Speaker 1: Episode seventy three, Financial Independence through Frugality. Welcome to the
Speaker 1: Frugal Friends podcast, where you'll learn to save money, embrace simplicity, rights,
Speaker 1: and liver with your life. Here your host Jen and
Speaker 1: Jill Fire Fire Fire, Welcome to the Frugal Friends podcast.
Speaker 1: My name is Jen, I'm Jill, and we have a
Speaker 1: hotly anticipated episode for you today, Hot off the press,
Speaker 1: Hot off the fire. Hot. We are talking about financial independence,
Speaker 1: retire early movement, and frugality integral role in it, and
Speaker 1: also some of our love hate relationship with it. So
Speaker 1: you're gonna want to listen to the whole episode because
Speaker 1: some of you are loving fire, some of you have
Speaker 1: no clue what it is they are You're wondering why
Speaker 1: we're talking about natural disasters. But by the end you're
Speaker 1: going to be able to figure out whether this is
Speaker 1: the financial move for you. Good word, Jim, But first
Speaker 1: our sponsors. Yes, today's episode is not brought to you
Speaker 1: by food. It's brought to you by presents, not the
Speaker 1: kind you get for your birthday, but the kind that
Speaker 1: allows you to fully embrace the right now experience it
Speaker 1: by taking a deep breath and thinking about one good
Speaker 1: thing that's happened to you today. Stressed out about tomorrow,
Speaker 1: try being present. Worried about the unknown? Being present can
Speaker 1: help with that too, for all the things in life
Speaker 1: you can't control. Forget about the what ifs and try
Speaker 1: being present. Whoa jan you took a hard turn from
Speaker 1: humorous fake sponsor into remarkable life tips. Um. I mean presence,
Speaker 1: like just really wanted to sponsor the show, So sure,
Speaker 1: that's true. It has nothing to do with us just
Speaker 1: coming up with things on the fly. Just whoever is
Speaker 1: giving us money at the time. We vet and then
Speaker 1: we decide who gets to be on the show, and presence,
Speaker 1: I mean, how can you say no to being present?
Speaker 1: You can't. I do like the people who like our
Speaker 1: fake sponsors, and I'm concerned for them for when we
Speaker 1: get real sponsors. But so far, so good. We're over
Speaker 1: a year in and we're not getting real sponsors, so
Speaker 1: I don't think we have much to worry about. Glad
Speaker 1: you all are still with us. Let's do this thing.
Speaker 1: Let's start fire, Yes, Jill, what do you know or
Speaker 1: feel about fire? Okay, it's pretty limited, although I don't so.
Speaker 1: I am not an expert in this, I will say that,
Speaker 1: but I am I have become more acquainted with this
Speaker 1: over the last year and a half, and what I
Speaker 1: know about it is it's stay on for something. We're
Speaker 1: not just talking about a blazing fire that you can
Speaker 1: roast your smores over. We're talking about financial independence retire early.
Speaker 1: And I know that some people will identify with different
Speaker 1: parts of it. There's a big movement for financial independence.
Speaker 1: The FI part of the fire, and then the r
Speaker 1: E part is the retire early that some people may
Speaker 1: or may not get on board with. And there's a
Speaker 1: lot of different ways of looking at it of what
Speaker 1: that means to retire early in what you do with
Speaker 1: your time. And so that's that's what it is. I
Speaker 1: know there's a lot of different opinions on it, and
Speaker 1: I'm really excited about talking with you on this, Jen, Yes,
Speaker 1: about the different perspectives and our perspectives. Yes, Um, I
Speaker 1: have been following the fire movement for about two years,
Speaker 1: so since we paid off our debt. And at first
Speaker 1: I was like, very gung ho, I would say on fire,
Speaker 1: but I'm not that corny. But you did that. You
Speaker 1: guys were waiting for it. I'm sure that you were,
Speaker 1: so I want to point it out. Uh, and over
Speaker 1: the course of two years, I've kind of come to
Speaker 1: embrace more of a frugal lifestyle that is not as
Speaker 1: how how do I put it gently? It's not as crazy.
Speaker 1: Was that putting it gently or was that giving up?
Speaker 1: I can't that was giving up? That was giving up. Uh,
Speaker 1: that's not as crazy as some people in the fire
Speaker 1: community can be. And I've seen people do it well
Speaker 1: that are very balanced and have a really great sense
Speaker 1: of self in this journey, and then I've seen people
Speaker 1: that are crazy. So I'm really excited to talk about
Speaker 1: these articles that we have that kind of got me
Speaker 1: introduced to fire and then help you figure out if
Speaker 1: it's a movement that you want to use your frugality
Speaker 1: to attain, because frugality is one of the essential pillars
Speaker 1: in becoming financially independent, and some would say it's more
Speaker 1: important than making money. Talking about my qualms with that later,
Speaker 1: I love that you described it as a pillar. How
Speaker 1: frugality is so necessary for this to even be possible,
Speaker 1: whether or not you graduate in the FIRE system or
Speaker 1: you just take components of it. But and I also
Speaker 1: think I agree with part of the reason that I
Speaker 1: am not an expert and haven't explored this to its
Speaker 1: fullest potential is because I am still in the paying
Speaker 1: off debt stage. I think most people who are steeped
Speaker 1: in fire I have already paid down debt. This is
Speaker 1: what comes next. So it can paying off debt can
Speaker 1: be a goal within the financial independence retiring early movement,
Speaker 1: but you're not gonna go full force with it until
Speaker 1: you've taken care of that initial step. So that's a
Speaker 1: big component here too. Yes, side note, I'm writing my
Speaker 1: next book. It's out next month, and it's about paying
Speaker 1: off debt and how to sustain the journey. And it's
Speaker 1: also super relevant to sustaining a journey to financial independence.
Speaker 1: So I'll talk about that later. But I am so
Speaker 1: so so excited about it, super stoked. I love your books.
Speaker 1: They're so easy to digest, have great tips in them.
