What They Don’t Tell You About FIRE with Andy Hill

Introduction – Welcome Andy Hill (0:00)

Rebie: What they don’t tell you about FIRE with our very special guest, Andy Hill. We are, well, you should say this next part.

Bo: Rebie, I am so excited to have Andy Hill here with us today. Man, how are you doing?

Andy: I am fantastic and I’m so glad to be here. Thank you so much. This is going to be fun.

Bo: So, for those of you that are not familiar and do not know, Andy Hill is the family financial coach behind Marriage, Kids, and Money, which is a platform dedicated to helping families build two things: wealth and happiness. Right. And it’s nice when those two go together. Absolutely. The team was telling me 10 million podcast downloads and views. So, it’s not like a small little thing. You’re reaching a lot of people, talking to a lot of folks.

Andy: You know, as you guys know, as you do these things for long enough, the views start to gather.

Bo: You’ve been featured in CNBC, Forbes, MarketWatch, Kiplinger’s, NBC News, and you got an exciting thing going on right now. What’s what’s going on in your world right now?

Andy: I just launched my first book this week, which is fantastic. It’s called Own Your Time, and it’s dedicated to those families out there that are looking for that wealth and happiness, and also feeling the pinch of not having enough money, not having enough time. So, this book is a blueprint that helps people walk them through those steps to say, “How do I get some more margin in my life? How do I get some more breathing room because I’m feeling so claustrophobic right now in the situation I’m in?” So, it’s not a quick one-hitter process. It’s a long stretch for how you’re going to do this, but we’ve built it in a way where it’s a step process so you can improve 1% at a time.

The Messy Middle and Finding Margin (1:46)

Bo: So, when you’re saying that, the thing that immediately comes to my mind is messy middle. We talk all the time about folks that are at this crossroads where you have very little discretionary time and very little discretionary money. It all happens together. Is this book built specifically and written for folks in the messy middle or is it broader than that?

Andy: It’s really built for anybody who wants to own your time like you said, but specifically written for parents who are feeling that pinch, especially as you come together with another partner. And a lot of the ideas that you have about what your ideal life might be, you have to share those with somebody else too and make sure that you are finding that compromise in the middle to find out how you can do this thing together. And so there’s steps in there to really help people with that challenge as well. Opportunity. Did I say challenge? I meant opportunity.

Bo: And so it can even be used as a tool for spouses, for significant others to kind of come together to get on the same page.

Andy: Absolutely. Yeah. And a big part of that is really coming up with those goals and dreams in the beginning because I think once we get so busy with marriage and kids and busy work, we forget to dream. We did that when we were kids all the time. We’re too busy just putting stuff together to be able. So we have to dream. We have to take that time, 15 minutes just to write down where do I want to go, who do I want to be, and then ask your spouse to do the same thing with you so that you can dream together and also help each other achieve those dreams and goals because that’s really exciting because all the other stuff after that is a lot of hard work. And a lot of dedication to make those dreams come true.

Andy’s Journey Through the FIRE Movement (3:28)

Bo: So when I hear the title like Own Your Time, the thing that immediately sort of resonates in my mind is that connects to the whole financial independence, retire early. Is this a book about FIRE or is FIRE coming like is that the idea here or is it something different?

Andy: Well, I’ll tell you what, Bo, I have fallen deeply into a lot of these movements, you know, the Ramsey movement, the debt-free movement, the FIRE movement, and I’ve experimented with them all. So this book a little bit talks about my learnings and my failings through that process and through the FIRE process. Through the FIRE process because there were points in my corporate career where I was just feeling so low and I did not feel connected to my family. I felt like my work owned me and I was gone too much and I hated it. And then I hear this message.

Bo: I think a lot of people resonate with that, right? Like you kind of sell yourself to what you’re doing.

Andy: You hear the message of retire early, just get out of this thing as quickly as possible and you can do whatever you want. You can sit on the couch, you can do whatever you want. And I really liked that message and I said, “Well, how can I buy my freedom? How can I do this immediately?” Well, aggressive savings rates can do that. Extreme frugality can do that. And through that process, I’ve learned a lot about the FIRE movement and have made a deviation on which type of FIRE that I want to follow.

Bo: Okay. But what did you think? What FIRE did you think you were on? And then what did you end up on?

Andy: I really liked the traditional FIRE movement. Just, hey, max it out as much as you can. Maybe use rental properties to go that route. And I know that’s been successful for a lot of people as I went through that process personally and with my wife. We both found that that really did not work for our family situation. So what we fell into over a period of time as well as marriage counseling as well as trying to test out new things is that Coast FIRE is a beautiful middle ground that gets you that financial freedom you’re looking for and also emphasizes the reality that we don’t need to stop working to be happy. We need to just find work that we actually enjoy. Okay. And so through that process, my wife and I have been able to find part-time work for both of us now at 44 years old. And we both work 3 days a week. And we enjoy what we do. And we leave a lot more time for family, for connections, for taking care of our health, for all the important things that we know we need to be seeking.

What is Coast FIRE? (5:58)

Bo: So for those of our audience out there who maybe is not familiar, right, you use this expression Coast FIRE. Can you kind of break down just very simply what does Coast FIRE at least to you what does Coast FIRE mean in your world?

Andy: Yeah, to me it means building up those investment accounts, those tax advantaged investment accounts so that you get to a point with time and compound interest. It’ll take you the rest of the way there towards your traditional retirement without any further contributions.

Bo: So no more putting 401k, no more doing Roth. You just kind of hit you hit a number and you let that number just grow until you get to true financial independence.

Andy: Exactly. And so for us, just a quick math problem, we got to around a half a million dollars in our investment accounts by age 40. We saw with those magical compound interest calculators, it could potentially, it’s no guarantees, could potentially get to around $2 million by the time we’re in our 60s. And that is plenty for us to live on comfortably using the 4% rule or 5% rule. You know, Bill Bengen’s changed things up for us a little bit. But with those rules, that can really give you some freedom. And then at that point, you just say, “Wow, if I don’t need to contribute as much to my retirement, what do I want to do with this extra money? Do I want to maximize my family experiences right now and enjoy more life today? Or do I even just maybe want to work less because I don’t need to make as much money in order to be happy?” Or maybe a combination of both. So my wife and I are experimenting with a combination of both, which has been great for our marriage and great for my sanity working outside of the corporate world now.

