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2020 Reflections and Intentions for the Year Ahead

January 1, 2021 by CM Leave a Comment

2020 needs no introduction. It was the year of the burning dumpster fire that scorched all four corners of the earth. It was nuts.

But amidst the craziness, there were so many little blessings. Rather than focusing on the pain this year caused from a global health crisis to civil unrest and a bizarre election here in the US, I choose to ponder all the goodness that also happened.

On the Home Front

As many of you know, my husband and I moved to Austin, Tx from the SF Bay Area late last year. While I still think that was a great decision for many reasons (ie, quarentining with a pool), it was also very isolating. We don’t have any friends in Austin, and once the pandemic hit, we weren’t out making any new ones, either.

While I don’t love Facetime and Zoom discussions, I’m so grateful that this technology exists. Not only do I have regular Zoom chats with my friends from all over the US, I also had 2 virtual surprise birthday parties when I turned 50 in May. It was the weirdest, most wonderful birthday ever.

Expanding our Family

This year we started fostering with the Austin Pug Rescue. So far we’ve taken in 4 dogs. Two were senior pugs that we had just for a night and the others were Chihuahuas. The first one, we named Tango (he’s still available for adoption if you’re local and looking for a love-bug). Our last one was a #fosterfail.

Little Jack is a 15 year-old PomChi that was surrendered with his sister (who is a pug). The rescue couldn’t say no to his little face, so they took him in and I agreed to foster him.

He was a mess when we got him because his teeth were so rotted. But the Pug rescue paid for his dental work and today this spunky monkey runs around our house stealing snacks and cuddles.

I’m so grateful we adopted him and I’d encourage anyone to adopt a senior pup. They’re a delight to hang out with, they sleep through the night and they know exactly where to do their business.

Money & FIRE

From a financial standpoint, 2020 was very good to me. Despite pulling a bunch of money out of the market in March (yep, I did that) only to buy back in at higher price, we still saw a sharp increase in our wealth.

Our house also went up 11% in value according to Zillow, because Austin is a hot destination right now and there’s not a ton of inventory. In fact, I’d say we’re up more than that based on the upgrades we made this year to the kitchen and bathrooms.

We had the cabinets painted and replaced the countertops.

I also had a great year with my consulting practice and my wellness blog brought in a profit for the first time! That’s what I am most proud of since I’ve been blogging for about 12 years, for free.

My desire for FIRE Sizzled out

Oooof, this is a hard thing to talk about, but this year showed me that I don’t have a lot of things I’d rather be doing than working. I want to say that’s a bad thing, but I’m not sure.

When I am writing, I feel 100% my most creative self. But the fact that I’d rather be pounding away at my laptop than traveling, seeing friends and family or even floating about in the pool is a little disconcerting.

This year has shown me that I need to find value in doing non-productive activities… ones that don’t promise more money, better health or career advancement.

In fact, listening to the book “Do Nothing” by Candice Headlee has made me painfully aware that I’ve fallen deep into the “you’re only as good as your paycheck” mentality and that’s not okay.

I’ll write more on this in January, once I’ve fully processed what all this means, but I think a mindset shift toward more living and less earning is in order.

The one place I felt completely relaxed this year – Anna Maria Island, FL.

Intentions for 2021

I heard one of my favorite people on Instagram say this and it landed so profoundly for me, I had make a meme out of it…

This year, I picked up a lot. Most felt important at the time, but in retrospect, very little of it actually was.

For 2021, I don’t have any goals. Ironically, aside from seeing my business continue to grow, I have everything I’ve ever dreamed of – family, friends, health, wealth and a home I love being in. I want for nothing, and yet, I am still not at peace.

I believe that a profound sense of peace is possible for all of us, but it won’t be found in a pair of Lululemons. Peace happens when we are true to ourselves 100% of the time, and when our choices and actions match our values.

So that is my only hope for the year ahead. To live in complete alignment with my truth, so that I may be at peace.

I wish that for all of us.

Namaste and have a happy, healthy, prosperous year ahead.

Moving to Austin (from California)… One year later

November 29, 2020 by CM Leave a Comment

It’s been a while since I updated ya’ll on our move from California to Austin. It’s hard to believe we’ve been here for a year already! Today I’m going to cover some common questions I get from readers. Hopefully it will help make your decision a little easier.

Living in Austin – One Year Later

It’s actually been a little over a year now, but who’s counting? With 14 months of Austin living under our belt, I can safely say I’m really grateful that we moved here for several reasons:

Our home is perfect for quarantining. We’ve spent a good portion of the summer, bobbing around in the pool or playing in the garden (my new favorite hobby).
It’s really easy to socially distance in the burbs. We live in a great neighborhood where people respect each other by keeping a safe distance when walking in the neighborhood. Most of us don’t wear masks when we’re outside, but we’re far enough apart that it’s safe.
The reduction in the cost of living has enabled us to save a TON more while still maintaining a good quality of life.
We have the opportunity to influence the voting direction here in Texas. In California, voting blue is a given. Here, we have a chance to create a purple state. I love that.

