Late Starter to FI Series #35 – Finally Time to Live

Allen, his wife and 2 teenage children in a cave

Welcome to the Late Starter to FI series!

I am a Late Starter – I did not discover FIRE (Financial Independence Retire Early) concept until I was 47. This was way later, I thought than others who seem to have it all together in their 20s and 30s.

Since I started to write about my own journey, I have discovered there are many more Late Starters like me, yay! It is such a relief knowing I am not alone. 

I want to share our stories, our unique perspectives and show that it is absolutely not too late for us.

So in this series, I particularly highlight those of us who start our FI journeys in our 40s, 50s and 60s. And explore questions such as ‘where do we start’, ‘can we still retire early(ish)’, ‘what are the specific challenges for us late starters’. We look at our past, not to castigate ourselves but so that you can learn from us.

Please join in the conversation in the comments below. I encourage you to share your story if you fit the profile of a late starter. You absolutely don’t have to be a blogger or podcaster to share your story. 

Please email me at info@latestarterfire.com or connect with me on Twitter or Facebook or Instagram.

And if you’ve missed any of the previous stories, you can catch up here – Late Starter to FI series

 

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I first came across Allen from Physician on FIRE’s Sunday Best and was excited to discover another late starter. Thankfully, he agreed to share his story here when I reached out. I am very grateful at the depth of what he’s shared.

You can connect with Allen at https://finallytimetolive.substack.com

Allen, his wife and 2 teenage children in a cave

A little about me

Hi, I’m Allen. I live in the US (Florida) with my wife, Maile, our two teenagers and our Labrador Retriever, Magic. Maile and I just turned 50 this past year. Magic is also about 50 (in dog years).

We have both spent the majority of our careers working in technology, which has paid well. We are very fortunate. However, for much of our working careers, those fat paychecks went straight into other people’s pockets to support our lifestyle.

We like to travel. One of the things we have learned from this community is the idea of “slow travel” or becoming “slomads” and that has changed our entire mindset on what retirement looks like.

We also like to learn new things so we have been investing time in learning Spanish. We intend to spend several months each year in Spanish-speaking countries, and we like the idea of speaking the local language to help us connect with the culture and people we meet.

I’m new to blogging, but people can usually find out what we’re up to from our substack newsletter / blog at https://finallytimetolive.substack.com

Childhood memories of money

When I was growing up, if we talked about money, it was in the context of “things”. Affording things, or not being able to afford things. The topic of money came up when it was time to buy groceries, clothes for school, a new car, or other stuff.

I guess I was raised with somewhat of a scarcity mindset. At times as a kid, I felt like I was financially a liability, because things that I wanted (or sometimes needed) provoked stressful conversations about money. That shaped my decisions and behaviour going forward.

Here’s an example that I can remember: I’m the youngest in my family and all of my older siblings got their own car and began driving at 16. But when I turned 16, I told my parents a lie. “I’m not ready to drive yet, Dad” I said. It wasn’t true, but I had heard my parents talking (and maybe worried?) about the cost of auto insurance. So I waited a year.

I haven’t done a lot of reading on the scarsity vs abundance mindset, but I think growing up worrying about affording basic necessitites has probably made me more risk-averse as an adult. I started investing money late in life, and I probably still hold too much cash.

With our own kids, we are trying to strike a balance between teaching responsible spending, while also helping them see that this is a world of abundance and opportunity. I love and use Paula Pant‘s philosophy in our family – We can afford anything. We just can’t afford everything.

I wrote a post about how communicating about money changed our family’s retirement trajectory – We Don’t Talk About Bruno, And By Bruno I Mean Money

 

Lightbulb moment

This will be a very roundabout answer on how I found FIRE, but it’s the way it happened for me:

Around 2018, I was pretty dissatisfied with my job. So my first instinct was to re-skill. As a manager in technology, you don’t always get to do something tangible. It’s a lot of meetings and emails, and it is easy to feel a little disengaged and not adding value.

I started to develop a little bit of Imposter Syndrome because there were always young, hungry managers surrounding me who are hyper-engaged in everything.

I thought I could maybe transition back to an engineer and be happier. Then at least I could write some code and feel like I did something real at the end of the day. So I took a Java programming class, and then an advanced Java programming class. At the end of it, I told myself ‘Wow, I just did some pretty complicated stuff.”

I don’t know why I made this connection, but learning one hard thing (Java) led me to think about what other hard things I could learn, and investing came to mind.

