Category: Money story

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Late Starter to FI Series #36 – Catching Up to FI

image of headless medical people holding stethoscopes

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

 

Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases. Thank you for your support

image of headless medical people holding stethoscopes

I first came across Bill while listening to the Earn and Invest podcast by Doc G (Jordan Grumet) –  Episode 361 – The Consequences of Being Unconscious With Your Money.

A lot of what he shared resonated with me as a late starter – how backloading our finances is so much harder than frontloading it when younger. And the guilt of not being better with money earlier in life.

So I reached out to ask if he would share his story here. Thankfully he said yes!

You can reach Bill at two Facebook groups he administers – Catching Up to FI and Financial Literacy Project

And now over to Bill …

A little about me

My wife and I are reasonably high income physicians, in emergency medicine and psychiatry. We’re empty nesters now, in our late 50s and living in Tennessee after a long chapter in Chicago with our Aussie Labradoodles.

Lightbulb moment

I only woke up to the notion of financial independence at age 50. I’d been asleep at the financial wheel and almost crashed. It had been a 20-year Rip Van Winkle slumber. I realised suddenly that I had an irresponsible, unconscious and unintentional money mindset.
 
I could offer plenty of excuses, but they don’t make me feel better. Shame, grief and disbelief overcame me initially. At times, regret still haunts me. We had lost so much time without taking care of our future.
 
An acute financial depression ensued. I felt panicked and lost. Our financial realisation arrived simultaneously with family health issues, transitional job stress, downsizing and a growing awareness that I had a conflicted relationship with money.
 
The weight of all this nearly led to a mental breakdown. Yet my tale is an optimistic story of recovery, thanks to a dramatic change in our financial attention and direction.
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The early years

As is often the case, our relationship with money was forged in childhood. I grew up in a middle class patriarchal household. My mother was a nurse and then a stay-at-home mum. My father was a state-employed physician and sole breadwinner. My parents divorced for many reasons – money among them. We had enough, yet were led to feel like we lived in constant scarcity.
 
Neither my wife nor I had any constructive money behaviours to model. There was also an utter lack of formal personal financial education. We learned to care for others without learning how to care for our financial selves. Somehow, it always seemed there would be a time to take care of this “later on”.
 
We exited medical school in our early 30s. We had no idea how to allocate the money from our first real paychecks. I now know the recipe for financial independence. Start early. Insure your human capital. Increase your income. Spend less than you earn. Save the difference. Avoid consumer debt. Invest in a simple portfolio of low cost index funds. Let compounding work for you.
 
It’s simple but not easy. We didn’t know any of it at the start. Immediately out of our residencies, we started a family. We were blessed and overwhelmed with fraternal twin boys. One of them had significant developmental challenges requiring years of intense focus. Happily, in the end, our concerted efforts paid off.
 
We bought a big doctor’s house and new cars. We hired high-cost financial ‘advisors’, among them insurance salesmen. We established an inflationary lifestyle that led to a paycheck to paycheck existence. We spent first and saved the leftovers.
 
Who knew what dollar cost averaging was? There was a never-ending litany of distractions from our money managers. It’s scary for me to think how common our story is, especially among late starters to the financial independence movement.

Mistakes along the way

Our biggest mistakes happened during the Great Recession. We completely renovated our “forever” home in 2007. Housing money was cheap and plentiful then. By 2008, we were suddenly underwater on the mortgage and house-poor.
 
In addition to our paltry savings rate, we panicked and sold stocks. Committing a cardinal financial sin, we “de-risked” our portfolio at the worst possible time. We missed out on a significant portion of the subsequent bull market recovery. Our non-fiduciary advisor just let us do it. We had no idea what we were doing.
 
In the end, we emerged from a 20 year wind tunnel of spending with less than $1 million in savings. It was 2016, and we realised that our retirements loomed ahead. At age 50, ignorance was no longer bliss.
Luxury speed yacht near tropical island in Miami, Florida
Not Bill's actual boat!

First steps on the path to FI

I went down the investment book, blogging and podcast rabbit hole. Analysis paralysis set in for a time. I wished someone had created a personal finance education platform just for physicians.
 
Then I discovered it’d been done. Driven by his passion for giving doctors and other high income professionals a “fair shake on Wall Street”, Jim Dahle had already created The White Coat Investor.
 
