Now that we’ve detailed the money mistakes millionaires make, I thought it was time to share another round of my money mistakes.
I do this from time to time to 1) keep myself humble, 2) interrupt what can seem like a never-ending list of “I’m so great” posts, and 3) demonstrate that you don’t have to be perfect to achieve financial independence (FI).
It’s the last of these three that really gets to me. This is why I regularly write posts like Money Lessons from Failure.
I see people commenting time and time again that they can’t grow their wealth because they made this or that mistake, that it’s “easy” to become wealthy when you never make mistakes, and things like that.
No one is perfect and we all make mistakes.
I have made mistakes (and some big ones as we’re about to see), millionaires make mistakes, retirees make mistakes, EVERYONE makes mistakes.
I don’t want people to become discouraged by their missteps or use them as an excuse. We’ve all had them and have yet overcome. If you feel overwhelmed by your mistakes, just know that they don’t have to be a deathblow to your finances. You can recover like the rest of us.
This is why I’m going to list ten big mistakes I made on the way to becoming financially independent. Not itty-bitty mistakes. BIG ones.
And to note, these do not include the even more numerous small mistakes I made along the way.
I’m listing them in the order that 1) I regret most and 2) had the largest impact on my finances.
Here we go…
1. I cost myself a decade of freedom.
Ugh. This is the worst of the lot and the one I regret most.
I’ve talked about this previously, but the short version is:
In my generation, we thought “retiring early” was around 60
Couple that with me setting an arbitrary “I need $4 million to retire” goal
These two things kept me from running my personal FI/retirement numbers.
That’s why I missed it when I became FI at 42. It’s also why I didn’t really consider retirement much the next ten years even as I became even more solid financially (through index fund growth and buying rental real estate).
Eventually events conspired against me (or really for me) and work was so bad that I retired.
Still, I had a lost decade of retirement, which was the equivalent of 30+ retirement years.
Lesson to be learned from my mistake: Run your FI/retirement numbers for yourself, using your data, your goals, etc. If you need help, use my ESI Scale financial calculator.
2. I missed several years of saving and investing.
After I got my MBA at 24 I spent the next several years being financially sloppy.
I was making a ton of money (for me), was young, and knew virtually nothing about managing money.
I never spent more than I made, but I was pretty good at spending what I made.
It was like that for three years. Then I met my wife, we took a money coaching class, and we started advising people on how to manage their money (mostly budgeting help).
Part of our education centered on the value of saving and investing over time. Somewhere a couple years in I began to pay attention.
I started to save and invest knowing that my money would grow upon itself if I simply started socking it away.
That said, I missed five years of saving and investing.
Do you know what five years of compounding would have added to my net worth?
If you take my net worth now and add five years of growth at even a conservative rate, it’s probably in the neighborhood of $1 million — and that’s just the compounding effect (no additional saving/investing). If I had saved and invested more it would be substantially larger. Oops.
Lesson to be learned from my mistake: This is why I advise people to save as much as they can for as long as they can. It’s also why I emphasize the power of time in investing.
3. I made numerous investing mistakes.
Even when I did begin investing, I went about it the wrong way because I thought I was the next Warren Buffett.
After all, I had an MBA, was a successful business person, and was smarter than 99.9% of the investors out there, right?
Uh, no.
Anyway, I wasted another couple of years buying my own stocks, under-performing the market, and losing my shirt in a couple instances.
Thankfully my 401k didn’t offer stock-buying options so at least that money was safe and growing. Also, I only floundered for a couple years until I got my act together and boarded the index fund train.
Of course that didn’t stop me from making a couple bad investing decisions after that, but thankfully these were few and far between.
Lesson to be learned from my mistake: When investing for growth over long periods of time, stick with index funds for their numerous advantages.
4. I didn’t buy more real estate when the time was right.
I’ve detailed this in What I Did Well and Not-So-Well in Real Estate Investing, but the main mistake here was I was too focused on a given return rate.
