Doug: Hey, what’s going on? Welcome to the Doug show. My name is Doug Cunnington. And today we’re going to talk about. Financial independence. We’ll talk about fire. I’ll go over some of the like main ideas of the fire movement, maybe some of the pros and cons, but I’m going to lay out kind of the foundational ideas and hopefully it’ll push you in the right direction or you’ll learn something from it.
Or maybe you’re doing pieces of this and you can optimize a little bit better and take it from there. Now. This is not financial advice or legal advice or professional advice, or it’s no advice at all. This is just entertainment and I am sharing some of my experiences. So do your own research. I think, you know, some people.
I actually mentioned this to me in the last few, few weeks. I can’t remember who, but the sort of fire movement like grew a lot in the last, I don’t know, like 15 years or so. And I think maybe it peaked around 20. 17 to 2019 or so. And then maybe the interest has gone down just a little bit. It just depends on who you’re listening to, really.
I mean, if you just found a new podcast about financial independence and retiring early, then you potentially are. Are thinking it’s huge right now and it’s bigger than it’s ever been, but maybe it’s not. It’s just, there’s tons of podcasts out there and there’s so much content that you could go around and like, I mean, actually I was doing a little research for this episode here and went to YouTube search for a couple.
Uh, different questions that people might have just to see what comes up. And there are significantly or significant channels, big channels, lots of views, lots of subscribers. I’ve never seen or heard of these people before, but they have very big audiences. So it’s kind of mind blowing that even me, I go to financial creator conferences and never run across, you know, a lot of people.
These people, not to say that every, every creator goes to conferences, but like it’s specifically the one where people interested in financial independence might go to. So we’ll get into some of those details. And I actually recorded an episode on this topic. In 2021, I went back. Cause I was like, what did I say back then?
Who knows what kind of crazy shit I was talking about. Right. So I was like, ah, I, I should go back and see what I said. I thought about actually like republishing the old episode, but I thought, you know what, I’ll do it. I’ll do it fresh. I’ll do it fresh and I won’t be lazy. I’ll record a new one. Hopefully this one’s better, but I didn’t actually go back to listen to the other one.
We’ll just assume that it was better, but it was hundreds of episodes ago. So that, If that tells you something, it’s been a while, it’s been a while. Okay. The reason why I wanted to cover this today is. The, the normal audience out there, the audience, you out there, like we have been covering on this show and on the YouTube channel content websites, niche websites, and SEO and that sort of thing.
And over the past 18 months, two years or so, SEO has been unpredictable and volatile. And in the last six months has been even more dire and people that. Like me over the years have said, Oh, like SEO affiliate marketing. It’s not dead. Like things are just changing. Now, people like me and other folks are saying, yeah, it looks like it’s dead.
Like, even if Google changed their tune and embraced the small creators, smaller websites, niche websites, even if they were like, you know what? We made a mistake. We want to lift y’all up. There’s a strong chance no one would trust it and it would be really volatile and we wouldn’t believe them anyway. So with that said, I mean, there’s no indication that Google’s going to do anything like that at all.
But I was chatting with like Matt Giovanissi, we were having some beers the other day. He was brewing. It’s not just the front. He actually brews beer. So we were having some beers in his garage. Thanks for the beers, Matt. And. Basically we were both saying, yeah, we think SEO and affiliate marketing. I will put words into his mouth, but maybe I’ll invite him to, to a live stream sometime soon, but basically I was like, yeah, I mean, effort into SEO, like, ah, I’m not like, that’s not my thing right now.
Like I have zero interest in that. I like doing creative stuff. I like this format of YouTube videos. So. You can shoot a vlog. You can do a tutorial. Like I have full freedom to do whatever the fuck I want on the YouTube channel. And then from a podcast standpoint, I get to talk to my friends. I have this show.
So it’s the Doug show. Technically I could talk about whatever stuff I want to talk about. And you, you find listeners out there, you keep listening. And I appreciate that even though we’ve shifted what we talk about. And then for mile high five, I get to talk to my friends, there are tons of people in the fire community that have done super amazing things from a wide range of backgrounds, low income, high income young, old, whatever, like all over the world.