Bo: So you got to half a million by 40 and you said, “Okay, we’ve done the math. That’s what it takes.” And so right now you said you’re both just doing part-time work to pay the bills. You guys have a family to cover the expenses for the family without a big emphasis on saving or anything. It’s really just about covering today because you’ve already covered tomorrow with the savings you’ve done previously.

Andy: Yeah, absolutely. So, just numbers-wise, because I know the audience likes that, when we started our journey, we were probably spending around $10,000 a month for our comfortable life. You know, typical family, two income earners, depending on where you are in the country. After we eliminated our debt, hit Coast FIRE, and then paid off our mortgage, our comfortable living expenses were $6,000 a month. So, at that point, part-time work could really cover that for our family. Now, of course, that doesn’t mean that we won’t want to make more money in the future, but now our baseline is like, I need to enjoy what I do and then can I grow it from there? And so, that’s where my wife and I have been over the last four years. Now, we’ve both been working part-time and yeah, we try to increase our income, of course, but it’s not the driving force of our happiness anymore. If we’re able to increase our income, that baseline still needs to be three days a week of working and four days of enjoying and living life.

Bo: I love that. And what I think is great is that you’re someone who’s actually living the FIRE or living the Coast FIRE life. I think so often we read blogs or articles or academic papers, these people who have theorized what it could look like, whereas you actually have some tangible, real experience around, hey, here’s what FIRE actually looks like. Here’s how it’s manifested in our lives. Here’s what it has done for us, which I think is great.

Follow It or Forget It – FIRE Rules Game (9:14)

Bo: And Rebie, I think you said you have an idea. Since we have an in-house expert here, you wanted to play a little game.

Rebie: Yes. You are living the FIRE life to some degree. And so, we have a fun way to kind of see where you guys land. We’re going to play a game called Follow It or Forget It. And I’m just going to read a common quote unquote FIRE rule that you might see online or reading or watching videos on TikTok or Instagram. And then both of you have a little paddle with a thumbs up for follow it or a thumbs down for forget it. And I want you to hear the rule. Tell us if you would follow it or forget it. And then you get, you know, 15, 20 seconds, give a little explainer around why you think that and maybe even share some of your experiences. I know Bo, we’ve got clients who have done this kind of thing. Andy, you’ve been living it. So, you ready to dive in?

Andy: I’m ready to do it.

Rebie: Okay. The first rule is the rule of 25. You must save until you have 25 times your desired annual expenses to do FIRE. What do you think? Forget it. You guys can say if you follow it.

Bo: Oh, I’m sorry. Words are good. I say I disagree with that.

Rebie: Why do you disagree with that?

Andy: I disagree with it for many reasons because this is one of the traditional kind of FIRE ideas and I think it can be one of those incredible sounding ideas and simplistic ideas but for the vast majority of Americans it’s very very difficult unless you’re a multi-six-figure earner unless you don’t mind extreme frugality and you don’t mind giving up a lot of important moments of connection during your very important years in life. So, I think that while it sounds like you’re being led to a great destination, you might lose a lot of important things on that path towards what you think might be a better future.

Bo: So, what you’re saying is 25 may be too aggressive of a goal for someone to try to pursue.

Andy: Yes, might be too aggressive. And also, I would say 20 times based on some math that I’ve learned is just totally fine. I think in my opinion, too. I think that we’ve had an overemphasis on this 4 percent rule for forever, you know, where it’s like, hey, 4% until you’re 90. It’s like, okay, no, if you still got a lot of money at 90, you better be ramping that thing up. So yeah, for a lot of reasons, I give double thumbs down.

Bo: Yeah, I completely agree. I think that 25 times kind of is another way of saying the 4% withdrawal rule. But what if you have other sources of income? What if you have a pension? What if you have rental property? What if you have other things? You might not need to have that level of expenses covered. Or, and this is maybe a hot take, what if you’re someone who wants to check out way, way early. Maybe I want to be done working in my early 30s. I might even argue in that scenario, in that environment, maybe 25 isn’t enough. Maybe 4% won’t do it for you. So I get real cautious when anyone says you must do something. So when I say you must save that before you fire, I think that personal finance is personal. So your number should be your number, not what someone said it has to be.

Andy: I would agree and I think there’s actually an easier way to do it, too. I would say having just a year’s worth of expenses in savings could help you bridge from a place where you’re feeling uncomfortable to a place where you want to go. So you can figure that out over a year. That is experimenting with a new business. That’s maybe switching industries. That’s maybe going back to school to try a trade that is actually more fulfilling. I think this 25 times rule might be a 15-year venture where you could really maybe do something in about a year or two.

Rebie: Love that. So, awesome. No, that’s great. Okay, second FIRE rule is eliminate debt before you invest.

Both: Forget it.

Bo: Oh man, I thought I thought that was good. I was trying to bait him. I was trying to bait him. You baited. I think that you should eliminate some debt. I think that high interest debt, we actually have this nine-step process called the financial order of operations. I’m throwing it up. Brian’s not here, so I got to help out. The financial order of operations would suggest that, okay, yeah, if you have high interest debt, credit card debt, consumer debt, that sort of thing, by all means, knock that out before you start investing. But if you have low interest student loans, low interest auto debt, low interest mortgage, I don’t know that I would satisfy those before I start investing because I know how powerful my dollars can be.

Andy: I agree. And especially if you have that employer match at work, that can be some major way to build wealth early. I worked at my corporate jobs for seven years. And not that you have to max it out, but I maxed it out and got this great match for just seven years and I walked away with almost $200,000. The market was great, but it’s like that’s amazing. That’s magical. So, you got to take advantage of the market. And yes, I do believe that eliminating that high-interest debt is great practice psychologically for an easy, okay, I can handle this because sometimes investing can feel intimidating where it’s like, I don’t know where to start. There’s a million people online telling me different things to do, but I do know, okay, pay off credit card debt. I got that. So, if that can help you get the ball rolling psychologically to say, “Okay, I can really handle my situation,” then go for it. But yeah, don’t give up that free money.

Rebie: Third rule for the FIRE movement, quote unquote, is have as many side hustles as possible to maximize income.

Both: Forget it.

Bo: We’ve not disagreed yet. I know you see this. I mean, these are pretty bold statements. FIRE culture is very pro side hustles. Why do you disagree that you have to have as many as possible?