When I met with my real estate mentor, I set a return rate of 10% (not counting appreciation) before I would make any purchases.
Do you know how many great places I passed on because the numbers said I would earn “only” 9.9%, 9.5%, or even 9%?
If I had just relaxed a bit, I would have at least twice the number of properties I have now, be generating almost twice the income, have seen several hundred thousands of dollars in appreciation, and likely be named the crown prince of real estate in Grand Rapids, Michigan.
And yet because I was so fixated on 10%, I lost a ton.
Of course it’s good to have guidelines and mine might have saved me from several bad deals. But just a bit of flexibility would have given my net worth a very big lift.
Lesson to be learned from my mistake: Be willing to be flexible/adjust from plan when the situation warrants it, especially in the long term.
5. I didn’t maximize my career.
You might be surprised to read this one since I write so often about making the most of your career.
But this is precisely why I talk about it — because I missed out.
The reason I struggled here is because I had absolutely no idea what I was doing career-wise.
I was a fresh-off-the-farm country bumpkin from Iowa who thought he knew what he was doing and really had no clue.
It took me YEARS to figure out my seven steps to growing a career and even then, I didn’t apply these fully as I didn’t understand them completely.
Despite this, I was able to average over 8% annual pay increases. Imagine what the numbers would have been if I had known how to maximize my career and had put in the effort it deserved from day one.
This is why I talk about it so much. I know the opportunity to earn is tremendous and I don’t want to see others leave as much on the table as I did.
Lesson to be learned from my mistake: Work at growing your career immediately and put in the time and effort it deserves. The opportunity is great if you just take it.
6. I didn’t take full advantage of my side hustles.
I’ve made a lot of money with side hustles.
My first big side hustle was writing for magazines (remember those?) in the late 90’s. I built freelance writing into a sizable business then took the earnings and paid off my mortgage in less than a decade.
But once that was done I slacked off a bit, lost most of my contacts, and the business evaporated.
Later I became a soccer referee with my son. It was a nice time with him and we made some money, but we could have made a lot more. I just didn’t take it seriously.
Then there was blogging. I started a site which did quite well, but again I didn’t push it. Over time I’ve earned just around $1 million blogging (much of which I’ve given away), but it could have been much more if I applied myself a bit more.
Lesson to be learned from my mistake: A side hustle is way more than something fun you do to earn some pennies here and there. If done correctly and with the right attitude, a side hustle can help you reach financial independence within 10 years. Just run your FI numbers with and without a side hustle and you’ll see what I’m talking about.
7. I spent too little.
You’re probably surprised to see this one too, but in retrospect I think it was something I could have done much better.
In my post 2018 Financial Year in Review and 2019 Forecast Millionaire 22 left this comment:
In my case, Income was $109K and we for the most part spent it all, and then we spent another $127K on travel.
Trying to spend down the assets is difficult. Retired nearly 4 years ago, but now my Net Worth is $600K more.
To which another reader asked:
Just curious if you’ve ever wished you had spent a little more prior to this stage of your life?
As I thought about this a bit I found that I do wished I had spent a bit more.
But before I get into why, let me say that it’s not an easy question to answer since there are several factors to consider.
In addition, there are a couple major assumptions that seem built into the question (if I’m reading it right):
- More spending = more happiness. In other words, you spend more on this or that and your life is better in some way. The more you do it, the better it is.
- Spending/buying stuff is the highest level of happiness.
Now as I said, maybe I’m reading more into this than there is here, but given that much of America has a spending problem (compared to a saving problem), it’s worth recognizing these both exist and are untrue.
That said, I wish we had spent more on travel when the kids were younger.
The background was that we lived in Michigan where the winters are 14 months long each year. Ok, I could be exaggerating a bit, but not much.
As the kids got older (maybe 14 and 12 or so), we started breaking up the winter with a January cruise. These were great trips that we still remember fondly today.