So it’s pretty cool to have those conversations. So I do enjoy that. But the SEO part, like, I mean, I could turn some of the content like from video or audio Into the written word into a blog post But I don’t I don’t think it’s really worth my while unless I just want to publish it and put that information out which little prediction here as Trends go up and down.
I suspect there will be some resurgence within the next five years of blogging, or at least like the written word. And people won’t give a shit about the SEO portion. Like that will have died down. They’re just writing it because they want to, when they, they want to communicate, they want to write something that someone wants to read.
So maybe that never changed and it won’t because it’s independent from search engines. But. Anyhow, the reason why I wanted to cover this topic today is I, I have been able to. Not worry about the volatility of SEO, the niche site world, because I put myself in a great financial position through some of the ideas that I’m going to go over today, again, not financial advice, but if you do want to get financial advice, I can refer you to it’s a fee only like advisory.
Like matchup thing. You could hire people, you could hire financial advisors by the hour and it’s like a flat rate. So if you have like a specific question, you can go hire someone, go over the material, whatever you need to do. I have to say most of the time, it’s probably going to take more than an hour.
So just keep that in mind, but you can get help on a certain thing. You don’t have to. You know, go to a bank where they’re going to charge you like 1 percent assets under management or something like that. You can just have someone look over your stuff, ask specific questions and a fee only situation. So I’m an affiliate.
It’s a company called nectarine. Actually, my friend, a few of my friends run it over there and, uh, they’re founders of the company. So pretty cool. I’ll link up to that. But it’s worth checking out if you do need some financial advice. This is not financial advice. Okay. Overall. Yeah. I put myself in a good position.
So when. When I was making good money, I saved it. I took money off the table. So you hear a lot of entrepreneurs, a lot of times I don’t know. I don’t know if they’re always truthful. They’re probably not if they’re, if they’re a creator and they have to get views and all that stuff like me, but. They would say, I’m, I’m reinvesting everything.
I’m reinvesting everything back into my site, or I’m reinvesting like 90% and I’m pulling just a little bit of money off the table. I never did that. I, I probably reinvested I don’t know, five to 15% or so, and I took almost all the money off the table, all the profits, and then I invested it in a low cost index fund over the years, over and over again for like nine years, 10 years, something like that.
While I was working for myself. So if you do that, I got great returns. Turns out the stock market did well over the last decade or so longer than that, but it did well, so financial freedom, financial independence, basically it means having enough wealth or passive income to cover your living expenses without needing to work, and that is.
Through a couple of mechanisms. Like if you have real estate, for example, maybe it’s the rent. I’m not a real estate person by the way, but maybe it’s the rent income coming in. I’m an index fund investor. So typically that’s just going to be the dividends plus the growth. Although I reinvest the dividends at this point in time, but you have capital growth and.
I can actually like draw it down, which I’ll get into that moving forward here in a couple segments. Basically, if you have enough invested, you can live off the interest. That’s the idea. So if you have a certain amount of big nest egg, you can live off the interest, never touch the principal if you don’t want to.
And the main thing, I mean, people call it financial freedom because it gives you the freedom to do whatever you want to do. Whenever you want to do it for how long and whoever you want to do it with, and you don’t have to worry as much about financial constraints. So you do have to think about it ahead of time and expenses are very important.
We’ll get into that in a second. And most of the time. You know, people are not winning the lottery. They’re usually not having a big exit where they start a company and then they sell the company for like 5 million bucks. That’s rare. Usually this takes time through compound interest and. You may have seen videos or read articles or something like that, where like, once you save that first a hundred thousand dollars, things start speeding up, like you have a critical mass of money and the interest in the interest upon the interest, which is what compound interest is, you end up growing much faster than you would anticipate.
It’s kind of amazing. And I remember my wife and I started tracking our net worth. In 2014, so only 10 years ago. And I remember thinking, wow, that’s a, that’s a lot of money. I mean, we were we were in our thirties then, and my wife had a better handle, she may have known her net worth before. But maybe not, even though she had a very she has a very regimented like budget and expense tracking habit that she’s had since probably high school timeframe or a college, at least I wasn’t, I was like, ah, I’m making enough money.
