A History of My Interest in Financial Freedom and Early Retirement

Who am I and how did I get here?

As an infant, the concept of work and career are foreign.  The concept of play is not.  Somewhere along the way, work becomes more important than play… far more important.  Therefore, as we grow up, it is incumbent upon us to figure out a way to reset the pendulum.

This little dude ONLY knows how to play.

Welcome to the Finance Patriot.  What comes to mind when you think of a patriot?  The web defines a patriot as;

a person who vigorously supports their country and is prepared to defend it against enemies or detractors.

Fair enough.  In America, the Country I live in, this is often thought of as having a level of freedom not available in other lands, or at least not as abundantly.  However, can man truly live free, if he must rely, exclusively, on the kindness of his employer to provide for the needs of himself or his family?  I think the answer is, unequivocally, HELL NO.

My Financial Story and interest in Financial Freedom

Once upon a time, I was a young man working in fast food.  I knew how much I made. I knew it wasn’t a lot, and I knew my parents did not have the resources to let me fall back upon them if I failed in life.  However, having watched the news for years, I had this seemingly insatiable desire to invest in the stock markets, make lots of money, and someday live free.  The best I can pinpoint my first conversation, discussing money and freedom, was at age 18.

A fast food employee/aspiring early retiree, age 16, circa 1992

At some point at work, I talked to my boss about financial freedom. He let me know that he was very interested in it, he was investing $100 per paycheck in company stock, and wanted to be free from having to work someday. He was kind enough to provide me with a booklet discussing financial freedom. The fire, already smoldering in my brain, was lit with the intensity of volcanic rock.

Now what?  

I had read about Individual Retirement Accounts (IRA’s).  Back then, only traditional, tax-deductible, IRA’s were available.  I knew I wanted to invest in wealth producing stocks.  I had no idea how to do so.  Consequently, I stuck with what I knew.  I went to my bank and put a cash deposit into an IRA, set up in my name.  As I had more cash to contribute, I would go to my bank (in the snow, uphill both ways I’ll tell my kids) and make small deposits.

By age 19, I was in College with an interest in studying “something” related to business.  I was at a friend’s apartment and one of the people at the house was meeting with, as luck would have it, a financial adviser.  Needless to say, I steered myself near that conversation, and asked politely for that man’s card.  I need in on this Dow Jones party, and he sounded like he knew how to get me there.  So I did what any young lad would do, set up a meeting, and set up my first IRA in a real mutual fund (Putnam Investments).

During College money was scarce, but I managed to open up a “taxable” mutual fund with Alger (mutual) Funds.  I also racked up some student loan debt at a state school, studied accounting, and graduated.  Now I was ready to roll.

First job until now

Ever since I first started working my (cushy air-conditioned) first professional office job, I wanted to invest more.  Even in my early mid 20’s, I kept a spreadsheet detailing my assets (investments plus cash) and my liabilities (outstanding debt).  I started out small, and as time went on, I met my wife and she, too, had been saving and investing.

I will spare you the details of my job hopping.  Suffice it to say, my interest in saving and investing never waned.  My idea of retirement was age 59.5.  Why?  Because that is when you can access an IRA and 401k’s without that nasty 10% IRS penalty.

That’s it, right?

This is where the story is supposed to end, right?  I simply work, have a family, lease new luxury cars every 3 years, and run a marathon with the Jones’.  I work straight through, from age 23 to 59.5, and advance my career (and spending) with the gusto of a zombie.  At this point in my career, my daily routine was like a scene right out of The Walking Dead.

Just another day at the office, one of many until I retire and die at age 65

What is a bad day at work anyway, doing a job I don’t want to really do, and not reaping the full rewards of my productivity?  Heck, it’s what everyone around me was doing; full of complaints, filled with corporate buzz words, memos, and career advice self-help books.  Was this all there was to life?  The weekends, those short stints of the free life and retirement, told me differently.

At some point in my spreadsheet tracking, I began to forecast out the amount of money I would have by age 59.5.  With additional contributions, and the pace I was going, I was going to have a very opulent lifestyle, just prior to dying and having this fruit split between the government and my offspring.  Heck, I was going to go out with a bang.

