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Achieving financial independence is easy. Look at me. Prior to turning 45, I was a financial moron. I had nothing saved for retirement, was brimming with debt, and thought happiness came via the accumulation of unnecessary crap. And then I said enough. Started saving 50-60% of my gross income—and boom! In eleven short years, less than two weeks after I turned 55, I was financially independent and retired. How do you like me now, suckas?
Is Achieving Financial Independence Really Easy?
If I were an egomaniac, I would stick with the superficial version of my life outlined above. It would make me look pretty awesome. But it would also be a lie. I did a lot of things right once I turned 45. But there’s no way I could have achieved financial independence at age 55 without a great deal of luck. To show what I mean, consider the following.
Marrying the right person. I married Mrs. Groovy shortly before I turned 42. I knew she was level-headed and had good values. But I had no idea what financial baggage she was bringing to the marriage. And likewise for her. We never discussed finances during our courtship. It turned out that we both had ample debt and some fairly shabby financial habits and attitudes. It also turned out that our financial situation wasn’t who we really were. In other words, we were financial morons because we were just doing what everybody else was doing. Once we discovered the FIRE community, and learned that there was no law requiring us to live paycheck to paycheck, we quickly ditched the consumerist Kool-Aid and starting imbibing heavily on the FIRE Kool-Aid.
Not having kids. Because Mrs. Groovy and I got married late in life, we decided not to have kids. The thought of having teenagers when we turned 60 made us shudder. And while not having kids will always be a regret, it did have one gigantic benefit: it made life a lot less expensive. None of our income went to such things as diapers, daycare, birthday parties, dance lessons, Little League, braces, video games, SAT tutors, or 529 plans.
A willingness to pursue geoarbitrage. I live in Charlotte, North Carolina. I used to live on Long Island. Property taxes on my 2,000 sq ft home are $2,100. Property taxes on a similar home on Long Island would be around $15K. My Charlotte home cost $225K. A similar home on Long Island would easily cost $500K. I was very lucky that a beautiful, affordable community existed a mere 630 miles from New York. I was also very lucky that I married someone who couldn’t wait to leave New York.
Making the best of an epic housing boom. In 1998 a bought a one-bedroom condo for $70K. In 2006, we sold that same one-bedroom condo for $340K. After satisfying all the closing mumbo-jumbo, we walked away with a little over a quarter of a million dollars. We then used that $250K to payoff our remaining consumer debt and buy a home outright in Charlotte.
Solid household income. After moving to Charlotte, I got a job as a data analyst before the PTO from my former government job ran out. Mrs. Groovy’s transition was even easier. Her New York employer allowed her to keep her job and telecommute. Neither Mrs. Groovy nor I made killer salaries. But our household income was always slightly more than double the national median. And both of our employers provided excellent benefits. In Mrs. Groovy’s 403(b) plan, for instance, she got an 8% employer match on a 5% contribution.
Do you see how crucial luck was in my quest for financial independence? If any of the above failed to happen—if Mrs. Groovy refused to leave New York, for instance—accumulating twenty-five times my annual living expenses by the time I reached 55 would have been impossible.
Don’t Wait to Be Good
Here is my heartfelt plea to young people. DON’T WAIT TO BE GOOD! I didn’t develop solid financial habits until I was roughly 45 years old. And it worked out for me only because the financial gods, for whatever reason, decided to treat me well. Will the financial gods be as kind to you? Will they, in your fifth decade of life, favor you with a great spouse, a childless household, a fantastic geoarbitrage opportunity, a $250K tax free real estate profit, and a nice stretch of stable, well-compensated employment?
I wish it were otherwise, but here’s the cold, hard truth. The later you wait to be good financially, the more you’ll need luck to achieve financial independence. And that’s not a good plan. Luck is very fickle. It’s far better to remove luck from the equation and embrace good financial habits in your 20s.
To that end, then, I have another heartfelt plea to young people. START! Just make a concerted effort to do one of the three following action items. Each one is a gateway habit. Make any one of them part of who you are and you’ll develop an unslakable thirst for better and more consequential financial habits.
