1500 Days to Freedom

Think different and escape the rat race.

Richer In Retirement

by 28 Comments

I vividly remember struggling with money at university. My apartment was paid for, but I supported myself otherwise. I had a part-time job at a computer lab that paid $4.25/hour. From this money, I had to buy food and everything else.

My diet suffered the most. I’d buy the cheapest tomato sauce and cook a huge batch of noodles on Sunday evening. Then, I’d eat spaghetti all week. Every week. Lunch was peanut butter and jelly sandwiches. All week. Every week.

My food drought ended when I started working a real job after graduation. The first thing I bought with my first paycheck was a pound of ground beef.

Twenty Years Later

At the time I bought that pound of ground beef 20 years ago, life was a lot different:

  • Debt: I had so much debt that if I was in a Harry Potter book, my name would have been Dumbledebt. That was a horrible joke, but I’m tired. Forgive me. Anyway, I was in the hole to the tune of $60,000 (50K in student loans and 10K in credit cards). I felt buried. Now, my net worth sits at $2,300,000. Life is good.
  • Sloppy Joe: With that first pound of beef, I made sloppy joes. That was one of my most memorable meals of all time. And, I still love sloppy joes to this day. My debt may be gone, but my shitty tastes still exist.
  • $37,000: My first job paid me around $37,000/year. I felt that I was making loads of money. This past weekend I was at a community college and glanced at a job board for students. One part-time student job offered pay of $18/hour or about $36,000/year. Sigh…

Fast forward 20 years and I’m now done with formal work. Despite not having a job, this has been a lucrative month:

  • Trailer park (elevated living estates to the politically ultra-correct): $12,867
  • Syndication deals: $1,500
  • Coworking space: $1,000
  • Mortgage notes: $500
  • Private loan: $293

$16,160! BOOM!

That is a lot of money to make in one month. And I’m not even including blog money (it isn’t much) or wife revenue (it’s a bit healthier). Also, the month isn’t even over yet.

And these income streams will continue to grow:

  • Trailer park: We still have elevated living units for sale and four lots to develop. The park won’t hit its full money-printing potential until late 2020 or 2021.
  • Syndications: I just signed up for my biggest syndication deal yet ($100,000) and it will start paying out shortly. The others will continue to increase payments as the syndicators rehab the properties and raise rents.
  • Coworking space: We’re growing memberships and improving the space. Warning! Shameless (and idiotic) plug ahead:
Join today!

And then there will be new income streams. Mindy and I just bought another home and will rent our current one out. I’ve thought about starting another small business. I have a friend that I may partner with who wants to buy properties for vacation rentals. On and on.

What we’re doing is building momentum. We’re far more interested in making a lot of money long-term than generating short-term cash flow.

And no lifestyle inflation over here either. We’ve spent $3,782 in October. The surplus for the month is over $12,000.

Just when I need money the least, we have more of it than ever.

FIRE Is A Positive Feedback Loop

I first learned about positive feedback systems in university when studying the estrogen cycle in human physiology class. From Wikipedia, a positive feedback system:

Positive feedback (or exacerbating feedback) is a process that occurs in a feedback loop which exacerbates the effects of a small disturbance. That is, the effects of a peturbation on a system include an increase in the magnitude of the perturbation.

What the hell does that mean? I’ll lay it out with a simple example:

Imagine your thermostat breaks and works the opposite of how it should. Instead of the heat coming on when it gets cold, it comes on when it gets warm. So, the hotter it gets, the hotter it gets.

FIRE helps create a positive feedback loop. FIRE gives you the gift of time. Time leads to money which frees up more time which makes more money:

Here are some examples where my freedom has contributed to my bottom line:

  • New house: It took a couple of years of diligent work, but Mindy and I just scored a spectacular deal on a home. We expect to make at least $150,000 in tax-free gains when we sell it.
  • DIY fun: This new home has a pool that needs repair and a furnace that needs to be replaced. The quotes that I received for the work were $20,000 and $6,000 respectively. One of the guys who gave me a pool estimate flat out told me that ‘the job would be $5,000 if I lived in Florida where there are more pools and less competition for labor.’ I did a load of research and calculated that I could do the pool repairs for about $2,000 and replace the furnace for under $2,000. I’ve never done either job, but I’m confident that I can complete both and not drown or blow myself up.
  • Entrepreneurial adventures: I wouldn’t own a coworking space or trailer park with a job.

Not working frees me up to do what I love. It just so happens that some of the things I love to do like building things and farting around with real estate have the side-effect of making more money.

This is why I don’t worry about the 4% Rule, safe withdrawal rates, or running out of money. My income as a software developer was healthy, but I see a time when money from all of my FIREy activities surpasses it.

Of course, this won’t work if you plan to sit on the couch in pajamas and eat Cheetos. However, if that’s your plan, you should just stay at your job anyway. But, if you’ve saved enough to retire early, you’re probably a driven person who would feel miserable living a life of leisure.

