Sunday, January 1, 2017


"And I asked...can there be breaks in the chaos sometimes?" 
- Coldplay, Amazing Day

Many times in my life I've been busier than I am now - much busier, in fact.  And many times I've experienced a faster pace of life changes.  But I don't think I've ever had a year that's been so chaotic.  It's just been one of those years where almost nothing went according to plan, and where you eventually get weary from life buffeting you around day after day to the point where you feel you have no control over anything.

Yet I am grateful for the occasional breaks in the chaos.  Even though they were temporary, they have been some of the sweetest moments in my life, and I suppose it's only possible to feel that way because these moments came amidst the backdrop of such upheaval.

Happy New Year!  I look forward to what 2017 holds for us all.

Thursday, March 17, 2016

The Way Forward

And so at last we come to the pivotal post of this blog, the bridge between the old and the new.  After nine years of writing and struggling, I have finally arrived at the gates of financial freedom while still in my late 40s.  But along the way, my early retirement dreams did not stand up to the scrutiny of what I really wanted to do with my life.  Unlike many, I don't aspire to hang out at the pool in the afternoons and play video games in the evenings.  I still want to work hard.  I still want to learn and create.  And I still want to make a difference.  Yet I refuse to put my life on autopilot as a corporate citizen into my 50's and 60's.  I will not go gentle into that good corporate night. :-)

I have eventually produced a plan which would have seemed so foreign to me even five years ago, and yet now I cannot imagine it being any other way.  In an earlier post, I urged readers to keep an open mind.  Indeed, on one large personal finance blog, when the author merely announced he would be paying down his mortgage early, a number of readers commented that they "felt betrayed" and "wanted to throw up."  Since paying down one's mortgage early is a fairly minor point, I can only imagine the fury of such individuals upon hearing my plans in the next paragraph.  Fortunately, my readers only number in the low hundreds and comments have been turned off long ago.

So the way things will unfold is as follows: I am going to continue working (for now), but we are now going to "spend" nearly all of the money that we have previously been saving each year.  More specifically:

The New Plan
  • Continue working until 55 or until triggers are reached
  • No more saving money, except to get employer matching
  • Spend all dividends and previous savings
The New Spending
  • New spending will all be on new creative projects
  • There will be no net increases to existing spending items
  • Some money may be spent on tools and other "enablers" to save time
The Existing Money
  • Don't touch the principal; it will continue to grow
  • There will still be some savings (matching)
  • The longer I work, the fewer years of drawdown and private health insurance
Since it's my life, I don't really feel like I owe anyone a lengthy rationale, but in case you think this is absolutely crazy, I would suggest you consider the following:
  • Because of sequence risk and health insurance risk, I'm just not comfortable with a traditional retirement in my late 40's.  And I'm not likely to be comfortable with that approach until I'm near 65, which is too late to accomplish what I want to do.
  • On the other hand, every model I've ever looked at says I could already completely stop saving money and still be fine at retirement, as long as I don't start drawing down assets now.  Continuing to work means I can avoid drawing down existing assets.
  • Continuing to work, but (mostly) ceasing to save is actually now the low-risk option for maximizing wealth/happiness in my life, and this meshes nicely with the seed money that will be necessary for other ventures.
  • Other family members have been taken into account.  There is ample savings for college tuition, life and disability insurance are adequate, and there are multiple buffers and safety nets in place.  No one is going to wind up in poverty even in adverse circumstances.
  • Lastly, don't assume all money will be spent on myself.  It is anticipated that a good chunk will be spent on partnering with other people to accomplish certain things.
Although this approach isn't reckless, it's also not timid.  We are not talking about small changes.  I make a good salary, we do not live like paupers, and we still have a saving rate of 40%.  Obviously you can do the math: that's a lot of additional money to spend.  Additionally, we will also now be spending the dividend income.  So all this additional spending is considerably larger than our existing budget, yet will be concentrated on a few items.  This is not a trivial amount of spending to manage properly.

So where will the money go?  Well, that's a topic for another post.  And while I'm not going to elaborate in great detail, I'm not going to be completely vague.  In a future post, I will attempt to wrap things up here and give you a brief roadmap of where I'm heading.  For now, all I have to say is that I'm very excited about 2016.  Thanks for reading.

Saturday, January 30, 2016

The Third Domino Falls: Risk

About 20 years ago, I used to work for a company that handled absolutely huge projects.  Because the projects were so large, there were all sorts of status reports and metrics to track our progress.

One day, my boss's boss's boss's boss (yes, 4 levels up) called me into his office.  As we never had any interaction with that level of management, I could only assume I was being fired or promoted.  To my surprise, he only wanted a status report from me.  I was totally confused.  Was everyone in my management chain on vacation at the same time?  I began to regurgitate the weekly status report for my group.  "No, no, no,"  he said, "I don't care about the numbers and spreadsheets. I want to know where the project really is right now.  How do you feel about it?  This is off the record."

I told him we were on track.  We had been really behind (although the official schedule had not shown that), but we had also caught back up.  Then I ask him why he was asking me this question.  He said, "Sometimes you need to throw out all the metrics and get a gut check.  Today, you are my gut check."

To this day, I still don't know why he came to me.  I asked around and he apparently did not come to anyone else in my immediate group.  Maybe he saw honesty or intuition, or maybe I was just a random sample of the whole project for that week.  I will never know.

Over time, I've also developed an aversion to an overreliance on numbers.  It's certainly true: sometimes you just need a gut check.  During the past weekend, I did that with my finances.  Setting aside all the numbers and all the targets, I asked myself how I felt deep down about our household financial situation.  Was I ready to move on to the next phase?  Was I finally ready to take new risks?  There was no hesitation in my mental response: the answer was yes.

Thursday, January 14, 2016

The Second Domino Falls: Income

With debt out of the way, it was only a short amount of time until enough productive assets were accumulated to reach my desired passive income floor: $40,000 per year.  This breaks down into $36K of dividend income and $4K of interest income per year.  Also, I have never disclosed this fact on this blog before, but I have an additional $10K per year of income that is reasonably consistent and completely unrelated to my employment, but is not strictly passive in nature.  This means I have not only $40K/year in passive income, but also $50K/year in total income unrelated to my job.

And no debt of any kind.

Clearly 2016 is going to get interesting...

Tuesday, December 22, 2015

The First Domino Falls: Debt

Our mortgage is now completely paid off.  And we have no other debt.  No car loans.  No HELOC.  No student loans.  No margin debt.  Nothing.  We are 100% debt free now.

Unlike some bloggers, I've never taken an extreme position either way with regard to debt.  I don't think debt is inherently bad and something to be avoided at all costs.  But I also don't think people should load up on debt to binge on consumer items or to play games with low-cost debt versus higher-return investments.

Debt is both a tool and a risk.  That is why most corporations have some moderate level of debt.  But corporations can operate in perpetuity; individuals have a fixed lifespan.  Hence, as people get older, it is natural for debt levels to fall towards zero if things are managed properly.  We just arrived there a little earlier than some others.

The elimination of debt was the first domino to fall.  The next one is on the way very soon...