We took more over time (roughly one per year), but I do wish it had been more. We have more than enough assets to last the rest of our lives and I wish we had started taking trips when the kids were much younger (we did get a Disney trip in there when they were much younger, but that’s it.)
By the way, I don’t want to suggest that our lives were miserable because we were misers. We made a high income and while we saved a ton, we also spent a ton (because our earnings allowed it). I just wish we had dialed back a bit on the savings, maybe freeing up $5k or so per year for family experiences.
Lesson to be learned from my mistake: Money isn’t everything. Saving at a high rate is great and will get you to FI faster, but don’t do it at the expense of enjoying life along the way. Stop and smell some roses too. 😉
8. I missed house hacking.
Where was house hacking when I was growing up? Did people do it and just call it something else?
Anyway, I would have LOVED to have started with a house hack right out of college.
Not only do I think it would have been fun and very educational (setting me up for a potential real estate investing empire) but house hacking is a great way to grow your wealth.
It’s too late now as I don’t think I’d like the lifestyle, but as a young person I would have thought I was living the dream!
Lesson to be learned from my mistake: Consider building wealth through house hacking, especially if you’re younger. If you’re older, think about helping your kids do it (something we’re considering). They can build their wealth and perhaps you can make some too (as their investor/funder).
9. I bought too much house — several times.
I remember when we moved from Michigan to Oklahoma (also called the “dark days” by some in our family) we had trouble finding a house we liked.
But we had to buy something (or rent) soon as my company-provided housing was running out.
So we bought a house that was bigger than what we had in Michigan even though we were hoping to downsize.
This led my son to say what has now become a famous quote in our family:
My dad’s idea of downsizing is buying a bigger house!
LOL!
When we moved to Colorado, we again bought a big house, much more than we needed. It was our only good option if we wanted to live in the location we liked. That has worked out well as the house has appreciated nicely, but still the house is a bit over-the-top.
In fact, we’ve had more house than we’ve needed throughout our entire married lives. Most of our homes have been 3,000+ square feet and we’ve never had more than four of us living in them.
Sure, the homes gave us plenty of room and made it super nice when we had visitors (they had their own bedroom and bathroom), but still it was too much.
The only redeeming factor was that we lived in markets like Grand Rapids where a 3,200 square foot house in a decent neighborhood would run about $180k.
Eat your heart out New York and California. 😉
That said, it’s not only the cost of the house, but the extra costs associated with them: insurance, utilities, maintenance, etc. Way too much spent on housing.
Thankfully we paid very little in mortgage interest since we haven’t had a mortgage in 25 years or so.
Lesson to be learned from my mistake: Buy a house based on what you need and not more. Or even rent. Spending too much on housing can be a budget breaker even for someone with a decent income.
10. I gave the wrong way.
Here’s another mistake I made based in timing.
You see, back in the day donor advised funds weren’t as popular or as sophisticated as they are today.
As a result, we gave most of our funds through income.
Instead we should have given appreciated assets out of our investments. Then we could have used our income to buy more investments, effectively raising the cost basis in our investments and reducing our future tax burden.
I’m not sure how much this is going to cost us in extra taxes, but probably a few hundred thousand dollars at least.
Lesson to be learned from my mistake: Give the right way. Use all the advantages (like a donor advised fund) that the government allows to minimize the tax implications of giving and investing.
We Survived!
There you have them. Several millions of dollars lost because I didn’t know what I was doing.
It’s a miracle that I got to where I am today! LOL!
But again, the point of this is I did make it through with a high net worth, even making all these mistakes.
I was not perfect — in fact I was far from it.
Hopefully this post saves some people from making the mistakes I made as well as encourages others that they too can become wealthy even if they’ve made money mistakes along the way.
How about you? Has anyone out there ever made a money mistake? What were your worst ones?
I hear you. I’ve certainly made my share of mistakes.
