Category: Late Starter to FI series

Posted on

Late Starter to FI Series #28 – FI is Freedom

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 are a late starter. AND especially if your story is not reflected in any of our stories so far. 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

FI is Freedom. Amen. Enough said 🙂

I invited FI is Freedom to share his story here as his approach to retirement income is not the usual strategy of using the 4% rule (withdrawing 4% from your portfolio forever, based on the Trinity study). He changed his strategy in his late forties and still managed to retire at 55.

You can find him on his blog – www.fiisfreedom and on Twitter as @FiisFreedom

A little about me

I am 55 years old and live in Middle Tennessee, USA. I’ve been married for 34 years and have a daughter in her freshman year in college. I retired this March after a long military and IT career.

I have always been an avid backpacker, to the point of, probably, an obsession. I’ve hiked over 1000 miles this year since retiring in March 2020 at 55.

I just started a FIRE blog focused on monetising your nest egg to replace your salary with dividend income. Financial Independence is Freedom is my motto – www.fiisfreedom.com

Lightbulb moment (or not)

I did not have a lightbulb moment that drove me to pursue FIRE but really always planned to retire at 55. I did have a moment where I realized that to make my goal of 55 happen, I needed to change my strategy after several cycles of making money on high flying stocks, losing some, saving more, losing some, making a little more and repeat.

This led to some early fear that the volatility I experienced would never make me comfortable giving up a salary. That led to some serious planning as to how I could better monetize wealth without the ups and downs.

This planning led to passive income, which for me means dividend investing for the long term.

getting started checklist

Feeling Overwhelmed?

Use this FREE Checklist to start your journey to Financial Independence

DOWNLOAD NOW

My financial situation at that point

I really started to worry about the volatility I experienced as a growth investor when I knew I was going to make what I considered my number. Probably about 6 years from retirement, so in my late 40s, I knew I would never feel comfortable pulling down principal as a source of income.

At this point, I was probably 80% ready for retirement assuming an annual income in retirement from $70k to $120k. I was in a very stable “C” level technology position with particularly good income allowing me to save more in my last couple of years than I did in the previous ten.

It is easier to save enough to hit the crossover point than invest your way to success.

 

First steps on the path to FI

This is a tough question since saving and investing has been important my entire adult life.

Probably, opening up a mutual fund in my late teens. I can’t even remember what it was or who it was with but I had it a few years before I opened up my first brokerage account. I have always preferred picking my own investments.

I have undergraduate finance education and have spent quite a bit of time in finance tech consulting and business leadership that I feel I have the ability to analyse a business well enough. That education and experience have been crucial to what I consider my current success.

My current financial situation

At my blog, I cover one of my main portfolios in depth with full transparency. I am not comfortable sharing all my financial details but will talk about the other things at times besides this portfolio. It is a focused dividend income portfolio that I will not touch for at least the next 5 years so it will be exciting to blog about how I plan to double that income from now till I need it.

The Freedom Portfolio, as I have named it, is the IRA I’ve used since 2006 to rollover 401ks. The current value is around $550k and 12 month forward dividends should be a bit over $40k. I consider all the holdings near permanent positions. I may do some rebalancing at some point because of some positions that have performed very well. That rebalancing would be done with dividend reinvestment allocations rather than selling equities.

Early retirement

I am financially independent and retired at 55 last year. I guess that is considered early but if I had started early or learn my lesson in 2000, I could have done it earlier. Not sure I was ready earlier but 55 was just in time.

I am kind of surprised at how happy I am being retired, even after planning for it my whole life. Not just happy with my current circumstance – I mean I’m genuinely happy I do not have to pursue work any longer. My family is very blessed to be in the situation we are in.

 

 

The most significant step to reach FI

I would have to say the most significant step is just understanding the need to save in the first place. So many of my friends, older and younger, are so far behind just because saving hasn’t been a priority. I am retired right on time but in 2008, I got scared I wouldn’t make it.

Are you READY to TAKE ACTION today?

🔥 practical tips & strategies

🔥 step by step guide

🔥 cut the overwhelm, second guessing & paralysis by analysis

I WANT THE ACTION PLAN

How my relationship with money has changed

First of all, no regrets. I’ve made mistakes. I’ve made bad decisions and I learned from them. Luckily we have a long time to correct our experience deficiencies and buckle down and get serious.