Andy: I think life is for living. If we constantly are pursuing the maximum of everything. We are not listening to our body, our health, our family and friends. We need to have more facets in our lives than just worker or income earner or employee. We need to have more facets in our life that diversify who we are as an individual. This will help us have a well-rounded life. And when we say side hustle, side hustle until you cry, I don’t think that’s a good recipe for anybody. I mean, for a season, I don’t want to say that doing side hustles isn’t helpful. If you’re saying, “Hey, I do have credit card debt and I’m having an issue getting it down because I can’t seem to make more money in order to do it.” Do it for a season. Yeah. Say, “Hey, you know, I’m going to hustle for whatever, three months, six months, and I’m going to be debt-free after that.” That’s neat. That’s great. Good for you. But set a cap at it. So, this isn’t a forever thing. And definitely don’t do it until you get 25 times your expenses, because I mean, I don’t want to sound too hyperbolic, but this could really affect your health. It really could. And if the goal is to maximize our lives and have that wealth and happiness, then make sure you’re listening to your body.

Bo: Well, and I think a lot of people don’t recognize that even sometimes side hustles can be incredibly ineffective at accomplishing the goals you have. Has Peter released yet? No, we have a Making a Millionaire episode. For those of you if you have not subscribed, make sure you subscribe to the channel right now because we have a Making a Millionaire episode coming out in the next couple weeks with Peter and he’s a young guy who’s doing a lot of things really really right. But one of the things he’s doing wrong, he has these side hustles that are really pulling away from his main job where he makes his main amount of money. And so we kind of walked him through, hey, all these goals that you have, you would likely be more suited to reach them if you step away from some of these side hustles. So it’s a really fun real world example of that going on. You want to make sure that the time that you’re using is well spent. And so side hustles could be a part of that, but not always a part of that.

Andy: Yeah. And I love the side hustles that eventually don’t require your time and attention and presence. I love it. So, if you can grow that and build it up, those are the best side hustles to go for as well.

Rebie: Love that. Awesome. All right. The next FIRE rule is always maximize tax advantaged accounts first.

Andy: Follow it.

Bo: Forget it.

Rebie: This one stumped him. I don’t I guess I don’t have too much trouble with that. Maybe I’m not reading. We got a disagreement. Good. You know, otherwise we’d be boring. Let’s get some nuance in here, though. Okay, so Andy says follow it. Bo says forget it. What do you guys think?

Bo: Let me hear why you, you know, I can also learn something today. Well, I always It says always maximize tax advantaged accounts first. I’m just thinking through, okay, if I’m maxing out my Roth IRA and I’m maxing out my 401k, but I’m someone who wants to check out of the workforce at 45. Yeah, I’m going to have an issue getting access to my dollars because I haven’t hit that 59 and a half, 55. So, there might be a season where yeah, you started out doing your Roths and you started out doing the pre-tax, but once you began figuring out, okay, this is how I’m actually going to use these dollars, you may say, hey, instead of going all the way up to $24,500 on my 401k, yeah, I’m going to start shifting some money to an after tax brokerage account so that I’m building that bridge money. I struggle with always. I feel like Rebie did me a disservice because I need a halfer.

Andy: You need a halfer.

Bo: I need I need an it depends. If you gave me an it depends, I would.

Rebie:We did purposely did not make one with the diaper on it, right? We’ll just say depend.

Andy: No. So, just for fun, I’m going to disagree just for fun. Here we go. The reason being is that I think folks like you and I or probably a lot of your listeners have the ability to maybe utilize a taxable brokerage account for early retirement or for their goals. But then there’s a lot of people out there who are like me, I’ll be honest with you, who will build up that taxable brokerage account and just say, you know what, life is really good right now. I’m going to buy a brand new car with that. And I did that and but I don’t mind that I got my car and I like my car. And you do that when you’ve built up a certain amount of wealth and decisions like that don’t feel that bad. But looking back, you’re like, okay, you know what? I probably could have bought a new to me car and maybe not done it impulsively and drain my taxable brokerage. So, I think that sometimes when these tax advantaged accounts have a label on them that says, “Hey, this Roth IRA or this 401k is for your retirement in a traditional age and you don’t have a choice.” And you don’t have a choice otherwise there’s going to be a penalty. It’s just enough for you to be like, “All right, fine.” Or the HSA, it’s like this is specifically for health purposes and don’t use it for anything else. Okay, fine. Or 529. All these things that have that label on them. So, I would say yes, I’m using a taxable brokerage account for other purposes outside of buying a car, but maybe some people would have a little bit of difficulty with that if it doesn’t have a specific label on it. So, that whenever we talk about investing or saving, I’m always a big proponent for what. Okay? You know, not just saving and investing because it’s smart and you can have a higher percentage. Put a label on it so that you remember why you’re doing it. Otherwise, you’ll buy a car when you feel impulsive about it.

Bo: I get that. It can be behavioral. That person’s going to have a hard time when they get to 45 trying to figure out like, “Oh, okay. Well, where’s this where are these dollars going to come from?”

Andy: Absolutely. Midlife crisis has happened as well. And then you just want to get that car and you’re like, “Oh, man. Whoops. I messed that up.”

Rebie: All right. So, we got one. We got one that we disagree on. I know. Let’s do one more FIRE rule, then we’re going to get into your questions. So, be sure to drop your questions in the live chat if you’re watching live. The last rule I have today is invest only in low-cost diversified index funds.

Both: Follow it.

Rebie: Invest only in low-cost. I mean I don’t know. I got no problem about that actually. You know, hold on. Stay red. Stay red. They both say follow it. Why do you say so?

Bo: You know what though? Hold on. No, I’m going to put on my professional advisor hat. I love love love low-cost index funds. We use those for the vast majority of the portfolios we manage. But there are seasons and there are times and there are situations where an index fund might not be the best solution. When I think about how we allocate our client portfolios across, you know, anywhere from 7 to 11 different asset classes, some of those asset classes are really, really easy to go get index exposure. S&P 500, love it, index it. Even international, love it, index it, small cap, index it. But there are some nuances where perhaps the index is not the best solution. I can think about over the last decade, we were in this really unique interest rate environment where interest rates were at all-time lows and it seemed likely that they were going to increase. And if you don’t know this, bonds and fixed income was one of the toughest asset class categories to navigate. And we arrived at the conclusion, you know what, rather than just simply buying the bond index, there might be some active managers who could actually add value to that portion of the portfolio. Same thing about the alternative sleeve. So always and only using index funds I don’t think I would sign up for because we don’t practically that’s not what we do professionally. I do think there are justifications for using an active fund or a strategic fund in very specific purposeful situations and once your portfolio reaches a large enough size I think that’s justified. But for early on folks building up to that critical mass up to that initial threshold I love the idea of using index funds.