I’m not watching too closely, but actually I had no idea what was going on. So after some time. We started saving a little bit more. We eventually tracked our net worth in 2014 and we were over the six figure mark at that point in time fairly healthily. But after that, like the growth has been amazing.
Now we’ve had some great years in the stock market, so that helps a lot. Not all, you know, 10 or 15 year periods are going to be like that. It’s going to be a very lumpy ride too. So while there’s been a huge amount of growth, I can’t remember, I feel like over the last 10 years, it might be, I don’t know, it might be like 10 to 14 percent returns or something like that.
If you just look at like the S and P 500 or total stock market index fund, double check, but basically. It’s been some good years and they won’t all be like that. If you look at those 10 years, it was extremely lumpy. There were some down years that were flat years. Some years were up 20%, some were down 20%, and that’s just part of the game, right?
Like, you know, it’s going to go up and down, but if you’re looking at a. 10, 20, 30, 40 year timeline. The, the lumpy ride along the way. It doesn’t matter. We’re, we’re thinking about this in decades, not in years. So, so yeah, once you hit that a hundred K mark, things grow much faster. And if you happen to be lucky, like we were lucky that things have been growing in the last decade, then you’ll be in a much better position than you think.
Now the fire movement is financial independence retire early. One of the. Top, you know, most well known bloggers, Mr. Money mustache. He. He actually lives in the town that I do. So we’re friends and he actually recorded a couple episodes with me for mile high five podcast, which I think a new one’s coming out either tomorrow or the next day.
So I’ll link up to that just to make sure you’re able to check it out. But he retired just before his 30th birthday and he just turned 50 here recently. So he’s been retired far longer than he. Even worked a corporate job. Now he has worked a little bit, but basically there’ve been several bloggers and a whole movement in Pete was sort of in that forefront of that.
I can’t remember when he started his blog and you know, there’ve been other people before him that talked about the same topics and talked about the 4 percent rule, which we’ll get to in a second here and some of the other ideas around it, but basically when we say retire, a lot of us. Really just mean retire from a corporate job.
We don’t mean you can never work again. It just means it’s optional work is optional. So that means you can get a job doing something you like, like for me, I haven’t actually retired and it’s not really on my radar to retire because I worked for myself, I’m doing this show and I’m doing other projects that I want to work on and every now and then I.
Start something like ranking revolution, the podcast that I was like, Hey, this’ll be a cool project. And then after some time, I was like, you know what? Not that cool of a project. I’m not that interested in it. And I’m just going to quit. I’ve done a lot of things in, in the past. Some work, some, some don’t most don’t work by the way.
So. It was time to just, you know, call it and move forward. And yeah, it’s actually, it’s good for me to share the story. I think people actually enjoyed me sharing the story of just quitting. I mean, I’m not throwing away the content. This is one of those projects like ranking revolution, where you usually want to pick a.
A project where even if it fails, you still come out ahead. This one was so closely related to other things that I was already doing that I don’t know if I learned anything other than be really fucking sure you want to start a side project, because if you don’t, you’re going to end up wasting a little time and then you’ll feel a little silly when you, when you do eventually realize that you should have not started it.
So, but that’s where I am. And, um, basically. This retire early thing is totally up to you. So it just means works work is optional and there are two camps. So, the industry that I came from management consulting and engineering and sort of the tech industry, there’s a lot of us that just, just hate it.
It’s like, we went to school for a certain thing. I went to school for computer engineering and. It was it was fine. Like it’s one of the higher paying you know, degrees that you can get. And even back then when I got my degree, you know, 20 years ago it was one of the higher paying jobs now is still one of the higher paying jobs and it’s.
I mean, it’s held true. So it’s a good degree to have never really used it directly. And the thing is, I didn’t like the consulting job so much. I think there, there could have been a world where if I, if I worked at a certain company and maybe had a certain position, maybe the culture matched up a little more closely with what.
You know, I find it important what my values are, but, but I didn’t. And alas, I tried to climb the corporate ladder for about 10 years with a various success. I think once I kind of figured out what I was doing, I was like, this whole thing’s a joke. I was like, this is, this is just dumb. Like the way to get promoted is to work on getting promoted, not doing a good job.