The one I find the most painful I think is all the time I put into stock picking instead of index fund investing.
After years of picking stocks I realized that my index funds were doing nearly as well (during this 10 year bull market) and took about 0.1% of the mental input.
I did make the switch but I realized I had wasted a lot of time I could have spent elsewhere. Oh well, at least I learned my lesson.
I love posts like this one, John. It is so important for people to see that you can make mistakes and still find financial success.
Thanks for continually being open and honest about it.
Jimmy / TPP
Nice post! So very true that one’s journey does not have to be perfect to lead to a desirable outcome. There usually is a way to redeem those mistakes, even if it involves significant sacrifice.
The flip side, of course, is that any of these mistakes might actually derail someone else’s journey to FI. Especially the “too much house” one…. if you bought in the mid-2000s, for example.
Great post John. People typically read only about the successes everyone has and then develop an inferiority complex because they think you have to be perfect.
I wanted to break that myth so I actually started my blog listing my mistakes as well, and some were quite a doozy. Like you I lost more than 7 figures to my net worth because of mistakes along the way (the most painful for me was divorce).
Still, the person I am today would be completely different if I did not have to go through some hardship. I would have never discovered the personal finance community if I hadn’t hit rock bottom financially and emotionally after my divorce. Thus I likely would not have the net worth I had today if I everything went smoothly.
It is interesting your biggest regret is not retiring as soon as you hit FI. I’m probably at the same stage now but have been holding on because I feel like I’m too conservative and need to get a big buffer for all contingencies that probably won’t occur. I guess it’s better to have too much than too little.
I am a frequent reader of your posts and I agree with a lot of what you say, but in this particular post when you mentioned growing your career I kind of disagree. What I mean is sometimes politics can play a part in keeping you from advancing in your career. My point is I work for local government and I have been passed up for promotion several times to people who was not qualified nor had the experience that I had. I have a degree and multiple certifications only to get passed over for someone who has a GED. So on this one I would have to disagree. I would focus on making money outside ones career. Luckily I had side hustles that suffice.
Michael Clark,
Like you, I worked in government my whole 35 year career (Air Force and Air National Guard). I agree that there can be many impediments to advancing and increasing your salary in this sector. The military has very specific salary levels depending on rank and time in service. If our local government is any indication, I’m sure local government everywhere can be very political. I guess the choice is whether or not to work for the government. I had several opportunities to go to the airlines, but chose to stay with the Guard and have a more stable lifestyle (post 9/11 wars not withstanding).
I found that, even without a high salary, consistency in saving and investing was the key for us. I chose not to chase advancement in rank and responsibility for quality of life reasons. My wife chose not to work full time as a Nurse Practitioner for 20 years in order to be available to our children. I imagine if I had worked toward and accepted higher rank and my wife had continued to work full time, our net worth and retirement pension would be much higher. Looking back, we have no regrets. We always used the adage that we would save a certain percentage of our income towards retirement, and spend the rest . . . and that’s what we did. We were able to travel quite a bit with our sons and I have owned two airplanes and it has all worked out.
I don’t disagree with the advise but growing career earnings due to hard work and self-career management is far from a sure thing in the private sector too (well at least my observations in tech). Bosses come and go quickly. Companies and sectors that are hot can flame out in a few years. So after that layoff, you may have spent years building up expertise and relationship capital only to see it become of questionable value. I think it is true that for your early employment years, your earnings can run an average 8% growth with effort, but in your later years, you may find yourself stuck at an experienced individual contributor or low management level with little/difficult prospects for significantly increased compensation in your chosen field.
I wish we would have bought more real estate in Florida in 2011 when we bought our house. The deals were insane! And we had a four bedroom house with no kids or roommates – totally should have had roommates. Even so, we still managed to pay off the mortgage in 2.5 years, that’s just how cheap housing was back then!