Andy: I like it and it makes a lot of sense and I love how you caveated that. I would just say for the if I’m going to be the opposite side, I’m just going to say for the majority of people I think they get locked down when it comes to investing and then they just say, you know what, this is all too confusing. Seven asset classes, you know, do I need to be in crypto? Do I need to do this? Ah, I’m going to do nothing. So, I really just want to get people started and realizing that this can be super easy and it can be as simple as clicking a button. Now, when you do start to get a little bit more advanced, you start to build up your wealth, meeting with a financial adviser to support you on your journey after you’re feeling, okay, I’ve done this DIY thing for a little while. I need some support is an extremely smart decision, especially ones you can trust. So, absolutely. Not so bad, right? You agree.

Bo: That was a good conversation. I loved it. I love that we get to do this.

Live Q&A – When Is It Safe to Retire? (24:20)

Bo: But one of the things is not only can we put together this stuff and answer FIRE questions, but we love one of the things we do every Tuesday at 10 a.m. right here is we like to sit here and answer our audience questions because we care about what you care about. And we want to load you up and today is no different. We have a special guest, Andy Hill, here today that’s going to walk us through some of the answers to these questions. So, I imagine if you have questions about how to own your time, how to do FIRE, how to get on the same page with the spouse, I bet you’re going to have some fantastic insights.

Andy: I would love to share both my insights and my failures.

Bo: Absolutely. So, if you have a question right now, make sure you get it in the chat. We have the team out in the wings collecting your questions because we really do believe that there is a better way to do money. With that, Rebie, creative director Rebie, felt weird not to say it. I’m going to throw it to you. I’m such a creature of habit.

Rebie: You’re a creature of habit. It’s fantastic. All right, I do have a question queued up from Stan M. It says, “Hi, money guys. I’m 36, married with four young kids, messy middle. I have enough saved to live on a 2.5% withdrawal rate, but I can’t force myself to retire. How would you convince cautious clients it’s safe to retire?”

Bo: You know, it’s really interesting, Andy. At some point you had to make the decision, hey, I’m going to step away from the corporate world. I imagine when you and your wife were both working, making good incomes, it sounds like had some success, you reached a point like, hey, I can step away from this. How did you have the clarity and the comfort to do that at a pretty young age?

Andy: Absolutely. Well, it was a few things for me. So, I had been testing out my side hustle for four years before that and finding that I loved it. Every moment that I could do it was a lot of fun. And I didn’t want to ignore that. That was very fun. I was doing this in the 5:00 a.m. to 9:00 a.m. or the after 5:00 p.m. to 9:00 p.m. kind of time frame. So, I found something that I was interested in. Also found something that could make money. I love passion hobbies and things like that, but you really need to make sure people are actually going to pay you money before you’re going to say, “Hey, this is something I’m going to do.” The third thing was we saved up $100,000 of FU money to essentially say, “Hey, this is 12 months of expenses to cover us even if things go nasty.” And then fourth, I had a supportive spouse that said, “Hey, man, you got this. Let’s go for it. Let’s not do those rental properties.” We both looked at those things that that’s not something we want to get into. Why don’t you try this? You’re super passionate about it. I believe in you. So, between those four things, I felt confident enough to go for it. And I would say to our the listener, if you do have the money saved up and you know that you can do it because you’ve been watching the show a bunch and you feel pretty comfortable about it, I would have some more internal discussions with yourself saying, “Do I like what I do? Are you not leaving your job because you like it?” And that’s okay. Like having a job you like is a blessing. Not a lot of people have that. So if you enjoy what you do, that’s great. Maybe a step down there is like, can you do what you’re doing three days a week? There you go. Just back down a little bit. I love it. Maybe four days a week this year, three days a week next year.

Bo: So you can still do it and enjoy it. But I think a lot of people don’t realize it doesn’t have to be a switch on or off switch. Another thing, Stan, I would tell you to do obviously what was great is Andy kind of walked through some of the psychological triggers. I think you can go through some mathematical triggers, too. And this is what we do for our clients before we ever say, “Hey, you’re clear. Check the box. You can make it.” We actually do a long-term cash flow analysis. You said, “Hey, I believe that we can live off a 2 and a half% withdrawal rate.” Well, in reality, in practice, when it comes to how people live, it’s most often not two and a half% chunks every single year. Because inevitably, there’s that year that you have to replace the car and there’s that year that you have to do the wedding and there’s the year that you’re going to do the travel. And so, what I would do is I would map out what I really think. If I’m 36 right now and I’m really thinking about stepping away, I’m really thinking about retirement. Have I accurately depicted what my life is going to look like in a best case, not best case, in a best thought-out scenario from 36 all the way out to age 95 with those contingencies? You said I got four kids. Have you accounted for four colleges, any number of weddings, any number of first homes, whatever those things are that you want to do. Have you put that into a plan? And then have you actually stress tested that plan? Have you said okay what if we go through a below average market environment? What’s my probability of success of actually being able to make it through this? So I think you can combine both the qualitative measures that you said with the quantitative data and then when you do it try to change as few things as possible. We find for our clients all the time they get really uncomfortable. They’re like man okay what am I going to do when my paycheck stops? I say hey we’re going to start a paycheck for you. You tell us what day you want it to happen. You want the third of the month. Okay, on the third of the month, X dollars will hit your checking account and you budget and treat it the exact same way. And if you can do that, I think it does help you sort of ease into what it’s like to actually be retired, actually be financially independent.

Andy: I think that’s fantastic.

Rebie: Yeah, Stan M, thank you for the question. I am going to designate today as Tumbler day. So, if you would like a Money Guy Tumbler since we answered your question on the show, just email [email protected] and we would love to send you one.

Saving Money with Young Kids (29:52)

Rebie: All right, next up we’ve got a question from HTBO1529. This is a very messy middle question, so I think you guys will have something to say. It says, “Hi, two of my kids are potty training and I’m excited about saving on diapers. Any other tips for parents who are trying to save some money? My kids are three, two, and seven months.” This is the most messy middle question.