I love podcasts, so I searched for investing-related content and began learning a bit about value investing. The value investing ecosystem eventually led me to the Choose FI podcast, which is really about life optimisation more than anything.

Choose FI led me to Go Curry Cracker, Mad Fientist, Mr Money Mustache and many others.

 

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Our financial situation at the time of finding FIRE

We had little, to no debt, when we found FIRE. We paid off our house before we found FIRE, but that was more due to a scarcity mindset and wanting to feel secure. I think we had about $10000 in our emergency fund and we had legacy retirement accounts scattered all over from job changes throughout the years.

We were lucky in that we had at least done the conventional things right. We invested in 401K plans, though we did tinker with them too much. We started to build up our taxable account, wanting to apply some of the value-investing ideas we had learned.

We were investing in individual stocks and actually did pretty well on our picks. The thing is, we lacked conviction. We were only confident enough to invest a small amount in each company we researched. We got good returns, but we weren’t making big bets. We would have $25000 invested across 5 companies, and then $75000 just sitting in cash. 75% of our taxable portfolio wasn’t working for us.

We finally started aggressively automating monthly investments into a total market index fund and continued to do so all through the pandemic. The rate of return was lower, but we were putting more of our portfolio to work so our bottom line was better.

We started to transition our mentors in investing away from Charlie Munger and Warren Buffett to JL Collins, Paul Merriman and Jack Bogle.

First steps on the path to FI

Our first real FI step was to communicate with each other about what our goals were in retirement. We needed to get on the same page.

Before I started throwing spreadsheets at my wife on the ‘how’ of FI, I needed to sell the ‘why’. We needed to really crystallise what we wanted Life 2.0 to look like.

Then it became easier to make some of the sacrifices that FI demands.

Other factors that influenced my view on finances

My Dad worked very hard and had a lot of passion for his job. Unfortunately, much of his retirement savings were tied up in the stock of the private company he worked for. The company went bankrupt, and a majority of his savings were lost. When he was finally downsized, he was in his 70s. He couldn’t realistically hit the job market after that.

I watched my parents abruptly transition from a comfortable middle class lifestyle to being forced to live off of about a third of their prior income. They lost so much and eventually separated.

I learned then that you can’t rely on your paycheck to always be there. We all get older. And as our salaries increase, it’s only a matter of time before our name appears on the wrong side of a company’s cost reduction spreadsheet.

Americans, in general, are woefully underfunded for retirement, at least if they want to maintain their current lifestyle.

By FIRE standards, my parents had plenty of income, even after all of that happened to them. But they weren’t emotionally ready to cut their lifestyle. The change was just too abrupt.

Allen and family

How far along the path to FI are we now?

I retired in June and my wife still runs her own consulting company. We are in a pretty tough bear market right now, so it is fantastic that she is still bringing income into the house so that we don’t have to sell in this market.
 
My emotions ebb and flow between being confident and completely insecure. I wrote about some of my anxiety on our blog – Do We Have Enough? Has This Been A Terrible Mistake? Fear & Anxiety In Retirement

Thoughts on early retirement

Before finding FIRE, we were aware that we had a lot of savings in 401Ks and IRAs from various jobs, but it all seemed untouchable until full retirement age. One of our early ‘aha!’ moments was learning about Roth IRA rollovers, not only for tax savings but as a mechanism to access your retirement accounts early. Once we discovered how that worked, it made everything else seem possible.

Like many in the community, we have put together a pretty robust spreadsheet with our consolidated numbers across all of our accounts. I am a pretty detailed individual, so I wanted to see how our retirement balances looked each year.

We also used a very conservative investment yield of 5% and our numbers still took us into our nineties. Seeing our financial life laid out, year after year, really gave us confidence in the plan.

I was pretty dissatisfied with my job so I had been ready to retire for years. Having said that, it was pretty obvious we were entering deeper and deeper into a bear market. So we took a half step into retirement, with my wife continuing to run her consulting business for a while longer.

Retired is a word that I struggle with. When I first left the corporate world, I called it a sabbatical. Maybe I was afraid to assign some permanence to it. At a recent CampFI, I heard the term Financial Independence/Recreational Employment, and I liked that a little better.

The FIRE community is very industrious in my experience. Even those I’ve met over 40 don’t want to just sit on a beach and drink out of a pineapple. They just want more control over their own time and energy. I’ve spent my whole life regretting that I never started my own thing, always nesting in the safety of a big corporate job.