Hello ESI,
I am a long-time reader, and a first-time commenter. Thank for your efforts in creating and publishing the content for this site. Your approach is well thought-out and I really appreciate the consistent, quality posts.
Regarding your list of mistakes, several resonate with me on my journey to FI. The one that I have not considered before was #10. As a family of faith, we give regularly to our church and other causes, though I haven’t previously considered whether there might be more effective ways to give. If you are up for it, I’d love to see a more detailed post about using donor advised funds, or other means, in order to give more effectively.
Thanks!
I have had this on my list of to-dos for some time now. Hopefully I’ll get to it this fall. 🙂
I second this notion. I would love to read your thoughts on the best methods for charitable giving.
Third notion. I would love to hear more details on donor advised funds for the same reasons Boogie listed above.
Thanks for continuing to share. I subscribed to you about a month ago and I look forward to the email alert with the latest interview or financial advice! Keep it coming and sincerely appreciate the insights.
This is thought provoking and I appreciate the way you’ve listed the “ 10 Things” you did wrong. I flipped that and saw the list as a “ To Do List” for successful retirement.
I also see real estate as a foundation for much of your success. As an “accidental” real estate guy – who is also a registered rep for investments – the bigger opportunities for true wealth/tax abatement and income simply are not in the market. I’ve used my SEP as a tax shelter each year but beyond that there’s really no steady predictability for returns. Real estate as been the way for me thus far. As it pertains to the FIRE approach – which I’ve used imperfectly for 20 years – there is no other way frankly. Given the need to push my taxable income from my “primary day job” down , there is no other single approach as good as the real estate. Seems to always be at the
forefront of the better financial plans.
Again thanks for the share. Btw – like you I go for 10% but have begrudgingly taken 7-8% on my last 2 houses. It’s worked out very very well.
Hey ESI,
Do you have future plans to sell off your rental properties and transfer the wealth to liquid assets like equity ETFs? Are you going to hold forever and pass down to your kids?
I ask because my situation is similar to yours where I have a decent real estate portfolio and as i get older converting to liquid assets for several reasons (simplification, less liabilities, less hassle etc.) gets more appealing. I also bought between 2011-2013 and love the appreciation since, but I believe it will normalize moving into the future (I.e. 2-3%/yr vs 10%+/yr seen in my market – Seattle). The downsides of liquidating (capital gains and depreciation recapture tax) is hard to accept, hence the ongoing debate in my head.
Curious what your thoughts are?
Thanks!
I’m going to hold for the foreseeable future since I like the income they generate.
Not sure what I’ll do in the long-term…hopefully I have some time to decide that.
Jeremy – great question here. For now my plan is strictly passive income. I have a son and so the tax law succession planning / stepped up basis is very attractive. I’m quite aware that the political climate over the next 20 years may dictate a change in that law. For now I invest for cash flow.
Speaking of selling properties. I recently sold a commercial building that housed my primary business. The gain was around $ 1 million. I thought I’d hit a home run until I talked with my tax advisor and realized that 12 years of depreciation would be captured – along with capital gains. The “ net gain” was really unattractive – around $700k. (Rent rates are bad here so I still need office space- The money would have been gone in 8;years.
I did a 1031 exchange into a newer better property that I now own out-right. (And which has rentable space). I’m currently exploring owner occupied financing at a rate of around 4.75 locked on a 25 year amortization for 25 years. How much ? I’m qualified for $700-800k. Lol. It’s insane. So the 1031 allowed me to avoid taxes and then borrow MORE money than I would have netted by selling and pocketing the cash. The best part is that I still have the asset as well as the cash !
That is the power of real estate and Leveraging tax law – also having the good fortune of low rates / cheap money.
Long story but I hope it helps you. Your market is one of the most enviable in the country and the fact that you bought when you did is just incredible. Have you explored borrowing against the assets ? Rates are cheap and it doesn’t create a taxable event.