- Go to Rockstar Finance every day and read the three featured blog posts
- Use a spreadsheet to track your expenses
- Open a Roth IRA and contribute $100 a month to it
And, finally, since inertia bedevils so many people—especially young people—I’ve included this YouTube video from Brian Johnson. In it, he provides some excellent advice on how to slay the dreaded procrastination monster.
Final Thoughts
Okay, groovy freedomists, that’s all I got. What say you? Do my heartfelt pleas to young people make sense? Or are my heartfelt pleas an exercise in futility? After all, how many young people are open to the sage advice of an old fart like me? Let me know what you think when you get a chance. I’d love to hear your thoughts. Peace.
Nice post – I’m not one to claim I’ve made many great financial decisions or had the luck of the gods (yet 😉 but the mentioning of geo arbitrage makes me feel happy as it is something I aim to make full use of the coming years. Love the inspiration, feeling the FIRE lit under my, eh, bottom. Thanks !
Hey, James. Sorry for the late reply. Things have been crazy in Groovyland lately. Anyway, I’m a big fan of geoarbitrage, especially when you’re a late-starter and you need a big win to dramatically change your financial trajectory. Mrs. Groovy has been bugging me to write a how-to post on geoarbitrage. Perhaps it’s time I heeded her pleas. Thanks for stoppping by, James. I really appreciate your kind words.
Every success story I see online, is another source of positive motivation for me that FIRE is achievable and you did it while starting at 45!
I think very few people have the mindset that retiring early is possible. But the time they start to take action, they’ll be in their 30s and doubt that they can make it happen. But your journey should give anyone hope and tell them to start right away!
There is hope. But when you start late, you got to be bold. Downsizing to a tiny house or relocating to a low-cost area of the country are two examples of this. If you don’t have the stomach to flout conventionality, you’ll be doomed to working until you’re 70. Meh. I hope our message is getting through to young people. Their margin of error will be even thinner than my generation’s. Thanks for stopping by, T. I always enjoy reading what you have to say.
I’m 23 and it constantly boggles my mind how so many young people just don’t care too much about creating solid goals and working towards something.
Take emergency funds and investing for example. So many twenty-somethings operate on the “if worse comes to worse, I can have my parents bail me out” when it comes to emergencies, hence why they don’t have any sort of emergency fund. As for investing, it’s so simple nowadays, if you really want a passive completely hands off option, then throw some money into a robo-advisor like Betterment. Better than nothing.
Oh, and I love the phrase “ditched the consumerist Kool-aid” haha. You should get that printed on a shirt.
My son, with an 80% debt-service rate, took my advice to use the bank of dad as his emergency bail-out plan. I doubt I’d have counseled him so had he not already established a track-record of prudence and frugality.
LOL! Bank of Dad is the best bank around.
So true, Colin. Why are so many people, especially young people, so adverse to preparing for financial emergencies and retirement? Are we raising too many passive people? People who are perfectly fine leaving their fate to the government or their parents? Sigh. Thanks for stopping by, my friend. It’s always great hearing from a 20-something who has his financial act together.
I have been very lucky. My wife and I retired from government jobs. Thirty one years for me with no social security expected. Wife twenty seven years and paid social security here whole career. For years my work week was 96 hours. But hourly rate was one of the lowest in the state much of my career. I work parttime to complete my quarters for social security. If I qualify it may pay a bill maybe. We were always short staffed to keep benefit cost low.
Hey, Craig. Most people don’t realize that not everyone is part of the Social Security system. I worked in local government on Long Island and I paid into Social Security. But old-timers, who started working for my municipality in the 1950s, weren’t. Needless to say, they were all darn good savers. Good luck on completing your quarters. Social Security is far from perfect, but its monthly benefits, however small, will surely help. Thanks for stopping by and sharing your story. I really appreciate it.
I love the idea of geoatbitrage. We live in Southern California but he makes twice his wage as an electrician in the Bay Area. So he works up there and lives rent free with family.
