You may be wondering how it is that we are traveling all over the United States in our 30’s/40’s, without jobs. No, we didn’t win the lottery or recieve a million dollar inheritance. But we have been both lucky and privileged along our journey, and we’ve had the good fortune of receiving some financial gifts from our families. So, the short answer is we have achieved “FIRE” or “Financial Independence / Retire Early”. In this post I’ll give a little longer explanation of what that means, and how we got there.

FIRE

FIRE is a catchy name and acronym for a concept that has existed for about as long as money. The idea is to save enough money so that you are no longer required to spend your time working to support your lifestyle. In other words, you are Financially Independent. Once achieving that, quitting work and Retiring Early (anytime before traditional retirement age) is an optional path that you may or may not choose.

The thing that is unique about the recent FIRE movement is the goal of achieving financial independence at an early age, like in your 30’s, 40’s, or 50’s rather than your 60’s and 70’s.

There are a number of approaches to building up your savings in order to reach Financial Independence (FI). When considering a financial strategy, some people choose real estate investing, others entrepreneurship, and some aggressive saving and investing. There is not one single correct path, but for us, we chose that last one.

In 2015 we made a choice to pursue FIRE using the principles outlined in the blog post The Shockingly Simple Math Behind Early Retirement by Mr. Money Mustache. The basic idea is that “savings rate” is key to achieving FI, and optionally RE. In other words, how much of your income are you saving and investing versus spending. The higher that number is, the faster you will achieve financial independence. This may sound obvious, but most of the financial industry will tell you that your retirement nest egg should be calculated based on your income. When you take a little time to think about this, it makes little sense. You need an investment portfolio (or sufficient cash flow), that will support your living expenses. Expenses are often related to income, but they don’t have to be! The trick to reaching FIRE is to widen the space between your income and your living expenses, and invest the difference wisely.

After Kristy and I discussed these ideas, and agreed to pursue this approach to our finances, we began to implement a series of actions and changes to optimize both our expenses and income. While Kristy and I had both been financially “aware”, we had each made our fair share of financial mistakes. Luckily, we did make a few good choices along the way too, so we were in an ok place to begin with. The changes we made did not happen all at once, but rather took place over several years and compounded upon each other. Some of them were big, others small, but all in service of the goal of achieving FI. The Aggregation of Marginal Gains post from the folks at ChooseFI does a nice job describing how multiple changes over time can lead to big outcomes.

Expenses

Here are a few of the more notable items that have contributed to our success in controlling and reducing our expenses:

• Financial Tracking - Once a month I produce our family financial report. We track all of our income, expenses and investments meticulously. I believe that fiscal awareness, and more importantly, a shared financial reality with Kristy, has been a major factor in our success.

• Cost of Living Areas - Kristy made a conscious choice to move from the super high cost of living city of San Francisco to the lower cost of living area of the Twin Cities in Minnesota. She even nabbed herself a promotion and salary bump for moving to a corporate job in the process.

• Housing Costs - Before meeting me, Kristy bought a townhome that was well below what the bank said she could “afford”. We still live in that townhome today. We chose not to move to a more expensive home when we were each promoted, or when Owen was born. I wasn’t quite so savvy in my real estate purchases, but that’s a topic for a different post.

• Vehicle Costs - Several years ago, I was in a relatively minor car accident, but the insurance company deemed my Hyundai Sonata not economical to repair. Rather than buy another vehicle, we decided to just be a one car family. That was in 2017, and we still only have one vehicle to this day. The savings from reduced insurance, gas, etc has been substantial.

• Food & Dining - Good, healthy food, and social time with friends and family is important to us, so we optimized for this. We spend deliberately, but not restrictively, on food and dining.

• Debt - We committed to being a debt free family. Step one was eliminating all “consumer debt” as fast as possible (credit cards, car loans, etc). When we got married we agreed to manage our finances jointly, and with our powers combined and a laser focus, we knocked this out quickly. Step two for us was to pay off our mortgage. This isn’t for everyone, and the math might say otherwise, but for us it was the best thing for our family. Since Kristy had made a great decision with the house she bought, we were able to pay off our mortgage in record time. The feeling of freedom and security is indescribable.

• Practice - We “practiced” big financial changes. For example, when we decided that Kristy would stay home with our son Owen after he was born, we “practiced” living on only my income for about six months. We invested 100% of Kristy’s salary during that time. This made the transition to one income totally seamless, with the added bonus of super-charging our investment contributions.

Income

So what about income? Through a combination of hard work, luck and privilege, we were able to achieve higher than average incomes. I chose the route of Information and Digital Technology at large corporations. Kristy chose to be a rock star Executive Assistant, working with C-Level executives (Chief Marketing Officer, etc). Both of us made conscious choices in our careers to pursue additional responsibilities and actively develop ourselves, so that we could achieve promotions and/or higher salaries. We also both independently made the decision to uproot and move to a new state in search of better career opportunities, which paid off for both of us. All of these choices contributed to us achieving higher than average salaries, which we then turned around and invested.

Any financial windfalls we received, we invested. Both Kristy and I received bonuses, promotions and other unplanned financial boons during our journey toward FI. We would celebrate these modestly, and invest the remainder in either debt payoff or in our portfolio.

Investments

And how about investments? Here is the high level overview of our investment strategy.

1. We roughly subscribe to the 4% “rule”. Put simply, this means that on average, and in the long run, a broad-market, U.S. based, stock-heavy portfolio will return around 7-10% annually. So, if you can arrange your annual expenses to be 3-4% of your portfolio, you have a high probability of outliving your money. There is a lot of nuance to this, and a few exceptions, but that’s the idea. We also bake in some flexibility to our plan.

2. As for investment strategy, we generally agree with J.L. Collins and his Simple Path to Wealth. We invest in low-fee, broad-market, domestic index funds, preferably Vanguard’s VTSAX or whatever S&P index fund is available in a given investment account. While we were in the accumulation phase (still had income coming in) we invested as much as possible as soon as possible, and we plan to leave it there “forever” (or until we need to sell it to pay for living expenses).

3. We prioritize funding tax advantaged accounts like 401k’s, HSA, and IRA’s. Whenever possible, we max these out before funding taxable investment accounts.

That’s the gist! I may cover our investment strategy in more depth at some point, but if you were curious about our approach, the above should answer most questions.

Disclaimer: The above investment strategy has worked for us so far, but we might change it at any time. It may or may not work for you. For the most part, I believe you should educate yourself and manage your own money, but if you are not comfortable with that, talk to a professional!

Financial Planning for Travel

And finally, the actual trip! We have been planning this grand RV adventure for several years. To maximize enjoyment and minimize risk, we decided to build up our cash savings. The cash savings we accumulated will fund the majority of the planned expenses for the trip. Additionally, we have rented out our townhome while we are away. The rental income will help offset expenses while on the road. Ideally, we won’t need to sell any assets (stocks) to fund our planned trip.

Are you still with me?

Whew, that was a lot! If you made it this far, kudos to you, here is a fun picture of Owen caring not at all about money as your reward.

Feel free to leave us your questions in the comments, and we’ll try to answer them…when we are somewhere that has internet and we feel like answering comments rather than hiking ;)

P.S. This post title is a nod to the fantastic Wait But Why blog. If you haven’t already, go check it out :)