With my new freedom, I’ve thrown myself into writing with a very simple goal: Write 50 great posts. Strengthen that muscle. Build an audience. And then we’ll see.

Others' reaction to my early retirement

I think when you first learn about FIRE, you want to tell the world. You want to proselytize FIRE to everyone you know. But everyone is in a different place, living their own lives. It almost never goes well when I corner someone at a party and start trying to talk to them about FIRE. It’s maybe why I write about financial independence. It helps scratch that itch of wanting to tell everyone without freaking them out at a dinner party.

When we told our friends and families about our plans to FIRE, they were super congratulatory and supportive. My dad was a bit “flabbergasted”, to use his word. We haven’t had too many probing questions, though we’d be thrilled to answer them. They just accept us and all of our crazy ideas. I also think, being 50, we aren’t all that special. If we were doing this in our thirties, I’m sure we would receive a more puzzled response.

I heard this phrase in the GoWithLess Facebook community (which I highly recommend if you are into slow travel):

“They don’t know if we’re filthy rich or dirt poor”

Specific challenges or advantages of starting late

I’m going to make a pretty broad assumption, which sometimes gets me into trouble. But I’m going to assume that the people drawn to the FIRE community late in life are not in a dire situation. They are not heavily in debt, with terrible credit, and they are not getting pay day loans to stay above water.

For someone in this situation, while there are certainly things to learn from the FI community, there are more basic challenges to solve, and those may be better tackled through credit counselling programs, and even the Dave Ramseys of the world.

For those fortunate to have done the basics – remained employed, received steady rises, built some home equity, and contributed to available retirement accounts – like us, you are probably not starting from zero. You likely have some assets.

That is your advantage. You’ve been on the hamster wheel for decades, and have something to show for it.

So what’s the challenge?

If you’re like me, you are pretty far removed from your days of driving 15 year old cars, having room mates and eating modest meals. We become accustomed to paying up for convenience or comfort at our age.

So the big questions for us were: Can we get a handle on our spending? Can we get off the hedonic treadmill and stop throwing money away?

We found that if we could start spending like we were just out of college, and still find a way to be happy, that we could retire tomorrow.

That is easier said than done. We have found that cutting back on comfort spending is kind of tough. The FI community likes to talk about the ‘big three’ – Transportation, Housing and Food but don’t underestimate the challenge of making good $10 decisions every day.

We have created and thrown away a lot of budgets over the years, until we finally figured out that our impulse purchases are a very emotional thing. And ’emotional me’ doesn’t care about my pretty little spreadsheet. I wrote about how we changed our approach to budgeting and finally mastered those impulse buys – Until You Start Budgeting Emotionally, You Won’t Stop Spending Emotionally

What's next?

We are still maybe five years away from both of our kids launching into adulthood. Once that happens, my wife and I will do slow travel for about half the year. We’d like to hike the Camino de Santiago while we still have “young knees”.

Ultimately, we expect we will settle somewhere international as full time expats when we grow too tired of jumping on airplanes. We will have travelled all over, to some amazing places with great culture, food and low cost of living.

I think slow travel, besides being cheaper than how most people travel, gives you that extra time to answer the question “Could we live here?” We think that answer will be yes many times over, and the difficulty will be choosing between say, San Miguel de Allende, Mexico or Porto, Portugal.

 

Back to Latestarterfire

Thank you, Allen for sharing your story especially about your experience of retirement. I totally relate to that fear of ‘What if I’m making a monumental mistake?’

And the struggle to rein in spending when we’ve gotten used to a certain level of comfort in our lifestyle. I would go so far as to say that is, in my opinion, one of the greatest challenges of the late starter to FI. I love that you’ve incorporated emotional impulse spending into your budget!

I also resonate with your experience of a scarcity mindset from childhood – it is hard to change that mindset and know when enough is indeed enough.

Looking forward to reading more about your activities in early retirement!

Is your investing hampered by a scarcity mindset? When is enough, enough?

The Joy of Spending My Money Guilt Free

Closeup of female hands with australian dollar in shopping mall

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Yes, this is still a FIRE blog.

I am unashamedly pursuing Financial Independence as a late starter and plan to Retire Early(ish) at 55.

But I’ve also recently enjoyed a not-so-cheap 4 and a half week holiday in the United Kingdom. And … I absolutely loved spending my money during this holiday without any guilt!

