2018 was quite the turbulent year for the financial independence crowd, and it’s just going to get busier in 2019.
Let me cover a few highlights from last year and then give a personal update. I’m here to reassure you that financial independence is sustainable and life is good. At the end of the post, I’ll share a few more personal details from our years of FI experience.
Sit down, strap in, and hang on.
The media seems to have jumped on the FI bandwagon, but I don’t see any of them declaring their own FI with a mic drop. Instead, they’re going for the drama, bless their hearts: giving the public the impression that we’re all black-belt frugalists living under highway overpasses and dining on fresh roadkill. We’re recycling our toilet paper and missing out on life while chortling over our 98% savings rates.
Either that or (according to other astonished journalists) we’re all white males with tech careers and $300K salaries. We’re complaining on the fatFIRE groups about how hard it is to back our Teslas up to the free EV charging stations. We all earn six figures from our side hustles and we’re adding millions of points to our Chase Sapphire Reserve rewards accounts. With our 98% savings rates.
A few articles are concerned that we have no idea what we’re doing. We’ll lose all of our (working) friends, we’ll be so bored, we’ll run out of money, we’ll lack fulfillment and wither away into miserable outcasts.
No, I’m not going to give those media outlets a backlink from this site. Here’s a better link from Paula Pant.
Personally, I think we (me included), were all snookered by that Mistress Maven of Marketing, Ms. Suze Orman herself, screeching at the crowd of stunned Afford Anything listeners about how intensely she hated the FIRE movement. Even by her drama standards, it was an epic rant– although she still managed to moderate her outrage enough to mention her book, her new show, and Oprah.
Fortunately, it turned out that mistakes were made (but not by Suze), and she was never adequately informed about what FIRE really means. A few weeks later she admitted that she’d been completely rehabilitated and she now enthusiastically supports the FIRE movement… with her book, her new show, and Oprah.
The Good News About FI
Meanwhile, we personal-finance bloggers and entrepreneurs are all growing older with the FIRE movement. (I’m still trying to avoid “maturity”.) Many of us are looking at sustainable lifestyles (not just sustainable finances) and considering our next acts. Even as J. Money grows his audience (and his net worth reports) at a record pace, he’s committed to being an at-home parent who blogs instead of a hardcore at-home blogger who parents. Kids will do that to us every time!
Military veteran Jeff Rose marked a decade of blogging with his biggest year ever. He joined a seemingly huge crowd of other successful online entrepreneurs who’ve moved to the vicinity of Franklin, Tennessee. He started 2019 with a bang by declaring that he’s sold his advisory firm and is starting a new phase of life.
In August 2018, Brandon Turner of BiggerPockets announced that the Turners were moving…
to Franklin Tennessee. No, just kidding, they moved to Maui. (Seriously!) He’s been surfing since FinCon16, he’s spent months researching the surf breaks of Oahu, and they keenly appreciate how much warmer the ocean is around Hawaii than in the Northern Pacific. I’ve watched them work every real-estate tactic that he’s ever shared with the BP audience, from “How can we find a way to afford that?” to negotiating the price and fixing the permit issues.
2018’s FinCon and the Military Influencer Conference were by far the biggest ever— so big that I met more new friends than old friends. Camp Mustache continues working its magic up in North Bend WA and a few other sites. (I feel a twinge of FOMO every time I see the latest stories, but it’s not on our radar for another year or two.) Meanwhile, CampFI has expanded like crazy, bringing a similar small-crowd weekend experience to just about everybody’s time zone. Check CampFI’s 2019 schedule and make a commitment, because they’re selling out fast.
Best of all, the “Playing With FIRE” documentary is hitting the streets soon. (The audiobook and the paperback & eBook are out this month, too.) Travis Shakespeare told me about his plans way back in 2016, and fate connected him with Scott & Taylor Rieckens to make it happen. (Scott brought me in for an interview… there was surfing… and we’ll know in a few months whether that made the editing cut.) They raised a monster six figures on Kickstarter to finish the production, but you should track down the book now… and either shell out the investment for your FIRE or ask your local public library to buy a copy for you.
(There are no affiliate links in that last paragraph. And I supported the Kickstarter campaign about 10 minutes after Scott announced it at FinCon.)
On the military side, the Department of Defense has finished implementing the biggest pension overhaul since WWII. Whether you’ve opted into the Blended Retirement System or decided to stick with legacy High Three, it’s irrevocable and we’re moving on. Now we’ll help you make the right military financial decisions to optimize your life, your career, and (possibly) your pension… in that order.