Btw – as far as hassle- have you explored getting a property manager? Hassle is relative but it would be ashamed to give up a great cash flow / tax advantages and appreciation if you could hire a property manager.
Good luck.
Personal opinion, I think we put way too much emphasis on the “RE” portion of “FIRE” so I would respectfully disagree that not retiring earlier in one’s life should be viewed as a “mistake.” I’ve never agreed with the idea that retiring early is the ultimate goal of becoming financially independent. The ultimate goal is to become financially free in order to have choices in life of which retiring early just happens to be one of them.
For a small minority of people, retiring at 40 may work very well. For most of us, that doesn’t make sense for many reasons. Frankly, I’m glad I had another 15-20 years to develop myself through my career until now. Part of my growth was how much good I could do in developing people that worked with me and for me. And along the way, I developed myself as well by expanding and pushing to horizons I never thought possible. You don’t get that very often by sitting on a beach, playing golf or even volunteering though I would agree there are other meaningful ways to contribute to society but they are more challenging to generate the same kind of productive results that a vibrant career can offer. Not always, and for those who just find no meaning in work then, by all means, use your FI to escape the rat race and find your beach.
One size does not fit all and I think the FIRE community does somewhat of a disservice to represent early retirement in such a glamorous way. Retiring is a lot harder than most folks realize for all the reasons you read about in ESI’s new Retirement series interviews. Some people are really good at it but I think a majority of people struggle initially to find their place and their value after work ends.
We can agree to disagree on how important retiring early should be but I would hope we all can agree that our main emphasis and energy should be on becoming financially independent as soon as possible, no matter what our goals may be after that.
Totally agree, I’ve never really understood this obsession with retirement. I see RE as an extreme reaction to a dissatisfaction with a life that people are afraid to change in any other way. Ironically, it is not a good financial move. What if Warren Buffet decided to RE when he hit FI? If we truly want to learn from the ultra wealthy, the reality is they don’t RE.
If you’ve followed your passions all your life as one should, you won’t need RE to follow your passions. Warren Buffet, happy as can be on television, appears to have followed his passions and continues to do a lot of good for many – usually the essence of the pursuit of one’s passions and it has nothing to do with money (ie. FI).
Also, there is ultimately no such thing as a FI number as there is no way to predict future COL inflation and healthcare inflation, nursing home/ALF needs, market returns, tax rates, 401K/IRA laws, dependent costs, financial emergencies (what if Vanguard went the way of Bear Stearns with your $3M or you’re the victim of a Ponzi scheme?).
My parents have always been very happy, successful and satisfied people. They retired in their mid 60’s from their accounting jobs…then they opened an accounting firm! We’re all going for a two week cruise in Europe and Greece next month. Two weeks after we get back, they return for a 10 day trip to Russia with extended family. During my childhood, they also took us on many cruises and trips. The passion for life was always there, nothing changed! They didn’t go from unhappy to magically happy.
Try to love this life from day 1, not age 65 (or 40 if you still want RE)! It’s not the money or things that does this. It has to be something much deeper.
I don’t mind your personal opinions, of course, but for me, which is what this article is about (my mistakes), not retiring earlier was most certainly a mistake.
John, I see your point and agree with you. This was your reflection based on your past experiences, hindsight, and conclusions that for YOU, it was a mistake not to have retired earlier. You have every right to this opinion and I apologize if my remarks seemed somewhat insensitive to that opinion.
My point was meant to focus more on others who respect you and view you as a voice for the FIRE community and who might take your impressions based on your experiences and also view it as the same “mistake” for their situations. Even though it was not your intent to convince anyone else that it was a mistake for them as well, people are influenced and do draw their own conclusions.
I read a lot of FIRE blogs and I just see what appears to be this undertone of consensus that once you achieve FI you should immediately RE. For some, this may well be true but for a majority of folks, I question the validity of such a practice. While it may be viewed to be a mistake to retire too late, it is certainly true that a far greater mistake, with lasting consequences, can be retiring too early.