The top 10 things I’ve learned in our first year of Austin Living:

People here are genuine and kind.
Austinites really do covet the weirdness that Austin is known for.
The restaurant scene is better than any city in California (LA, San Francisco or San Diego). By better I mean, more interesting, more affordable and more creative.
Not all summer’s are unbearably hot. Our first summer was intolerable. This year, it’s been much better. Although we did have days that hit 100 degrees or more, they were minimal.
Weekend destinations are way less interesting than in California
The bugs are next level here.
Tacos, bourbon and queso are 100% worth the calories
It’s a lot cheaper to have an LLC here than it is in California ($400 here vs $800 there) and not paying state income tax is well, pretty freaking awesome.
Housing is affordable, property tax is not so much.

And the most important thing I’ve learned living in Austin for a year…..

10. It’s really hard to meet new people during a pandemic.

Maybe it’s just me, but I’ve found this to be a hard one to deal with. There are no meet ups, no casual coffee dates or lunches, and no reason to collide with like-minded people. Add to that, we’re all wearing masks these days, so it’s hard to connect with a new person when you can’t see their entire face.

I bring this up as a critical point as most people don’t put enough thought into social connections when making a move to a new city. In fact, studies show 30 to 50% of people who move, often regret doing so.

Let’s face it, moving is hard! It’s also expensive and takes a ton of precious time and energy. On the upside, as my mother always said, you know what it’s like to live where you are, so why not try something new?

Change is good. It challenges you and makes life interesting. I think you just need to be in the right headspace about it.
It also helps not to do it during a pandemic.

Just sayin.

Bottom line on the moving to Austin

It was a good move, even though we both miss our friends. Ironically, even my friends are missing each other because nobody is going anywhere or seeing anyone these days. So we have set up a weekly zoom happy hour to reconnect and it’s freaking awesome.

The other great thing is that this move has essentially made us financially independent. Yep, now we work because we want to (and because there is literally nothing else to do these days).

Being financially independent is a great feeling, but it comes with a contingency. That is, if we ever decide to move back to our beloved California, we will have to give up our FI status.

Bummer, dude.

Should you move to Austin?

I get this question now and again and I always say the same thing…. Why not? Life is short and adventure builds character. I’m inclined to add that California will always be there, but given the fire situation, that might not be the case.

It’s interesting that California and New York have been the top two desirable destinations in the US for a long time, but 2020 has flipped that on it’s head. Now everyone seems to be filtering out of these expensive areas for more space, less cost and slower pace of life.

What about you? Are you a California die-hard or will you opt for something different in the next 12 months?

The FIRE Movement vs Home Ownership

September 23, 2020 by CM Leave a Comment

Lately I’ve been thinking about the FIRE movement and it’s attitudes toward home ownership. Ask any FIRE-driven millennial and they’ll probably tell you that homeownership is not a fast-track to FIRE, but I disagree.

Homeownership has Accelerated my Path to FIRE

In fact, I’ve owned 5 homes (2 in Canada, 3 in the US) and all but one of them sold at a considerable profit. In fact, my back-of-the-napkin estimate is that I’ve profited over $700,000 USD from the combined sale of these homes.

Now, this doesn’t include the estimated $200,000 I’ve invested in home upgrades, most of which happened in our Bay Area home. But those upgrades elevated our Joy Score as well as ultimately increasing our profit. So even at a net gain of $500,000 (total profit minus out-of-pocket investment), that return is nothing to sneeze at.

Overall, homeownership has been good to me.

But what about mortgage interest, taxes and upkeep?

Aside from the cost of upkeep – new A/C units, pool heaters, broken toilets, and the like, which are expenses I would have avoided as a renter, the rest of it is a wash.

Yes, mortgage payments are mostly interest for a long time, but…

I’d still have to pay to live somewhere.

So even though my mortgages, with our historically low interest rates, have cost a lot, especially when you factor in property taxes and HOA fees, I’d still have to pay about the same in rent for the same space.

For example, the last two homes I rented were $3200 and $4200 per month (in LA and Silicon Valley), which combined probably cost us a total of about $160,000 over our 4(ish) years of renting. You know what i have to show for that?

Diddly squat (outside of not being homeless).

Rents Rise + Interest Falls

When my parents bought their first home in 1969 (for $25,000 CAD), the interest rate on the first mortgage was 17% and the rate on the second mortgage was 25%. Crazy, right?

When I bought my first home in 2000, my interest rate was just below 7% and that felt like a really good deal at the time. Last year, we bought the home we live in now with an interest rate of 2.85%. That’s practically free money.

Conversely, when I rented my first apartment in Richmond Hill, Ontario back in 1987 it was $400 a month for a studio apartment. About 5 years go, we were playing $4200 a month for our 2 bedroom condo in Silicon Valley. now, that’s years later and very different cities, but my salary was also a lot higher than it was in 1997.

My point here is that when you buy your home, you lock in the cost of it at a fixed rate. If you stay in that home forever (which granted, we rarely do), you would pretty much have a set living expense until you paid off the home (assuming you have a guaranteed mortgage rate for the lifetime of the loan).

