My Road to FIRE

I am 43 and caught on the to the idea of FIRE probably rather late; only a couple of years ago. I do make a good salary, as does my wife, but we live in a high cost of living area; the suburbs of NYC. I am trying to find the balance between living, and saving so that we can retire early. Early might mean 60, 50, or somewhere in between. We have a young child, a mortgage, and a some good habits. I think we might be leaning towards the FI, Financial Independence, part of FIRE more than the Retire Early. Early retirement will most likely mean a less stressful job in 10 years, for a few years until full retirement after junior goes to college.

There is more to it than that, though for me. I like to share what I have learned and to learn from others. I think blogging about it will help keep me a bit more on track with my own goals. My logic is that if it remains an interest, I will do a better job of staying on track. I do wish I learned some of the ideas I will share here earlier than I did, or applied them better when I did learn them. One of the things I will do is to share my mistakes and stores about how and what I did. I hope you find it interesting.

One of the reasons I started blogging is a result of all the research I have done for myself on this subject.  I work with a lot of young guys, and many of them have asked me for my advice and opinions on how to get started on all of this. I don’t tell people what to do, but I do offer my opinion.  I started blogging basically as a continuation of those conversations, and it’s become something that I enjoy.

This brings me to my most important point, I may be wrong on anything and everything I say. I have had high credit card debt, and spent money like water for a few years. For another thing, I am an engineer, not a financial adviser. My goal is to share what I think is true and my opinions, as I learn them, and hoping that others find it interesting. I hope to be corrected, and to learn.  Now most things I’ll write about are far from controversial, and the rest vary depending on your own evaluation of life. Is it better to spend a bit more now, or save a bit more now? What is your risk tolerance? Where do you live, and would you move? How much do you earn, and what do you have to do to earn; commuting to NYC vs living in NYC for instance.

This all boils down to the fact that everyone values things differently. Everyone has a different risk tolerance, and even tolerance for this subject. In my case, and I bet this is true for most people, their opinions have changed over time as well.

Looking back, I left college with about $20,000 in school loans and about $2,000 in credit card debt. This is in the late 90s. Now as an engineer, I could have made a good salary, but I chose to join the military, and while they did pay most of my cost of education, they did not pay all. They also did not pay all that much while I was active. So, for those four years, I did not pay much of my school loans. I drove a cheap car with no AC for 2 years, and when I got that big 1st Lt pay raise, which was like all of $300 a month, I decided to buy a nice Honda Civic, Ex model. The rest of that raise went into a IRA at about $50 a month. That’s all I could afford.

I loved that old civic, it was manual, and living far from the NY area meant driving was fun. Driving manual near NYC is not fun. I am sure it’s not fun in any high traffic area, but boy was it fun in Ireland. This is an aside, but if you ever get a chance, do drive a manual in Ireland. It was the most fun I have ever had behind the wheel.

Anyway, fast forward 4 years, and I left the service, and moved back to NY. Sadly for me, this was right after the dot com bust, and work for an engineer with my experience was hard to come by in NY. I eventually found a job on Long Island that had me paying about $5,000 a year in commuting costs, and I was living in a $2000 a month studio apartment in Manhattan. Living there, single as I was then, was a dream of mine. It really was a lot of fun, but I spent more money than I had. After 2 years, I ended up about $10,000 in debt, but I had started paying off my school loans. I also had some investments. I was not wise, as they were in individual stocks, not index funds or anything like that. I was looking at lottery tickets as I have come to view individual stocks. Most of those investments did not pan out.  I learned that I am not a good stock picker.

Luckily, I found a good job as an engineer in the finance industry, I am not a finance guy, but I do write software that finance people use. It was at this point that I started to get my act together. I was 28, had almost no savings, and no money saved for retirement. Those 2 years I stupidly did not contribute to a 401k. I should have known better; I missed out on a 3% match.

My new job paid $5,000 more a month, and my commuting costs were basically $0. I had a six block (roughly 1/4 a mile) walk to work. Those two things together put me at about $7000 ahead each year from where I was. I was still spending a lot drinking and living the NYC life, but I paid off those school loans in 5 years. I put money in a 401k to the company match of 4%, and I was throwing more in my IRA.

Then I did something stupid again. I put most of that IRA money in a stock. I believed in the technology of this stock, and while the idea was not bad, I was playing the lottery again. It was a speculative investment in green technology that went bust taking my whole investment.  I thought I was going to be rich.  It was an expensive lesson, and a few years later, that money was gone too. Fortunately, it was only about 60% of what I had saved, and that was still not too much. I had no car, and didn’t travel much, so there was a bit of a balance. I did splurge on a $2000 HDTV which was a new thing around this time.

With my hand burned again, and now a few years older and wiser, I got smart. I had paid off my school loans by age 33, and was upping my 401k quite a bit. Eventually, I was able to max out the contribution as I have been for most of the years since then.  I also started saving more, and while I did gamble a few more stock, one green one did do well and I still have it, but mostly I was investing in a variety of index funds. I also started learning quite a bit. I was lucky; I did not lose my job in the 2008 crash, and I started applying common sense. I bought a lot of quality index funds around the crash, and while I did not time the market in any trader sense, I did keep buying through the low. That has done well for me by now.

It was around this time that I met my wife, and it was fortunate for me that I had shaped up by then. She never went through the foolish phase as I did, and I do not think she would have married me if I was still frivolous with my spending.

I was then starting to max out my 401k contributions, as I have most years since, and still saving on top of that. I also kept reading more blogs, and looking for more good ideas. It’s really been since I got the job in finance, now 13 years ago, that I realize it’s been my goal to get smart about this subject. My parents were blue collar folks with pensions, and never had to worry. They taught me to be careful with money, and I can’t say I was ever that bad. I just never had a financial goal, and I did do some careless things. I will say this, though, the memories bought with the frivolous spending that I did living the nightlife of NYC in my single late 20s was a lot of fun, and is something that I will look back on positively.