I think another interesting question to ponder is the actual definition of retirement. If you “retire” from a career and start your own business, are you retired? If you retire from a career and drive a Lyft part-time, are you retired? If you retire and start a few side hustles that take up several hours per week are you really retired?
To me, my parents embodied true retirement. My Mom was a teacher and my Dad was in sales. They worked until they were 65 and retired, both with corporate pensions, social security and interest on their laddered CDs to live on and they never worked another day for money. If you exchange working hours for money then it seems to me you are still working and not fully retired so the lines appear to be a bit blurred around the true meaning of retirement and I think that could be a very interesting piece to ponder and debate.
Last thought on my definition of retirement. There is a time in your life when you work for money and then, hopefully, there comes a time in your life when you no longer work for money because your money is now working for you well enough that you no longer have to work for it. For me, this is true retirement.
I think we’re on the same page. I just wanted to clarify that the post was a listing of my mistakes and I was not making any comment on whether or not these would be mistakes for others.
A few things on the definition of retirement:
1. The definition is changing.
2. It means different things to different people.
3. There’s a big difference IMO between needing to work and working because you want to/enjoy it.
4. I have a post on this topic coming up. 😉
Sound the alarm! We got a “retiree” still working for money!!
Lol. Retiring without a plan is a mistake. Retiring because you have too many things you’d like to do rather than work a 9-5 sounds perfectly reasonable. Ain’t nobody quitting their jobs to sit on the beach for 50 years and nobody in the FIRE community is preaching that message if you truly read what their writing.
Hahaha! 😉
“So, what do you do for a living?”
“I’m retired.”
“And what do you do with all your free time?”
“I work.”
? 😉
I think there’s a difference between people who work during “all their free time” and a few hours a week. But perhaps that’s just me.
I “work” in that I run a website. It’s about 10 hours a week. Here are some things I spend more time on than that each week:
Walking
Exercising
Playing pickleball
Playing video games
Watching TV
Reading
Visiting with family/friends
I used an extreme to make a point. Let me give you my personal example. I retired from a 36-year career in Medical Devices and was fully FI. I chose to become involved in a startup the last 4 years, not because I needed to but because I wanted to. I did this during what is supposed to be my retirement years.
While the last 4 years have had their rewarding moments, my time has certainly felt more like work than retirement. So, I ask the question. Am I retired, am I semi-retired or did I just exchange one career for another?
I get that what one does in retirement is a personal decision and may or may not involve work. Like you said, the traditional definition of retirement is changing and perhaps retirement no longer actually means retiring from work in order to enjoy other things in life that don’t involve a working career.
And it makes me wonder about the true definition of FIRE as well and what “retire early” really means in the new normal. I look forward to reading your future post on this.
I think the new definition of retirement will take some time to work out.
Post coming up in a couple weeks… 😉
I’m starting to wonder if some of us have an innate, untaught ability to avoid the majority of life’s big financial mistakes and to capitalize on the same opportunities beyond others. Sure we all make some mistakes but we also have different ways of recovering from these mistakes, or changing our circumstances without the fear others have of change, and very few of us get as much pleasure from saving responsibly as we do with spending for the moment. As a matter of fact I personally have started despising spending as I have done plenty of it in my life and have found it doesn’t give me the satisfaction promised by society – whether things or experiences. That’s all a very powerful illusion from the government and billionaire class – don’t get puppeteered. A minority of us seem to see right through that.
For such insights, the rewards can be great – I’m now a decamillionaire in my mid 40’s and longing for nothing other than Truth and living for my passions NOW. No need to think we need retirement in order to “live”. People have way too many misconceptions and it is precisely those misconceptions that lead to repeated mistakes. No matter how many financial books one reads, it won’t matter without correcting those misconceptions, and often we don’t even know they are misconceptions for decades until something clicks.