Also on the military FIRE side, my friend Grumpus Maximus had a huge year with his site, and he shared his analysis of the blinding epiphany that he can retire at 20. His military chain of command has obligingly agreed that he can start terminal leave this October. I need to connect him with a West Coast surfer (and military retiree) friend who can help with the remaining questions of longboard design.
The Other News
2018 wasn’t all unicorns and rainbows. It turns out that life after financial independence has many of the same challenges as life before FI.
Brandon Turner and Josh Dorkin have recorded over 250 episodes of the BiggerPockets podcast, but Josh announced that he was stepping down to spend more time with his family. Everyone’s doing much better but, as Josh said, they went through some truly terrible things on the road back to health. Brandon has partnered the podcast with David Greene and headed for the future. BiggerPockets is getting, well, bigger with more podcasts and their expanded book catalog.
J.D. Roth has released the surprising news that he’s no longer financially independent. He’s still doing well, and he’s living the purpose-filled life he wants, but he’s also making major changes. I suspect that this financial dip will be temporary and he’ll be back on a solid FI footing by 2020. Please read his thoughts and follow his site to watch him work through the finances of what everyone fears about life after FI.
In other surprising news, Pete & Simi Adeney have divorced. His New Year’s Eve announcement was preceded by months of speculation. Many readers were less curious about why the divorce happened and much more concerned about the impact of divorce on FI. For example, a few skeptics are re-interpreting Pete’s financial updates of 2018 through the filter of whether they were raising money to pay for the divorce or for the division of marital assets. (Spoiler: they’re doing fine financially.) As Pete says, read the comments on his site to share in the messages of hope for post-divorce happiness.
In that vein, podcasters Doc G and Paul Thompson over at “What’s Up Next?” put together a very compelling panel on divorce. It includes J.D. Roth’s long-term perspective and other well-known financial writers who’ve dealt with their divorces. The discussion is both painful and inspiring.
I’ve cited enough examples here. I’ve heard about a few other FI relationships breaking up, and several FI bloggers who are struggling through market volatility or unexpected expenses. I’ll let them share their stories in their own way.
My point (and I do have one…)
As much as this spate of “other” news reflects life’s turbulent changes, it also raises a difficult issue about blogging and podcasting and YouTube channels. When we FI exemplars seek the limelight for our philosophies and share our lifestyles as a testament to our advice, then we become public figures. (We’re public even if we don’t have those little verification marks next to our social-media handles.) We’ve all invited our audiences to watch us pursue our goals of financial independence. We’ve generally been open about the successes and the failures. Especially the failures.
The media tropes have shown what audiences really want to know about our FI movement: whether we’re blindly optimistic, or sadly deluded, or (even worse) lying liars. People want to know how our FIRE advice applies to them, not just to our lifestyles. You can study the logical & mathematical nuances of the 4% Safe Withdrawal Rate for years, and you can follow dozens of mentors, but it’s still intensely personal. Everyone feels that terrifying leap of faith to embark on your post-FI journey and make your assets last for the rest of your (long, healthy) life.
In my opinion, when our blogger personal lives take a turn for the worse then we have to keep up our public narrative. We can’t just flip a personal switch from “PUBLIC, woo-hooo!!” to “Privacy please.” The sooner the better, we should announce: “We’re going through some difficult personal issues and we’d appreciate people respecting our privacy while we work this out. We’re still FI and we’ll share our thoughts later.”
We can’t just go dark. Even worse, if we create a vast sucking void of personal silence then everyone else will fill that vacuum with speculation. When you surrender control of your story then the media’s FI obsession will bring a Suze smackdown back on you.
As a writer, I own another bias: writers have to write. If you’re going to write about all the awesomesauce in your life, then you owe it to yourself (and your loved ones) to accept the challenge of writing about the less awesome. You can’t just turn off the stage lights and walk away for a few months of solitude and silence. In fact, when you’re a writer then you NEED to write about what’s happening in your life, if for no other reason than keyboard therapy. Maybe you write because you just can’t shut up (or so I’ve heard), but perhaps your writing process helps you make sense of your life.
Take control of your narrative before someone else does it to you.
Changes To Our Family’s FI… And Our Lifestyle
Here’s my 2019 narrative for Ohana Nords: it’ll look a lot like 2018. Life is good, and it goes on.