Also a note on not waiting to be good. I think young people have this idea that they can’t be successful or respected or financially strong until a certain age. One of my gurus bought and flipped his first house at age 18. I say we learn to be awesome by starting now.
Hail geoarbitrage! I’m assuming by “he,” you mean your husband or boyfriend. Anyway, I’m glad he can earn Bay Area wages and take advantage of very favorable rent. Family comes in handy every once in a while. I have neighbor who is doing something similar. He got a very well-paying job in Raleigh, NC. But he and his family live across the street from me in Charlotte, NC. To avoid another housing expense while in Raleigh Monday through Thursday, he bought a used RV and lives off the grid in his workplace’s parking lot. Thanks for stopping by, Elsie. I really appreciate your thoughts.
Rockstar, spreadsheet, Roth (pension in Ireland)…simple, great advice!
Haha! The beauty of simplicity. It took me a while to appreciate it. But once I did, the good in my life far outweighed the bad. Thanks for stopping by, Catherine. It’s always great hearing from someone across the pond. Cheers.
Great advice and I picture a Winston Churchill speech during the Battle of Britain.
Getting a decent head start in my 20s allowed me to quit my job and afford a steep paycut for my 30s.
I also am a big fan of geoarbitrage. Thankfully my wife is from East TN and that made it easy to find our own little slice of heaven in that corner of the world. We couldn’t have made the career decisions we did if, say, we lived in my former home in the D.C. suburbs.
Agreed, Josh. Geoarbitrage should be on the back of everyone’s mind. And in today’s digital world, it’s even more of a no-brainer. Heck, you could be in the remotest corner of Montana, and as long as you have a satellite internet connection, you’re just as much a part of the humanity’s hubbub as someone in Times Square.
Great post. I can relate to much of your story. All we can do is make the most of what we have. Keep trying to do better. I see it as part luck and part hard work. Don’t try to be perfect. Just try to make progress.
“Don’t try to be perfect. Just try to make progress.”
Wow! In two simple sentences you distilled the essence of my post. Thank you, sir.
We relocated to the South (Atlanta burbs) from the north east back in 2009. What a great move. Better weather, vibrant job market, less taxes and cheaper real estate. We went from a small town house to a single family twice the size for half the cost. Much better quality of life. I second the geoarbitrage strategy.
Awesome, TPM. I think it all depends on your mindset. I wasn’t doing anything in New York that I couldn’t do in North Carolina. So why sit on the couch eating Doritos in New York when I can do the same far more cheaply down South. And if I really want the New York experience–there’s nothing like watching a bunch of drunks fight on the LIRR when you’re coming home from Ranger game–I can visit. Thanks for stopping by, my friend. It’s always great hearing from a fellow North-Easterner who has upgraded his life through geoarbitrage.
Great background story on you as a couple.
Impressive how you reach FI in just 10 years. I like how you break it down into a few key moments.
There were others, of course. But those were the main ones. I’m just happy Mrs. G and I were really open to the tenets of FIRE. If we weren’t, we would have wasted some really good luck.
I enjoyed reading essentially a basic wrap up of the Groovy’s life together. Always makes me smile to see people find their soulmates and help each other in every facet of life. Makes life very beautiful :3
I think Jared and I are being good, I like Mr. AE’s answer – it does give you a better chance to get lucky.
We’re pushing off having children. Jared’s turning 30 soon but I want to try motherhood later. I’m hoping my teenager would be bearable when I’m 60 and robots take over housework for us haha. If that never comes – I’ll go on permanent vacation to Asia with the monies I saved.
Haha! I love the way your mind works, Lily. Be good early and become a luck magnet. And I think you and Jared will become awesome parents. I can’t wait to see the photos of the little frugal genes when you guys are posting from Taiwan.
Better late than never Mr. Groovy. It’s great that both of you were able to realize that you can achieve FI before the standard retirement age of 59, when you can start withdrawing from your retirement account without fees.
I also like that both of you are telling the younger generation to start early because they will not regret saving and investing in their 20s or 30s.
I just hope more people will realize this and they don’t need to have advanced financial knowledge to achieve FI. Thanks for bringing more awareness!!
I had a co-worker friend back on Long Island who wasn’t SAT smart. So he was never going to become a doctor, a CEO, or a tech titan. But he was compound-interest smart. And he funded his mutual fund contributions with the money he earned from a landscaping side-hustle business he started in high school. Well, long story short, my non-SAT smart co-worker was a millionaire by the time his was 35. Not too shabby for someone who only had a high school education. Thanks for stopping by, Kris. It’s always great hearing from someone who gets it. “[You] don’t need to have advanced financial knowledge to achieve FI.” Great freakin’ insight.
Start young and you have a longer time frame to get lucky
Wish I would have stumbled upon FI when I was shot gunning keystone light 4 nights a week instead of amassing an impressively huge pile of debt that handcuffed us for 6 years 🙂
Do they make sense. Absolutely. Do they make sense to young money Morons….. probably not – but you might be the trigger!
Haha! Never enjoyed Keystone Light. Genny Cream Ale was my poison in college. And your first sentence in your comment nailed it. “Start young and you have a longer time frame to get lucky.” Lot of wisdom there, my friend.
These are excellent points. I try to give my my young adult children sound financial advice so they won’t make the same mistakes I did. I bring FIRE blogs to their attention. I hope it sinks in soon!
Thank you, Lizzy. I do the same with my nieces and nephews. They’re great kids so they tolerate my unsolicited advice. Whether they’re heeding my advice is another matter. Sigh.
I think the first step of anyone, regardless of age, when they embark upon getting their financial house in order is frugality. If you’re in debt, you don’t need to know how index, value, or dividend investing works, you just need to escape debt. Like the man says, you need gazelle intensity.
Sure, you can quibble the relative merits of snowball vs avalanche payoff methods. Just pick one and embrace the suck.
The young person can spend the time it takes getting out of debt strengthening the frugality muscles and learning how to best to invest.
Thank you, Steve. Frugality is paramount. Control your appetite and you control your world. And here’s the kicker. Most people associate frugality with deprivation. And this couldn’t be further from the truth. Is buying a four-year-old Camry rather than a brand new Lexus really synonymous with a spartan existence?
I like the 3 tips there 🙂
And killer comeback story!
Thank you J$. I always tell my nieces and nephew two things. If you want the big-picture view of economics and finances, go to realclearmarkets.com. If you want to learn how to fix and manage your personal finances, go to rockstarfinance.com.
Your heartfelt pleas make total sense. I repeat similar ones of my own to anyone that will listen. 🙂
My guess is you have many young people listening to your advice, as you are someone who’s seen both sides. Luck is only good luck when you recognize it and use it the right way.
As always, Mr. G, a wonderful post! We are lucky to read your thoughts and experiences.
Thank you, Amy. I always say to Mrs. G that we were lucky as hell. But I am proud of the fact that we were excellent stewards of our good fortune.
Great advice! While I did start investing right after college, I wish I had started even earlier. And being flexible in life (Geoarbitrage, etc) is key!
I would also add that while you should be living life, living live does not equal “YOLO” or whatever. Being 20 doesn’t automatically mean you can just splurge on frivolous things. Save for the epic vacation, but travel hack it and find unique ways to cut costs. Eat great food…maybe try making it at home.
“I would also add that while you should be living life, living live does not equal ‘YOLO’ or whatever.”
THANK YOU, Mrs. AR. No one’s saying you can’t have fun or “live.” But your fun or “living” must reflect your wallet. When you’re 20 and broke, you shouldn’t be clubbing every Friday and Saturday night. You should be going over a friend’s house with a six-pack of cheap beer. There will be plenty of time for “bottle service” at some foofoo club when you actually have some wealth. Meh.
Yes, a little luck involved in your path, but you also made your own by getting started and taking action.
Your plea to young people does make perfect sense, the sooner you can get started handling your money they better you will be. Who knows what your future will bring, but I’d much rather have my financial house in order because that will give me options.
It’s something I’m I’ve been talking to my three children about. I never want them to feel trapped.
Exactly, Brian. As the sturdiness of your financial house grows, your options multiply. I just wished I learned this truism twenty years sooner. Sigh.
Wish I learned it in my 20s too, but I don’t dwell on the past too much, just keep looking forward.
I hear ya, my friend. No sense dwelling on something you can’t change.
Great advice. I wish I had started younger with at least the Roth IRA. I had one that I contributed a small amount to when I was in high school, but stopped during college, and didn’t pick it up again until this year. UGH that was a stupid mistake!
Hey, Dave. I hear ya. But the Roth IRA is one opportunity I didn’t neglect when I was young. And that’s because the Roth didn’t exist until 1997–when I was 36 years old. But there was the traditional IRA when I entered the workforce after college and the municipality I worked for beginning in 1986 had a deferred compensation plan (i.e., a 401(k) without a match). So there was really no excuse for starting as late as I did. Thanks for stopping by, my friend. It’s always great hearing from someone who has recognized the errors of his way. Long live the Roth IRA!
I actually thought this post was going to be about volunteering and pursuing “good” causes based on the title. Perhaps I have too much of the Texas flooding nightmare on my mind.
Still – good post! 🙂
I love that you got such a late start, but really buckled down to get serious and were able to achieve your FI goal so quickly. That should be inspiring to the millions of people who are already behind on their financial goals
Hey, Brad. Thank you for your very kind words. I hope I can inspire some late starters to take the FIRE plunge. That’s the primary reason I started this blog. I wanted to show others that there is hope. But I also didn’t want to give false hope. That’s why I try to be as transparent as I can about our incredible good fortune. Thanks for stopping by, my friend. And sorry about the head-fake. A post on frugal charity is in the works.
Sounds good Mr G….It is funny how once you break the cycle of inertia the gains can be huge. I decided at 34 to get my act together. I was 2 years into my career (yup becoming a doctor takes a lot of training) and over $300 in debt….that decision 3 years ago has led me to a positive net worth and the ability to think of retirement. When I mention these thoughts to my friends they look at me like I am crazy. I am not crazy! Just motivated!
Amen, DDD. It’s amazing how comfortable consumerism, debt, and toiling just to service that debt can be. Thankfully you broke through that inertia.
P.S. Yes, you got your financial act together at 34. But to become a doctor, you had to be pretty damn disciplined from a young age. Nothing wrong with letting personal finance slide while you’re pursuing a tremendous academic achievement. Bravo, my friend.
Your heartfelt pleas make sense, especially since some of your luck can’t really be replicated by a lot of folks. Some people never find the right person to marry. Some of us have kids ( I’ll be 60 and Jon will be 68 when Little Bit heads off to college.) Some folks already live in inexpensive areas. Taxes may be higher in the future, and market returns and housing markets lower. Good jobs may get scarce with automation and globalization.
So yeah. start now, kids. Learn to let your money work for you. I’d add “whenever you get a raise, ramp up savings before ramping up spending” to your list. Other than that, looks good.
As usual, your comment contains a lot of wisdom. I agree with you 100% about the future economic headwinds young people will face. The best way to combat those headwinds is to start saving early. My generation was probably the last generation that could be oblivious to personal finance and come out okay. Sigh.
You definitely had some luck but you also made some of your own luck. Some people never make their own luck 🙂
Your advice about starting sooner is spot on. When compound interest is your friend, you become almost unstoppable.
I FIREd at 52 but Mrs. Freaky Frugal and I have always been pretty frugal. We definitely could have done more though and then I would have retired even sooner. I wish Mr. Money Mustache had been around when I was 25.
Agreed, Mr. FF. If Mr. Money Mustache were around when I was 25, the whole trajectory of my life would have changed for the better. I was very receptive to the tenets of FIRE. I was just “normal” by default. Thanks for stopping by, my friend.