To avoid all these mistakes, learn what they did from those who have done it better. I have friends with a 9 figure net worth and I watch their every move very closely. Try to avoid all mistakes, both small and large, and you will shift toward a more perfect and satisfied financial and emotional life – but that may involve temporarily giving up those things you don’t think you can give up. Problem is, most are unwilling to stop making the mistakes we know are mistakes. Understand the psychology you have individually around money and life’s purpose as well as what society has led you to believe. That you need to spend unnecessarily on both things (Starbucks, newest phones, specialty hairstyling, 6 year car loans, holiday shopping for self (???)) and experiences (excessive vacations to escape an unsatisfying reality, overpriced concerts and theme parks, fine restaurants, memberships, emotional homeownership etc). Divorce is very expensive as are single parenting, gambling and non-professional day trading, substance abuse and self neglect/declining health, limited income in high COLA – avoid these mistakes if you can. Your life will be so much better for it.
To get where I’m at: I moved from a high to low COLA and optimized geographic arbitrage, got a graduate degree, married up, became CEO of my own corporation, invested in commercial real estate, paid all homes off within 5 years, paid for all vehicles in cash, moved from trading stocks to holding mutual funds long term, always maximized retirement contributions, optimized taxes, still buy almost everything at major discounts, question value of all purchases, implemented about a dozen prosperous side hustles within my business to augment my “bread and butter”, carpe diem-ed, sought God’s guidance and it’s all worked out amazing so far. Most of the mistakes I’ve made are (hopefully) behind me as I now remain vigilant to identify them and open to making changes to avoid them.
If you’re there too, great. If you’re struggling or just early in your journey prayers you will find your way.
So I’m living in a 9000 sq ft house by myself 🤣. I’ve been to Michigan only once and never realized it is so cheap. Are those house prices as of today?
They are as of six years ago…when we lived there.
Thanks for sharing as it gives hope to others (ahem, me) who have made many past mistakes.
So I give generously but I do it out of my income as it was a habit I built when I was still paying off debt. Since then I’ve learned about DAFs but I have yet to pull the trigger. Since you’ve been doing it for a while, you probably know this answer. If I set up a DAF, can I set it to automatically send dividends to a particular organization like my church? I understand the investing part but I’m not sure how the payout part works. Any resources you can refer me to are appreciated…
Thanks for sharing this! I too missed house hacking, and looking back it seems like such a cool opportunity. Oh well! As you said, we survived!
Appreciate you sharing these learnings.
Thank you for being so transparent with this article. It’s hard to admit our mistakes (even though we know we all make them) and even harder to post them to thousands of subscribers (most of which you’ve never met).
Curious as to your FI perspective when you first retired. I know from reading your articles that it was more or less an early retirement based on the bad relationship with your boss. But perhaps you could frame that “lost” decade as a necessity for you to grow your FI knowledge enough to realize you didn’t need the $4mm to retire.
It’s probably true that I wouldn’t have retired when I hit FI, so I probably didn’t lose a decade (though we’ll never know).
The concept of FI wasn’t as developed or widespread back then so that’s the key determining factor for me — much more than a good or bad job/boss.
My guess is that if I had known about FIRE then I would have worked a bit more to make sure I had much more than enough to retire, and then quit working maybe five years after I hit FI.
This would have put us still living in Michigan, which is a whole other decision I’d have to face — would I want to retire there?
“That said, I wish we had spent more on travel when the kids were younger.”
When I initially read the part about ‘spending more’ I was semi-perplexed, but you nailed the one area where I’m making an effort to relax purse strings.
Kids will never be as young as they are again and if having some memories for a lifetime mean an incremental year or two for the working timeframe, it is well worth it.
I’ve known far too many stories recently of colleagues being struck down by disease in their 40s (or even earlier) where I think it’s finally sunk in.
Time, and more importantly time with loved ones, is the one resource we can never recoup.
Good article and good insight. Thanks.