My relationship with money has definitely changed. For quite a while in my career, I was earning enough to buy things I didn’t need, spend freely and still save the normal 10%.

I think my mistakes were chasing growth at all costs and getting slammed in both 1999-2000 and in 2008-2010 market crashes. 2008 especially made me rethink everything and led to my first dividend stocks.

In hindsight, which is always 20-20, I wish I had learned of dividend income as my retirement funding source a lot earlier. I had always planned to follow the safe withdrawal rate theory of 4% a year and potentially deplete my principal at death with little leftover. Now just by living off of part of my dividends, I have an eye towards building generational wealth.

Specific challenges or advantages of starting late

For me, it was pure career burnout and knowing I wanted out early.

I imagine someone else starting their retirement journey early would just have to put their head down and get serious with earning and saving.

The only advantage I would think for starting late is most should be at the peak of their earning years and hopefully beyond big expenses like saving for a home or college.

The key is to start. If you don’t start, you will not meet any goals.

The effect of COVID 19 on my strategy

Quite the contrary, 2020 has been great for my strategy. I retired on March 1st and rolled my 401k into the Freedom Portfolio in April at the market low.

All I really did was increase all of my current postitions but the yields I bought in at were like rocket fuel to not just this year but the whole five year income projection I had before retirement. Just the right time to enter the market.

Sometimes we do get lucky.

What's next?

I plan to hike the Appalachian Trail beginning this Spring. Probably the only goal I’ve been working on longer than FIRE and to me, the epitome of the freedom I’ve gained. This effort will consume me through 2021.

After that, I plan to enjoy life with my family and continue to live an adventurous life. More hiking is definitely in my future. Maybe the Pacific Crest Trail or Continental Divide Trail or both. I’m not young enough to commit myself to those but that would complete the Triple Crown of hiking.

Back to Latestarterfire

Thank you for sharing your story and retirement income strategy with us, FI is Freedom.

I would love to pursue a dividend income strategy for my own retirement, thereby not touching the nest egg and passing that on to my niece when I die. I’d always assumed that starting late would make this strategy difficult to execute.

But after reading your story, it may be possible if I can live off the dividends and supplement it with another source of income eg working a regular evening or weekend shift and monetising this blog. Hmmm … lots of food for thought.

Wishing you all the very best for your Appalachian Trail hike – stay safe and keep us updated on your progress! It’s definitely not for the faint hearted 🙂

 

How will you fund your retirement income?

Posted on

Late Starter to FI Series #27 – Pursuing Slow FI as a Late Starter

Gardening tools | Slow FI lifestyle | Late Starter to FI Series #27

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

Gardening tools | Slow FI lifestyle | Late Starter to FI Series #27
Photo by Neslihan Gunaydin on Unsplash

I met Liz on Twitter, where I confess I meet a lot of like minded folk pursuing FI in our ‘later’ years. I also love connecting with people from all over the world. Liz is from Malaysia, our first Late Starter from Asia, yay 🙂

Although Liz discovered FIRE in 2015, her financial independence journey started earlier when she began to eliminate her debt.

Liz is an accomplished author and writes at elizabethtai.com She can also be found on Twitter as @liztai

Here is Liz, in her own words …

 

A little about me

I live in Malaysia. I’m currently working in marketing as a content strategist, which is a fancy way of saying that I write, edit and manage content for a company. It involves working with digital marketing tools, SEO and editorial strategy.

I’m in my 40s, about 45.

My hobbies are writing, blogging but I love gardening very, very much. My biggest dream is to create my own urban permaculture homestead.

People can connect with me on my website at https://www.elizabethtai.com

Lightbulb moment

I don’t really remember a light bulb moment. Rather it was a series of realisations that led to a series of experiments that led to me discovering that there was a movement behind what I was doing!

But my journey of personal finance rehabilitation started way back in 2008. I just got fed up with being in debt. Back then I had a few types of debt: a credit card debt that was nearly RM$10,000 and a car loan with about RM$10,000 or so left.

And of course, the giant one was my housing loan of RM$120,000.

I never searched for early retirement because I just thought it was impossible for me.