Speaker 1: Looking forward about Okay, well let's get started with our
Speaker 1: first article. So this is the article that literally started
Speaker 1: the fire movement. Um it coined the term early retirement,
Speaker 1: and it's Mr money Mustache dot com his article The
Speaker 1: shockingly simple Math behind early Retirement. If you ask any
Speaker 1: like O G Fire person what their favorite blog post
Speaker 1: is or what their favorite article is, like nine times
Speaker 1: out of ten it's this article because it's really what
Speaker 1: started the movement. So Jill, after reading this, what are
Speaker 1: your thoughts? Yeah, it's neat to hear background. I always
Speaker 1: like personal stories that go along with something, reasons behind
Speaker 1: why someone makes certain decisions, and we talk about that
Speaker 1: to the why being so important, So I do like
Speaker 1: I never want to downplay what Mr money Mustache did
Speaker 1: for himself in the ways that it has worked for him.
Speaker 1: And I also like how he just explains what it
Speaker 1: is and how this could be feasible and pushing back
Speaker 1: on some of the naysayers, which I think we see
Speaker 1: in our own frugality movement, Jen, for you and I
Speaker 1: have people pushing back on well I need to buy
Speaker 1: that new thing, or I can't because I'm single, or
Speaker 1: I can't because I have kids, or these diferent things,
Speaker 1: and part of that's true, but maybe it just looks
Speaker 1: different and how can we get at this goal and
Speaker 1: yet have it be nuanced so that part I appreciate
Speaker 1: and just him explaining it and so really talking about
Speaker 1: what it is. And the second article talks about this too,
Speaker 1: but we can say it for for now, even for
Speaker 1: those who are new to this concept, it's all about
Speaker 1: your savings rate. Ultimately, being able to become financially independent
Speaker 1: with the potential of retiring early is dependent upon how
Speaker 1: much you take home each year, the money that you
Speaker 1: bring home, and how much you can live on, and
Speaker 1: and then beyond that, the amount of money that you're
Speaker 1: saving being able to invest that is key to be
Speaker 1: able to grow this lump sum that could theoretically sustain
Speaker 1: you with what it earns in investments for the next
Speaker 1: thirty plus years of life, depending on when you retire.
Speaker 1: So I appreciated that breakdown and some of the simple
Speaker 1: tenants of what this is and how to do it. Yeah,
Speaker 1: he gives a lot of numbers, obviously in shockingly simple
Speaker 1: math that can tell you if you were to increase
Speaker 1: your income by this much, decrease your living expenses by
Speaker 1: this much, and then invested the rest when you can retire.
Speaker 1: So he goes to net worth of fi dot com
Speaker 1: is the website he uses to figure this out, and
Speaker 1: so he's got a graph. If this person has his
Speaker 1: savings rate of sixty four percent, then this person can
Speaker 1: retire in ten point nine years. So it really it
Speaker 1: does have everything to do with how much you save
Speaker 1: and invest. Financial independence is defined as like, once your
Speaker 1: annual investment growth is enough for you to live on,
Speaker 1: you are then financially independent. So I think a lot
Speaker 1: of people use, like a million dollars is a cut
Speaker 1: and dry, easy number a lot of people use. And
Speaker 1: so once you hit a million dollars, then theoretically your
Speaker 1: million dollars should be growing by forty thousand dollars every year.
Speaker 1: So you can either let that compound or you can
Speaker 1: plan on withdrawing forty dollars every year. Therefore, your nest
Speaker 1: egg never moves. It's always a million. But if you
Speaker 1: can get your living expenses down to forty dollars a year,
Speaker 1: you are by definition, financially independent. So that is why
Speaker 1: frugality is such an integral part of financial independence, because
Speaker 1: even if you had a million dollars and it was
Speaker 1: growing at forty thou you can't live off of. You know,
Speaker 1: if you're spending sixty dollars a year like you're, you're
Speaker 1: not financially independing it. Then you'd have to save so
Speaker 1: much more. And I like that, Mr money Mustache says
Speaker 1: in the article. So the most important thing to note
Speaker 1: is that cutting your spending rate is much more powerful
Speaker 1: than increasing your income. The reason is that every permanent
Speaker 1: drop in your spending has a double effect. It increases
Speaker 1: the amount of money you have left over to save
Speaker 1: each month, and it permanently decreases the amount you'll need
Speaker 1: every month for the rest of your life. Which is
Speaker 1: our mantra infrugality, that it is better to cut your
Speaker 1: spending than to earn more money, because there's always the
Speaker 1: potential of rising to meet that in your spending, and
Speaker 1: so better to practice the discipline of identifying what don't
Speaker 1: I need? Where can I cut expenses? But then it's
Speaker 1: for what purpose? And this is where I differ a
Speaker 1: little bit from the fire community in what my savings
Speaker 1: or decreased spending is for. And another whole. And this
Speaker 1: has been said, this is nothing new. I'm not bringing
Speaker 1: new perspective to to this field. But it's worth noting
Speaker 1: here that there are holes to be poked in this
Speaker 1: not that it can't be done. And I'm going to
Speaker 1: be a naysayer that nobody should ever go after this goal.
Speaker 1: But our lifestyle is not static. We can see that
Speaker 1: just by looking at our own lives over the last
Speaker 1: two to five years. It has not stayed the same.
Speaker 1: Expenses change, lifestyles change, uh, number of people in your
Speaker 1: household change, the economy changes. It's it's dynamic. We're constantly changing.