Last June I reached 16 years of military retirement. My spouse and I have logged 19 years of financial independence. We’ve known each other for nearly 40 years and we’ve been married for over 32 years. We’ve also shared 17 years of dual-military active duty, which means that we’ve only lived together for 29 of those 32 years.
We’ve moved over a dozen times with the military, and not always together. Today we’ve lived at the same address for over 18 years, which is a personal record for each of us. I’d like to do a few more decades of that same-address lifestyle.
Our fellow Baby Boomers are experiencing that life stage when the kids are launched, the careers are winding down, and people reflect on their life choices. FI gave us a head start on our cohort, and we’ve already spent years working through those stages.
My generation’s “gray divorce” statistics are soaring, yet I feel that FI has made our marriage stronger than ever. The skills that get you to FI help you work together and share common goals in life as well as with money. Perhaps financial independence simply makes you more of what you already are.
Marge and I tend to discuss our life questions to absolute exhaustion before reaching a decision– even though we don’t always agree. Each of our major life changes means that our rules are subject to renegotiation, and we’ll keep talking through them. My spouse has very good longevity genes, and she frequently assures me that she will outlive me. I think that means we’ll have many more years together. Right? Right.
A few months ago I turned 58 years old, and now I’m only 16 months away from that fabled age of 59.5. I’ve spent years planning for early withdrawals from retirement accounts without penalties or taxes, and now that stage of my life is almost finished.
Ironically that milestone age won’t change anything. The math of the 4% SWR has a small failure rate, but it also has a much bigger success rate. More than 80% of the time, you’re going to end up with more money than you need– despite recessions, bear markets, volatility, and unexpected expenses. In our case, it’s way more. We never touched our Roth IRAs during the last 16 years, and unless we crank up our hedonic treadmill then we won’t touch them during the rest of our lives.
Once you get past FI’s first decade of “sequence of returns risk”, I’ll speculate that even divorce and eldercare won’t extinguish your FIRE. You already have assets, and you’ll be able to rebuild your wealth through a few years of cutting expenses, freelancing, and saving. Social Security will eventually kick in with its inflation-adjusted annuity.
Our investment portfolio dropped in 2018. Instead of having 258% of the money needed for our continued FI, we were down to 253%. We’ve already recovered a bit of that drop in January.
Surprisingly our 2018 spending has remained flat… again. We started our FI at the 4% SWR and our expenses have lagged behind inflation. Meanwhile, my military pension has gone up 40% in 16 years and our investment portfolio has grown faster than inflation. Having more than 2.5 times the 25x assets for a 4% SWR means that our FI is darn near bulletproof. We’re not talking yachts and private jets, but we’re certainly enjoying cruises and first-class travel hacking.
Everybody fears running out of money, but our FI spending is following the typical “retirement spending smile”. As long as your portfolio keeps up with inflation, your FI is sustainable.
During Camp Mustaches and CampFIs I’ve given a talk titled “How I Wish I’d Invested Back Then”. I’ll turn that into a blog post with detailed examples of how much more robust the finances of FI are with today’s tools.
As many of you may remember, my father passed away in November 2017 from late-stage Alzheimer’s. (I’m shocked to realize how long ago that was, because I’m still dealing with the files and the family photos.) My brother and I settled Dad’s estate by March 2018, and I’ve inherited half of it.
The inheritance won’t make a difference in our lives. I’ve put those funds into a personal account (invested in a total stock market index fund) which we’ll either give away or make our heirs very happy. My spouse and I have already self-insured for long-term care, and an inheritance won’t change that.
I’ll write more about Dad’s finances in another post. I’ve learned a lot of lessons about estate planning, settling an estate, and the emotions that go with it.
The important news about the inheritance account is that we jumped through Fidelity’s flaming circus hoops to give our daughter a durable power of attorney over it. If she ever needs to take care of us after an emergency (due to our disability) then she can tap the funds right away instead of having to petition the probate court for conservatorship. I’ll write a lot more about that as we put the rest of our assets into our revocable living trust.
Simplifying our finances.
As I settled Dad’s estate, my spouse and I realized that our finances have grown more complicated than necessary. We spent most of 2018 turning over our bill payments to her accounts. (As she says, our bills are already in autopilot and there’s nothing left for her to do!) The durable POA was a big step and our RLT will be quality lawyer time, but we’re also simplifying our asset allocation.
Over the next few tax-efficient years we’re moving to just one ETF (a total stock market index, 0.04% expense ratio) and our remaining Berkshire Hathaway “B” shares (0% expense ratio). I’m winding down my angel investments (“survivor bias” has already happened) and by my 60th birthday, our investments should be totally in autopilot.
Rebalancing? Nah. We’ll spend the ETF’s 1.8% dividends and sell the shares as needed (at lower capital-gains income-tax rates).
We stopped budgeting over three years ago, and now we track our spending in autopilot. Personal Capital has already helped us reduce our investment expense ratios and nudged us to raise our umbrella liability insurance. PC is our only financial tracking tool for the next few years. I hope they stay in business.
PC works very well for us because our spending is largely flat (in the long term) with a few lumps (in the short term). Our spending has lagged inflation for over 16 years, even as we broaden our slow-travel lives. We enjoy buying used stuff and flexing our DIY skills, which means extended sweat equity (and low recurring expenses) punctuated by rare replacement purchases.
We’ll continue blowing out bigger bucks for months of slow travel. (Mostly for AirBnB apartments, because we prefer military Space A for our air travel.) We joke about “travel while you can”, yet we’re very glad that we reached FI while we’re young enough to have many years of travel left in us.
Our 2006 Prius is running great but it’s racking up expensive repairs in auxiliary systems, so we gave it away and we bought a 2015 Nissan Leaf electric vehicle. We’ll recharge its battery from our photovoltaic array, which means that I’ll buy a few more solar panels. We’ll knock about $400/year off our vehicle operating expenses. The Leaf needs almost no maintenance, although our second car (a 2005 Prius) still has oil changes and other gas-engine chores. The Leaf is the ultimate in engineering nerd frugal cool… and way more entertainment per dollar than a Tesla.
Now that I’m no longer under the benevolent supervision of the probate court (for my father’s finances), I’m free to disclose more updates about my health. No worries, as the doctors say I’m doing “as well as can be expected for a man of your age”. (What the heck happened?!?) Much to my surprise, there are signs that I may be mortal after all.
My knee injuries and hearing losses are having their way with me like so many other military veterans. My muscle fatigue, recovery time, and stiff joints are more insulting every year. I also have a few genetic zingers which I’m minimizing with a healthy lifestyle. Luckily I know many ways to paddle around on the water, and I’m going to keep paddling as long as I can.
I’ll share more “financial life planning” details in another post.
Once again I’m very glad that we made FI a priority, and I’m keenly aware of unpredictable lifespans. If you’re afraid of the 4% SWR’s sustainability then I’ll put that into perspective with some bigger life fears. You never know how much time you have left, and you might not want to spend it in the workplace. It’s worth pursuing FI earlier in life so that you’re not deprived of your remaining life.
Speaking of traveling while we still can, my spouse and I will be at CampFI Mid-Atlantic on 24-27 May in Spring Grove VA. Add your name to the standby list, because you’re in for a unique reunion. Justin (RootOfGood) and I have been online friends for over 15 years, and this will be the first time we meet IRL! You’ll want to witness this epic gathering. Please take pictures.
This fall we’ll be in Washington DC for FinCon19 (4-7 September) and the Military Influencer Conference (8-10 September). Afterward we’ll scamper for a Space A flight to attend our first Chautauqua in Portugal (21-28 September). We expect to spend October and November roaming the Iberian Peninsula. Seeing all those old buildings and ancient olive orchids makes us feel young again.
More of the FI crowd.
2018 changed many lives, but perhaps those are just the media’s attention-getting headlines. Consider the longevity of other FI rockstars, and understand that the FIRE lifestyle is sustainable.
Vicki Robin has put out a new call to the “Your Money Or Your Life” community, and rumor is that she’s working on another book. (She’s my longevity role model.) John Greaney has 25 years of experience with the 4% SWR and lots of advice for health insurance. He’s a 20th-century FIRE godfather. Meanwhile, Billy & Akaisha Kaderli continue to wander the world after nearly three decades of perpetual expat travel. Their net worth has also risen faster than inflation.
Our FI life seems pretty tame compared to their examples, let alone the media’s drama of 2018. I had plenty of excitement during my military years, and I’m happy to settle down to a more mellow routine.
We planned for the worst but we’re experiencing the best. Your FI life could be like that too.
Your Call To Action:
The Military Guide to Financial Independence and Retirement Price: By Doug Nordman: This book provides servicemembers, veterans, and their families with a critical roadmap for becoming financially independent.