Heck, because I loved my job so much then (I was a journalist for Malaysia’s then largest English daily), I thought it was crazy to kick back and do nothing. I didn’t have a desire to be an entrepreneur, but I certainly had a desire to live the life I didn’t want to leave – and I was living it. I was incredibly fortunate to land my dream job so early in life, and in a fantastic company with great bosses and colleagues at that.

But by 2008, I could see storm clouds in the horizon. Media companies were failing in the Western world, and I knew that Malaysia’s media would not be far behind. I began thinking about how it would be like to lose my income with all that debt. The thought left me terrified.

Then I came across Mr Money Mustache’s blog. And he made me think – is it possible for me to do the same?
 
The thing was, I was a generalist and we generalists do not earn big bucks. It would seem that people in the FIRE movement, the successful ones that crossed the finish line, worked in software, were bankers or cashed in stock options.
 
So I sort of resigned myself to the fact that I will probably retire at age 55. In my country, people retire at age 60 now, but I’m actually eligible to withdraw my retirement savings at 55 because the law came into effect later.  So I suppose, in that sense, by Australian standards, I get to retire early.
 
Still to be honest, when I discovered FIRE, I kind of got depressed. I was thinking, I’m too old! I discovered this too late. I don;t work in software, I don’t earn big bucks – how am I supposed to do this? I got really discouraged by FIRE. But I’m attracted to financial independence.
 
The FI journey appealed to me then because through FI, I could be free of that fear of losing my job and ending up under a bridge. Yes, so you can say that anxiety was the fire beneath my FIRE journey!
 
I’ve been aiming to be less reliant on money since 2008.
 
So, after paying off my car loan, and my credit card debt, aside from a few credit card debt relapses of a few thousand, I never got back into commercial debt.
 
Well, except for that time when I came back to Malaysia after living in Australia for a couple of years. I had to buy a new car – I am one of those that break the sacred tenet of personal finance: I buy new cars, not old ones.
 
In Malaysia, our cars are really expensive, even second hand cars. I did my research, and I could buy a brand new car for about the same price as a second hand car. A local car manufacturer had released a lower end model whose price was close enough to a second hand car.
 
I wasn’t very happy about getting back into debt, but I had to do what I had to do. I paid that RM$35k car loan off in three years though, so it wasn’t so bad.
 
I became 100% debt free around 2015 when I paid off my housing loan. And it wasn’t something I wanted to do.
 
It was something I had to do.
 
So by then, in 2015 or so, I was already completely debt free, and I was toying with the idea of changing my life so much that I no longer have to rely on money too much.
 
And it was a struggle when I realised that I had not sort of invested correctly or saved as much as I should have.
 
I was kind of sad and a bit annoyed with myself. But I was proud to have come so far too. The solid foundation I laid for myself has enabled me to weather the wild winds of COVID-19 in a better shape than most.

First steps on the path to FI

The very first step I took on the path to FI was to get rid of all my debts (Dave Ramsey way).

Then I simplified my lifestyle and downshifted. I moved from my own apartment to sharing one with my brother. Radical, perhaps, but it allowed me to rent out my apartment for extra cash.

I think that the change in mindset was the most crucial thing in changing my financial situation. You can get rid of your debts but if you don’t change your mindset, you can easily slip back into bad habits.

Embracing minimalism was also a biggie. Believe it or not, I got into debt because I loved books so much and spent almost RM$1k a month on them! With a reporter’s tiny salary, it wasn’t wise. I also loved eating out all the time.

Minimalism helped shift my mindset so that I don’t feel deprived living a frugal lifestyle. In fact, I rather enjoyed it! But sometimes I take it so far that my parents think that I save too much.

getting started checklist

Feeling Overwhelmed?

Use this FREE Checklist to start your journey to Financial Independence

DOWNLOAD NOW

How far along the path to FI am I now?

I guess I am now working towards total financial independence.

I would like to build my passive income to a point where it covers my basic living expenses. Theoretically, I’m already there, because if I could rent out my apartment completely, it would cover my basic expenses due to the fact that I have very low living expenses.

However, I’m not comfortable with just relying on one source of income, so I’m planning to diversify my income.

How do I feel now? Sometimes I feel a bit depressed. Knowing how far I have to go. Sometimes, I just want to be financially independent now, because it has been such a long, long journey.