And then I was like, Oh, well, I’m not super interested in that. And then luckily after that, I started doing I wasn’t as good of an employee, like following orders. I was more independent, which, I mean, that makes sense for me to be an entrepreneur versus you know, someone who has a corporate job, which is totally fine.
So the point is a lot of people with my background hate their fucking job. There’s a subset of people. Same job. They actually like it. Part of it is probably just like the right temperament. They have a good attitude. They’re positive. They’re like Ted Lasso, something like that. They just have a good optimistic outlook and their team players.
Right? I’m not, I’m more of a squeaky wheel situation, independent. I, uh, Contrarian, that sort of thing, which is great for entrepreneurship, right? So anyway, if you hit financial independence, you can keep working the same job you have. It just gives you more options. It turns out a lot of times, even if you like your job, you like the company.
If your boss changes to someone who’s an asshole, not as cool. If you have financial independence, it gives you a huge amount of leverage. So you can renegotiate your position. You can quit straight up. You can do whatever you want because you have the freedom and the leverage to make those decisions. And it gives you it gives you so much power as far as negotiations, better jobs will come your way again, because you can say no.
To things you don’t have to take like whatever job comes your way, which is, I mean, that’s literally what I ended up doing, like with a couple, couple of corporate jobs that I had. So one of the, one of the issues with the fire movement early on, before I got involved with, with it and probably like 2020 or 2021 around that timeframe, the big issue is the early bloggers We’re sort of sprinting towards financial independence.
They wanted to retire as soon as possible. So they deprive themselves of like spending money. They saved as much money as possible. And they were like racing to save more money than their other friends who were saving a lot of money. And basically you ended up with a deprivation situation, which is not what I want, and it doesn’t make sense, right?
Because you’re working super hard. And then all of a sudden you think all of your problems are going to be solved when you retire. And it turns out. That is not the case. So that’s a, that’s another subject. We ended up talking about that on my other podcast, my life, I, all the time really is sort of like, does not working make you happy and if you’re happy beforehand, there’s a good chance you’ll be happy after you retire, but if you’re unhappy and you have other demons to fight and figure some shit out on your own, if you stop working, you’re just going to have a lot of free time.
And then, I mean, unfortunately, I know. Uh, good chunk of people, higher percentage than you would think, they retire from their job and then they They had a depression period and they have to figure out what they need to do to be productive, to have like a fulfilling day of fulfilling life and all that stuff.
So the flaw early on was like sprinting towards retirement, but now there’s a little bit of a movement for like coast fi that’s, uh, you kind of coast there, I’m going to get into the definition of that, but also like slow So maybe, you know, from where I Where I’m coming from, like I could have had my corporate job for like eight years, saved really well in my 401k have other investments watch my expenses pretty well, then I have a great foundation.
So. Maybe I could just work part time or I could take a job where I earn like 30 percent less, but I don’t have to travel and maybe I don’t have to work like long hours. I could just work 40 hours a week, not have to commute and have like a better just lifestyle overall. And the fact that I have a great foundation.
It’s okay that I earned 30 percent less. It’s no big deal. Again, this stuff gives you options and actually going back to the top. One of the other reasons I wanted to do this show is like there I’m in a good position. I got lucky. I mean, I’ve, I’ve coached a few people here recently. And they are as smart or smarter than me.
They work harder than me. They tried much harder than me. And through timing. And again, I got lucky when I got started working on niche websites, they were unlucky, they, they put a lot of money and effort, and I’ve talked to some people that have overextended themselves and like went into debt and they were getting coached by people who were supposedly experts and stuff, and I’m just like, man, That really sucks.
And the thing is there’s, there’s other people that I know that were earning more money than me for longer than me, and I find that they are, they’re still scrambling and I’m like, what, what were you doing with all the money that you were earning? That was like, I mean, that’s like millions of dollars.
Like what happened to all the money? What did you do with it? And I, I mean, like I said, people were working harder than me. People are smarter than me. But I’m in a good position because I had a very slow like conservative approach to the, the monetary like savings investments for the future and all that stuff, and I’m trying to relay that if I could do it, like any, anyone can do it, right?