Bo: Wow. Yeah, I think Rebie, you and I were talking about this. You said one of the ways that you really saved a lot of money is you went cloth diapers, right? Instead of having to the throwaways. You were like, I’m just going to ring those guys out.

Rebie: I did not say that for the record. No. Shout out to you if someone is saying that. But I It’s an idea.

Bo: You’ve I imagine one of the things you write about in your new book is talking about families that are in this exact same situation, right? Money’s tight. What are some things that you’ve seen or what are some practices you’ve seen people put in place to figure out how to find a little more margin?

Andy: Absolutely. Well, I always like when we’re talking about saving a little bit more money when things feel tight. This can be a slippery slope, too. And I don’t want to go down the rabbit hole of cut, cut, cut. Because when you’re already feeling tight, the opportunity for mental distress as a young parent, oh my gosh, can be really difficult. That being said, there are some things that you can do as you look at your budget overall and make sure that we’re looking at those numbers, what’s coming in and what’s going out. Most people know how much is coming in. They always like to say their salary or they know their salary. They know that one. They don’t know how much is going out. So, looking at those numbers and really diving deep into those and making sure what’s in your budget actually meets your values and things that you actually care about. Some ways to save money without really killing your joy. I love the experiment of just walking around your house, especially if you’re a young parent, and seeing things that have value that you can sell online in a quick way and maybe make $500 in a weekend, $1,000 on a weekend that can be thrown towards babysitter money. That can be thrown towards paying off debt. Those quick things like that. Looking at if you followed the FOO and you do have your emergency reserve, maybe looking at high deductible health plans if that fits with your health situation. That can save you some money in the long run. These are little things that you could do. Maybe even negotiating a lot of the bills you have between the cell phone companies and the cable companies and just making sure that you’re getting the best deal. These could put thousands of dollars back in your budget as opposed to maybe thinking about the cloth or disposable debate.

Bo: I love it. It’s not the only option. I love it. You mentioned ungrateful service providers. A lot of people don’t realize you can call your cell phone company. You can shop your insurance. You can change those things and those can be meaningful savings. We used to talk about cutting the cord, but now all the streaming got so expensive that it’s a new cord. I cut a cord and now you got 19 cords. It’s just an invisible cord. That’s right. Maybe reassess the cords that you have going out on a monthly basis. I just put two others. You know, with young families, buying in bulk is always a great solution if you can shop at a Costco or a Sam’s or whatever. It’s a great way to save some money. And then don’t feel the pressure because all of us as parents do this. We want to create memories for our kids. You know, this is our kids’ childhood. This is the things they’re going to remember. Don’t assume that memories for your kids have to equate to a lot of dollars being spent. Find ways to bedazzle your basic life. Maybe you’re not going to go on that super expensive crazy Disney vacation. Maybe you’re going to go to the local state park and you’re going to go do that and you would be amazed. And at these kids’ ages, they were seven, three, two, and seven months. They’re little. So all the more they are going to be so entertained. I know. I have little ones too. Don’t buy toys, just buy boxes, right? Because often times it does not take much to get what they play with best. And I think about be careful and I remember this when I was a new parent. I don’t feel like I struggle with as much now, but when I was a brand new parent, there was a lot of pressure around, oh well, I’m doing this and we’re doing this and our kids are doing this and our kids are in this. And it’s like you feel like, oh well, my kid has to be doing violin and piano and playing 19 sports and also doing the extracurriculars and maybe that’s not what makes the most sense for your family. So figure out what you guys value. Allow your dollars to go in that direction. Don’t allow them to go in a direction to impress people to buy things or do things to impress people whose opinion doesn’t matter anyways.

Andy: I completely agree. I remember signing myself and my son up who was a year at the time because I wanted to do something special bonding moment with him where we would do the swim class you know and we did it for I don’t know months and he looked like he was making progress and then after a little while I’m like okay let’s see what he can do on his own. Went straight down to the bottom of the pool. Of course I picked him up but it was a good example like son you wasted all that money, all those lessons. Maybe we’re trying to do these things a little too early and putting a weird pressure on ourselves and our kids that doesn’t need to be there.

Rebie: Yeah. No, it’s there’s a lot of truth to that. HTBO1529. If you would like a Money Guy Tumbler, just email [email protected].

Bo: You know, it’s funny. For those of you that are not aware, Nashville’s having a bit of we’re having a bit of a weather event right now. Yeah, we are. Lots of ice, not very much snow but lots of ice and stuff and you know my kids when we live in Nashville we get about one good snow a year and they’ll go out there and make you know snowmen or whatever but that’s not what this one has been. I’m so proud of them because they’ve just figured out man if everything’s icy I can still sled and I can still they it was 10° 8 degrees 10 degrees yesterday here my kids were outside for like an hour straight just tearing it up with the neighbors, you know, sledding down the sidewalk because it’s just a sheet of ice and that costs it cost nothing, right? It costs nothing. And that’s going to be a sweet sweet memory they have from the they’re not going to remember all the craziness of this ice storm. They’re going to remember doing that. And so the more you can find ways to encourage your family and your kids to have those kinds of experiences, I think the better off you’ll be all the way across the board.

Andy: Great advice.

Scaling Back Retirement Contributions (36:25)

Rebie: That’s great. Next question is from Foo Faithful. Love the username. We’re 37 with 1.3 million saved, 64% in Roth. Our projections show we’ll exceed our retirement needs. Should we scale back contributions even if it means losing a match? Or is free money always worth taking? I know what Bo’s going to say. I’m interested to see what Andy is going to say.

Andy: Well, I would say instead of thinking about what you’re taking away, the free match and all things like that, think about what you could add. So, if you get excited about, okay, maybe if I drop down by 5% in my savings rate, what could I replace that 5% with? What feeling inside your body right now are you saying man wouldn’t it be cool if, money can buy that, money can help get that, money can’t solve all problems but it sure can easier. So if you said man I am feeling so stretched at home with I don’t know clearing this ice and I got to do it myself, clearing the snow, it’s like wouldn’t it be great if I could use some extra money at home to pay for things so I can get some extra support and breathe a little bit. Man, it would be nice if we went on more vacations, but I got this 35% savings rate, so we can’t go on vacations. Go on the vacation. Especially if your projections are allowing you to have a comfortable retirement. Don’t give up a comfortable now for a potential comfortable future. So, if you can scale it back slightly, I think a lot of times people have found such success with these programs that we’re talking about. Wow, we’ve made this simple. We’ve DIY’d it and we are wealthy because of it. So in order to scale back, it just feels like you’re doing something wrong, right? So it’s like, well, I’ve done so well with this. How could I go the opposite way? Just think about what you’re feeding yourself on the other side, though. More time for family, more time for things that you care about, more time for your health, more time for community. That’s where real joy and happiness is. It’s not in a gigantic number on a net worth statement.

Bo: Money is nothing more than a tool that allows us to accomplish the things we want to accomplish. And here’s what I know, Foo Faithful. If you’re 37 years old, barring an inheritance, you’ve been saving like a banshee to get to 1.3 million, 64% of that in Roth. So, you’ve just been crushing it. What that tells me is your savings rate has likely not just been the employer match. Even if it’s a five to get five or whatever, you’ve likely been saving more than that. So, I love what Andy said. Hey, you can scale back without scaling all the way back. Because if there’s free money to be had, I would encourage you to get that free money. For our clients that retire but they decide they don’t want to stop working, we’ve seen this a number of times. Clients will they’ll make it to financial independence and then they’ll start working a job. They’ll be like, “Hey, I don’t need to save anymore, but I’m eligible for the 401k and the 401k has a free match. Should I take it?” And we’re like, “Yes, absolutely. You’re already financially independent, go get the free money.” Even if we need to distribute money from your taxable account and replace and we’re just kind of robbing Peter to pay Paul. Free money makes sense. So, I don’t think you’re going to be in a situation where the free money or not getting the free money is going to change a whole lot for you. So, you absolutely should take advantage of it while you can, but do the assessment just like Andy said. Can I do something more? Can I allow my dollars to give me not just a better future, but also a better right now. But it’s not all or nothing. It’s not zero sum. There are varying levels. If you’ve been pedal to the metal your entire career, it’s okay to ease off that gas a little bit, especially if you’re at 37 with $1.3 million. One of people we get a I don’t want to say financial advisors get a bad rap, but often times people think that the role an adviser serves is save more, more, more. One of our favorite things in the world to do is to get to tell people, hey, why don’t you back down your savings rate? Hey, why don’t you go on that trip? Hey, why don’t you replace that car? Hey, why don’t you do that home renovation? Hey, why don’t you actually use this money to improve the life that you have right now? Because what’s the point of having an entire pot of money at the end of your life that you did nothing with? So there’s a balancing act there. And Foo Faithful, you’re at a great point to start figuring out what that means for your situation.

Andy: I love that.

Rebie: That’s great. Foo Faithful, if you would like a Money Guy Tumbler, just email [email protected].

Are We Coast FIRE? (41:08)

Rebie: Next question is from KungFOOPanda11. Look at that. Great name. Look at that. My wife and I are 26 with $200k a year and $320k invested all in retirement accounts at a 30% savings rate. Are we in Coast FIRE? Should our hyperaccumulation be in brokerage accounts? We spend $7K per month. So he gave you a lot of information, right? Are you Coast FIRE. Yeah. Is he Coast FIRE and then step seven hyperaccumulation? What where should he go with that?

Bo: So we’re 26. Well, first of all, you as someone who is in Coast FIRE presently, is this a Coast FIRE person?

Andy: It is. What I am fearful of is that there is too much maximization of wealth and maybe not enough maximization of joy in your 20s. That being said, I don’t know a lot about your situation. Kung Fu Panda 11, awesome name though. You sound cool. I mean, two awesome things in that. So, I guess if it were me and going back to my 26-year-old self, if I was in this situation, I would experiment with increasing things that bring you and your wife happiness today and decreasing your savings rate because yes, you are Coast FIRE. If the idea of Coast FIRE resonates with you a little bit, you’re like, “Oh, I see how the math could work. I see how that could help me get where I need to go in retirement,” then experiment again with how you can pull back the savings rate a bit and enjoy more life. Now, if you’re 26 and your savings rate is holding you back from doing things that you and your wife are interested in doing, that is something to start to listen to and experiment with.

Bo: I use this analogy again. There was a Making a Millionaire episode that we did with Christine. Oh man, I might have got her name wrong, but there was a Making a Millionaire Danielle. We did it with Danielle. That’s right. Yep. She was in this situation. Hey, I’ve been doing this and I’ve saved up. My answer to you, Kung Fu, is are you in Coast FIRE? We don’t know enough yet. And I’m going to argue it’s possibly even too early in the journey to be able to assess that because you said that right now your burn rate is $7,000 a month. And it’s great that you have a handle on that. I can tell you for me personally, my burn rate at 26 looked very different than my burn rate at 36, right? There’s a lot of life that happens. And in order to be Coast FIRE, what you have to do is you have to reverse engineer. You have to figure out, okay, what’s the pot of money I need at the end of this journey, right? And that pot of money is going to be based on what you’re spending at that time in your life. Well, for a 26-year-old, if you’re pre-home, pre-kids, pre-job change, pre all these things, there’s a good chance that a lot of those things are going to change. The analogy that I always use is just like you’re I’m not a big runner. I do run, but I’m not a big runner. You know, I like to pick things up, put things down. But if you’re going to run a marathon, you’re going to run a 5K or any distance and you take off in the first, you know, 800 meters, first half mile, and you’re running a five-minute mile. You’re like, “Holy cow, my marathon time is going to be incredible.” Well, just because you started that way does not mean that that’s what the rest of the journey is going to look like. You haven’t gotten far enough in the race to make that assessment. Now, if you’re almost at the end, right? If you’re on your last half mile and you’ve been averaging a 5-minute mile pace, well then yeah, you can have some assurance you’re going to be able to finish the race at that level. For you at 26. This is one of the reasons why we say if you can save 25% of your gross income, we have a great deliverable if you go to moneyguy.com/resources that says how much can you save or how much should you save? If you can save 25% of your gross income right now, you’re going to give yourself maximum options and maximum flexibility. Now, there’s a chance you’ve already got $320,000 invested, so you should go again to moneyguy.com/resources, play with our wealth multiplier, and see what that $320k can turn into by the time that you retire. But does that mean that you should just coast on that level? I don’t think you have enough variables yet. So, I would consider just like you said, maybe you don’t have to have a 30% savings rate. Maybe it’s 25, maybe it’s 20, maybe it’s even 15. You’ll have to assess that, but I don’t think you can say, “Oh, I’m just going to take my foot off the gas.” I don’t think you’re far enough along in the race. I don’t think you’ve done enough of the heavy lifting yet to be able to coast. Now, if you’re married, no kids, not going to have kids, already got a home, and you know your expenses are locked in, I guess perhaps it’s a different story. Just most 26 year olds I know are not at that place.

Andy: That’s what I’m fearful a little bit of in the 20-something conversation where the savings rate thing becomes so important that other important goals get put in the back burner. That might be having a family, that might be taking care of your health. That might be pursuing more fulfilling things in life. So if like you said we find a balance of yes it’s important to save and invest for the future but not at the expense of living for today and enjoying life. That’s the balance you got to find. That’s why I like Coast FIRE because it’s a more tame version of hey maximize and grow money at all costs.

Rebie: Those are a lot of good thoughts there. Kung Fu Panda 11. Yes. Thank you for submitting the question of the day and for having a cool username. Email [email protected] if you would like to cash in on your very own Money Guy Tumbler.

Healthcare and Early Retirement (47:00)

Rebie: Next question is from Abby Lim4365. It says, “Any suggestions for how to handle kids medical and dental insurance if we retire early and the kids will lose their insurance? Do we just have to pay for their insurance until they can get their own?” I thought this was interesting because this is kind of one of those downsides of FIRE, right? Or things you have to consider. Sure. It’s not on the shiny brochure. So, I don’t know. Andy, do you have any thoughts?

Andy: Absolutely. Yes. So, this was an exact situation in 2019 as we were saying, “Hey, let’s both step back from corporate life.” And with that, the big scary thing that a lot of folks see online is insurance. Well, what are you going to do with insurance? I went to healthcare.gov and looked up a policy. I got the exact same policy that my corporation was giving me and we pay on average. It’s varied over the years for sure with a lot of things that are going on, but it’s been between $600 and $1,200 over the past five years. So, that’s per month for a family. That’s per month for a family of four. High deductible plan. That being said, that’s not a small amount of money, but if you factor it in to your expenses and you realize that not all corporations are paying the whole bill anyway, you know, they might subsidize it a bit. You’re still having to pay some money. So, it shouldn’t be a stopping point for saying, “Hey, should I retire? How am I going to take care of my kids?” You just have to realize it’s an expense and it’s become a business expense of mine. I have a solopreneur small business, so I am the only employee of my business. It just becomes an expense as a part of my business. So, I’m able to take care of my family that way for the past six years.

Bo: And I think I agree with all of that fully. One of the things that’s unclear to me is how old will your kids be when you early retire? Because it’s different if you’re talking about, hey, we’re going to early retire and I’ve got a nine or 10 year old versus, hey, I’m going to early retire, but I have a 22-year old, you know what I mean? Because then there’s a different conversation you have around where your kids are and what they’re doing. And then you have to factor it into your plan. If I’m going to retire early, what do I believe health care costs are going to be for premiums? And then what do I think I’m actually going to spend for the actual health care? Because those are not the same thing. Just because you’re paying for the insurance doesn’t mean you don’t have additional health care costs. Absolutely. So you want to factor that in. And then you want to get creative and do other things like okay well do we want to carry dental insurance? Because I’ll tell you one of the things I carried dental insurance and it was the biggest crop, it was awful, right? I found that for the dentist that we see, they have a plan where you can do a little membership deal and it was much less expensive for us to be members of this dentist and pay directly out of pocket. Way cheaper than what the cleanings and all that kind of stuff was through insurance. So you ought to talk to your providers and figure out, okay, does dental insurance make sense? Does vision insurance make sense? Or are those expenses I could appropriately account for in my budget in retirement and be able to do that. What I think people get so excited about the retire early part and so excited about the oh I want to own my time and be my own boss they glaze over. There are things that happen and there are expenses that come. You want to make sure that you are more conservative than you think you ought to be. That’s why we say even when it comes to retiring early in the FIRE movement, we want you to do the 3D glasses. Okay, here’s the dream. Here’s what’s on the brochure. Here’s what’s down to earth. Here’s what’s most likely going to happen. But this is the doo-doo. This is the stuff that uh-oh, I don’t want this scenario. But if it happens, I know I’m still going to be okay. And if you actually do that, then you’re likely going to set yourself up to have a successful financial independence era.

Andy: Yeah. And you know, as a business owner, the idea of own your own business and it’ll be the best thing in the world. There are some realities to that that you need to dive into as well. Exactly. Right. Got to figure out the insurance. You’re the boss now, right?

Bo: There you go. Exactly. Can I throw one other thing out there? You can. Another just again since we have you here as sort of the FIRE expert. Barista FIRE is often a thing that people think about is say, “Okay, I’m going to retire. I’m going to leave, but you know what? I’m going to go get some sort of part-time work. I’m going to go work for some sort of organization where working part-time or working this level qualifies me for benefits. So if I need to provide I may not have to have the high corporate super stressful crazy job but I can have the job over here doing XYZ that provides benefits for my family and that might be a really great way to bridge. So your FIRE, your financial independence might be in a few different segments and that’s totally okay too.

Andy: I like that one. I like that. I think what’s happened with the FIRE movement is people tried it out and then they said ah that was good for me or it wasn’t good for me and then they just invented their own versions over the past 10, 20 years and I love these multiple iterations because as you said at the beginning personal finance is personal. Create your own situation because it’s not going to be a repeat for everybody.

Bo: That’s right.

Rebie: Andy have you heard of the FINE movement? Financial independence next endeavor I believe it stands for. Next endeavor.

Andy: I like I know I was going to say that’s Bo’s favorite. I like to restructure Coast FIRE into Coast to financial independence and relax early as opposed to retire because retire is so loaded. You know that word is so similar. Yeah. So I think if we can modify our verbiage in a good way that works for you that you say ah yes. So I love your FINE movement. Absolutely.

Rebie: We read it somewhere online, you know, there’s all these different things that pop up. And I remember when we told Bo that, he was like that, you know, I resonate with that.

Bo: I understand that every one of our clients, every client that wants to retire is on FINE, financial independence. And then what does the rest of my life have to look like?

Andy: Exactly. I mean, that’s the whole point, too.

Rebie: I feel like that’s what a lot of FIRE people are actually like honestly.