With this knowledge now in hand, the race was on to take over our financial lives. We fired our financial advisor from the big private bank. We moved our investments from actively managed mutual funds to passive index funds at Fidelity Investments and Vanguard Group.
 
We left only our checking accounts at the bank. We opened a high yield savings account at Ally for our emergency fund, and created various savings funds for the intentional needs and wants that we’d identified as still worthwhile.
 
Our gains were still punctuated by mistakes. Fortunately, we had exited a whole life insurance policy and purchased term life insurance. Unfortunately, we had used the proceeds of the whole life policy to pay cost overruns on our home renovations. Fortunately, we moved from Chicago to lower cost Tennessee. Unfortunately, we’d build our own house there.
 
Mistakes are best made when you’re young and have time on your side to recover. We certainly made mistakes, but now our time to recover was dwindling.
 
We finally realised how leveraged our lives had become. To get out of debt and reverse the tide, we shoved our savings rate from the single digits to 35% to 40% of income. We saved as much as we could without eating rice and beans. Painfully, in 2019, we downsized from our costly custom home.
 
We kept shedding our materialistic weight, including selling our pleasure boat. Appropriately named YOLO – you only live once – it described our old way of living.
 
Lifestyle inflation was insidious and easy. Lifestyle deflation is much, much harder. Yet, amazingly, our overall quality of life isn’t much different than before.

Can you wake up too late to catch up?

Sadly, I think the answer is yes.
 
It’s never too late, however, to take control of your financial life. If the best time to plant a tree was 20 years ago, the next best time is now.

Our relationship with money has changed

We just don’t let money slip away any longer on the mindless consumption promoted by our culture. Those dopamine hits are short lived. The Joneses may appear rich, but they probably aren’t wealthy.
 
We’ve chosen to enjoy the present, but not sacrifice our future to it. I know that’s not assured, however. From my work in the ER, I know that planning on those future golden years can be an illusion.
Lily and Rudy

Will we reach FI?

Today, we’re well on the way to financial independence. The goalposts still move a bit, but right now, 63 to 65 is our target retirement age.
 
Critical to achieving this goal is following our formal investment policy statement and an intentional life plan. Even with all our progress, our current phase of mindful living can still feel like the hardest part.
 
Why? The problem lies with our late start.
 
It’s hard to stay on the straight and narrow when we’re surrounded by a community of early starters and early retirees. We have some ground to make up, while our peers can be more relaxed with money now.
 
We’ve amassed roughly 3.5 times our net worth since 2016. Our home’s value makes up 20% of this total. College for our twins is paid off. Thanks to a modest windfall, we paid off the last of our debt a few years ago – and treated ourselves to a hot tub.
 
A debt free life has brought extraordinary peace of mind. The hot tub is good for our aching backs. Our nest egg still needs to grow a bit to meet our anticipated retirement spending. We are works in progress, but now it feels like we can get there in time.
 

What's next?

Stay the course. Stick to the plan. Which is easier said than done. We have less time to recover from mistakes, and yet we still make them.
 
The question I often ask is this:
While late starters like us are probably the predominant demographic in society, why do they make up such a small part of the voices in the financial independence community?
 
We’re the silent majority and should speak out to help others that come after us. There’s no better time than now.

Back to Latestarterfire

Thank you so much, Bill for sharing your story.

“Lifestyle inflation was insidious and easy. Lifestyle deflation is much, much harder.”

This is so true and is a hard lesson for us late starters to learn. After years of living above our means or constantly upgrading our lifestyle because we’ve worked so hard to earn our money, it’s a shock to the system to have to tone it down.

Staying the course now is hard, I agree. Especially when you see many others in the community who are much younger retiring early. But I firmly believe that your time will come too. You’ve already made so much progress and being debt free will free up so much more to shovel into investments and savings.

I look forward to listening to your new podcast with Becky – Catching Up to FI. If there are any readers who’d like to participate in the podcast, please reach out to Bill. The more we share our stories, the more we spread the message that it’s never too late to take control of our finances and save for retirement.

 

How has lifestyle inflation affected your ability to save for retirement?

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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

 

Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases. Thank you for your support

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?

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