and so what am I going to do all day and also it's just a psychological component like you don't save 50% of your income because you are suffering and sacrificing for 15 years you save because it feels good and so imagine like you're driving down the road at 80 miles an hour and then you're just going to slam it in reverse that's basically what you're doing going from like a 50% savings rate to spending from your portfolio so our plan was always to be very gradual and cutting back so my wife has a remote job she works for a company out of Washington DC part time like I said after having our daughter shortly after that she started with that company and she was the seventh employee it was a startup so they kind of just give her a really sweet deal and so she's able to work part time and I plan to keep my physical therapy license I thought I may work part time or do a travel assignment once or twice a year and our investments did really well I did better than I thought with our book and blog and so I just kind of let my license expire and I am I guess completely retired as a physical therapist now I'm not going back but yeah that was kind of always our plan is to have a gradual a gradual transition and so it'll be five years for us in December and my wife is again looking to cut back working this year to kind of cut back our hours again and but we're kind of still like most months we are just basically right about even so every now and then if we have expenses we'll take from our savings every now and then if I have a good month we'll put a little bit into savings but we're not drawing down much we're not saving anymore and it feels very comfortable it's a nice it's a nice transition point you didn't cover one of the observations I know about the fire committee I see as a downside but at least the more vocal fire proponents really seem to hate their job to the point where they will blog about it and like they just want to get out in 10 or 20 years I'm not sure it's like do you think that's representative or maybe just the loudest voices in that community is basically doing it that way and I'm wondering if you have any thoughts about that I'll be honest with you I don't read a lot of fire bugs anymore because I'm kind of like I'm at that transition stage so I don't know what's out there now I do think sometimes the loudest most extreme voices get the most attention that's just natural I mean my personal opinion if I think if you are you know two to three years away from fire and you you know I think it's a rational decision if you have a high paying job to maybe put your nose down and just get through it and hit your number and then quit but you know if you're starting your career and you know that's not what you want to do to suffer and sacrifice through it I mean I think there's a lot better ways to go through life I mean I wouldn't recommend you know suffering for the next 10 years to reach this number that you know there's no guarantee you're ever going to get there so you got to live your life and enjoy it all the way so one question of interest in this is it seems like there's accumulation accumulation of and it has to be taxable investments at this point if you're going to be living your off of it is there a trade-off here where you're just bypassing 401k matches long-term taxable income or tax-free earning on those things to achieve this other side are you passing up those company matches because you're focused on being away and is that a trade-off that's worth it I don't know if that makes sense or not yeah I mean I would say in general I hate to give one size fits all advice but passing up a company match is one unless maybe like if you have a ton of credit card debt something like maybe but you're getting a tax advantage and you're getting just a 300% return so I personally would never pass that up but beyond that I mean when we were in our accumulation years I mean if you're saving enough again unless you're really doing the extreme frugality version of this I mean for us we maxed out both of our 401ks then we maxed out both of our Roths and in the one year we had the option to we maxed out our HSA and then we still saved a substantial amount in taxable investments so we ended up we have a pretty nice mix and a lot of diversification amongst asset or amongst taxable types of accounts but I think if you aren't in that position you have to make a decision I don't know how I would answer that question for many people I think you have to look at your own situation and you know where you're going to be yeah there is ways to get money out of you know your 401k there's you have to jump through some hoops but like there's you can do it's called a 72t and you could take like kind of almost equivalent to RMDs but you're doing it earlier in your life so once you do it you have to do it for a period of at least five years and there's ways to do it also you could just pay the penalty and sometimes that still might be better than paying depending what your tax rate is if you're in a much lower tax rate in retirement you're paying the 10% penalty that still might work out in your advantage so again it's it's really hard to give specific advice to a general audience you have to kind of look at your own situation yeah hello just a general question one of the big threes that you mentioned was housing do you have any advice for people living in high costs of living cities I'm from New York City work in New York make a good living in New York but I find that the housing costs are extreme right now any general solutions I mean besides living with the roommate because I'm doing that now but any other advice you could give no I mean I think again we kind of talk about principles right the principle is you have to do less but then there's the tactics and how are you actually going to do that I think one thing in a high cost of living area like I guess my question would be why are you living like is that where your family is is that where you want to stay because like I think some people go there because there's higher paying job opportunities but then you can always move to a lower cost if that's where you want to live now if you want to stay in the higher cost of living area I think like a roommate is a great idea I mean you're kind of limited by your creativity once you understand the principle but yeah I mean if it's a super like if you're in the Bay Area in Manhattan yeah I mean it's expensive to live there and it's going to take up more your so it's a decision is is that worth it is it worth it to go somewhere else and that's a personal decision that you have to make yeah I think again again like I think a lot of it is just what do you really want like again like my wife she works for a company based out of Washington D.C. but she worked for them when we were in Pennsylvania and she works for them when we're in Utah and so some like especially now since the pandemic a lot of jobs if that's an option but again if your family's there is that a sacrifice you're willing to make again we did move away from our family but it was because of other reasons and those are always hard decisions and I can't give you a good easy answer on them Hello my name is Chris from the D.C. Area yes I just want to start off by thanking you for revealing some of the particulars for example you know somebody who's still working their way up the income curve you know I didn't really think it you know it could be possible to achieve fire you know without you know the six-figure and above income so that was really encouraging so thank you for that I'm curious because one of the things that I don't hear too often in the fire community is the discussion of how you think about paying for a child's education I know a lot of vocal heads will think that you should always put your retirement first because you know your child can always bar for college but I'm just curious if those are things you think about and what kind of ideas you have there yeah absolutely so that is something when I was when we were our last five years of saving for financial independence we were cutting those investment and fees