Speaker 1: And so to say that, Okay, if I have a
Speaker 1: million dollars saved and theoretically it's making forty dollars a year,
Speaker 1: and I'm able right now to live off of forty
Speaker 1: dollars a year, well, to me, yeah, theoretically you're financially independent,
Speaker 1: but should you should you stop working and plan to
Speaker 1: do that? Assuming that now because you're able to live
Speaker 1: at forty thou forever and always you'll be able to
Speaker 1: live at forty thousand. That's not even talking about rate
Speaker 1: of inflation, which is talked about in this realm. But
Speaker 1: to me, there there's a whole lot to look at
Speaker 1: here than just the basic tenants. Yeah, the math is
Speaker 1: a little off for me because you can you can
Speaker 1: work in percentages, but everyone has a different percentage of
Speaker 1: or a different income. So he's working off a fifty
Speaker 1: k take home pay, which is about seventy five thousand
Speaker 1: dollars of gross income, So not everybody is at that,
Speaker 1: And yes, that is the average for Americans, but it
Speaker 1: is really discouraging to see math like this. If your
Speaker 1: gross pay is fifty dollars, then you're taking home only
Speaker 1: that and that's so much less to invest and cutting
Speaker 1: expenses can only do so much. We've said that over
Speaker 1: and over. It's wise to do and we support doing it,
Speaker 1: but there is only a certain limit, in which case
Speaker 1: a lot of people in the Fire movement will compensate
Speaker 1: that by with entrepreneurship. But in that case, you have
Speaker 1: to look at a lot of Fire bloggers, including Mr
Speaker 1: money Mustache, who are now making so much money off
Speaker 1: of their blogs and their side ventures. They are not
Speaker 1: really retired, which I think they talk about. There are
Speaker 1: so many loopholes in this Fire movement in that yeah,
Speaker 1: you're you're saying you're retired, but you're actually doing other things,
Speaker 1: which in some ways is providing you freedom to do
Speaker 1: what you want and you're enjoying it, but you're not
Speaker 1: fully actually not earning more money. Right. There are very
Speaker 1: few people that actually reach financial independence the traditional way
Speaker 1: and maintain it. There's when I said, when I was saying,
Speaker 1: like having that million dollar investment. Mr money Mustache calls
Speaker 1: it the stash and then living off a forty thousand.
Speaker 1: That's called the four percent rule. So theoretically, whatever your
Speaker 1: investment nest egg is, you can live off a four
Speaker 1: percent of it, and the nest egg should be safe.
Speaker 1: If you want to not save a million dollars, if
Speaker 1: you want to save only eight hundred thousand, then you
Speaker 1: need to be able to live on four percent of
Speaker 1: that every year. Yeah, and I love what you were saying,
Speaker 1: Jill about everything is so flux, like every year, every
Speaker 1: decade changes and so you can't predict. You have to
Speaker 1: like factor in that maybe when year you can't spend
Speaker 1: four percent because the market is only allowing you to
Speaker 1: spend two without touching your nest eggs. So a lot
Speaker 1: of holes to poke, But I'm on board with how
Speaker 1: can we cut expense? Is how can we save? How
Speaker 1: can we be wise with our money and be able
Speaker 1: to create freedom in our lives to do the work
Speaker 1: that we want to do, to not have to be
Speaker 1: living paycheck to paycheck. Like there are certain principles interwoven
Speaker 1: here that I am fully on board with and nuances
Speaker 1: that I would say no. And that's that's the beautiful
Speaker 1: thing about this. We can pick and choose that it
Speaker 1: doesn't have to be just like our initial when we
Speaker 1: put our toes into the water with Dave Ramsey's course,
Speaker 1: you can think, oh, I've got to follow this to
Speaker 1: the tea, and then you can start to realize there's
Speaker 1: freedom here. I can kind of pick and choose and
Speaker 1: see what works for me and what doesn't. So similar
Speaker 1: thing with this. Yeah, that's why I loved our episode
Speaker 1: on frontloading your life with Robert Farrington and being able
Speaker 1: to invest a lot upfront and then not reaching financial
Speaker 1: independence officially, but once you have that next egg that
Speaker 1: you create in your twenties and thirties, and that money
Speaker 1: can grow over time, then you can take a job
Speaker 1: you love, or stay home with your kids, or do
Speaker 1: something that doesn't pay as well and you're not investing
Speaker 1: as much, but you've already set a foundation that will
Speaker 1: just build over times. You're not work, work, working until
Speaker 1: you hit that number and then you just you know,
Speaker 1: drop off and retire. But you set yourself up early
Speaker 1: in life so that you can take it easy in
Speaker 1: the middle and then maybe transition to something different at
Speaker 1: the end, and you can have these different parts of
Speaker 1: your life like it doesn't have to be I'm working
Speaker 1: and then I'm retired, it's I'm working and then I'm
Speaker 1: like monetizing a hobby and then I'm doing this or that.
Speaker 1: It's a creating more freedom there. And before before we
Speaker 1: get into the next article to really outline the ways
Speaker 1: that you can attain components of fire, I want to
Speaker 1: just make sure that we cover what is the extreme
Speaker 1: has the pendulum does swing, and we're always going to
Speaker 1: want to point towards the radical middle where that we're
Speaker 1: where we're not living in either extreme of something because
Speaker 1: that can be detrimental. But the extreme of fire. The
Speaker 1: reason that I'm a little hesitant to dive all in
Speaker 1: is because at the most, at the furthest end of this,
Speaker 1: it would be people who are heads down trying to
Speaker 1: make as much money as they can for as short
Speaker 1: amount of time as they can. So it is a
Speaker 1: sacrifice in the immediate for you know, long term being
Speaker 1: able to live off of that, but it's a training
Speaker 1: self for always living very minimally even though you are
Speaker 1: earning a lot of money, because the goal is to
Speaker 1: live off of a low amount of money so that
Speaker 1: you don't have to continue working in you know, quote
Speaker 1: unquota debt end job or something you don't want to
Speaker 1: be doing for the rest of your life. And to me,
Speaker 1: the extreme of that is it doesn't create a lifestyle
Speaker 1: that is able to be generous, to have wiggle room,
Speaker 1: and to be able to engage really in larger community
Speaker 1: than than that very extreme community. So that that's the
Speaker 1: one end of it. Certainly not everybody is there, but
Speaker 1: people are not. Yes, right, but even just this idea
Speaker 1: of a real and genuine retirement, like what you would
Speaker 1: imagine at sixty seventy, where you are not putting your
Speaker 1: hands to any plow and you are able to just
Speaker 1: veg out on a beach in Hawaii. Honestly, I have
Speaker 1: talked with people who this is the goal. So that's
Speaker 1: why I'm saying, this is the extreme of I'm going
Speaker 1: to make a little amount of money so that i
Speaker 1: can genuinely retire at thirty five and I'm going to
Speaker 1: live in Hawaii and live my dream, only to find out,
Speaker 1: I mean, mind you, they get two years into that,
Speaker 1: it's like, oh, now I'm still only thirty seven. What
Speaker 1: do I do? Like We're not built for that. We're
Speaker 1: not built to not put our hands to something, which
Speaker 1: is why you see Mr money Mustache continuing to put
Speaker 1: his hands to something and other people in the fire community,
Speaker 1: because it's not a real genuine retirement when we're still
Speaker 1: so young and we want to be purposeful with our lives.