Meanwhile, rents go up. You may aspire to stay in the same controlled place forever, but that’s not always your choice to make. You’re subject to inflation and ultimately you are at the mercy of market availability and cost.

Buy vs Rent? Choose your own adventure

Here’s a fun graph I pulled from the Financial Samurai. It illustrates the increase of rent in the San Francisco Bay Area since 1980. As you can see, it’s gone up, considerably.

Contrast that with the real estate market over the same period of time in San Francisco, and it paints a very similar trajectory, but very different financial outcome.

From Bay Area Market Report (Compass Reality)

I don’t know about you, but I would be willing to eat ramen noodles for a few years to enjoy the increase in home value as a homeowner in SF, rather than succumb to the crazy rental market. Yikes!

Now it goes without saying that SF is a unique market that seems to go up no matter how many fires, earth quakes or recessions it endures. That’s not true of all real estate markets, but more often than not, the most expensive markets are priced that way for a reason. And, they keep going up.

You can Quit like a millionaire, but still own your home

One of the most amazing, yet controversial books I’ve read about personal finance, is Quit Like a Millionaire. This is the story of two Canadian millennials who “retired” at the age of 30 because they had amassed a million dollars in savings.

Based on the 4% rule, they could technically live on 4% of that million dollar investment for the rest of their lives, although I think that’s unreliable math, given how young they are.

The couple also eschews the idea of homeownership as a poor financial strategy, given the high cost of living in Toronto (where they are both from). I would argue that the 2 Toronto homes I sold, and my SF Bay Area home yielded some of my biggest returns.

Because here’s the thing… as I mentioned earlier, cities that are high cost of living, tend to stay that way and retain their value over time.

Finally, the beauty of homeownership is that once you’re in the market, you not only have a roof over your head, you can continue to grow your equity over your lifetime. It’s a win-win.

Real Estate Typically Goes Up

Certainly, this isn’t the case 100% of the time, but based on historical evidence and the fact that nobody is making anymore land, the value of real estate is generally going up.

I recognize it’s not easy to get into real estate these days. Nor is it the best choice for everyone. But if you can swing it, and you enjoy investing your time and energy into maintaining it, homeownership is now, and probably always will be, a good investment.

(I caveat this by saying, I am talking about a primary residence. I’ve owned a vacation home and lost money on it, but the memories created there were 100% worth the financial cost).

How to FIRE with Homeownership in 2020

Honestly, I have zero game when it comes to real estate strategies, but I do think there’s a value in investing in emerging real estate markets. Since moving from the Bay Area to Austin, Tx, we’ve seen a steady rise in the projected value of our new home.

Interestingly, even though the pandemic has hit the Bay Area very hard, the home we sold last year has grown even more than our Texas home!

Not only do I believe in real estate as a long-term strategy, but given the pandemic, I think there’s a general trend toward investing in our homes, since it’s the only place we can really enjoy right now.

home ownership - picture of a chair in a living room — *Pin for Later*

Final Thoughts

I’m sure there are lots of great counter-arguments to what I’ve written here, but there’s one underlying reality that makes me continuously bullish on real estate – home is important.

I’m all for nomadic, adventurous periods in life, renting when it makes sense and having flexibility to consider every housing option possible, but as someone who has traveled the world more than once, I can honestly say, nothing is more valuable than the security of home.

Quit Like a Millionaire (just not at 31)

July 28, 2020 by CM Leave a Comment

I recently picked up the book Quit Like a Millionaire, and next to Glennon Doyle’s Untamed, this is by far the best book I’ve read this year. While I don’t agree with all of it, it certainly taught me new some new life-changing money strategies (that I’ve already started using).

I was schooled in tax optimization

Authors Kristy Shen and Bryce Leung shares some basic personal finance advice that completely blew my mind. I’m embarrassed to admit that after 3 years of writing a personal finance blog, that I had no idea how to tax-optimize an investment portfolio.

You want to know why I didn’t know these strategies? Because it’s #boringAF I mean, seriously – who wants to learn about this stuff?

But Kristy makes it easy. So easy in fact, that I had to snag the Kindle version after listening the audiobook, just to confirm that I wasn’t misunderstanding how easy it was. Bonds go in tax-advantaged accounts, and stocks go in after tax accounts. It’s that simple.

Don’t worry – I didn’t give away the ending.

My eyes were opened to traveling as an affordable lifestyle

Now, in general, I can see that a nomadic lifestyle is an affordable way to live, both by living in cheaper cost-of-living areas, and also because of some of the tax advantages it affords. However, this is where we start to diverge in our thinking.

In her book, Kristy breaks down how much her and her husband Bryce spent every month while traveling the world. I don’t know what kind of space you can rent in Thailand for $500 a month these days, but her per-night cost for housing while in the US was $25. That makes no sense to me unless you’re living in a hostel. A really bad one.

So, sure, you can retire to a life of budget travel and your million dollar portfolio might last forever. But the charm of traveling on the cheap wears off eventually – trust me on this.