The Greatest Luxury

The greatest luxury in life is time. It’s hard to truly appreciate it until you have it. Or have lost it.

The confines of a busy life constrict our time. And when we don’t have time, we don’t have mental bandwidth. When we don’t have mental bandwidth, we don’t come up with ideas or create. Time to sit around (or walk) and just think is highly underrated.

I’ve never considered myself to be a creative type of person but now that I have time, the huge list of things I want to do grows longer every day.

Because of financial independence, I believe that I’ll end up richer by measure of bank account.

However, I’m already richer in personal development and experiences which is far more important.

Life is good.

Sunset over the mountains

Join the 10s who have signed up already!

Subscribing will improve your life in incredible ways*.

*Only if your life is pretty bad to begin with.

Powered by ConvertKit

Reader Interactions

Comments

  1. The confines of a busy life constrict our time. And when we don’t have time, we don’t have mental bandwidth. When we don’t have mental bandwidth, we don’t come up with ideas or create. Time to sit around (or walk) and just think is highly underrated.
    I’ve never considered myself to be a creative type of person but now that I have time, the huge list of things I want to do grows longer every day.

    This is so perfectly stated! This is exactly why I don’t have and don’t WANT to have a full, specific plan of to-do for when I no longer punch the 40ish hour weekly clock. There’s definitely an outline, but part of me is looking forward to seeing what comes up when I have the time to just let the brain do what it’s meant to do.
    Financially Fit Mom recently posted…Getting Better at MeMy Profile

    Reply

  2. I love this post!

    Can you explain more about the syndication deal, or maybe there’s another post that I can’t find. What is it?

    Reply

    • Oh wow, they’re a diverse and complicated topic, so I’ll just throw one name at you now. This ISN’T advice and do your own research, but I like these guys a lot: https://wildhorncap.com/

      They take big apartment buildings, fix them up and then resell years later.

      With all of that said, I’ve used 4 different syndicators and all are still going. With most, the big payout is at the end when the building is sold. So, I won’t be able to tell you how any of them went for at least another couple of years.

      Reply

  3. Hi Carl,

    You are listing various streams of income that you have. But you haven’t shared your dividend income from your index funds, stock investments etc. How much are you earning in dividends every quarter?

    Best Regards,

    Dividend Growth Investor

    PS One of my first jobs was at a computer lab as well, but it paid $5.15/hour. I ate lots of lentils though..

    Reply

    • I’d LOVE to know what my dividend income is, but I’m pretty lazy when it comes to pouring over that. Do you know if there is a way I can get Personal Capital to tell me? Doing it for all of the different funds I own seems very tedious!

      Reply

      • Tedious? Nothing makes me happier than seeing fresh cash dividends deposited to my accounts. I love getting paid more and more each year for an investment/s I have done years ago..

        I don’t use Personal Capital, but wouldn’t there be a view that shows investment income, as opposed to net worth?

        Reply

        • I LOVE seeing cash come in, but in my case, dividends don’t amount to much. Here are my top holdings:

          • Facebook: $232,000
          • Amazon: $116,000
          • Google: $92,000
          • Tesla: $50,000

          Those are all growth and don’t pay a dividend. If I had to guess, my dividends are probably less than $10,000/year. I do expect that to change as the companies mature and start returning cash to investors.

          I suppose I get the same feeling as you seeing my stocks appreciate though.

          Reply

          • I thought you had a lot in index funds nowadays, which pay quarterly dividends. If you use Etrade, it shows estimated income for stocks and bonds. ( yours may be at Vanguard)

            I love dividends, and dividend growth. When you have dividend growth due to rising earnings, you can generate very good total returns too ( like Altria did in the past 60 years or so or REITs like Realty Income since 1994)

            I was just curious, didn’t mean to hijack your thread. But on a $1M index fund portfolio of VTI/VTSAX you probably would earn $20K in annual dividend income

            I do like the focus on time in financial independence, and doing things on your own terms. Ironically, when you focus on your passions and don’t need the money, is the point at which you really start making money. Like when you mustachian friend retired, and then started making a lot of money even if he didn’t need to, and even if his goal was not to make more money. Or with you, after you stopped focusing on money your wife got an awesome job, you are doing great etc.

  5. *sigh* Time…
    I chucked a sickie yesterday and had a beautiful Spring Monday all to myself. After I went and got a medical certificate to hand into work today, I had the entire day to potter around and do whatever I wanted.
    It was fabulous. I didn’t do anything earth-shattering or expensive – in fact I didn’t buy anything at all. I just lived my life and it was good.
    Can’t wait till next year when I go part time. My quality of life will be so much better.

    Reply

  6. Love the positive message of the post.

    I was in a similar debt situation as you when I graduated from college too, and I ate a ton of ramen and rice. I can remember buying that first “real” meal with my own money.