Speaker 1: So I think that, yeah, some of the luster of
Speaker 1: what this might look like, I'm just going to veg
Speaker 1: out in Hawaii. Yeah, that only lasts for two weeks
Speaker 1: and then you're like, now what, Yeah, which is why
Speaker 1: most people focus on the financial independence aspect of it.
Speaker 1: But we will talk later in our lightning round about
Speaker 1: the extremity side. So I'm excited. But some people can
Speaker 1: also rationalize not pursuing these pillars, which we will get
Speaker 1: to in our next next article. They rationalize not following
Speaker 1: these ideas because of the end of the spectrum idea,
Speaker 1: like I'm not going to retire when I'm thirty five.
Speaker 1: I can't do it. I don't want to do it,
Speaker 1: so why would I even try and do these things,
Speaker 1: which is also the wrong idea. These are all amazing
Speaker 1: ideas and you should do all of them, but not
Speaker 1: to the extent where you are living in the future
Speaker 1: and you forget about the present presents. It's all coming together,
Speaker 1: I see, I see. So our next article is actually
Speaker 1: from a blog related to another podcast, are podcasting brothers
Speaker 1: Choose f I, who don't know that there are brothers
Speaker 1: that I just called them that we're their friends and
Speaker 1: there are brothers, yes, even though they you can't choose
Speaker 1: your family. I don't know how that fits in, but
Speaker 1: it's um the beginner's guide to reaching financial independence. And
Speaker 1: I chose this one because I really learned about financial
Speaker 1: independence from the Choose FI podcast. We don't consider ourselves
Speaker 1: in the Fire movement. We're not Fire podcasters or bloggers like,
Speaker 1: we're not in that sphere by choice. And so if
Speaker 1: you want an introduction to financial independence, this is your episode.
Speaker 1: If you want to dive deep, then choose f I
Speaker 1: as your podcast. And it's an amazing, amazing show. So
Speaker 1: we just wanted to go through their summary of how
Speaker 1: to achieve financial independence. So first of all, as we
Speaker 1: mentioned in the last article, this is heavily dependent on
Speaker 1: your savings rate, and the Fire community recommends saving fifty
Speaker 1: percent of your take home pay rather than the traditional
Speaker 1: cent that financial planners have recommended. This severely expedites your
Speaker 1: ability to live financially independent. Didn't and it's assuming I
Speaker 1: mean in the article, it says we don't want to
Speaker 1: work a job we don't love for forty years. Like,
Speaker 1: so it's assuming you don't have a job that you love,
Speaker 1: where the alternative is to just have a job that
Speaker 1: you love or or enjoy. And so the next one
Speaker 1: is lower your living expenses. And so we talked about
Speaker 1: in our housing episode a few weeks back about whether
Speaker 1: it's more frugal to buy or rent, and you can
Speaker 1: do either on the path to fight like, they don't
Speaker 1: lean one way or the other. You can do whatever's
Speaker 1: most frugal for you. But you're living expenses are the
Speaker 1: most are the highest expense you have every month, and
Speaker 1: so if you're going to lower something, choose the thing
Speaker 1: with the highest impact. We we say that all the
Speaker 1: time too. So there's this a living expenses and a
Speaker 1: few of the ways they recommend doing that, or one
Speaker 1: of the ways is by house hacking. This would be
Speaker 1: purchasing a duplex or tri plaque or for unit. Those
Speaker 1: are establishments you don't need commercial loans for. You can
Speaker 1: still get a traditional mortgage for anything for units or
Speaker 1: less and living in one of the units and renting
Speaker 1: out the others. And in that case the people renting
Speaker 1: from you pay your mortgage and you live for free,
Speaker 1: and that eliminates that expense for you. Theoretically, there's also
Speaker 1: you know, costs associated with the mortgage and the tenants
Speaker 1: and keeping up the property and all that stuff. But
Speaker 1: so that is the number one way to essentially eliminate
Speaker 1: the housing costs. And we've got episodes on house hacking,
Speaker 1: So if you're interested in more even non traditional housing
Speaker 1: and how that can help cut expenses, check that one out.
Speaker 1: Will link it in our show notes. This article also
Speaker 1: says that you can work towards achieving a fire lifestyle
Speaker 1: by utilizing travel rewards. We also have an episode on this,
Speaker 1: but I would one agree with this that where you
Speaker 1: can take advantage of travel rewards, have a travel rewards
Speaker 1: credit card. This can help you in cutting your expenses.
Speaker 1: Where you would traditionally be spending a large sum of
Speaker 1: money on travel, whether that's just by vacation or visiting
Speaker 1: friends and family in different parts of the world or
Speaker 1: the states, having travel rewards can cut that expense. But
Speaker 1: an even greater part could be that it could help
Speaker 1: you travel more at no extra cost or even less cost,
Speaker 1: depending on how much you are travel hacking so one,
Speaker 1: we are hardly spending money on our three vacations this
Speaker 1: year just because of travel rewards. So I can say
Speaker 1: it works, and it's it's happening, and I'm loving it.