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Before finding FIRE

I was the typical happy go lucky person, very laid back about money in my 20s, 30s and early 40s.

My philosophy then was – I earn it, I spend it and I save some of it … to spend later.

As long as I had a job (no worries about that – I was in a stressful, demanding job) and I could pay my expenses including my mortgage and travel, I was good.

Fortunately my parents drummed into me the importance of spending within my means. I will forever be grateful to them for this advice. And grateful to past me for sticking to this advice.

Finding FIRE

It comes as no surprise therefore when one day in my late 40s, I woke up stressed about the thought of retiring. I had a lot of things going on in my head – mainly that work is too stressful and that I can’t handle it anymore. I had a suspicion that I hadn’t saved enough for retirement. I was right.

So I googled how much I needed to retire and stumbled onto the FIRE community. And was inspired by much younger people who implemented these strategies to retire at 30!

Well, that boat has well and truly sailed sometime ago so the next best thing is to retire earlier than the traditional age. Mind you, there is no ‘traditional’ retirement age anymore. In Australia, it is illegal to ask anyone to retire – you can literally work until you die.

Most people aim to retire around 67 when they may be eligible for the government age pension.

Anyway, I thought that if it took the young ones 10 years to retire early, then why can’t I do the same and retire in 10 years? That would mean I’d retire at 57 instead of 67. That’s a 10 year bonus. So I jumped right in!

After finding FIRE

The side effect of me pursuing FIRE is that I feel guilty about spending money. On anything.

Because I thought that every dollar should be squirreled away for investing. Every dollar is earmarked for my retirement, right? The quicker I can accumulate my stash, the quicker I can quit my job and live happily ever after.

And if I spend on gifts, travel, fine dining, I am denying myself early retirement.

After all, I was already starting very late and therefore behind. Time was not on my side – all that compound interest gone, poof!

Thoughtful young woman holding credit card and piggy bank

The struggle between spending and saving is real

I must admit this 180 degree change in how I view spending was very surprising to me. Because all my life, I most identify with being a spender. I honestly cannot relate to being frugal although I’ve tried.

So this push / pull with spending money is annoying and unsettling.

I agonised over buying a Roomba with free gift cards – I didn’t pay a cent for it and yet I felt guilty. How silly is that? (I wrote about that experience here)

Pre FIRE me would have happily forked over more to buy the techiest version.

I felt really guilty on a trip to Uluru, shortly after I started pursuing FIRE. I travelled with a friend and enjoyed unforgettable experiences such as dining under the stars with Uluru in the background. But I felt I’d spent so much money that I didn’t want to track my expenses.

Pre FIRE me would not have felt guilty at all. Pre FIRE me would have justified that I could easily earn back what I spent. No worries at all.

FIRE

Let’s face it – being on the FIRE path can be very intense especially if you have a deadline and a constrained time frame. Late starters, anyone?

Every effort is made to save as much you can, not by societal standards or the general personal finance advice of 10%. No, you must save at least 50% of your income.

Compromises and sacrifices abound – spend $2 per meal only, cycle everywhere, no takeaway meals etc. And when you’ve reduced as many of your expenses as you can, it’s time for side hustles to increase your income.

I’m writing this tongue in cheek – because it is absolutely critical that we look at our spending and identify areas where we can save. And invest those savings. After all, it’s not fun to retire with no savings at all and rely on the mercy and generosity of the prevailing government.

However, I feel it is just as important to look at our expenses and identify which bring us joy or which we value and either not cut those out completely or think of ways to do them less expensively.

Yes, the trade off may be that it’ll take longer to arrive at FIRE, if we can’t free up much money to save and invest.

But the longer I’m on my FIRE journey, the more convinced I am that we need joy in our life NOW. We can’t just wait and defer joy to when we finally achieve FIRE. Ten to fifteen years is a long time to deprive oneself of the things that make us happy.

Of course, what makes us happy may not cost a lot of money. The whole point of FIRE is to discover what it is that fulfills us and make us happy and find the time and money to do those forever.

I don’t want to arrive at FIRE a shell of who I am and desperately in need of healing and a long rest because I’ve hustled so hard to get there.

I want to arrive at FIRE, raring to go, with lots of plans underway. I’m up for a short rest of course, doing absolutely nothing.

I also don’t want to arrive at FIRE, scared to spend my hard earned money, worried that my money will run out. It will be difficult as it is to switch from an accumulation mentality to spending the dividends or drawing down my shares portfolio.