    It’s pretty amazing how far people can come in just a couple of decades.

    Reply

  7. I love the outlook, Carl, even though I don’t share it. I think many of the retirees from the past decade have enjoyed a historically good sequence of returns, and their finances reflect that. I’m expecting a fairly bad sequence (we’ll see what happens) and think there will be a lot of early retirees in this ‘cohort’ who do have to give some consideration to running out of money.

    Of course, earning big bucks during retirement certainly changes the math quite a lot. If you’re adding to the nest egg instead of drawing down, I suppose you never have to worry!

    I was good this past weekend: only three for me. 😉 Hope all is well with you, friend.
    Done by Forty recently posted…Way Too Transparent: All the Money We MadeMy Profile

    Reply

    • Yep, we’ve lived through a spectacular time in the markets. I agree that the next 10 years will probably be tough and many won’t be prepared. Blame the human nature to only think in the shortest of terms.

      But, if your spending is 40K/year and you can find a way to make 10K (an early retiree I met today does this by renting a spare bedroom on Airbnb), you’ve greatly increased your chances for long-term success.

      Reply

      • I agree. I think “pushing yourself” just a little and making like $10,000 – $15,000 a year part-time doing something you enjoy can really be a great buffer and helps with the long term math in sustaining your investment portfolio. I view it as kind of a small insurance policy.

        Reply

  8. The first time I realized I was adulting was when I could buy whatever I wanted at the grocery store. Luckily what I wanted wasn’t saffron and truffles.
    I can’t imagine how you’d drown fixing the furnace, but…wear a floaty just in case.

    Reply

  9. Do you ever worry that all these ventures will consume most of your time? Once I had enough invested and a big pad of extra on top of that I no longer wanted anything that resembled a full time paying job. I work a day or two some weeks and my volunteer work is a day or two most weeks, and that’s enough. Your load sounds bigger than that, or maybe because you are enjoying it the amount of hours worked doesn’t matter at all? I’m older and since it would be impossible for me to spend what I already have in the time I have to do it, gaining more money seems kind of pointless? I never thought I’d feel this way, but then I never thought making another million would be meaningless to me either, and it would be absolutely meaningless.

    Reply

    • “Do you ever worry that all these ventures will consume most of your time?”

      Yep, all of the time actually. I have to get better at saying “No!,” a skill I’m not good at. So far, so good. But there is a fine line. I NEVER want anything to conflict with time for the kids. The day I can’t help the children with their homework because I have business to tend to is the day I realize I’m doing something wrong.

      Reply

  11. That’s why working from home is a job that gives you as much autonomy as possible is one of the best way to have bandwidth (for thinking and creativity) while pursuing FI. I love this article! And I was just thinking about even the tiny small wins with time and money that we already feel with the traction we have. Thank for this! I doubt I will be sitting around after retiring from a corporate job, I already have tons of ideas and the list keeps growing 🙂

    Reply

  12. I agree with you about the luxury of time and that having money gives you more time to do other things besides work. When I worked in IT, I put in my 8-9 hours a day, and then all I wanted to do was sit on the couch in the evening and do nothing. Now that I am not working that JOB, I am doing something from 6:15 AM to 9:30 PM every day and not tired. Some of the stuff isn’t work, per say (like playing with my kids, taking them fishing, cooking lunch and dinner, and grocery shopping), but it’s such a better life than it was when I worked a JOB.
    Ryan Schlomer recently posted…When Life does not go as PlannedMy Profile

    Reply

  13. I love that you’ve found success post-retirement. Having time and energy makes it a lot easier to find opportunities.

    I’m a bit strange in this FIRE movement that focuses on index funds and the like, but I’ve ramped up my stock & options trading in the last year and am making more than enough to cover our monthly nut. I’m not brave enough to get into big real estate ventures. Flipping houses in our area has VERY tight margins. So I rely on my background as a former stock analyst for a mutual fund and actively trade instead of the typical FIRE streams of income.

    When I retired 3 years ago, we’d planned to live on 4-5% of our savings. We under-guessed health insurance costs by about $1,500/month ($18,000/year) and needed either to increase income or up the withdrawal rate. At the time, we just needed a break from working – so we at the extra $18,000 per year the first year. Then, we chickened out and sent one of us (my wife) back to work. She’s gotten the urge to be jobless again, so I’ve taken it upon myself to generate more income. This last year has been our test run. It was hugely beneficial to escape watching the markets for 2 years. I’m not refreshed and have found a strategy that works for our time constraints, risk tolerances, and personality.

    Long story short, I completely agree that FIRE leads to more wealth. And a higher qualify life.
    Ryan @ RoseRelish.com recently posted…Halfway Through October: Grandma’s Birthday & Big Boy BedMy Profile

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge