Many people hear the word retirement and think of a person being put out to pasture to quietly live out the rest of his or her days. Early retirement is much different. It is the freedom to pursue other avenues for which a full time job would just get in the way. For many its travel, for others its volunteer work, but for me it’s about seeing my kids more than a few hours in the evenings and to be free to teach people about personal finance. I am sure many of you can empathize with the hours at work versus the hours at home. On the one hand, the more effort you put in, the more promotions and raise you get. On the other hand, the more time spent at work, the more things you miss with the kids. I didn’t think much of that until I had my first child. Suddenly, I felt guilty if I worked late, but also if I left at 5:00PM to spend time with my young son. It can be a no win situation.
Okay, now back to the main topic of the difference between plain old retirement and early retirement. My solution to the no win situation mentioned above is to eventually eliminate the job as a cause of stress. Having the financial freedom to name my hours, do consulting work, or go stretches of time not working at all is really appealing to me. If I have enough money in the bank (retirement, checking, etc) the decision becomes what makes me the happiest. I know I really enjoy teaching people how to better manage their finances. Could I make that a full time job? Probably, but not without a lot of 80 hour weeks building a client panel and lots of travel to conferences and speaking engagements. That is not ideal with two young kids at home.
My income as a Chief Financial Officer is too high to just swap out for a new career right now. That does not preclude me from finding other ways to start living the early retirement lifestyle now, however. In addition to finding ways to spend more time with my wonderful wife and extremely energetic kids, I have a couple of other goals in mind.
As I aggressively pursue early retirement by trying to get my savings rate north of 50%, I have decided that I need two creative outlets (hobbies would be an appropriate synonym) to keep me sane. I want to write this blog to talk about my journey and help others. It’s done in my spare time or late at night when the kids have gone to bed and it gives me a sense of fulfillment to be sharing what I’ve learned over so many years in business/corporate finance. The second is to continue the free financial acumen classes I have done recently. Is it a coincidence that neither of the two items really cost any money? Sort of. I still spend money on some other pursuits, but these two seem to give me more satisfaction per dollar spent.
The classes are really rewarding to me personally. I started out by helping a few friends work on fixing their credit scores probably 10 years ago. I then started facilitating some training classes at a previous employer. Some of the classes were finance related and others were not. I already knew I liked talking in front of groups and educating others, so I decided to create a credit scoring training course. After creating an outline I created a flyer and had it sent out to the other workers in my building. Since it was our corporate headquarters, there were over 300 employees that could potentially attend. There was so much demand I had to schedule 2 sessions to accommodate everyone.
Both sessions ran over in time because there were so many questions and it was much more interactive than most training courses I have facilitated or in which I had been a participant. For months afterward I received emails, phone calls, or had people stop by to tell me about something they had achieved or fixed because of the class. I was hooked at that point. When I moved to California in 2010 I immediately set up the course at my new office and had the same impact on my coworkers (lots of questions and follow ups). When I changed companies in 2012, I did the same thing and it was a great way to meet some of my new co-workers.
Fast forward another 2 years and the newest class is now called “Personal Financial Acumen.” It sounds a lot more polished! In addition to expanding the topics to credit, budgeting, and retirement, I also expanded it to allow spouses or significant others to attend. One thing I have learned in my journey is that people aren’t always compatible money wise. I am fortunate to have a wife that was excited to learn about my views and we have reached a middle ground that works for us. I want to be able to do that for others as well.
In addition, I feel that more education around budgeting basics and retirement topics like risk and taxable vs deferred retirement accounts is sorely needed. It’s not taught at many high schools or colleges, but it is such a critical set of skills. I see doctors making very high salaries and not knowing how get serious about saving (and probably not blowing away their student loan debt like they could/should). I also see people not making six figures that haven’t figured out to optimize spending to be able to pay off debt and start saving. The need is there no matter what the income level. Since I have been on both sides of that income threshold I can share my experience, including the mistakes and the victories (the mistakes make for funny moments and prevent it from feeling like a lecture where they are being judged for not being perfect with money). Setting people up for success really does make me feel good.
Early retirement, to steal an economic concept, is about making the choices that yield the most utility for you. Utility does not mean the most money, but it does mean the most satisfaction. What choices have you made to try and create a better work/life balance?