Hack Your Wealth

#45: Early retirement must be executed differently, and very intentionally, with kids. There are no easy, silver-bullet solutions.

I think about this topic often. And, ever since my kiddo popped out a few years ago, I’ve made real changes to my financial planning in response – from building larger, stronger passive income streams to doing very detailed financial analysis of kid costs that, in turn, have influenced our planning decisions.

This week, I invited to the podcast Michael Quan, an early retiree (now blogger) with 2 kids who founded and ran an IT services company for a decade before selling it (and not for “FU money” btw) and retiring. I ask about Michael’s mindset, actions, and challenges he faced when early retiring with kids.

We discuss:

• How the financial crisis motivated Michael to start his own company
• How much he had saved up on the day he retired vs. where his portfolio is at now
• When did kids enter the picture relative to his retirement date
• How kids impacted the family budget, including lifestyle trade-offs they made to accommodate
• Key areas where early retirement actually brought significant savings
• How Michael spends his days now
• How having kids has influenced the way he thinks about wealth building

What resonated with you from Michael’s story? What seemed less relevant to your own situation? Let me know by leaving a comment when you’re done.

Also: I want to bring on more guests who have FIRE’d with kids.

Michael’s is one story, and hopefully you got good nuggets of insight from it, but it’s not the only story. If you know a good potential guest (early retiree family with unique story), tell me about them. I’d love to reach out.

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Links mentioned in this episode:

• Financially Alert
• Breakthrough Millionaire Podcast
• The FIRE Planner book
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#44: One common trait of ordinary people who accomplish extraordinary things is their ability to turn personal struggle and tragedy into resilient energy channeled toward big goals.

And one of the most challenging tragedies ordinary people commonly face is the death of an immediate family member.

This week, I talk with Adam Fortuna, an engineer who turned his mother’s untimely death into motivation to achieve financial independence and retire early – which he did at age 36 with a portfolio >$2M.

We discuss:

• How Adam got into software development, then transitioned into product management
• How his mother’s premature death suddenly forced him to figure out how to manage and invest assets…and why it made him realize he wanted to retire early
• How he applied an estimation technique used in the software development industry to come up with his FIRE number
• Why moving states cost him 6 figures in taxes
• How his boss reacted when he pulled the trigger and gave notice
• How his portfolio crashed 30% when he quit his job…and why that didn’t faze him
• Why he scrutinizes trailing averages (rather than specific months) when analyzing his safe withdrawal rate
• How he uses the 4% rule as a heuristic, but doesn’t apply it strictly
• How he handles health insurance post-retirement
• The simple Google spreadsheet plugin he uses to import all his financial data into Google sheets for manual number crunching

What personal life events motivated YOU to get smart about your finances? How would a windfall impact your retirement plans? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Minafi
• Tiller (automatically export personal finance data into Google spreadsheets)
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#43: People spend way too much time scrutinizing examples of early retirees who just recently FIRE’d and not nearly enough time on early retirees who actually made it through decades of retirement.

That’s why there’s a whole cottage industry of blogs and books by recent retirees dispensing advice (and downloadable spreadsheets) on how to save a million bucks, retire to Southeast Asia, and sip mango juice all day and get cheap massages.

But there’s nothing to actually scrutinize in these examples because no one really miscalculates their nest egg so badly that they have to go back to work within a few years.

We should spend more effort analyzing examples of people who actually successfully STAYED retired for decades. (And I don’t mean folks with $10s of millions.)

That’s because the shockingly simple math to get TO early retirement is different from the shockingly un-simple math to get THROUGH early retirement.

Yet there are few and far between examples of early retirees who actually made it through decades, weathered all the ups and downs intact, lived a good and fulfilling life, and are still in good physical and financial shape.

So you can imagine how excited I was to speak with today’s guests, a senior couple who achieved precisely this.

This week, I chat with Billy and Akaisha Kaderli, a husband wife couple who early retired 3 DECADES ago in 1991 and are still going strong. With one full 30-year retirement already behind them and a nest egg that is bigger than ever, Billy and Akaisha have traveled the world across decades, lived a great life, and have tons of stories and advice to share.

We discuss:

• Their varied career path before retirement (French chef, stock broker)
• Why they decided to retire early long before a FIRE community existed
• Why they decided not to tell anyone about their early retirement plans
• Why they defined their FIRE number based on only a subset of their expenses (and which expenses those were)
• What they invested in before there were ETFs, and how big their portfolio was on the day they retired
• How they planned their travels via a multi-year loop over the decades, and how they chose regional “home bases” around the world
• When they decide to travel together vs. solo
• How large their portfolio is now 3 decades later
• How they afforded healthcare over the decades (including emergency surgeries) with no health insurance…and without bankrupting themselves
• How they dealt with downturns and recessions over the decades…including the one time they briefly considered going back to get a j-o-b (and why they decided against it)
• What they would have done differently if they could do it all over again

Does Billy and Akaisha’s story change your view on what it takes to get to FIRE? What it takes to successfully live a good and full retirement life for decades? Does it influence any choices you might make in your retirement planning plans? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Retire Early Lifestyle
• Retire Early Lifestyle bookstore
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#42: A big reason why I started HYW was to show how you can “hack systems” in large and small ways – whether related to taxes, travel, real estate, etc – to achieve FI and retire early…

…and to continue growing wealth even in retirement.