and tax fees because we were I was also learning the investment side while I was going down the fire hole the fire hole and so I had a lot more money that we were already saving that was freed up and so and also I took a little a side job it was just because we couldn't get out like we I like rock climbing and I couldn't get out and do stuff because it was a drive from where we used to live so I took a job with a local university so all I did was that little side hustle money I threw all that into account for her and in six years of teaching right before we left for Utah I had kind of maxed out what I wanted to say for her for her school and so we we stopped saving when we stopped working so yeah we front loaded it and just like we front loaded our retirement savings I'm from Nashville shot out to Dolly we like your daughter like in Dolly my question is specifically for healthcare because I'm a nurse and I work in a trauma center and we see terrible things happen all day for people who were retired and now their whole life is going to change what does the fire community say about getting ready for whatever particular catastrophe might come your way you hope it doesn't but what would they do what does the fire community say about that yeah I mean this is one area where I do differ for with some people from the fire community who are way more risk tolerant or maybe naive than if I want to be not as diplomatic about it but to me health insurance is absolutely a must for everybody and it's just such a such a huge risk and so just like any entrepreneur you have to figure out how you're going to get it I did do like a deep dive I know some people like the health share ministries for me I just for personal things with like kind of the activities we do like adventure activities they wouldn't cover some of those things and my wife has a pre-existing condition it wouldn't cover so it wouldn't work for us but that is an option that's cheaper I think for most people they try to optimize and this is what we're going to do when my wife cuts back is try to optimize on our subsidies and just go through the ACA but again it's a big challenge because again they passed the law I guess what are we in 2020 midway through 2021 so it didn't be any good to plan because you're already halfway through the year improving the subsidies and it only went through this year and now they passed it again but that takes us three more years but again for myself I'm 46 so that still leaves me 16 trying to do math on the flyer 16 years till Medicare yes I don't know we're going to we just kind of again I think maybe a reason to oversave a little bit a reason to if you can be open to having some income in a way that's enjoyable ways to pay it food yeah it depends I mean if you if you have a low enough income you can get your insurance subsidized to a high level and you could pay very low premiums and also but then you also have the other side of the question that's not the only uncertainty you also don't know if you're going to be healthy so even if you have insurance you know you can have some substantial out-of-pocket costs in a given year so you have to look at what your potential max out-of-pocket is and you just it's a planning exercise you have to figure all that out and look at what your downside is and again the hard part is on the premium side you just don't know what things are going to be in three or five years and things get a lot better or they could go back to having no system who knows it's such a political football okay thank you yeah my name is Mike I just first of all thank you to you Chris and Rick and Dr. Dolly and everybody that's here I feel like I've kind of found my tribe here right so I guess my question is more of a general one of how do you approach your lifestyle with folks that you interact with day to day as far as kids friends parents and you know approaching the glide path to retirement and how did you approach that professionally with your peers and then maybe more generally how do you pay it forward with the folks that you come into contact with trying to think of these questions one at a time so I'll start with the last because I remember that as far as paying it forward I mean just being here being part of this conference I really respect what the Bogleheads do and I was beyond honored and excited when they asked me to come speak and I was happy to do that writing my blog again I do monetize it now but I wrote for five years and didn't make a penny and it's not like a big moneymaker it's more to offset our costs so just trying to put good information out there and like I said I just out of curiosity I went and decided to go down the CFP route to educate myself just to make sure that you know what don't I know and to better be able to educate and help other people so that's that question and then I think you asked about like just in our life interacting with people if people ask what I do I kind of say I'm like semi-retired I say I might write a blog or most people don't really care to be honest as far as my child I guess I'm a little bit I'm a little bit worried like are we going to spoil her is she going to not have the work ethic we have I mean I think every parent has that though I mean I don't know how you know the right balance and you just do the best you can and then as far as like her friends and stuff I mean I think again with my wife and I like I think more is caught than taught so like when I look at the stuff we did well and I look at the stuff we did poorly most of that came from our parents but not because they told us to do anything or not to do anything mostly just we watched and saw what they were doing and I think that's how kids mostly learn so we try to set a good example with how we are stewards of our money and how we spend and we do have occasional conversations but she's 10 and she doesn't really want to get too involved and getting too deep in the weeds there one of the biggest expenses was housing yes on your list yes and the way you solve that problem was you like to rock climb and you wanted a better you didn't want to you didn't want when the long commutes you wanted a quality of life so you moved from Pennsylvania to Utah did your parents follow you there how did how did the the grandparents in your kid situation resolve itself that is a great question and a tough question because that's my parents that's their only granddaughter and so it was a tough situation again this really isn't a financial like we didn't we moved to where we moved is substantially more expensive than where we came from it was a low cost of living so it wasn't a we weren't moving to save money we were moving for lifestyle and like the area we were at in Pennsylvania I mean if my family wasn't there I would never live there I was there because of my family and also just as a place to raise a kid I mean it was it's a it's a depressed area they're just not a ton of opportunities and and also Pennsylvania like the education costs are extremely high so there was a lot of reasons that kind of factored into her quality of life but that that was definitely a tough thing and and we built that in just to our into our lifestyle both in our budget to travel we typically go back we were back this summer we're going to go back for Thanksgiving my parents we have a house with like a mother-in-law suite so my mom's been pretty sick and unable to travel ever since COVID but prior to that they would come out and spend three four weeks at a time with us to be around my granddaughter my daughter their granddaughter so but yeah I mean those are always tough things and it's really not a financial question and so I think you have to navigate that on your own so I've got three kids and eight grandkids and go where you want to go parents want you to be successful go where you need to go if the parents follow they chase their kids then that's what they do if they don't they don't but don't let that be a factor in what you do thank you Chris it's been wonderful and now right outside we have lunch and then we'll be back in here in a little little less than one hour enjoy your lunch