Reaching Financial Independence

Reaching Financial Independence

Howdy $wanigans! How are you on this fine day? I’ve been thinking lately of when the actual day comes that I retire. Specifically, how I will explain reaching financial independence and retiring (for good…) in my 30s. To me it was fairly simple and straightforward. But why is the average savings rate in the US a mere ~5% while I somehow have managed to save over 50% of my salary for the last 10 years. How is that simple?

Well it is simple, but not easy.

The Declaration

While I haven’t actually retired yet and don’t necessarily plan on it for another 5 years, I do consider myself financially independent. And that is the first time those words have come out of my mouth (or fingertips…). What a declaration!

How can I consider myself financially independent? Well, my net worth is currently hovering around $1.5 million. Using the trusty 4% rule, that means I could theoretically spend $60K annually for the rest of my life and not run out of money. However, I have historically preached and used the 3.5% as my safe withdrawal rate as I’m fairly conservative and prefer to be safe rather than sorry. A 3.5% safe withdrawal rate represents $52.5K of annual spending in retirement.

Right now, my annual spend is ~$47K*. Therefore, I’ve reached a fairly comfortable status of financial independence.

So why don’t I retire right now? While I consider myself financially independent based on my current level of spending, I’m not entirely sure how my spending will evolve over the next (hopefully…) 60 years of my retired life. Again, I’d rather be safe than sorry and I don’t mind working a few more years to resolve all doubt. If I pass on a few million to my kids or a charity of my behest, that isn’t the worst thing in the world. Plus, I’m only 32. If I were 62, my answer would likely change and I’d be much more eager to retire (and have a much better guess of my spending over the remainder of retirement). After all, time is finite.

The Explanation

How will I tell people that I’m able and comfortable to retire in my mid-30s? That won’t be easy. I can’t help but think of my wife’s family (her parents and her brother’s family). My family is fairly open with finances and understand my intentions to retire early. My wife’s side of the family though, not so much…

My in-laws, ~30 years my senior, are on a similar retirement timeline as my wife and I. That is they will be looking to retire in the next 5 years or so…They know we have done well with our careers, but I don’t think they have any sense of how much we actually make.

They know we are fairly frugal, but they’d be shocked to know we’re frugal millionaires. And they know we’re smart with our money, but who retires in their 30s?

My brother-in-law’s family…I’m fairly certain they are on the opposite end of the personal finance spectrum as us. They are the typical American family. He makes solid money and his wife stays at home with the kiddo. Although we aren’t open with each other about finances, it is fairly easy to tell they spend about what they make. You can just see it in their mannerisms and spending habits. They save, but I wouldn’t guess it is all too much in terms of percent of salary. Especially considering they live in a high cost of living location; Washington DC.

So how do I explain to them, or pretty much anyone else we encounter, how we retired early?

I’ve Worked My Ass Off

While I’m no Einstein, I’ve made up for it with hard work. Surprised? After all, my mantra is “work harder, work smarter…”!

My mindset has, and still is, that if I can graduate near the top of my class in undergraduate and graduate school, then I should be able to come out with a high salary and generate income and wealth in the top percentiles of the population.

While, admittedly, I’m not the smartest, a little hard work can go a long way. That’s why I work hard, and as smart as I can. Anything to maximize my salary and potential. While I may have to work harder than some, it is worth it to put myself in the top percentiles of wealth.

I worked summers in high school and college, paid half of my college costs, graduated in three years, earned a graduate degree with distinction from a top public university, did what I needed to in order to advance my career, and have reaped some monetary rewards because of it.

As you can read between the lines, I sacrificed a lot personal time and work life balance by working young, getting a graduate degree during nights and weekends, and regularly working 60-70+ hours per week. This sacrifice was worth it to me and my family. It isn’t a sacrifice everyone is willing to take, but if you are then rest assured that hard work pays off.

In retrospect, working my ass off was the biggest sacrifice I made on my journey to financial independence. But nothing worth having comes easy. I’m 32. I’m financially independent. I have the rest of my life to make up for lost time.

I’m Stingy as F***

I hate to splurge. It goes against every fiber in my body. Every major purchase has been examined for its worth and value. I optimize…and track spending to the cent. Then I optimize some more. I’ve never stopped optimizing. For example, two years ago my wife began cutting my hair at home.

There is always something to optimize and optimization adds up. It adds up each day, month and year. And it certainly adds up over decades. That was the view and mentality I had on my road to financial independence.

I questioned spending money for practically everything over my ~11 year adult life. Although not a perfect record, it’s pretty darn good. I would get cash from my parents for my birthday. They told me to go buy something special. I did. Index funds.

You think I would buy my coffee from Starbucks?

In this day-in-age, you think I’d pay for a cable package?

Pay someone to cut my hair for me?

The list goes on and on.

I “insource” or go without for about everything I can. My wife and I carpool (~90% of the time). I even insourced my utilities as much as I could (thank you solar panels…)! That’s right, I generate my own electricity! In the words of Alan Donegan on the ChooseFI podcast, it is the “Aggregation of Marginal Gains”. And don’t think they don’t aggregate…

But I still pay for what I want.

No Sacrifice

While being stingy as f***, I won’t say I’ve really sacrificed. The things I value most in life I’ve kept, the things I don’t I’ve cut out.

Yes, I’m stingy, but I don’t value any of those things listed above. Things I don’t value, I cut out, and I cut out ruthlessly.

However, I am willing to part ways with my hard earned money for certain things I do value (of course after finding the best deal I can…).

I have a 55 inch tv (to watch my over-the-air channels and streaming networks).

I bought a new car.

We take nice vacations.

We own a nice, ~3,000 s.f. house.

Our boys are in swim lessons (yes, both boys ages 9 months and ~4 years).

I got LASIK (PRK actually…).

I’m loosening up now, but that’s because frugalness is a means to an end for me. The power of financial independence means I have the power to spend on things I value to no extent.

No Remorse

So how do I tell this to others without them feeling remorse for their own path. If I heard this all for the first time when I was nearing the end of a 40 year career, I’d likely feel like I missed the boat. Or have just been wandering aimlessly. Of course that is coming from my jaded and biased point of view.

In the case of my brother-in-law’s family, they spend lots of money and don’t seem too bothered by it. And because of that, I don’t expect they’ll change their behavior once they know we’re ditching the grind. No doubt that it would take them a significant shift in mindset if they tried to follow suit. And who’s to say that their current mindset is wrong for them. There are certainly people out there perfectly happy in their decision to spend what they earn with little buffer. It’s obviously a choice they’re making and who is it for me to say they’ve not adequately weighed all options.

Nonetheless, it is tough to come out with the news of early retirement to folks like this. Maybe they’ll have no remorse for their own path. Maybe they will. But either way, what’s there for me to say about it. “Awkward…”

I’m reminded of the Dumb and Dumber line, “Well, see you later.”

Thanks for taking a look!

The Green Swan


*Does not include the ~$18K of annual daycare we spend on my two boys, but if I were retired I wouldn’t be spending this…

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  1. Awesome man!!

    I know this is your personal decision and also you stated the reasons for still working, but even Mr. Money Mustache has made more money in his retirement than expected.

    If you love your job great – then do it! You still have F-You money!

    If you begin to find it being a dragggg, well you can always find something else you like more to do and still be safe while doing so.

    Congrats to you for the declaration!

    1. Great point Chris! Just like MMM, I would expect to still be doing something that might bring in a little spending money and additional cushion. Always nice to have the comfort of F You money!

  2. Congratulations. Being FI and still working is the best of both worlds, I think. That is where I’m at too. It gives you a lot of options to adjust your life however you want without stressing much about being fired. I actually enjoy my work now (after FI) more than I used to. I focus on doing only what I want to do and what I’m good at and it made me more efficient. Being FI gives you confidence and power when negotiating hours, compensation, etc.

    1. That’s awesome WealthyDoc! Sounds like you’re in a great position. That played out perfect for you and you still are rolling in extra dough! Thanks for sharing! Hopefully my FI scenario follows suit 🙂

  3. Wow, congrats to you on reaching FI and such a huge net worth at such a young age. If your job isn’t bad and you still enjoy it then you should continue to work. You can just keep padding the stash and with your frugal habits you’ll end up a multi-millionaire.

    I’m semi-FIRE at part time now and even with the 3.5% rule I have some padding as well. But I’m staying part time to keep my health benefits. It’s just piece of mind, and I still enjoy going to work 20 hours a week to stay in the game and stimulated for that part of my interests. It’s a decent balance for me right now.

    1. Thanks Accidental FIRE! That’s awesome for! I could see myself or my wife (or both) doing a part time gig for the extra cash, social benefits of getting out, and also the healthcare and other employment benefits. It sounds like a very nice and comfortable life to me!

      Thanks for sharing!

  4. Congrats on FI. We are in a similar situation. My work is very much optional. I decided to ditch the corporate job and start a consulting company. I lined up my first contract for a year. Best part, they agreed to let me work only 20 hours per week.

    I truly believe 20 hours is the best number of hours to work. You still feel engaged, but it doesn’t occupy your entire life. Not to mention, my stress is gone.

    1. Awesome! Good for you for making the jump to consulting and self employment! I presume with consulting you may actually be getting a better hourly wage too. Maybe not now having just started out but eventually. That’s awesome.

      There are some folks who have turned to consulting from my current role so it’s nice to know that path is there for me too. I also could see my employer allowing me to go half time. Something to consider down the road!

      Thanks for sharing!

  5. Congrats on reaching financial Independence JW! What an incredible accomplishment. Sounds like breaking the news to family is causing some consternation but I wouldn’t worry too much. Just keep doing your thing. You can always tell them that your side businesses have taken off and allowed you to escape the grind. Hope you get some peace of mind knowing you have enough money to last you and your family for life 🙂

    1. Thanks! Yes I sort of dread breaking the news to my wife’s side of the family… No sense in worrying about it now though. But the day will come…

      It is a nice peace of mind. I’ve noticed over the last year or so I don’t worry about money as much!