Even if you have lower income, like I said, I was surrounded by people that more successful than me. So, but yet I find myself in a, What seems to be a better position currently. So let’s go over there and I want to make sure that doesn’t sound arrogant. I’m again, I’m trying to lay it out that I’m, I’m the worst of the people that I know, everyone I know has like a more advanced degree than I did and yeah, they have more education, they’re smarter.
They were more successful when they actually executed the job. I dumb luck ended up at the right place at the right time. A couple of times. All right. Let’s talk about the types of fire. Hopefully that comes off the way I’m hoping it is. All right. The types of fire. So we have lean fire. So that’s retiring on kind of a minimal budget.
So this like covers your required expenses and maybe a tiny bit more, but it’s very lean and you, you probably won’t be spending extravagantly. This fits for a lot of people. The minimalist sort of movement would be perfect. I’m, we’re not in the lean fire situation. You could see all the fucking piles of guitars behind me here.
So we’re not in the lean fire area. Fat fire is retiring early with a larger budget for a more comfortable lifestyle. So at one point in time, many people describe this as like spending over six figures a year or so. But it could be whatever you want. I mean, it’s all relative, right? So we don’t have kids.
Someone might have four kids. So their fat fire might be very different than just fat fire for a couple. So keep that in mind. But basically fat fire is higher expenses, maybe more. Extravagant vacations, maybe eating out is very important to you. Maybe when you go on vacation, having a very high upscale hotel and lodging experience is important to you, or maybe you have some expensive hobbies.
Like, I have some friends that love mountain biking. So they have like several bikes, they have like e bikes, they have other bikes for, you know, riding around town. They have some with a like sort of cargo. So they’re able to carry stuff from the grocery store or whatever. Or I mean, maybe it’s, it’s Another hobby, like curling, like my wife curls, that’s the winter sport.
You’re on the ice and you slide the stones and you have the brooms and all that. It’s a relatively expensive sport to play. Much, much more difficult than you would expect, but pretty fun. She enjoys it. Okay. So that’s fat fire, just higher budget barista fire is reaching partial fi and working a low stress part time job for added income and health benefits.
So. Barista fire is sort of, inspired from, I think like Starbucks, right? Cause I think Starbucks employees get healthcare and essentially you’re hoping that you’ll, you’re, you’re going to cover, um, some or all of your expenses or maybe even more. But at this point, the barista fires, like you’re getting some benefits, you’re earning a little cashflow so that you can spend a little more freely, but you’re not necessarily working that old corporate job.
That’s more stressful. And maybe you’re working full time, maybe you’re working part time, whatever works for you. So it’s a little more flexible, but the healthcare is, is definitely something that can be extremely expensive. So as a quick example, my wife and I, just two of us were in our mid forties.
Quite healthy. Our health care was like, About 800 bucks a month. So it’s pretty fucking expensive when you think about like the level of care that we were getting and we hardly go to the doctor. So if you have a family that could be a lot more expensive, finally, there’s a lot of different versions of five.
The last one here is coast five, which I mentioned before. So that’s where you have saved enough. Where your retirement funds are going to be enough by the time you tap into them at roughly age 59 and a half. So that allows you to either not work or work part time to just earn the money that you need to pay for your current expenses or take a sabbatical.
And then like work every now and then, again, this financial freedom stuff just gives you the freedom to do kind of whatever you want to do. Now, I don’t want to make this too boring. So I’m going to, I’m going to kind of go through a little quickly here, but one of the key aspects is understanding your expenses.
So the 4 percent rule is something that you might’ve heard of, and really We should think about it as like the 4 percent rule of thumb. So it’s just a guideline. Some people are more aggressive. Some people are more conservative. Some people look at this as like a sort of law of nature, the 4 percent rule, but it’s not really a rule.
And if you go back to the original study from, I think it was like 30 years ago or so the original study, they looked at historical data. They looked over retiring a 30 year period. And basically they wanted to make sure you wouldn’t outlive your money over a 30 year period. There’ve been further analyses and, you know, more, well, just more studying and research of this and 4%.
Get you in the right ballpark and then after that you can adjust and the thing is like You have a pretty solid idea of like how things are going to go many years ahead of time. So this would be a case where like, once you’re in the ballpark, then maybe you consult with friends that have a little more experience.
Maybe you go to nectarine to hire an advisor or something like that. So the 4 percent rule basically means you can withdraw 4 percent of your nest egg. And live on, on that portion. So I’ll give you a quick, actually, before I give you a quick example, since we’re talking expenses, um, want to mention a company that I just started working with, but the thing is, I love the the service.
So. One of my big money wins in the last year is moving from, I won’t mention the mobile phone company, but it has three letters in it. And I was with them for shit. It must’ve been like 20 years. And the thing is it was fine, but it was kind of expensive. So my wife and I, our plan costs like 115 bucks for the two of us, which is actually a decent deal.
But like we moved to Mint Mobile. So that that’s the company that I’m an affiliate for now. I’m hoping I can get a, you know, some further partnership with them. Cause I love the company. The thing is with Mint Mobile, it’s only like 15 bucks a month for five gigs of data. And if you are a new customer and you want to switch, you can get any of their three month plans at 15 per month.
And there’s not a huge amount of like other fees or anything like that. So it might be a little bit more than 15, but it’s like a little bit. It it’s it’s great. It is awesome. Basically anyone I talked to that has like one of the big companies, you’re going to save a huge amount of money by switching over to mint mobile.
And the thing is like the coverage is just fine. So one of the cool things is you could test out mint for just a few days. Like I think they might have like a five or seven day sort of trial where you could test it out and make sure the service works for you at your home. Your home or wherever you’re traveling, their network is actually.
On the T Mobile network. So T Mobile great coverage here in the U S I’ve had zero issues. The only time you may run into like coverage issues these days is if you’re way out in the back country. And the thing is, if you’re way out in the back country, there’s not going to be any cell phone service anyway.
And most other, you know, places like here, I’m in my basement. I mean, I’m on my wifi now, so it doesn’t matter, but it turns out I actually get service down here just fine. So. Check out Mint Mobile, you can get a three month plan at a 15 per month. And what I have done is I, I slashed the the cost, but if you sign up for like the annual plan, so you can do the test, like make sure it works for you.
Super easy. One of the big hurdles I didn’t want to switch for a few years, even though I heard about Mint. The thing is. It’s so easy to switch these days. And I was thinking about how hard it was to like move your number 15 or 20 years ago, which it took a little time. You had to, you had to call the company, you had to call the other company, you had to unlock the phone and blah, blah, blah.
Now it’s so freaking easy. Like you, it took me like 10 minutes to set it up on my phone. And then another few minutes to set it up on my wife’s phone. We tested it out. And it was fine. And, you know, she doesn’t listen to the show, but my wife dragged her feet on this for a little while. And I was like, please just let me, let me switch it.
I’ll test it out and see how it goes. So if you’re still on one of the big mobile companies and you’re paying more than 15 a month, you should definitely consider switching. It’s so much cheaper. The service is just the same and it’s very easy to switch it up. So thanks to Mint Mobile out there. Okay. So back to.
The example with the 4 percent rule, I’ll give you real numbers here. And some people are going to have a little bit of an issue with this, but I’m going to, I’m going to make it work. So one key thing is to figure out your expenses. So you do need to know your annual expenses. If you look at just one month, you’re going to miss some stuff because usually there are certain costs and expenses through the year that might just be every six months or quarterly, or maybe it’s just once a year.
Like I said, for Mint Mobile. I’m just paying once a year now. And it ends up being, it’s funny. It ends up being just a little bit more than what I would have paid for like two months of the old service. The point is it’s really helpful if you’re able to look back through historical data on maybe your credit card or historical data on just your, your checking account or wherever you’re withdrawing from.
So for us, we. Basically put almost everything on credit cards. So we were able to like, go back pretty easily and see historical data over the course of a few years. Now, when my wife actually retired a few months ago, we looked even closer. She’s a extremely detail oriented, more analytical than I am. And.