Personally, I’d much rather work a bit longer and retire to a more sustainable lifestyle that I’ll feel comfortable with at every stage of life. Hostel-style travel isn’t as fun when you’re in your 50s when a good night sleep can make or break your entire day.

Bryce and Kristy’s Million Dollar Portfolio

Before I go further on the book, let’s break down the math of this couple’s retirement portfolio. At the time that they retired (at the age of 31) it was $1 million dollars, and based on the 4% rule, they could draw 4% of that million dollars every year and never have to worry about it running out of money.

While I believe the 4% rule has some merit (based on a study done at Trinity University in San Antonio, Tx in 1998), I don’t believe $1 million dollars or, therefore $40K per year is enough to retire with.

Even if you are able to avoid taxes completely on that income, $40K doesn’t afford you much. In fact, it’s barely double the poverty limit here in the US.

Who wants to sign up for a life like that?

It’s the same problem I see with most 30-something early retirees. They have not thought through the cost of aging, their potential for not wanting to count pennies for their entire lives, or what they’ll do if they need a hip replacement when they’re 58.

But that’s a conversation for another blog post, so let’s get back to the book.

Buying a house is not an investment.

That’s hogwash.

A lot of millennials are claiming this, and it’s just wrong. Sure, there is risk when buying and selling a primary residence, but as long as you’re willing to stay in it for the long term, you can still make money.

Kristy argues that the cost of ownership far outweighs the advantages, and that might be true in Toronto, the city we’re both from, but that’s not the only place to buy a home.

In fact, there are plenty of places where you can buy a home for an affordable price where the potential for appreciation is great. Also, keep in mind that here in the US, you can write off a portion of your mortgage, which you can’t do with rent.

Oh speaking of rent, that can be just as expensive as home ownership over the long term. That’s another thing the author seems to leave out – that whether you buy or rent, you still gotta live somewhere so that expense isn’t going away (like, ever). Unless of course, you’re opting for hostels or living in your parent’s basement for the rest of your days.

Anecdotally, I have owned six homes in my life, and only one of them was sold at a loss (we sold it for $40K less than we paid for it). But that was a vacation home, which is almost certainly not a wealth builder.

Every other home I’ve sold has seen a significant increase in sale price, from the lowest being $40K CAD for the sale of my first condo, to over $300K USD with the sale of my last house.

Now granted, in each of these scenarios, there were a lot of expenses with ownership, but they were never more than what I would have paid in rent for the equivalent space.

Bottom line, homeownership is still a great way to build wealth, especially if you’re willing to roll up your sleeves and enhance the value of your home while you live in it.

Don’t choose an educational path based on passion or interest

Kristy shares some great stories about her experience growing up and how it shaped her view of education and career training. As a result of growing up poor, she opted for an engineering path, not because she was passionate about it, but because it had the best income ROI.

While I think it’s smart to be wise with your university choices, I don’t believe that you can accurately assume a long term ROI based on a starting salary coming out of school. For example, while it’s true that STEM careers start out higher, they tend to even out with liberal arts degrees as careers progress.

Also, why go to school just to study something you’re not interested in, just to get a higher paying entry-level job? This is the kind of thinking that makes people hate working and naively aspire to retire early in the first place.

What if instead, you take an educational path that suits your strengths and interests and then aim to financially optimize your life around that career? A life well worked is a life well lived.

To go balls-to-the-wall for 7 years in a job you hate, only to retire out of it early and live near the poverty line for the rest of your entire life, sounds like a ridiculous waste of life.

surf board after quitting like a millionaire

Quit Like a Millionaire is one of the best personal finance books – here’s why

Even though I don’t agree with a lot of Kristy’s points, I still think she makes some powerful arguments that will inspire her peer group to reach for more. However, I also think she lacks the life experience to assume her retirement plans are sustainable.

The other reason I loved this book is that it’s one part learning, one part story. I really resonated with the author’s early life stories. I’m also a child of immigrants who grew up in Toronto with an ingrained mentality of lack and it has shaped all my life choices as well. Every fear she talks about I can identify in my own personal experience.

And that’s what I loved most about this book. She draws you into a story and guides you on a journey of what’s possible while subtly sliding in ultra-boring topics like tax-optimization in the most creative, non-boring way.

That’s not an easy thing to do!!!

Is this book just for millennials?

It’s clearly written for a younger audience, but there’s something for everyone to learn from it (back to that tax-optimization again). The funny thing about money is that at some point, you assume you’re old enough that you should know how to manage it, but that’s not the case. It’s a learned skill and you simply don’t know what you don’t know.

So to that end, I’d recommend this book to anyone who wants to learn about the potential to grow their personal wealth, regardless of age.

Why you shouldn’t retire at 30

July 26, 2020 by CM Leave a Comment

My head is exploding as I read about yet another young fire blogger hitting her FI number enabling her to retire at 30. I’m virtually fist-pumping her while also wincing at the same time.

Why Anyone Who is ABLE to Retire at 30 is a Badass

Assuming you built your wealth yourself, if you can amass enough money to live a comfortable-for-you lifestyle to never work again, you are a total badass.