That’s probably why many readers are engineers: you likely know a thing or two about hacking / optimizing systems.

That’s also probably why there are many ex-engineers in the FIRE community.

Today’s guests, who were engineers before early retiring, were one of the first folks in the FIRE community I started following a few years ago.

So it’s a real treat to talk with Kristy Shen and Bryce Leung, millennial early retirees who quit well-paying engineering jobs to travel the world, initially, for one year…but decided – after analyzing their spend that year and realizing it cost less to travel than to live in their hometown – to do it for good. (Along the way, they also wrote a popular FIRE blog and best-selling book.)

Their story is about applying simple rules of thumb to saving and investing to build a 7-figure portfolio and retire early, then optimizing your investments efficiently to withdraw safely into perpetuity.

We discuss:

• What motivated them to leave well-paying engineering jobs
• How they came up with their FIRE number and what they invested in
• Why they rebelled against conventional wisdom to buy a home
• How they stayed focused as friends and colleagues upgraded their lifestyles…and how they eventually became the envy of peers back home
• Why their parents objected but eventually came around (and what convinced them)
• The moment they realized it was cheaper to travel than to stay at home
• How big their portfolio was on the day they retired and how big it is now (after traveling over the years)
• How they use a “yield shield” to structure their withdrawals so they never have to sell in a down-market (and how long their cash buffer will last)
• How their mindset shifted from “traveling to consume” to “traveling to learn”
• How they deal with loneliness when traveling for long stretches
• How they handle health insurance after losing their universal coverage
• How getting older and potentially starting a family may change their travel lifestyle in the future

Would you travel long-term – potentially forever – in early retirement? Do you agree with Kristy’s and Bryce’s views on homeownership? What are your reactions to their safe withdrawal strategy (yield shield)? Let me know by leaving a comment!

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Links mentioned in this episode:

• Millennial Revolution
• FIRE explained in Mandarin
• Kristy's and Bryce's book: Quit Like a Millionaire
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#41: Is it crazy to quit a high-paying law firm job to take a lower-paying law job (not in a law firm)?

The majority of lawyers will say no. Because that’s what most lawyers who start their careers in law firms do! Whether it’s for better hours, better balance, less travel, whatever.

Now, is it crazy to quit being a lawyer to do something completely non-law related?

Again, most lawyers will say no – because tons of lawyers do exactly that.

But: is it crazy to quit the law to…deliver for DoorDash, shop for Instacart, be a dog walker, or recharge Lime scooters?

The first time I read today’s guest’s story, I admit I thought so. Why would you seemingly throw away a promising legal career to be a manual gig laborer, when there are plenty of folks who would dream about doing the opposite?

Then I realized two things.

1. I should be the last person to critique this because I myself “threw away” a legal career for a totally non-law path. Granted, I didn’t do it for manual labor, but it also wasn’t conventional by any means.
2. It’s not my place (or yours or anyone’s) to judge the career choices of others. What makes people happy is their personal decision alone, and no damn business of anyone else’s!

Interviewing today’s guest for the podcast just made that even clearer.

This week, I talk with Kevin Ha, a prolific side hustle expert, about why he quit the law to pursue a unique path to financial independence. He generates income both from his blog and through side hustles (which he often blogs about), each of which separately and independently replaced his full-time salary from his last job.

We discuss:

• Why Kevin quit the law without a traditional FIRE portfolio already in place
• How Kevin defines financial independence
• Why he doesn’t view gig economy side hustles as manual labor
• How he makes side hustles fit super efficiently around his schedule to minimize time spent
• How he structures his daytime hours now without a traditional job
• His technique for letting go of the “prestige trap” (notorious among lawyers), despite graduating with honors (and law review) from law school
• Whether Kevin would have gone to law school again knowing what he knows now

Do you agree with Kevin’s philosophy on FI? Even if you would not have made the same choice, do you see merit in this path? If not, why? Let me know by leaving a comment.

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Links mentioned in this episode:

• Financial Panther
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#40: Early retirement may seem glamorous when you’re dreaming about it….

Sleeping in every day. Going jogging mid-day. Picnicking on a random Tuesday. Flying off to vacation on a moment’s notice. Wandering abroad for months at a time.

But once early retirement is actually your life, it’ll feel different. You have to be intentional about it to make sure it lives up to your expectations.

This week, I invited Anita Dhake – a lawyer turned early retiree who’s retirement plan has shifted over time – to share her story about retiring from the law at 33 to travel the world, what she’s learned along the way, and why she no longer travels full-time.