Speaker 1: I'm smiling. So that's another great way of cutting expenses
Speaker 1: and and saving money. And if you're not into traveling,
Speaker 1: if you're not in that season of life where you
Speaker 1: can do that, putting your expenses on a cash back
Speaker 1: card and they have you know, bonuses of two to
Speaker 1: five dollars if you meet a minimum spend requirement, and
Speaker 1: then you can put you know, that bonus towards more investing.
Speaker 1: So it's all about optimizing the way that you're spending.
Speaker 1: But obviously, if credit cards are your downfall, then don't
Speaker 1: use them at all. They're not worth it. The next
Speaker 1: one is to eliminate debt. So that is a big
Speaker 1: way that most people find financial independence. That's how I
Speaker 1: found the concept. We were on this rapid momentum paying
Speaker 1: off our debt, rapid momentum saving our emergency fund, and
Speaker 1: then we were just supposed to kind of take a
Speaker 1: pause almost it seemed, to invest and just pay off
Speaker 1: our mortgage. We could have done it rapidly but we
Speaker 1: just didn't want to do that. We looked at the
Speaker 1: numbers and we knew that the market was growing faster
Speaker 1: than our like mortgage, our mortgage interest, and so that's
Speaker 1: we decided to go for the investing portion. And unfortunately,
Speaker 1: as soon as we started investing, the market took a
Speaker 1: year long plateau. So you cannot predict stuff like that.
Speaker 1: You you can't. We were on the longest bull market
Speaker 1: in history, which is the longest trend up, and then
Speaker 1: as soon as we started investing, we just started plateauing.
Speaker 1: So you've gotta be okay with that if you go
Speaker 1: down that route. So, but in like eliminating debt, even
Speaker 1: if it's like lower interest in the loan debt, it's
Speaker 1: still takes a weight off of your shoulders and freeze
Speaker 1: you to live like a less stressful life. And so
Speaker 1: to me, eliminating debt leads is financial independence, like you've
Speaker 1: practically achieved it even just that that point, certainly you
Speaker 1: can go deeper and deeper down this rapid trail. But
Speaker 1: eliminating debt, I would say, is step number one. Yeah,
Speaker 1: like when I lost my job, if I'd still had
Speaker 1: a five a month student payment at thirty weeks pregnant. Yeah,
Speaker 1: I but we're debt free besides our mortgage, and I
Speaker 1: didn't worry about it at all. Like I felt bad
Speaker 1: for my coworkers that still had student loan payments and
Speaker 1: and I didn't have to worry about it, and everyone
Speaker 1: felt bad for me because I was so pregnant, and
Speaker 1: I was like, you're literally enslaved to it. I mean
Speaker 1: it sounds extreme, but to me, that's what debt is.
Speaker 1: And as long as you are no longer enslaved to
Speaker 1: owing somebody money, that's freedom. Yeah. They say a few
Speaker 1: ways to cut expenses like cutting cable, learning to cook,
Speaker 1: checking your insurance costs and your other bills, buying used cars,
Speaker 1: all things that we have said before throughout the other
Speaker 1: what seventy episodes that we've had, So just go back
Speaker 1: into the archives if you want to find ways to
Speaker 1: save money to pay off debt. And investment philosophy, this
Speaker 1: is the next one that brings a big role in fire.
Speaker 1: And so people in this community recommend specific types of investment,
Speaker 1: which is a broad based, low cost index fund. And
Speaker 1: we are speaking to you as friends. We're not financial advisors.
Speaker 1: We can't like legally give you investment advice. So this
Speaker 1: is all for fun and entertainment, yes, and reviewing what
Speaker 1: this article says, not what we are saying. So they
Speaker 1: compare Vanguard and Fidelity. You can check out We are
Speaker 1: linking this article in our show notes. So if you
Speaker 1: want more information on these types of index funds and
Speaker 1: what the Fire community is saying about the best types
Speaker 1: of investment, feel free to check that out. Yeah, we
Speaker 1: personally use They recommend van It's total stock market index fund,
Speaker 1: the v T S A X. They love it. That
Speaker 1: is the one I personally have UM across all my
Speaker 1: investments I have. I have that one. And then they
Speaker 1: compare Vanguard Fidelity. I also love Fidelity if you don't
Speaker 1: have a lot of money to start investing. Fidelity doesn't
Speaker 1: require a minimum um for some of its index funds,
Speaker 1: and it even has funds with the zero fees. So
Speaker 1: Fidelity is great, Vanguard is great. You can't go wrong
Speaker 1: with either. But yeah, so low cost index fund investing
Speaker 1: is kind of like the gold standard when you're investing
Speaker 1: for financial independence, according to the Fire movement. So, and
Speaker 1: it's specifically that v T S A X because it's
Speaker 1: total stock market so it's total equity, which means it's
Speaker 1: going to have higher highs and lower lows, but over
Speaker 1: time it's going to theoretically grow more than a more
Speaker 1: conservative index fund that has all stocks and then maybe
Speaker 1: some bonds or other things. So, but you also can't
Speaker 1: go wrong with a target date fund. I know a
Speaker 1: lot of four oh one ks have that one that
Speaker 1: put you automatically into one of those, Like, don't feel
Speaker 1: like that is dumb just because fire people are all
Speaker 1: about this one index fund. It's fine, You're okay, yeah,
Speaker 1: You're okay, yeah, and then it says kind of where
Speaker 1: to put that fund. So I said, I had b
Speaker 1: T S A X in across all my accounts, so
Speaker 1: that was across my in my four oh one K
Speaker 1: from my former employer, and so that I was easily
Speaker 1: able to just roll that over to a Vanguard traditional IRA,
Speaker 1: so that's super easy. I also have it in my
Speaker 1: raw IRA, so you may not be able to choose
Speaker 1: that for your four oh one K. I was lucky
Speaker 1: enough to have a four oh one K that had
Speaker 1: all Vanguard index funds, and you may not have that.
Speaker 1: So that's why raw f rays are so important, because
Speaker 1: you choose whatever you want to put in it. You
Speaker 1: can put the best of the best in it, and
Speaker 1: the best of the the best is whatever you decide his best.