I started this in 2008 and sometimes I think, my goodness, you know, when will this journey end? When can I finally relax?

I’m pretty hard on myself. I don’t really know how to enjoy the journey, I’m afraid!

Still, COVID-19 taught me that I have established a strong financial foundation that enabled me to weather a brief period of uncertain income while others were suffering immensely. I remember having dinner with my parents and my Mum said to me “I am so grateful I can buy food without thinking about it. I feel bad for those who have to count every penny and think twice on buying something they want to eat because it means they won’t be able to afford it.”

There I was, with no debt, still able to pay my bills, thanks to some passive income and a healthy emergency fund. So I am thankful for this.

Reaching FI and retiring early

My current financial situation is pretty healthy, I suppose. Back in 2008, I’m pretty sure that I have a negative net worth, but now it is positively positive.

Do I feel confident that I’ll reach FI? I’m not sure. I think I will. If things remain the same and I have a stable income. It’s just that life is unpredictable and saying that it’s a certain thing is foolish, in my opinion. But if things go smoothly … yes, I believe I will reach FI one day.

Am I planning to retire earlier?

I’m probably going to retire at 55 like many Malaysians my age. Though I wonder, with the extension of the retirement age to 60 – whether more will choose to do it later?

But personally, I can’t imagine not working. If I’m going to ‘retire’ it is to retire from the obligation of working a job I do not love for the sake of money.

I’m more of a Barista FIRE fan, or what The Fioneers call ‘Slow FI‘.

It’s hard to wrap my brain around that sometimes because I’m an all or nothing person, but with Slow FI, I realise that I can live the life I want now on the way to financial independence. I’m still trying to figure out how that would work in the Malaysian context (Slow FI-ers tend to work part time, and in Malaysia, quality high paying part time work is rare.)

I would like to fully embrace slow living and dedicate my later years to writing lots of books, self publishing them and serving the community in one way or another. I don’t think I will ever stop working, in that sense.

I see myself running a business without worrying about the money, and that’s the kind of situation I want to find myself in my later years.

I care about living a life that is sustainable and meaningful. And work is a big part of that.

Purple eggplant | Slow FI lifestyle | Late Starter to FI Series #27
Photo by Diane Helentjaris on Unsplash

How my relationship with money has changed

I think I have a love-hate relationship with money.

Before, I used to be more carefree about it. You know, I didn’t care how much I spent. It was all about gratifying my desires at that moment. I didn’t understand.

And then later, money became something I tortured myself with. Debt tortured me. My lack of money made me miserable. I was always anxious about my money situation. Even now, as my financial situation is in the healthy zone, I’m still anxious about growing it!

Still, I’m shifting from that to … how can I use it to bless other people? I’m a Christian and sometimes I think my values as a Christian conflicts with the FIRE ideology of “amassing as much money as you can so you can retire early”. I am inspired by the stories of people like Princess Alice of Battenberg, Theoklitos Proestakis and Robert Greenfield because they make me think: is money really everything? What if I give it all away and live in service of the world?

Not very FIRE-like, eh?

I still have some way to go before having a peaceful relationship with it. But I think I’m getting there.

If I could change anything – I would not hurl myslef in investments I don’t understand. I bought property very young, and it complicated my financial life massively. So much so that my mental health suffered for it. I think that experience drove such fear in investing in me that I avoided it for many years. If there was something I learned, it is this – don’t let other people make financial decisions for you or pressure you into making one. Always educate yourself before making a financial decision.

Specific challenges or advantages of starting late

To accept the fact that we can’t really retire as early as we like.

We may also feel very regretful and upset about the financial mistakes that we’ve made. Forgive yourself.

Also, realise that you’ve tried your best. At least, you are starting to turn it around, no matter at what age.

I’m really grateful that I started my journey in 2008, even if I was in my mid 30s because it really helped me during many financial tough spots.

2020 was a real tough time, wasn’t it? I happen to start a business just when lockdown was imposed, so let’s just say my timing was really crappy.

But, my goodness, I am ever so glad that I took the steps towards financial independence, way back in 2008. As I read stories about people struggling to find work, struggling to pay their loans, I can’t help but feel for them and understand their fear so well. But I am ever so glad that I have options.