  6. Congrats on reaching fi. I’ve found the best way to handle it is just not to say anything honestly. If I were to quit my job I’d probably let people believe I’m self employed. It wouldn’t fully be a lie as I’ll probably always have some hustle going to keep me from being bored.

    1. Yeah that seems like a good route! That would probably work well for co workers but my wife’s family might ask a lot of questions. We could probably spin it a little though. Good idea.

  7. About a month ago I realized I did not intend to retire. Instead I want to work on my own terms. Does this mean I usher at the ballpark at minimum wage? If I want to. Does it mean I buy more rental properties and manage them myself? Ditto. Does it mean I take a job writing software again? Heheheh.

    1. That’s interesting, Steve! And good for you. It’s always nice to have that option to work on your own terms and maximize your enjoyment from it! I could do security at the ballpark too! 😀

  8. Well done mate! Hard work, frugality and perseverance does pay off in the long run (albeit 10 years is really not that long). Hat tip to you sir. Hope to join you in a couple of years.

    1. Not long at all! Certainly beats signing up for a 40+ year career out of college. Thanks and best of luck as you near your finish line!

  9. As I ride the wave of this wave of this multi year bull run, my #’s have gone up quite a bit as well. I find it hard to estimate how many years expenses I have since my run rate while the kids are making there way through college have been / and will continue to be the most expensive of my life. I decided I will nearly fully fund their college before I slow down. That said…..I’m mid way 6 years into a 11 year cycle (1 year of overlap) for 3 kids. So in 5 years, I hope to be debating the problem you are which is how to tell people who won’t stop asking. While I have plenty of time to work on that message, it’s going to go something like this. I work from home now. This will be true as I plan to go from full to part time at first, I just expect the part time to be variable as time goes on. Best of luck, and congrats at such a young age.

    1. Boy that’s a tough 11 year slog but as a parent you should feel proud to be able to do that! Hopefully it’s in-state tuition! 😀

      That’s a good idea to just say you’re working from home as you transition from truly working from home part time to retirement. I’ll consider that too!

      Thanks for sharing, Chris!

  10. Great info, and congratulations. I wish I had this info around when I was younger too – I pissed away way too much money before I caught the FIRE bug at 36. From then, its been a slow, steady progress up.

    Like you, I could say I am financially independent now, but that would be counting on social security, and I don’t want to do that. So its another 30 months before FI and I can take a “sabbatical” from my current work.

    Like you, I will probably continue to work even after reaching FI, but only doing something that I really like.

    1. It’s a life changing experience no matter when you catch the FIRE bug. 30 months is no time and that “sabbatical” will be glorious! I look forward to that day. Thanks for sharing!

  11. Hey, JW. You and Lucy rock. Love your story and love your attitude. Work hard, be stingy as f*** when it comes to meaningless stuff, splurge on the stuff that’s important to you, and ignore those who don’t understand. That, my friend, is the recipe for an awesome life–and financial independence. Thanks for sharing.

  12. Hard work and self discipline can result in great gains and improvement. Sounds like you have both.

    On the spending money on things you value topic, getting LASIK was one of the best life improvements I’ve made. I had really bad vision. It’s so nice to wake up and actually be able to see the time on the bedside clock.

    1. I agree on lasik! It was hard for me to convince myself to get it but in so glad I did. I underestimated the improvement in quality of life which had been great. No regrets!

  13. Love this post.

    If I retired in my 30s and were questioned about it by strangers, I’d create a story. I might make it sound real (I received an accident settlement) or crazy (I decided to cash in my off shore accounts), or get totally bizarre (and say it’s from a patent — then rattle off some jargon about a nonsensical patent). With your brother-in-law I’d probably say as little as possible.

    I think you might be on to an alternate byline: No Sacrifice, No Remorse

    1. Haha I like that! I’ll have to get my creative juices flowing and come up with a good story! How about that I’m a prolific thief and ask them if they’ve ever seen Oceans 11?

      Great tagline! 😀 Simple and oh so honest!

  14. Hi JW,
    Congratulations on being able to be in such a monumental position – I can only imagine how tricky that must be to tell others, but dont be embarrassed – as you say you worked your a$$ off for it and were sensible!
    Congrats again, and enjoy!

  15. You have the business with your brothers, if too many awkward questions come up. You are ‘focusing on the family business’. Which could also just mean focusing on your family, which includes you & doing what fulfills you (that isn’t a 9-5).

    Congratulations on being FI!

  16. Wow, you’re at incredible age and has achieved incredible outcome on FI. You have really hit the jackpot based on your own merits.

  17. Congratulations on reaching FI. I wonder, however, once you hit total FI that you will “splurge” a little more (e.g. a trip around the world….done, of course, with points or AirBNB or that kind of thing)? How are you “rewarding” yourself?

    1. It certainly will be nice to enjoy some more creature comforts. I think my wife and I would like to reward ourselves with some nice home renovations including a new master bath and updated bonus room / den, etc. A trip around the world would be awesome too, certainly, and our travel budget will get a boost in retirement. That’s about all I can think of now. What would be at the top of your list?

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