Most Americans don’t have enough money to sustain themselves past one missed paycheck, yet here you are, optimizing your income and spending so that you can live a life of freedom. This takes years of discipline, vision and a level of maturity most adults don’t have.

Also, to retire in your early 30’s means you spent a good portion of your 20s, focused on earning and saving, This is a time when most of us are still dancing on bars and dropping a good portion of their meager salaries on booze (or was this just me?).

Personally, my 20’s were a write off. I was a late bloomer, so didn’t even finish my education until I was 27, then I started my first job with a wackload of debt and a brand new car loan.

I was also still living with my mother.

Savings? Nil.

Debt? About $40K.

So for you to retire at 30 having amassed enough to do so is an achievement that I consider monumental.

Hats off to you!

I still don’t think you should retire at 30

Now that you know how highly I think of you, here’s why I wince at your choices and rationale.

Deciding at 30 how you will need to live off when you’re 50 and older is naive. I know you’ve spent a lot of time thinking through geo-arbitrage strategies and sequence of return risks. You’re smart, and you’ve no doubt thought through a plan for any conceivable situation (including a global pandemic).

However, there’s one thing you don’t have yet – experience with aging.

When you retire at 30, you are projecting a lifestyle onto your older self who may not feel the same way you do now about living on the cheap.

As you age, be prepared to have…

Less energy to travel and ‘geo-arbitrage’ your way out of bad financial years.
Less tolerance for change and uncertainty
Less ability to sleep well in new or strange places
Less tolerance for things like flying (especially in economy class), living in 3rd world countries or trying to navigate medical bills in a foreign language
Less physical strength, mobility and mental acuity

You may also have….

A desire for more comfort and safety…to grow roots or get a dog.
A curiosity to try things that cost money – golf, tennis, archery, boating, crossfit (who knows)
A marriage that falls apart, a child, or both. Or multiples of both!
An unexpected curve ball like a lawsuit, robbery or worse – hopefully none of these happen, but expect life to serve you a shit sandwich or two

When you choose an income for your 50+ year-old self, 20 years in advance, you put her into a box. A box where she can’t experience many things life has to offer because she’s resigned herself to a small budget she chose when she was younger and a lot more naive.

But that’s not the worst of it.

What happens if god-forbid, you get a cancer diagnosis in your 60s? Your parents are gone, you have no kids, and you have to live in Thailand because you don’t have health insurance in your home country.

Aging isn’t just about catastrophes. It’s the little things…

I think the most surprising thing I’ve noticed about aging isn’t big things like hip replacements or a heart attack (I’ve never had either). It’s the little things like declining eyesight and memory.

Everything hurts a little more than it used to, and I need a chiropractor more often. I’m also more sensitive to noise, light and the things I witness around me.

Keep in mind, I’m only 50 and I’m very fit, healthy and active, so its not as though I’ve spent a lifetime neglecting my health. I am maniacal about my health, but even still – you can’t escape the aging process.

While I do want to spend my retirement years traveling, I couldn’t imagine doing it without a few more comforts than I would have needed in my 30s.

I hope you’ve budgeted for aging, because it ain’t cheap

I certainly don’t want to discourage anyone from chasing financial independence and enjoying a life of adventure and authenticity. I 100% think you should do that!

But what I also know, is that you simply have no idea what your needs will be when you get older. That said, I’m also pretty sure, your $40K per year budget probably won’t cover them.

I can always get another job

Can you? Speaking again from the perspective of a 50-something professional, finding work isn’t as smooth sailing as it is in your 30s. You’ve been out of the workforce for 20 years. Your skills are dated, you’re not even sure you could tolerate a boss again after years of freedom.

And then there’s that other niggly issue… agism.

You may be able to jump back into the workforce in the next 5 years completely unscathed if you need to, but don’t assume that will be the case when you’re getting up there in age.

I can’t predict what the world will be like when you turn 50, 20-ish years from now, but I can tell you what it’s like right now. Women in their 50’s are the least likely to land a job, especially during and after a recession. Their highest earning years are now behind them, and that’s assuming no gaps in their resume.

You also won’t have many professional contacts if you leave your career in your 30s. Most people find their next gig through extended professional networks. You will still no-doubt have a wonderful network of fellow early retirees and expats, but they’re going to be less useful when it comes to a job search.

So if you shouldn’t retire at 30, then when?

There’s no exact answer here, but I would say that you either need to be a little older or a lot wealthier than just having a $1 million portfolio. Projecting a $40k annual income for yourself (based on the 4% rule), for the rest of your life, seems absolutely terrifying to me.

I can’t say what’s right for anyone else, but I can say that if my 30-year-old self decided that I wouldn’t need anymore to live on then what I was spending in that moment, I would not be happy today.

Not only would I feel incredibly limited financially (and therefore constantly stressed about money), I’d also feel as though I made a poor decision based on a limited life experience.

When I was 30, I was making $60K a year working at JDSU, a company that anyone with an interest in tech stocks at the time would be familiar with. I was lucky enough to have a ton of stock that had not yet tanked. For a 30-year old, I felt rich! Looking back, I really wasn’t.

Your experience with money and life are extremely limited at 30.

As a 50-year-old, I could live off a meager $60K a year if I had to, but it wouldn’t be fun. I’d have to think through every purchase carefully and I certainly wouldn’t own my own home.

But more importantly, I think a lifetime of minding my money to stay on budget and constantly being nervous about having enough in down years would make me more miserable than having to work at a job I didn’t love for another 10 years.

I still think you should reach for FI

Saving enough to cover your basic living expenses for the foreseeable future, is a such a smart move. It gives you the power of choice in so many ways, which is what financial independence is all about.

However, nothing can prepare you for life the way living does. There are no algorithms that will predict mental health issues, chronic disease, hip replacements, heart break, trauma, divorce, babies, or simply changes of heart. You just have to live your life and let it unfold.

For that reason, I urge you not to toss your hard won career out the window at the age of 30, just because you had a bad work experience. Go part time, find a job where you can work from home, take a few years off or just a 6-month sabbatical.

Whatever you do, don’t assume you know what you’ll want to live on when you’re older. You simply have no idea who that person will be, and she may end up resenting you for putting her in a financial box.

Be well,

Caren

Financial Independence Retire Early – I tried it & I didn’t like it

July 16, 2020 by CM Leave a Comment

Amidst the COVID-scented dumpster fire that this year has been so far, there have been a few nuggets of gold – like having the opportunity to practice FIRE (that’s financial independence retire early – not pyromania) and learning some important lessons.

Dabbling in FIRE

Now, to be clear, I’m technically not retired, although I could be if I wanted to. However, due to the economic slowdown, my consulting hours have been dramatically reduced. On top of that, we just had a week-long company shut down, so I found myself with a lot of extra time on my hands, and nothing to do with it. Normally, I would have planned a vacation, but #covid.

In another life, the thought of no income would have tossed me into pure panic. But because I’ve cultivated some pretty solid money habits over the past few years, I’m prepared for this (and very grateful for it).

Here’s what has saved me financially this year. Some of it was intentional, and some of it was dumb luck.

We offloaded our overpriced home in the Bay Area at the height of the market and moved to Austin. This dramatically lowered our cost of living while improving our lifestyle.
We kept our savings rate high and our spending levels as low as possible for the past 5 years. Embracing quasi-minimalism really helped with this.
My fitness website FINALLY started making some money (and it only took 13 years!).

Fortunately, I’ve been able to weather the lack of consulting hours relatively well, financially speaking. That said, there’s a mental/emotional impact to seeing my paycheck dwindle that in the past would have really thrown me off my game. Instead, I decided to play a game of “retired-ish” to see what it would be like.

Here’s what I discovered….

I really like the structure of employment

Even though I don’t work full time hours, I do tend to work 5 days a week. If I’m not working for my consulting client, I’m working on this website or The Fit Habit, so I keep myself contained to my office for a good portion of the working day.

But during my time off/FIRE experiment, there was no reason to head to my desk every day. In some ways, this was good. I took longer walks, did some projects around the house and puttered in the garden a lot. But most of it was drifting from one distraction to another.

I actually didn’t enjoy this as much as I thought I would, which makes me question everything I’ve been working towards for the last 5 years.

I also missed my Zoom meetings (<- who am I??).

I am generally not a fan of video conference calls, so to miss them is bizarre. But having those brief social interactions with colleagues before diving into work stuff is actually quite gratifying. So much so, that I actually missed the whole experience (even though I really still dislike Zoom meetings).

I thought only doing the things that made me happy would be awesome, but it wasn’t.

John Kabat-Zinn wrote a book called “Where ever you go, there you are’. I love the premise which is – you can take yourself out of your drama, but you can’t take your drama out of yourself, At least, not without some effort.

So last week, I felt the pinch of that experience first hand. I had all the time in the world to do the things that make me happy – walking, gardening, writing and yoga-ing but in retrospect, I wasn’t dramatically happier because of it. In fact, I was a little bored and aimless.

What this made me realize is that busting my butt to get to this point of being able to FIRE might have been the wrong approach all along. Perhaps just slowing down, and finding work that I enjoy doing so much that I’d never WANT to retire is the smarter goal.

It’s true that if I were retired under normal circumstances (where I could actually leave the house without hazmat gear) my perspective might be different. I’d be traveling more, seeing friends regularly and just enjoying a more active schedule. However, feeling that isolation was a good experience for me because it’s probably a reality for most retired people, at least some of the time.

I’m not putting out the FIRE just yet

I still love the idea of FIRE. Or, in my case FIBTOTRE (Financially Independent But Too Old to be Retired Early). Not because I want to spend my days in down dog or playing in the dirt, but because I so very deeply appreciate the freedom to choose how I spend my time. This is the ticket to funding happy in my opinion – it’s not about ‘the thing’. It’s about the freedom to choose ‘the thing’ (whatever that “thing” may be for you).

Rethinking Work in my post-Financial Independence Retire Early Life

This time off has given me a lot to think about. If I don’t want to fully retire, but rather devote myself to work that I love, then I have a lot to figure out. I like the professional work I do now, but I don’t love it. Never did.

My blog work is something I do love, but the solitude and lack of structure is a weak spot for me that I’d need to address.

What about you? Have you considered slowing down or transforming your professional life as an alternative to turning it off altogether?

If you’re on the path to FIRE, I highly recommend taking a practice run at retirement while staying at home, with absolutely NOTHING to do. It will give you a flavor for the less glamorous side of retirement, for sure.

Moving from Bay Area to Austin? What I wish I knew before I left

July 10, 2020 by CM Leave a Comment

Are you thinking of moving from the Bay Area to Austin? In my last post, I talked about the pros and cons of moving from California to Texas. In this post, I want to drill down a little further and share some of the realities of living in Austin that I wish I had known before we made the move.

For context, we’re about 4 months into our COVID 19 quarantine, so my situation is colored by the impacts of current events. We moved here last fall and focused on getting the house unpacked while working full time jobs and managing part-time businesses, so we didn’t spend much time getting to know the area or the people in it.

Then the holidays hit, and we were here alone. This was the first holy crap moment we had that gave us our first tinge of mover’s regret …

Moving to a new city is lonely

This experience is compounded when you work from home and don’t have kids, so you really have no reason to leave the house. Like, at all.

Fortunately, my husband and I are both introverted, so we don’t require a lot of social time, but we need some! I found it challenging to meet people here, especially since we live in the suburbs where there’s less of a transient culture. Now, compound this with a pandemic and suddenly, life becomes very socially isolating.

It’s true that we would still need to socially isolate if we were living in CA, but at least we would have friends nearby. There is something to be said for having people you know and love close by when there is a heightened risk of getting very sick.

So our first holiday season here was less than memorable, but we were grateful for a few visits from friends here and there.

By January, we were ready for some warm sunshine, so we booked a trip to the Caribbean – somewhere my husband had not yet seen since we mostly vacation in Cabo. We were really excited to try something new, but that brought us to the next issue we had not considered before we moved….

Austin Airport doesn’t fly direct to a lot of places

Now, we don’t travel much for work anymore, so we didn’t think this would be a big deal. However, we assumed our favorite vacation destinations (pretty much any tropical beach) would only be one flight away. Not so.

For our trip to Punta Cana, our only option was to fly through Florida or drive to Dallas (a 5+ hour drive) and fly direct. We ended up choosing the Dallas option because we wanted to avoid an 11 hour flight time (crazy!). That required an extra night in a hotel near Dallas airport on the outbound flight, and a long drive home on our return. Not ideal.

In retrospect, we should have factored in our love of quick and frequent trips to the beach. From the Bay Area, Cabo is only a 3-hour flight (5 total hours door-to-beach) and it’s even less from LA (where we used to live). Now, it’s a full day of travel to sip a cocktail with my feet in the sand.

First world problem, I know, but we value our beach time very much.

This brings me to the next thing I wish we had known before moving to Austin from the Bay Area….

There’s very few destinations within driving distance of Austin

Now, if you’re a Texan, you may not love what I’m about to say, but please understand that California is an insanely beautiful place where you can snow and water ski on the same day. The mountains, the oceans, the vineyards and the amazing coastal cities are all pretty accessible within a reasonable drive.

Now that everyone is hesitant to get on a plane, you can imagine how nice it is to have everything you could possibly want within a 5-hour drive.

Here in the city of Austin, there are a lot of great places to visit, from lakes to parks and great restaurants. But if you want to get away for the weekend, well, that’s a problem.

We’ve done a few road trips outside of Austin since moving here, and there’s pretty much nothing to see within a 5-hour radius of the city (unless you want to go to another city, which we don’t).

Texas does have a cute little wine country, but it’s nothing like Napa or Sonoma in terms of both beauty and quality of wine.

Sorry – but that’s the truth.

Austin is a little blue island in an ocean of red

Depending on your political values, this may not be an issue for you, but if you’re a liberal person who is looking at Austin because of the like-minded views, then you’re going to love it here. However, beware that the further out of the city you go, the less liberals you’ll find.

I won’t say much about this because republican or democrat is neither here nor there to me as long as you are a good person (and Texans are really good people).

However, right now in the US, the practice of wearing masks has become more of a political statement than a prophylactic. As a result, Texas, and more specifically Austin, has the fastest growing rate of infections at the time that I”m writing this. Not great.

Do I regret moving from the Bay Area to Austin?

Nope. I’m incredibly grateful to be riding out the ongoing craziness of 2020 right here in Texas. This move has put us in a great financial position to weather any economic storms and given us a pool to enjoy the endless hours of Shelter in Place.

There are also plenty of takeout options from the many amazing restaurants that are fighting to stay afloat. We have access to great medical resources (should we need it) and an abundance of caring people.

However, what I wish I had spent more time thinking about was how hard it would be to meet new people given that we work from home. I also didn’t realize how much I value having access to amazing places like Sonoma, the beach or Yosemite. California is a self-contained wonderland of seasons, activities and natural beauty.