Speaker 1: So those and then they also recommend real estate. So
Speaker 1: if you're if you are at a financial place where
Speaker 1: you can max out your I R and your four
Speaker 1: own K, that's kind of the time you could start
Speaker 1: thinking about real estate. Like, you have to have a
Speaker 1: lot of liquid cash, I think to start thinking about
Speaker 1: real estate. Um, and you really have to love it.
Speaker 1: You really have to like real estate to get into it.
Speaker 1: You can't just get into it because you think it's
Speaker 1: quick and easy money, because it is absolutely not. And
Speaker 1: side hustles we've talked about this one too, So this
Speaker 1: is another way to be able to increase what if
Speaker 1: you've maxed out how much you can save and live
Speaker 1: off of to also consider side hustles for extra income
Speaker 1: and how much that can expedite the process for reaching
Speaker 1: savings goals. The side hustles are also fantastic when trying
Speaker 1: to pay down debt. They're just an awesome way to
Speaker 1: not feel capped at your earning level and be able
Speaker 1: to bring in some side cash each month. Yeah, it
Speaker 1: can also lower that amount. Coming back to the four
Speaker 1: percent role. It can lower that amount that you need
Speaker 1: to save to live off four percent of your assets.
Speaker 1: They go through the four percent roule a little bit more.
Speaker 1: But I want to cap this one off with the end.
Speaker 1: It was saying, just get one percent better, And I
Speaker 1: love this idea, and just focus on what you can
Speaker 1: do this week to get one percent closer to your
Speaker 1: end goal. And and that's really it like trying to
Speaker 1: do everything at once. That is me to a t.
Speaker 1: I try to do everything once. I jump head first
Speaker 1: into things, and it's exhausting and it can really burn
Speaker 1: you out. And so I have to constantly remind myself
Speaker 1: just to get one sent better. Yeah, which can mean
Speaker 1: making your coffee at home rather than going through the
Speaker 1: drive through line, packing your lunch, just one percent, car pooling,
Speaker 1: making these small frugal adjustments. Because as you are good
Speaker 1: with a little, you will be good with much. Yes,
Speaker 1: the bill of the week, that's right, it's time for
Speaker 1: the best minute of your entire week. Maybe a baby
Speaker 1: was born and his name is William. Maybe you paid
Speaker 1: off your mortgage, Maybe your car died and you're happy
Speaker 1: did not have to pay that bill anymore. That's bill
Speaker 1: Buffalo bills, Bill Clint, this is the bills of the week. Hi,
Speaker 1: this is Maren calling from Maryland. And my favorite bill
Speaker 1: of the week is my mortgage because that's our only
Speaker 1: debt left after paying off just over seventy eight thousand
Speaker 1: dollars in student loans and a car payment. So they're
Speaker 1: excited to only have that mortgage payment now as our
Speaker 1: only debt. And I love you guys and have them
Speaker 1: listening to you for a while now, and thank your
Speaker 1: guys is great and you're hilarious, So keep the awesome
Speaker 1: sponsors coming and keep us a good work. Thanks. Yes, Maren,
Speaker 1: that's so awesome. That's like exactly our story too, So
Speaker 1: it's like hearing myself call from Maryland. From Maryland, I
Speaker 1: love also think we're awesome, So it's I resonate with
Speaker 1: your bill. So what I'm saying, thanks for your kind words.
Speaker 1: It really struck me when you said you love us.
Speaker 1: I mean, I know that that's not like a h
Speaker 1: an intense love like my husband loves me, but I
Speaker 1: still feel it and I appreciate that. Does my husband
Speaker 1: love me intensely? I don't know. I don't know what
Speaker 1: that means he does, but yeah, so I appreciate your
Speaker 1: encouraging words along with your your bill of only having
Speaker 1: your mortgage left, because I'm celebrating with you, but you
Speaker 1: also want above and beyond an encouragement. You didn't have to,
Speaker 1: but I appreciate it. But you did. And the transcription
Speaker 1: when you said awesome sponsors transcribed as awesome monsters, and
Speaker 1: I was looking forward to seeing what you really said,
Speaker 1: and I hoped it was awesome monsters. Um, but sponsors
Speaker 1: is good too. So if you have a bill of
Speaker 1: the week out there and you want to see what
Speaker 1: fun ways Google transcribes your bill, submit it to Frugal
Speaker 1: Friends podcast dot com slack bill and you don't have
Speaker 1: to butter us up. But we'll take it. You sit
Speaker 1: here and take it. Yeah, we'll sit here and take it. Well,
Speaker 1: you know what that leads to the lightning round. I
Speaker 1: think I'm getting better at that. My voice is training
Speaker 1: for intensity. Yes, you are growing. I could probably be
Speaker 1: a spinning instructor next. I believe it. Spinning is rough
Speaker 1: on the butt, Spinning is rough on the emotions. So
Speaker 1: I hear, yeah, it's that too. So for our lightning run,
Speaker 1: we actually got this inspiration from another article and it
Speaker 1: is from Financial Samurai dot com. So Sam who writes
Speaker 1: this blog, was one of the UM first early retirees
Speaker 1: along with Mr money Mustache, and he did it the
Speaker 1: extreme way. So he retired at thirty four. He made
Speaker 1: six figures in his working career UM and he retired
Speaker 1: in two thousand twelve at thirty four and had this
Speaker 1: fully fully funded nest egg, lived off the four percent
Speaker 1: rule and didn't monetize his blog munch, so he wasn't
Speaker 1: using that as as income. So he did it the
Speaker 1: way people say it's supposed to be done. So he
Speaker 1: wrote this article of reflection and really had some things
Speaker 1: that he would have done differently. And so and he
Speaker 1: had five questions to ask yourself whether you should pursue
Speaker 1: FI or how aggressively you should pursue FI, Like, ask
Speaker 1: yourself these questions to really get in touch with it.