How COVID-19 affected my strategy

I used to be a full-on, fast-track, Mustachian who wants to save enough to 100% retire by [insert date here].

I’m more relaxed about it now. I’m embracing the concept of Slow FI, made popular by The Fioneers. My strategy now is to design a life I want to live and slowly make my way towards financial independence.

COVID-19 made me realise that life is short, so I should live my lifestyle now. And that’s why I’m more intentional about the work I have. I’m now working remotely and I realise I really love this.

The COVID pandemic has made me realise that you should pursue the lifestyle you want right now, rather than work at a job that doesn’t give you the lifestyle you can live with.

COVID-19 also made realise that I shouldn’t complete my FI journey at a certain date because life is fluid and flexible. I was in such a rush to get there that I was really pissed off when it derailed my plans! (All or nothing, remember?)

So I’m telling myself not to stress so much about achieving that FI number fast. The slow period of work at the start of the year allowed me to experiment with a new lifestyle. In the day time I would happily toil under the sun in a community garden and in the afternoon I would nap, then write my novels or work on freelance projects. I got to experience retirement in a way, and realised that I am going to enjoy it!

What a rare opportunity to see what early retirement and slow living was like!

So to summarise, COVID-19 pandemic delayed my journey to my FI number. But it also taught me that I needed to be flexible with my strategy, and not to be so bloody invested in that timeline.

And to be thankful every day for what I have.

It haunts me that people force themselves into situations that they hate just to earn that big salary, so they can retire early, but once they reach that FI figure, something happens and they can’t enjoy their retirement.

I’ve had many people in my life who passed away unexpectedly at a young age (one just retired before he died two weeks later) and COVID-19 just emphasised that again for me. So many people are dying prematurely because of a virus. I have been lucky – so, I really need to live my life now.

COVID-19 also taught me to look at my previous decisions in a better light.

See, I did a few things that were not exactly healthy to my financial goals in 2012. I actually moved to Australia to start a new career in the nursing field. During that time, I wasn’t able to invest or save as much as I should because I was investing in my education and my life in Australia.

After returning to Malaysia, I blamed myself for, how to say, throwing a bomb, so to speak, at my financial health. I could have stayed in Malaysia and earned big bucks. In fact, I was offered a very high paying managerial position a few weeks before I was about to fly off to Australia and I turned it down!

But I am ever so glad that I actually took the chance to live in Australia for three years and tried out nursing. I had loads of experiences thanks to it.

Sometimes, it’s not about the money.
 
That time in Australia enabled me to test out a potential career, which was nursing. It also helped me test out a potential lifestyle – slow living in a slow city called Adelaide, working part time and writing my books part time.
 
So yeah, I’m still trying to find my balance right now. Between pursuing my financial independence goals and living a slow FI life.
 
It’s an evolving journey.

 

What's next?

Investing my money.

Okay, like I said, I’m very bad at investing in a sense that I let fear control my actions. I need to know what to do with my investments, basically, or rather, what to do with my property and the cash I have.

So my next step is to educate myself in investing and how to run my passion projects so that it creates income that can support me in my old age.

Back to Latestarterfire

Thank you, Liz for sharing your story.

Like you, I discovered FIRE after I paid off my mortgage and was officially debt free. I understand that fear of investing – which I think is more the fear of making a mistake. And the main fear of ‘what if I lose all my money’ with the implicit understanding that it may be too late to redeem any loss and start from scratch again. Yep, you are right – education is the key.

I love that you are embracing Slow FI and enjoying the journey to FI rather than sprinting there. I know, as a late starter myself, I am very tempted to rush towards the FI target and just get it over with. Who knows how many years I have left to live the good life? But on the other hand, burnout is real and I certainly don’t want to sacrifice my mental health to get to FI quicker. Like you, trying to find the right balance is hard.

I look forward to following your journey … will you or won’t you give away all of your money in the end? That is a hard one 🙂 And in the meantime, enjoy your gardening (I agree it is therapeutic for the soul) and wish you all the success for your business and passion projects.

Are you embracing the SLOW FI lifestyle? Is it too late for late starters to pursue SLOW FI?

Where can I send your
Monthly FIRE Goals Plan?

By signing up, you’ll also be added to my newsletter

You can unsubscribe any time, I promise.