Interview with James Collins from jlcollinsnh, Part One

I have known about James Collins (I’ll refer to him as “Mr. Collins” from this point forward) from almost the start of my blogging career. I learned about him while I was reading through Mr. Money Mustache and stumbled on his guest post. I remember clicking over to his site and reading a bit. Eventually I made my way to his Stock Series. More on that in a moment.

Real Life Mr. Collins

Sometimes I worry about meeting people in person. I don’t want the image I have of them to be shattered if they turn out to be a jerk. So at my first FinCon (Woodstock for financial bloggers) back in 2013, I was a bit apprehensive to talk to people. However, like 99,9% of the folks I’ve met in the personal finance community, Mr. Collins did not disappoint. Mrs. 1500 and I enjoyed the conversation we had with him and then repeated it at FinCon 2014. If you ever have a chance, I highly recommend you meet Mr. Collins in person, perhaps even at one of his Chautauquas in Ecuador. I’m planning on going in 2016. However, I have another mission today. That is, to promote Mr. Collins and his views on investing.

Mr. Collins convinced me to change direction

I’m a stubborn dude and it takes a lot to change my mind, particularly about money. However, I come here today to tell you that Mr. Collins’ Stock Series changed my mind. When I started this blog in January 2013, I barely knew what an index fund was. Now, I’m in the process of shifting most of my investments to them, mainly based on the teachings of Mr. Collins.

The paradox of the stock market is that the simplest way is the most effective way. Index funds were popularized by John Bogle and have lately been famously praised by none other than Warren Buffett. They are dead simple and amazingly effective. Isn’t it great in life when the right answer is the simple and easy one?

“There seems to be some perverse human characteristic that likes to make things difficult.” –Warren Buffett

“My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.”

–Warren Buffett in the 2013 Berkshire letter

Mr. Collins was kind enough to answer my 10 Questions last month. However, I wanted to learn more and was thrilled when Mr. Collins agreed to an interview. This was originally going to be one post, but things got out of hand to the tune of 6000 words, so I’m breaking this up into 3 parts. Today is part 1. I hope you enjoy it.

Warning: Mr. Collins is no stranger to profanity including the real F-bomb (not my click bait). If you are offended by rough vernacular, please avert your eyes. Or, at least refrain from sending me hate mail! However, if you can handle the F-bomb, do yourself a favor and watch the YouTube clip I’ve included below. This 1 minute of video will teach you everything you need to know about financial independence. And colorful metaphors.

Enough babbling, let’s kick this thing off! In part 1 of this 3 part series, you’ll learn about:

• How Mr. Collins’ beat MMM to the early retiree finish line decades ago
• What “FYM” stands for. Hint: “F” isn’t “frugal” and much naughtier than “fart”
• Mr. Collins’ hate mail

Mr. 1500: I didn’t know anything about early retirement until I discovered the Mr. Money Mustache blog. Shortly after finding MMM, I discovered that Jacob from Early Retirement Extreme preceded him. However, by applying the same concepts as them including a massive (50%) savings rate, you were actually financially independent way back in 1989 at around the age of 40. I find that fascinating and have a multi-part question based on this:

• The most common rule people go by to determine FI is the 4% rule. However, that didn’t even come out until 1998, almost a decade after you were FI. Did you realize you were financially independent at the time or did it come to you later? If you realized it, do you remember the moment? Did the heavens open and the Sun beam down on you? Did a triple rainbow appear with unicorns raining down? Or was it just another day?
• Everyone has their own vision of FI. I find that most folks continue to work hard in some form. MMM works, but on his own home and the blog. You chose to work in more traditional settings. If you knew that you were FI, how did that change your attitude toward work? Did you ever tell a boss to “stuff it” just because you could?
• Thanks to technology, the concept of early retirement and financial independence is everywhere now. MMM alone has millions of disciples throughout the world. To me, his movement (at least in the USA) may be a bit of a reaction to the crazy lifestyles that are a relatively new phenomenon (4000 square foot homes, luxury cars, vacation cottage, etc.). What do you think?

Mr. Collins: Like you, I had no idea early retirement was a thing. I only discovered it after launching my blog in 2011. I had never read or seen a blog before my own.

But writing it got me looking around and I discovered ERE and from there MMM. It was the first time I had ever come across a sub-culture with views similar to my own. Although my main motivation with my savings rate was to have money to invest. I never saw it as being frugal and certainly not as deprivation. I simply lived on 50% of what I earned as if that was all I earned. When my salary was $10,000, I lived on $5,000. When it rose to $100,000 I lived on $50,000. And so on.

I made huge investing mistakes along the way, mostly centered around picking stocks and fund managers. I resisted indexing for ~20 years after it first came to my attention. Would that I had been smarter and less stubborn. Still, it shows how powerful a savings rate can be.

In 1989 or 1990, I forget now, I quit my job with the financial research firm to pursue the acquisition of some business-to-business magazines. Publishing had been the bulk of my career. I spent five years trying and failing in this project, although by the last two it had morphed into a small consulting practice. Still, the first three of those years were totally without income.

Of course I knew I had a pretty good sized stash to carry me through, but the idea I might be financially independent never occurred to me. It simply wasn’t a concept I’d ever come across. It was never a goal.