Speaker 1: I so appreciated this perspective and I think vulnerable and
Speaker 1: count her what the fire community might say sometimes you
Speaker 1: might be able to attain by having this as your goal.
Speaker 1: So really interesting to see his perspective. He definitely would
Speaker 1: not do it all the same. There's quite a bit
Speaker 1: that he would change about the way that he approached this,
Speaker 1: So feel free to check out that article. I think
Speaker 1: it's really insightful. But one of the questions that he
Speaker 1: lists to be asking yourself on whether to fire or
Speaker 1: not to fire is why am I rushing to retire early?
Speaker 1: Am I running away from something? And so to me,
Speaker 1: this speaks a lot to this concept that I don't
Speaker 1: want to work a dead end job, something that I'm
Speaker 1: miserable with constantly going to the nine to five grind. Well,
Speaker 1: that's assuming that everybody is in that position, and we
Speaker 1: wouldn't encourage anybody to stay in that place, regardless of
Speaker 1: whether or not you're trying to reach fire or not. Like,
Speaker 1: there is definitely freedom, particularly if you've already attained debt,
Speaker 1: freedom to be able to explore new fields and to
Speaker 1: change field. It doesn't mean that because you don't like
Speaker 1: your job now you've got to retire. Why not switch jobs?
Speaker 1: So and not being afraid of work, I mean for
Speaker 1: those who retire later in life, there's a lot of
Speaker 1: boredom that comes with that, and what am I going
Speaker 1: to do now? And so much of my identity is
Speaker 1: all of our identities are wrapped up in what we
Speaker 1: spend The majority of our time doing. So consider that,
Speaker 1: and what what's the alternative? What's the opportunity cost here
Speaker 1: of no longer working? And and are you running away
Speaker 1: from something? You know? Sam retired at thirty four and
Speaker 1: now he's forty two, and he even states he regrets
Speaker 1: not working for one more year. I mean, certainly it
Speaker 1: could be how many one more years are there? But yeah,
Speaker 1: that it's not It's not a bad thing to put
Speaker 1: our hands to something, to be fruitful and productive. So
Speaker 1: consider what is the rush? What am I trying to attain?
Speaker 1: His next question is how will retiring early change my
Speaker 1: life for better or worse? Um? And I I would add, like,
Speaker 1: am I sacrificing too much to retire early? I think
Speaker 1: that's his fifth question that I kind of combined with that,
Speaker 1: but just coming back to don't live in the future,
Speaker 1: like live in the present. Don't sacrifice the things that
Speaker 1: could be making your life full now for you know,
Speaker 1: a quote unquote full life later. Like he gives the
Speaker 1: example like he waited to have kids with his wife
Speaker 1: until after they were fully fire and she was thirty four.
Speaker 1: It took them three years to have their son because
Speaker 1: biology doesn't improve as you get older, so that was
Speaker 1: his example. But that doesn't necessarily have to be yours.
Speaker 1: Like sometimes I think, like I would rather have one
Speaker 1: latte now and enjoy my time now, then be able
Speaker 1: to quit a few days early from the job and
Speaker 1: have to lattes later just sit around and drink lattees
Speaker 1: all day. You know, I'd rather work the job and
Speaker 1: have the latte. And what are you sacrificing. You know,
Speaker 1: you're pinching pennies now, but to be to be able
Speaker 1: to pinch pennies the rest of your life, that's what
Speaker 1: the ultimate If you are following this to the tea
Speaker 1: of always and forever needing to live off of forty dollars,
Speaker 1: how much freedom is that to have to live very,
Speaker 1: very inexpensively for the rest of life, and what that
Speaker 1: trains you for that, in my perspective, that trains you
Speaker 1: that you don't have money to spare. Your generosity is
Speaker 1: definitely going to decrease because you can't. You can't be
Speaker 1: giving money away when your goal is to be living
Speaker 1: off of all the money that you've stacked away for
Speaker 1: the first, you know, fifteen years being in a career.
Speaker 1: So there are a lot of other things to be
Speaker 1: considering just regarding morality and personal life goals as a
Speaker 1: part of this. The other question that this article puts
Speaker 1: forward is what will I do after I retire early?
Speaker 1: Am I running towards something? And this is the why
Speaker 1: question two of what is it that I'm hoping to
Speaker 1: be doing in retirement? Is it just sit on a
Speaker 1: beach in Hawaii? Or is it so that I can
Speaker 1: choose to put my hands to the things that I
Speaker 1: really want to be doing? And could you be doing
Speaker 1: those things now, even while you are working a traditional
Speaker 1: nine to five job, could you be starting your side
Speaker 1: hustles or the things that are interesting to you that
Speaker 1: could potentially grow into something bigger. The last question, which
Speaker 1: I think goes highly overlooked, is have I gained enough
Speaker 1: perspective from those who have already retired? And I think
Speaker 1: a lot of people in the fire movement get their
Speaker 1: perspective from two to four people that have retired, and
Speaker 1: they don't examine the experiences of a broad range of
Speaker 1: retired early retirees, um and so. And that's getting better now,
Speaker 1: especially with the choose Ify podcast. They interview a lot
Speaker 1: of people who have retired early, but a lot of
Speaker 1: their interviews are people still pursuing FI. So I think
Speaker 1: it's always wise to survey a broader audience to get
Speaker 1: a lot of different stories and perspectives. I love that
Speaker 1: because we can imagine and fantasize and glamorize something all
Speaker 1: we want until we are in it and realizing the
Speaker 1: reality of it. So that's not to say don't try it,
Speaker 1: but recognize that what you have as idealistic may not
Speaker 1: be reality. Yeah, and I wanted to just leave off
Speaker 1: with just one quote from this article that I thought
Speaker 1: was was really really good, and he says, why is
Speaker 1: it that when we're younger, we always seem to feel
Speaker 1: like we're in a rush to get things done. We've
Speaker 1: got two retire as early as possible, or else maybe
Speaker 1: it's because we lack patients and feel that we might
Speaker 1: all die in early death. I certainly feel like retiring
Speaker 1: early was a hedge against an untimely demise. And so
Speaker 1: I think one of the things that has driven of
Speaker 1: the fire movement is fear of wasting your life and
Speaker 1: fear of an early death, or fear of missing time
Speaker 1: with loved ones. You know, people retire at six year
Speaker 1: seventy and they've they've missed their healthiest years the wife,
Speaker 1: they retire in their unhealthiest years. So there's this fear,
Speaker 1: but I would just challenge that with there's a fear
Speaker 1: of of missing this season and fully living in it,
Speaker 1: even with a job, even with working. So early retirement
Speaker 1: isn't the solution to living a full life in fear
Speaker 1: of death, like balance is, Making decisions out of fear
Speaker 1: is never a good idea. Fear clouds perspective, so we
Speaker 1: will not see rightly if that is the motive behind
Speaker 1: some of this fantastic quote. Yes, yeah, and also just
Speaker 1: even considering opportunity costs in here of even if you
Speaker 1: have saved a ton of money, you are turning down
Speaker 1: whatever you were making. You know, let's say you were
Speaker 1: making eighty thousand dollars a year. To suddenly step away
Speaker 1: from that and retire early, you are now turning essentially
Speaker 1: that down for consecutive years too, and what that could
Speaker 1: have meant for lifestyle, for community, for fill in the blank.