Andy: If you get to a point where you do retire and you haven’t thought about what that next venture is, that can be a point of anxiety and depression for a lot of people out there. So experimenting with that beforehand and deciding who else you want to be because you’re letting go of this identity of saying I am a worker and then you’re going immediately to retired. So you’re also still having that identity as a worker. You’re either working or not working. That can be an identity crisis for a lot of people. So breaking up that identity, diversifying who you are as a person is a really smart move.

Bo: People there’s so much press around that happening to traditional retirees. Oh, I got to figure out what my next step is. This is true for early retirees too, maybe even more so. Don’t think that youth excuses you from having this existential crisis around, okay, how do I define what am I going to spend my time doing? Often times we get so excited about the thing that we’re leaving behind and don’t put near enough attention to okay, what are we actually moving towards? And you want to make sure that that moving towards thing is something that’s going to be able to sustain you over the long term. That’s something you’re excited about.

Andy: Absolutely.

Should We Move for a Pool? (54:01)

Rebie: Yeah, that’s incredible. Let’s do one more. Jakester 2003 has a hot question for you here. Spicy question. My wife and daughter really want to move to a nicer neighborhood to a house with a pool. Pool. I’m anxious because it would be above 25% of his gross income, which is our housing rule, I believe. Plus, our current mortgage is 2.75%. Help.

Andy: I love the help part. Well, if Jake’s writing in and asking this question, what does Jakester think about this plan? Right. Well, I mean, I guess they share a lot of the numbers, but I guess I keep going back to psychological things in that marriage. I would say it’s equally important for you to share your feelings and how this makes you say help or the anxious feelings that you’re getting with your wife and really having those deep conversations because I really do feel like there’s a compromise here that could work for both parties and it might take longer than just flipping the switch and saying go or no go. There are so many gray areas between staying in the house you’ve always been in and getting the house with the pool. You know what I mean?

Bo: I think I think Jake here’s how I would think through this. Obviously going above 25% on your housing cost is a risky endeavor. So I’d want to know where are you in your career trajectory? Are you early on in the career, middle career. Do you think it’s going to increase? And how far over 25? Are you going to be like 25.1 or are you going 36%? Because the scope of that matters. You did say something super interesting. Hey, my current mortgage is 2.75%. One of the things I might investigate is do you have to move to a new house and reset a new mortgage or might there be a means and mechanism to install a pool at your current house? And maybe you don’t have the funds to pay for it right now, but maybe that’s a goal that you could save for to be able to do that. And so that way you retain that low interest mortgage and you have this other intermediate term goal that it still fits into the housing thing, but it’s a shorter term goal, not like a 30-year house solution. And that’s exactly what my wife and I did. We were entertaining the idea of, okay, there’s some things about our home we want to change. So we started looking around at other homes around the area, and it was just going to cost a fortune. It was going to cost a fortune in terms of what real estate’s done, but also in terms of interest rate movements and that sort of thing. And so we arrived at the conclusion, maybe it makes more sense for us to just make this home that we’re in right now our dream home and let’s do some improvements and let’s do those things and we talked about it and went through the finances of it and stuff. And that was a great solution for us and rather than having to get rid of my super low two something% mortgage, we were able to keep that and also be able to have a pool and do that sort of thing. So I think that’s great.

Andy: And you know, I’ve been through this process, too, where I’m like, “Okay, we’re doing well in our finances. Maybe we should get a bigger house, more space for the kids, more things. I could have my own gym. I could have my own office. I could have a pool. You know, this gets really exciting.” But then I started to say to myself, well, does that add more stress and does that add more home ownership anxiety? Because, you know, the reality of owning a home, it’s not just owning it. It’s like sometimes the thing owns you, man. It’s got a lot of stuff going on. So, I started to investigate. Well, what are ways that I could have those nice things but maybe not go for this big house venture? So, I decided to join a gym instead of making my own gym. I needed more space for an office. I decided to rent an office just down the street from my house. You know what? I wanted some space to play pickleball near where I live instead of making my own pickleball court or whatever. Join a pickleball place, man. Not only does this help you save money long term, but it actually connects you with real human beings outside of your house and make community and friends. So you could find the things that you’re maybe seeking to have internally at your house. Might be lonely to have a pool where nobody’s at. Maybe a community pool or a club that you could go to where your kids and you could make some friends. So thinking about it in the same fashion you mentioned earlier where it’s like, hey, maybe I don’t need to sign up for all the kids activities and sports. Maybe we can just find, you know, fun frugal ways to make it happen. Just sledding on the ice could be could be a fun way to go. So you just got to look at it. You got to figure out a good compromise that works for both of you.

Bo: Love that.

Rebie: Nicely done on a difficult question that I knew was a difficult question, but you guys had some fantastic thoughts.

Closing – Where to Find Andy (58:29)

Rebie: Andy, it has been a delight to have you. Before we sign off, I’d love to hear where people can get your book and where people can find you and any last thoughts you guys have on Coast FIRE and Own Your Time.

Andy: Absolutely. Well, I am so glad to be here and I made it through the ice storm and we figured it out. I do have a new book. It’s called Own Your Time. I’m very happy to have this out there into the world. As of last week, I actually brought this nice copy just for Bo. Oh, let’s He’s a great guy. So nice. You got to sign this before you leave. Absolutely. But the book is out there. It’s on Amazon, Barnes & Noble, and it’s specifically for parents who are feeling that stress, both money and time, and they want a little bit of margin and freedom. And I’m excited to put it out there and really help people. It’s gotten some great reviews online already, and just happy to keep getting it out there.

Bo: Outside of the book, if people want to know more about the content you’re creating, stuff you’re putting out there, where can people find you?

Andy: Yeah. Well, I think there’s this beautiful collaborator feature that we’re taking advantage of today on YouTube. And I’m at Marriage Kids and Money, both on YouTube and my podcast. So, if you want to listen, you can find it there as well, marriagekidsandmoney.com.

Bo: Awesome. Well, it’s been an absolute blast. Thank you for being so willing to open up, share your story, as well as answer some questions for us.

Andy: Absolutely. It’s been a pleasure, man. Absolutely.

Bo: We love that we get to do this. We’re going to keep doing it every single Tuesday. If you’ve not subscribed to the channel, make sure you do that. If you’ve not checked out all of Andy’s stuff, do that. Go out and buy his book. We will be here with you next Tuesday at 10:00 a.m. For Andy, for Rebie, for the rest of the Money Guy team. Money Guy team out.