My frugal living and desire to be free kept me from enjoying this piece of Americana.  I knew I was never going to be able to spend that much money.  Frugality was ingrained in me, it was part of the very fabric of my being.  As a kid, I was taught to respect the value of a dollar, mostly by example and the destitution of my, otherwise, fantastic parents.   I could not see the point of retiring with millions of dollars, when I had only been living on a fraction of that.

By my late 30’s, combined with the savings and investing of my wife, the numbers that I previously had only forecast in excel, were coming to fruition.  No longer were those hypothetical future returns… hypothetical. In fact, they were real, large, and growing.  By this point, I was full into early retirement websites, reading more and more, learning even more that I hadn’t already known or thought about. From Billy and Akaisha at retireearlylifestyle.com, to MrMoneyMustache.com, I was no stranger to this community.  These were my virtual peeps, my soul mates.  I was “all in.”

My Epiphany and where I am today

My magic 8-ball says this will be my early retirement life

Upon reading early retirement websites like RootofGood, I stumbled upon a virtual person named the Mad FIentist.  I always considered myself to have great and in depth individual tax knowledge.  However, I realized that there were still strategies, related to early retirement, that even I hadn’t practiced.  Given our well watered and abundantly growing flower bed of retirement assets, I needed to make some changes in order to retire even earlier than age 55.

Step One:

Withdraw all the Principal from my wife and my own Roth IRA’s. Roth Principal withdrawals are neither taxed nor incur a penalty.  Therefore,  in order to beef up our taxable accounts, this was a great way to add $64k (combined) to our taxable brokerage account.  In the future I will write a full article about our Emergency Roth Rescue.  We will use these funds in the future to fund years 0-5 of our early retirement, whilst waiting for some Roth Conversion IRA ladders to bear fruit (5 year waiting period).

Step Two:

Tax loss sell.  The idea of buy and hold was all I knew.  I knew that market timing was futile, and rarely successful.  Further, I also knew that if you stayed in stocks long enough, the market would turn around and stock values go up.  They always go up.

I did it, over 2015 and during January 2016, I sold some index ETF’s, solely for the sake of claiming tax losses on our tax returns.  I was so successful, that we maxed out the 3k maximum tax loss limit in 2015, 2016, and have enough left (carry forward) to cover the full 2k for 2017 & 2018, and a partial loss for my 2019 return.  Since these losses are reductions of our taxable income, they will allow me to put more money away, post-tax and at a lower rate, to continue to build up our taxable brokerages.

When to early retire and my current status?

Today (February 2017) I am currently employed full-time and have started blogging as a hobby.  I enjoy writing profusely.  Thanks Mom for being such a good teacher to me over the years.

Great mom’s are critical in creating great adults.

I calculate that we have enough invested for me to retire soon, as in perhaps today.  There are a few reasons I still work instead of pulling the early retirement trigger, at age 40.

  • Most days I don’t hate my job and it’s usually not too stressful.  Given that I am well compensated, that’s a good spot to be in.  I imagine if I was still flipping burgers at a fast food joint, for less than $10 per hour, I would retire in a heartbeat.
  • The other reason I am not retired yet is due to Margin of Safety.  Even as a rational human being, there is always the fear of not having enough.  I firmly believe we have enough, but timing is everything.  I get paid well so saving more while I can tolerate my corporate job, is probably not a bad thing.

Thank you for joining me on this exciting journey and reliving my financial history with me.  There is plenty more writing to come so stay tuned.

How much do you need to retire?  How did you become interested in early retirement and financial independence?

10 comments

  1. Thanks for sharing your story. Really cool how you think about FI at such an early age. I never considered it until my 30s. I was lucky that I was frugal. 🙂

    1. Thanks Joe. Here is the thing, having frugality down is half, if not 75% of the battle. The rest can be learned. That’s great that you were always frugal, makes giving your employer the middle finger (or politely asking for severance in my case) much easier.

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