We went through like even more closely and like categorize stuff even harder, but you have to figure out your expenses for our example today. We’ll use two numbers just to make the math easy. So the easiest math is to say you figured out that your annual expenses are 40, 000. So remember we said the 4 percent rule again, you’re able to live off of 4 percent of your nest egg, which is invested in.
A in equities. So that is stocks and bonds in this case, or equities and bonds. So basically most people have it in a, a total stock market index fund or an S and P 500, and then some amount of bonds, so. You using the 4 percent rule, you take the 40, 000 and you multiply it by 25. So 25 is the inverse of 4%, by the way.
So you take that 40, 000, you multiply it by 25 and that equals 1 million. So. Again, it makes the math easy. And if you have 1 million as your, you know, invested nest egg, then you can safely withdraw 40, 000 each year. So we can use, um, yeah, let’s say you have a family. Let’s say you live in a higher cost of living city, then.
Maybe your expenses are 80, 000 per year. So you would, of course, need to save 2 million. We just doubled it. So it, it does follow that, that math. So it’s like times 25, and then that tells you what you need. Now, here’s the thing, a million dollars is a lot of money. So if you’re, it’s a lot of money, like any way you slice it.
When, when I was growing up, I, I, I’ve heard this a couple of times, but like when I was growing up in, uh, the late eighties, early nineties there, it’s like, Oh, a million dollars. Like that, that’s like so rich. Like it’s a un just unfathomable amount of money, but you know, with inflation. Now we’re many years later, we’re like 30 years later and you know, a million dollars, still a lot of money, but it’s, it’s not nearly as much as it used to be.
That said million dollars, still a lot of money. However, remember, and it’s beyond the scope of this, but like, if you, um, if, if you think back to the, like, Hey, you save that a hundred first hundred K and then you keep investing. I think like I’ve seen some of the. The charts and graphs, and you could go watch a video on this.
Basically, you know, you save that first hundred K and you keep saving in the same way. The first hundred K it might take you six, seven years to, to save that first hundred K the last hundred K from 900, 000 to 1 million, it’s going to take you like 18 months or something like that, like it’s so much faster.
And then it just keeps growing faster and faster if you keep investing in the same way. So while. 1 million is a huge amount of money. If you think about compound interest and you think about. 10 or 15 or 20 years. It’s a reasonable amount of money. So this is the 4 percent rule. And when you look back at, you know, some of the folks Mr.
Money Mustache Mr. 1500 Days, Carl Jensen, my former co host over at Mile Hi Fi, you know, they looked at, Hey, we think our expenses are, you know, X amount. So I need to save this much. And then once I save that much, then I can quit my job. And in Carl’s case, he actually kept working for a little bit longer, it’s like a year longer, but he just saved more money, which, you know, that’s a, that’s an issue on itself.
Which, you know, when is enough, enough, like if a little bit more is good, then a lot more is better. And then you basically can talk yourself into working forever after that. So you do have to be a little bit, you have to stick to your guns on this. And then like, when you have enough, you should stop. At least that’s what I think.
Some people are like, Oh, we save a little bit more, but there’s a whole thing of like one more year syndrome. So a couple, a couple other things here, your expenses. So if you don’t know your expenses, you can look through historical data. You can also use some budgeting app. So I’m not big on budgeting apps, but you could look at it that way where you’re like, all right, I’m going to use this app to figure out how much my expenses are, you kind of, you know, I would say within a month.
A month, you should be able to get down sort of the normal expenses, but. You should step back and look at your annual expenses overall. And in that case, you know, you maybe have auto insurance, maybe you have home insurance, maybe there’s other costs that just pop up every once in a while. Maybe you have like some streaming services that you pay like annually, not monthly a number of things like that.
You know, just thinking about the business here, I have a lot of software products that I pay annually instead of monthly. You typically get, you know, a 10 to 20 percent reduction in cost if you do that. So a lot of times I do pay annually. So make sure you take those into account and you can also, you know, look at seasonality and stuff like that too.