We discuss:

• Why she walked away from a high-powered law firm career after graduating from an elite law school
• What motivated her to retire early, and how she came up with her FIRE number
• How she tackled student debt at the same time
• How much she had in the bank on the day she FIRE’d…and how much she has now
• How retiring early actually made health insurance easier
• How many countries she’s traveled to since retiring, and why long-term travel is so difficult compared to vacation travel
• Why she ultimately stopped long-term traveling and what she’s doing now instead

Did anything in Anita’s story surprise you? Do you agree with her view on long-term travel? Would you do anything differently? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• The Power of Thrift
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#39: Everyone knows the cost of college is cray. 😖

It can create serious retirement speed bumps for parents…

…and it only gets worse with every passing year. 📈

But for students and parents who are super on top of their 💩, there is a real path – through scholarships and fellowships – to make the cost of college (and grad school) FREE.

Not only that, if you’re really good and write superb applications, you can even get PAID to attend.

They say, “There’s tons of free money out there for college; you just have to know where to look.”

Well, so…where’s all that free money? And how can you get it?

This week, I talk in-depth with Shirag Shemmassian, PhD, about the exact tips and tactics you need to win scholarships hand over fist, so that you can attend college and grad school for free…or even get paid to attend.

Shirag is a university admissions expert and founder of Shemmassian Academic Consulting, where he has helped students win admission to every elite college in the country.

As someone who himself won over $200k in scholarships, Shirag’s insights are pure gold, so for you neurotic parents out there, this is an episode you won’t want to miss.

What you’ll learn:

• The biggest myths and misconceptions when it comes to winning scholarships
• The 4 key places to find scholarships and the pros and cons of each
• How to write a superb scholarship application (and do it super efficiently again and again)
• How to ask for standout recommendation letters
• How the game up-levels (and differs) for the most prestigious and competitive scholarships in the world (Coca-Cola, Gates, Goldwater, Rhodes, Marshall, Soros, Fulbright, Truman)
• How to prepare for interviews with these scholarship selection committees

What tips / advice resonate most? If you’re a parent of a successful scholarship student, what other tips did you find effective for winning scholarships? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• The Ultimate Guide to Finding and Winning College Scholarships
• Shemmassian Academic Consulting
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#38: With all the ways your budget can explode after you start having kids, what can you do in advance to better prepare financially to reduce the financial stress that comes with starting a family? 👶

In this week’s podcast, I deep dive on this with Kevin Mahoney, founder of Illumint, a financial planning company focused on helping millennials in their 20s-30s navigate family finances.

We discuss:

• Why money so often causes marital strain and conflict
• The big money-related questions to ask that will help you understand your partner’s financial philosophy and values
• Why it’s important for both spouses to lean in equally when it comes to family finances
• The biggest ways your finances change after having a baby
• Concrete actions would-be parents can take to prepare financially for a family
• When and whether to buy life insurance

How did you prepare financially for starting a family? For getting married? What would you have done differently? Let me know by leaving a comment.

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Links mentioned in this episode:

• Illumint
• Lifehappens.org - for estimating life insurance coverage
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#37: It costs a pretty penny to raise a kid. 

I knew my expenses would go up with a kid in tow, but looking back I underestimated exactly how much they would go up by.

Hmm. “Go up” isn’t quite the right word. “Blow up” is a bit more accurate. 

That’s because kids are like vacuum cleaners: they clean your budget out.

In this week’s podcast, I share what I’ve learned, using direct examples from our own budget, about how our expenses blew up after starting a family.

What you’ll learn:

• 6 expenses that explode when your bouncing baby arrives
• How much you can roughly expect your costs to increase with a kid in tow
• Some practical tips on how to reduce those costs and save money

What’s been your experience with budgeting and expenses after having a kid? Any other expenses that ballooned after you had a kid? Did your costs increase by similar percentages as mine? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• House Hacking San Francisco Bay Area style
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#36: Last week, we dove headlong into the wonky but uber-crucial topic of retirement safe withdrawal rates.

My conversation with Karsten Jeske, PhD – a former professor, Fed economist, quantitative finance researcher, and early retiree – focused last week on sequence of returns risk and how to estimate your safe withdrawal rate in early retirement.

Our conversation was so action-packed that I had to break it up into two episodes, so this week we continue our discussion and focus on how to mitigate sequence of returns risk during early retirement.

We discuss:

• How to adjust your withdrawal rate and rebalance your portfolio in response to market conditions
• How to critique the common advice that the returns risk in the first 10 years of retirement determine success or failure in all retirement
• Why sequence of returns risk is a “zero sum game” between retirees vs. savers, and why investing strategies for these two groups should therefore inversely mirror each other
• Concrete actions investors can take, during their accumulation phase and during retirement, to reduce sequence of returns risk
• How early retirees can use rental real estate to reduce sequence of returns risk
• What is the lowest historical safe withdrawal rate that entirely eliminated sequence of returns risk
• How coronavirus might impact your safe withdrawal analysis and early retirement prospects

What actions do you plan to take to fortify your safe withdrawal rate? What other questions about safe withdrawal rates and sequence of returns risk do you have? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Early Retirement Now Safe Withdrawal Rate Series
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.