But I did have the concept of Fuck You Money early on, which I got from James Clavell’s novel Noble House. But to me, FYM simply meant I could go a few months or years without a job. The first $5000 I saved was enough for that.

Mr. 1500 note: In the course of the interview, Mr. Collins told me about this YouTube video. It will teach you how to be FI in about 1 minute. It will also teach you how to curse. Don’t say I didn’t warn you!:

About halfway through year three, I was reviewing our net worth and I noticed something very interesting. Not only were our investments paying all the bills, our net worth was larger each year than the year before. I knew a profound line had been crossed, but it never occurred to me what to call it. In fact, it was only after starting my blog that I realized it could be called FI.

No heavens opened, no sunbeams, no angel choirs, no rainbows. But I do remember a profound sense of freedom.

It never really changed my attitude toward work. I always liked working and my career, I just didn’t like having to do it all the time. But, as I said above, I was willing to step away very early on and with only $5000 to my name. In fact, it was only when I quit my last job in 2011 that it was with the thought that I’d never have another.

The closest I ever came to telling a boss to “stuff it” was when I got into a screaming match with the owner of the investment firm. A long story I’ll share with you some time. But I didn’t quit and, amazingly, he didn’t fire me. In fact, he started treating me much better. But then, he was a classic bully and that’s classic bully behavior.

In 1995, I finally gave up the acquisition search and went back to being a publisher for a company I had called on for consulting work. It got me back in the game at a time I wanted to get back in and I made the owner a lot of money. But we never really saw eye-to-eye.

After four years working there, I came back from a vacation one day. My second day back, Tuesday, he and I had a previously scheduled meeting. I forget about what. In any case, I was sitting there listening to him talk about some business related thing or another and I remember thinking just how far apart we were in our approach. Suddenly I heard myself saying, “You know Bill, I think maybe the time has come for us to part company and I hope we can do that as friends.”

Understand, I hadn’t planned this. I hadn’t been thinking of quitting. I hadn’t been looking for another job. I didn’t even have an up-to-date resume. But clearly my subconscious had been at work.

I’ll give him credit. He looked at me calmly and said, “Let’s not make any hasty decisions. Why don’t we both think about this and meet again Thursday.” I said that sounded good.

That night, my wife asked me, as always, “So how was your day honey?”

“I’m not entirely sure,” I said, “But I think I just quit my job.”

She said, “I’m surprised it took you so long.”

Thursday I quit and we indeed parted friends.

I think the concept of FI appears to be everywhere to us because that’s the world we live in with our blogs. Let’s look at some numbers, using MMM as a proxy. Last summer, if I remember correctly, Pete (MMM) told me he was getting about 1 million page views a month. If his readership is anything like mine, that would be about 300,000 readers. Let’s say it has doubled since then to 2 million/600k. Or tripled to 3 million/900k. Heck, let’s call it an even 1,000,000 readers. We won’t even ask how many of those are serious about it.

There are ~330,000,000 people in the US, ~7,500,000,000 in the world. The vast majority are either living the consumer lifestyle or desperately aspire to it.

We are still very much the odd ones out.

That said, until 2011 and about six months after my blog launch I had no idea there was anybody else like me, so finding this whole new world has been kinda nice.

Indeed, over the years while I was just doing what came and felt natural to me, it put me very much out of step with my peers. I was careful not show my cards. It would have made them very uncomfortable and would have interfered with my work and personal relationships. I was, you might say, in the closet.

In fact, there were several times along the way when I resolved to live a more conventional life, one more in keeping with my income. But I just couldn’t work up enough enthusiasm to make the effort and, thankfully, mostly failed in doing so.

Mr. 1500: Every blogger receives hate mail or nasty comments once in a while. I’ve received some very vulgar emails inviting me to perform disgusting acts on…, well never mind. Do you ever get hate mail? Has some demented person ever said something like, “If you like index funds, Vanguard and Jack Bogle so much, why don’t you marry them?” Or something worse?

Mr. Collins: Actually, I have gotten very little on my blog, and I’ve only deleted two that I can remember. Early on was one with a vulgar comment about my daughter. Zap! The other was just this week. Some guy noticed in a picture of a group of people I had posted that one fellow (not me!) was picking his nose. He rather gleefully pointed it out. I didn’t want that kind of mean spirited mockery on my site, so I deleted it.

Most of the nasty stuff I see appears on other sites, which I’m grateful for. This being the case, I probably miss a lot of it.

But my favorite on my site was the guy who posted this in the comments:

“I don’t know if you care, but the gurus on Reddit think you’re a moron.” This followed by a link to Reddit where, indeed, they were discussing what a moron I am.

To this day I can’t decide whether this guy was a friend giving me a heads up or just trying to put a stick in my eye. I debated with myself on leaving it up, but in the end I did. After all, my readers have a right to know I’m a moron.

Given my frequent cheerleading for Vanguard, I am a little surprised no one has accused me of being on the take. So I brought it up myself in this post: http://jlcollinsnh.com/2012/09/07/stocks-part-x-what-if-vanguard-gets-nuked/

That’s all for today. Be sure to tune in next week when you’ll learn about:

• Future plans for Mr. Collins’ Stock Series 
• How Mrs. 1500 is like a mule and what this has to do with Mr. Collins
• The upcoming, special edition, collectors only Mr. Collins Beanie Baby