Guilt Free Spending

In my humble opinion, the way to still have joy in our lives now while pursuing FIRE is to have money set aside for guilt free spending.

This is for spending on things that you won’t give up or find really hard to give up, that bring you joy and that you’d be miserable without it. Some describe it as Fun money.

But there were so many competing priorities when I started my FIRE journey. Do I build my non existent emergency fund? Should I invest? What should I invest in? Salary sacrifice into superannuation (retirement account)?

I had read The Barefoot Investor by Scott Pape and was therefore aware of having a splurge account ie money set aside for guilt free spending.

But I never set this up this account because my priority was investing in my superannuation and then investing in my shares portfolio outside of superannuation.

There was only so much in the kitty.

All my spending was therefore lumped under living expenses. Except Travel.

Lighthouse on cliff at Neist Point in Isle of Skye
Neist Point lighthouse in Isle of Skye, Scotland

My Travel Fund

Travel was in its own category.

And I’ve realised that this is my one true guilt free spending money account.

I don’t care about massages, spa treatments, Friday night drinks, trendy clothes etc. What really depresses me is if I didn’t have any money for travel.

After reading Ramit Sethi’s I Will Teach You to be Rich, I renamed one of my sinking funds to Invest in Self. But when money is tight, I stop contributing to it.

By contrast, it is very rare when I don’t contribute to my Travel fund. It only happened recently when I needed to build up my Bills account to be one month ahead. I felt the sacrifice keenly but knew I’d feel more secure if my Bills account was one month ahead. So it was worth the sacrifice.

At one stage, the Travel fund was larger than my Emergency Fund, at which point, I switched them around and swapped names. In fact, that was how my Emergency Fund was fully funded the first time.

I contributed all through the years the pandemic closed borders when I had nowhere to go. I did use some funds to buy online courses and programs in 2020 and 2021. But even so, the fund had a healthy balance by the time I booked my flights in February.

Heck, even when I was on holidays, I was contributing to the fund.

This is easy to do because my contributions are automatic. I set up automatic transfers from my weekly pay so I don’t have to think about it. Every week, a predetermined amount is automatically deposited into my travel fund. It is in a savings account that earns bonus interest if a minimum of $300 per month is deposited with no withdrawals. So I always make sure to deposit the minimum to get the bonus interest.

How I Spent Guilt Free on my Holiday

I accessed this account before I travelled, to pay for flight taxes and airport charges, attractions, train tickets, car hire deposit, travel insurance etc. I used Qantas frequent flyer points for return premium economy seats on the flights.

At the start of my holidays, I transferred an amount that I thought I’d need for the duration of the holiday into my global everyday account that can accommodate 5 different currencies. As I was travelling to the UK, I would need pounds (£) to pay for everything.

And that was my ‘budget’, an amount that I was happy to spend. There was money left in the Travel fund because I didn’t want to spend all of it. There is always more travel ahead!

I did not break it down to what I’m ‘allowed’ to spend on entertainment, food, transport etc. It was just a lump sum that I could spend however I liked.

At the end of the holiday, I transferred what hadn’t been converted to British £ back into my Travel fund.

souffle, rhubarb sorbet
Part of an 8 course meal at Three Chimneys

Feeling Free to Spend Again

In the past, even though my head knew that it was ok to spend this sum that I’d saved diligently for the last 3 years, I’d still feel a degree of guilt.

I’m not sure if it’s because I haven’t travelled for 3 years but this time I felt totally guilt free about spending my allocated ‘budget’.

I think it’s knowing that I still have money in my Travel fund for another trip. And I hadn’t sacrificed investing for my future.

To be honest, it felt really, really good. And so freeing, not having to think about each expense.

Final Thoughts

Don’t get me wrong – I have no desire to go back to my pre FIRE days when I spent money without a care or much thought.

And I’m not advocating that you spend money you don’t have (in the form of accruing credit card debt, for example) or spend money on fun things at the expense (pun not intended) of saving for retirement.

But I do want to strike the right balance between spending intentionally on the things I love now and saving as much as I possibly can to reach FIRE faster.

I want to do both – to have some money for the things that bring me joy (travel) now AND invest for my imminent retirement, early or otherwise.

This pendulum will swing differently in various ‘seasons’ of my life but the key is to find the right balance.

How do you find the balance between spending and saving? Do you feel guilty about spending?

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