Speaker 1: So that's another thing to consider here too, is the
Speaker 1: opportunity cost of the earnings you could have had if
Speaker 1: you hadn't have pursued early retirement. In conclusion, we love
Speaker 1: the tenants of fire but we modify it, modify it
Speaker 1: for our lives. Everybody's going to identify their own y
Speaker 1: and and get there. Some people aren't as concerned with
Speaker 1: generosity or being present in the moment now as I
Speaker 1: may be. That's my goal and purpose is to be
Speaker 1: able to live frugally too, Yes, save some money, but
Speaker 1: also be able to give where there's a need in time, energy, resources,
Speaker 1: all of that. So then I recognize that's not everybody's thing,
Speaker 1: so have at it. If Hawaii literally will be your
Speaker 1: best life, now do it. I heard it's great. Well,
Speaker 1: if you want more more engagement on this topic and
Speaker 1: others like minimalism, we are having our book club this
Speaker 1: month like all the other months, and we are reading
Speaker 1: The Minimalist Home by Joshua Becker. So we've read other
Speaker 1: books of his, this is his newest one and super
Speaker 1: excited to look at what he has to say on
Speaker 1: this topic. So check it out and we are giving
Speaker 1: away free copies of The Minimalist Home. You can enter
Speaker 1: to win one by leaving us a review on iTunes
Speaker 1: or Stitcher, screenshotting the review and sending it to Frugal
Speaker 1: Friends Podcasts at gmail dot com, and we will select
Speaker 1: one winner for every five reviews at the end of
Speaker 1: the month. Oh and look at this, We just happened
Speaker 1: to find a helpful review some fantastic literary work over
Speaker 1: here by Kentucky Twin Mama who says great tips accompanied
Speaker 1: by five stars. I enjoy this podcast more and more
Speaker 1: as time goes on. I especially enjoyed the episodes about
Speaker 1: college savings plans and raising kids frugally with Mrs Frugal Woods.
Speaker 1: I look forward to listening to this podcast every week.
Speaker 1: Keep up the good work, Thanks Kentucky Twin Mama. Yes,
Speaker 1: and be on the lookout because we will have an
Speaker 1: episode coming up about how to teach kids about living
Speaker 1: frugally and how to make that exciting for them and
Speaker 1: we have a really great guest for that. So that
Speaker 1: is coming up by the end of the year. And
Speaker 1: you'll want to stay subscribed to stick with us every Friday,
Speaker 1: and we will be in your stereo, in your earbuds
Speaker 1: everywhere you take us. We will see you next week.
Speaker 1: By Frugal Friends. Is produced, edited and mixed by Eric Seria.
Speaker 1: Because we do keep getting better. Like a fine wine,
Speaker 1: you keep you keep giving us time, we keep getting sweeter. Yeah,
Speaker 1: maybe maybe not sweeter, but more complex, more complex for sure,
Speaker 1: better at talking, maybe better at talking. I talk better
Speaker 1: for sure now than I did when we started. Episode
Speaker 1: seventy three has got to be better than episode one,
Speaker 1: even though episode one is apparently what everybody wants to
Speaker 1: listen to, that is our number one most listened to episode.
Speaker 1: We should we should redo that, like not not replace it,
Speaker 1: but kind of like revisit for and see if anything
Speaker 1: is that what comes after one oh one two oh one?
Speaker 1: I don't know school. It depends on if we're doing
Speaker 1: real counting or if we're doing college counting. What that
Speaker 1: would be one oh two? Yeah, right, they do still
Speaker 1: do one o two, but then generally then they'll just
Speaker 1: skip to thinking college, so it would be two o one. Okay, Yeah,
Speaker 1: we should definitely do that because that scene, I don't
Speaker 1: know why that is the most downloaded episode, but by
Speaker 1: far I mean I would probably listen to it is
Speaker 1: like where did they get started? And what do they
Speaker 1: have to say about? For like what is frugality one
Speaker 1: oh one? What are the what are the main things
Speaker 1: I need to know? I don't think we did a
Speaker 1: terrible job, but I haven't it in a while, so
Speaker 1: I don't know. But we recorded, didn't We record a
Speaker 1: few episodes. Yeah, we recorded before that episode. I think
Speaker 1: we never used it. We had to re record that episode,
Speaker 1: didn't we So we got the kinks out so that
Speaker 1: it was good. And that's probably the secreting podcasting is
Speaker 1: record your first episode twice and that way it doesn't
Speaker 1: suck so much. Yeah, I know that everyone's gonna constantly
Speaker 1: revisit your first episode. Yeah, there you go. There's the
Speaker 1: secret to podcasting. Okay, bye bye,