Like maybe you take more vacations in the, in the summer, maybe you end up traveling. To visit family or friends over the holiday season or something like that. Maybe it’s, uh, you know, your expenses are pretty low in like September, October, because you just traveled and you will be traveling and you’re just kind of chilling at home, that sort of thing.
So there’s other pieces in here that I won’t get into too much. I did, I did mention the the portfolio and in the original study, it was a 60 40 split. equity. So total stock market type fund or S and P 500 type fund for 60 percent and then 40 percent in bonds of most people these days will probably say that’s a little conservative unless you’re actually like retired.
So if you’re in the accumulation phase, You might be you know, 90 percent equities and then 10 percent bonds. So it’s something that, you know, you would need to look at your timeline, your risk tolerance, consult with a professional, all that kind of stuff. So. In the case of like within our family, like my wife and I manage our expenses and not expenses, but our investments separately.
So like, I’m actually more aggressive than she is. And she’s more conservative, especially after she just retired. Now our money, it’s all, it’s all one, one thing. We consider it, you know, our money, but we’ve. Manage money separately. So we do have a different style and we liked the fact that we approach it differently.
So it’s more, you know, we’ve met in the middle. So our combined portfolios are a little bit less aggressive than what I would normally do. And a little bit more aggressive than what she would normally do. So we ended up with a nice balance. We also have a financial advisor that we hired in the last year or so here.
So the other thing that, uh, some people may want to consider is just the flexibility that it gives you with, with everything. So if you have a sick relative, if you have maybe just the job that you have is like a little more stressful than you want, you could take a sabbatical. You could take time off and do what you need to do where, you know, my old job.
When I had the corporate gig, like I’d have to, well, I had a lot of vacation days. I would have to get approval and I would, you know, feel bad that I wasn’t on the job and all that kind of stuff. So it just gives you all this flexibility. So I think I will leave it at that. If you have questions or comments or thoughts on this, please shoot me an email, feedback at Doug dot show, or if it’s on YouTube, then you can leave a comment there.
And If you want to know more about this stuff, I’ll put a link for my other show mile high fi. It’s actually more of an advanced show, but there’s tons of podcasts on, you know, financial independence and retiring early. And the biggest thing, I mean, I am so much happier. That I am not working for another, like a company or a corporation.
I, I, I did not enjoy it that much. Again, I think there’s probably other companies that I could have worked for and it would have been better for me, but even now self employed and been self employed for about 10 years now. And I worked, I worked hard. Like I said, I got lucky I was at the right place at the right time, all, all this kind of stuff.
I got lucky. Um, And that’s not lost on me. I mean, I think a lot of people, especially I read a lot of not necessarily self help type books, but they’re more like mindset and stuff. But it’s like one of those cognitive biases where like people think they’re successful. Because they’re so good. But sometimes like luck in timing has a lot to do with it.
Like the, the year that you were born, the date that you were born, like there’s pieces like that, that actually do make a big difference. And now I do see, I got, I got pretty lucky. So I hope you get lucky too. I hope, I hope the timing works out, but regardless, I have put myself in a good position where not only You know, not working for a corporation is great for my Like mental health doing less work and being a little bit more careful on what I spend my time on as a self employed person is very good.
Also small business is very hard to run. You have to manage cashflow. You have to. Especially a one, one person show like I’m doing here. You know, it’s easy to get out over your skis and overextend yourself. And with the changes in the niche site industry and all that stuff. I mean, I was like, you know what?
Fuck, I’m going to retire my. I’m going to sunset my courses. I’m not going to try and publish another course. I’m not going to try to like, keep, keep doing this, make money online thing. Hopefully I’m not going to change my mind and eat my words here, but like, yeah. When I see some of the other people having to sort of scramble and like, all right, You know, here’s another way you can make money online.
I’m like, you know what, I’m just going to chill for a minute. I don’t, I don’t have to try to come up with another course. I don’t have to try to sell something right now. So, all right, that’s it for today. Please check out Mint Mobile. You can save a few bucks. You can test it out. Like they have, you know, eSIMs now on modern phones.
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It’s literally just straight advice. So it’s definitely worth checking out, especially if you need someone to look over your financial position and kind of see where you’re at. All right. Thanks a lot. We’ll catch you on the next one.