Texas just doesn’t have that.

So is Austin officially home?

No, probably not. My husband and I are both in agreement that while this is a great adventure, longer term it’s not for us. It’s not Texas – it’s us. We miss our friends and the proximity to places we love.

But here’s the rub.

We’re not California F.I.R.E.

By that I mean, we’re not financially independent with the option to retire early as California residents. We would have to work at least another 5 years if we wanted to achieve the same quality of life as retirees in the Bay Area (maybe even longer). It’s just so expensive to live there.

Another issue is that longer term, many of our friends will move from the Bay Area for the same reason, so we will all eventually retire elsewhere.

So do we go back, to enjoy the California lifestyle at least for a few years? That’s not something that’s clear to us yet. There are also other factors to consider with regard to our businesses, but I wanted to focus this post on lifestyle only.

It’s a conundrum for sure, but for now, we’ll enjoy what we love about Austin – beautiful hill country, great food, nice people and plenty of space to social distance.

Stay safe, ya’ll (<- ps, this is my new favorite word).

Love your Life, Not Theirs: Rachel Cruze Thinks You Don’t Need a Credit Card (or Even a Credit History)

June 30, 2020 by CM 2 Comments

I picked up the audiobook Love Your Life, Not Theirs by Rachel Cruze because the title intrigued me. I love money books that go beyond the numerics of financial success and talk about the mindset and juicy psychological piece.

I fundamentally disagree with many of her points, but here’s where we see eye-to-eye

I love Rachel’s idea of social media “comparisonitous” (yes, I made that word up). I try really hard (and often fail) to avoid comparing my life to the way people portray their picture-perfect worlds on Facebook and Instagram.

This is a conscious practice because it’s really easy for me to get down on myself for not living a Pinterest-worthy life.

While this is a problem for many of us in all areas of life, Rachel addresses it from a financial standpoint. Her message is simple: “keeping up with fancy-but-broke people is the fastest way to financial ruin”. Preach it, sister! I couldn’t agree more.

I love how she frames #blessed as the official hashtag of “look at me” posts. This is so true! Let’s be real… your $759 per month car payment on a teacher’s salary isn’t #blessed, it’s #stupid.

Keeping up with fancy-but-broke people is the fastest way to financial ruin. Click to Tweet

But here’s where Rachel and I diverge in our opinions….

Let’s start with credit cards. She simply doesn’t use them and recommends you don’t either.

This is where I start scratching my head. I use my Chase Sapphire card for pretty much anything I spend money on for a lot of great reasons:

It’s easy to track where my money goes
It’s insurance against sketchy sellers (which I was able to take advantage of this week)
I get free travel insurance if I have to cancel a trip due to sickness, weather or a host of other reasons.
I get free auto insurance when I rent cars (which can cost as much as the rental car)
I collect points up the whazoo to spend not just on flights, but also hotels and other things that I would have every intention of redeeming.

Now credit cards do require a certain level of financial maturity, but I also know that the credit mistakes I made as a kid, informed my good credit habits today.

Credit isn’t for everyone, that’s for sure, but if you can pay off your balance every month in full (as I do, and I’m she could too), then there’s a world of benefits you can reap from them. Discounting credit cards before you give yourself a chance to see if you can manage them responsibly is a wasted opportunity. A huge one.

Credit Card Points: You’re not using them, so why bother?

Rachel claims that the 14 million points that go unredeemed every year have everything to do with credit card users that just somehow ignore or forget about them.

While it’s true that around 30% of credit card users never cash in their rewards, there’s another 70% of us out there that are optimizing them as much as possible. Your best bet is to consolidate your points to one really good card (like Chase Sapphire) and use those babies up.

You’re better off making your credit score non-existent.

What the what? Rachel suggests that it’s a good thing to not have a credit score, period. Not a bad one, just not one at all. She suggests, there’s no downside to not having a credit score, and that you can even buy a house without one.

Really, Rachel? Where do you live that you can buy a house for cash? Maybe rural Nashville, but that’s about it.

Let me tell you as someone who came to this country with zero credit history, not only was it was a colossal pain in the ass to get anything from a cell phone to running water, I had to put extra deposits on EVERYTHING, so my out of pocket costs moving here was drastically increased because of my lack of credit history.

Now, keep in mind, I had a great job, money in the bank and a stupendous credit history in Canada, where I had lived to that point, but apparently, that has no bearing on your ability to pay your bills here in the US.

So would I make having zero credit score a goal?

Absofreakinglutely not. I do not recommend this strategy.

Personally, I don’t find Rachel’s perspective on money to be very relatable. But even though I don’t agree with her message, it’s something that people with credit card debt should practice like a religion.

She also broadens the range of thinking when it comes to personal finance. Fringe concepts (and yes, I think some of these ideas are out there), can help readers think critically about their own behaviors. As we know, it’s called “personal” finance for a reason 🙂

So rock on with your bad self, Rachel Cruze! Someone’s got to be out there on the edge. On that note, I’m off to see what I can do with all those airline miles I’ve racked up!