Afford Anything - How We Retired at Age 38 and 41 -- with Tanja Hester & Mark Bunge

Episode Date: January 8, 2018

#111: Tanja Hester and Mark Bunge used to have demanding but fulfilling careers as political and social cause consultants. While they loved the mission behind their work, they grew tired of the exhausting hours and grueling travel. Their home felt like a weekend crash pad. They had no time or energy to pursue outside passions like skiing, biking and volunteering. Six years ago, they read a book that changed the course of their lives. The book, How to Retire Early, set the couple on the path of financial independence. They moved from pricey Los Angeles to the more affordable North Lake Tahoe. They started automatically saving and investing huge chunks of their paycheck. They crafted detailed spreadsheets, plotting precisely how much they'd need to save before they could comfortably quit their jobs. Today, Tanja and Mark are newly-retired ... at the ages of 38 and 41. How did they progress towards early retirement so quickly? And what lessons would they share with anyone else who wants to escape the 9-to-5 grind? Find out in today's episode.   For more information, visit the show notes at http://affordanything.com/episode111 Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every decision that you make is a tradeoff against something else. And that's true, not just of your money, but also your time, which is your most valuable resource. So what are you going to decide is most important to you? And how do you align your behaviors with that decision? Answering this is a lifetime practice, and this podcast is here to explore how to do that. My name is Paula Pant. I'm the host of the Afford Anything podcast, and today I am interviewing time.

Tanya and Mark, a couple who now live in Tahoe, who are retiring, they've actually just retired, at the age of 38 and 41. What's fascinating is that their early retirement journey only started six years ago. So six years ago, they decided that they wanted to retire early and boom. Now here they are, ages 38 and 41, done with work forever for the rest of their lives. So how did they do it? We're going to find out right now. here's Tanya and Mark. Hey there. Thank you both for coming on the show.

We are super excited to be here. Thanks for having us. Congratulations. You've just retired. Yeah, it still feels super surreal to say that, but it's true. I'd like to walk through your story. Tell me about when your early retirement journey started. And I guess to get to that, let's go back to where you were right before you began working towards an early retirement. So set the stage for us. Yeah, Mark and I have both spent pretty much full careers or full early retired careers in the realm of political and cause consulting. Those are the kinds of jobs that pretty much define you and require you to devote your entire life to it. So though we did have free time, we were working much more than 40 hours a week and we were always reachable. And even when we were on vacation, we felt like we had to be checking our phones at all times. We liked the work that we were doing. We felt like it was important, but we also could see the toll that it was taking on us, just having that stress level all the time. And we saw some of our friends and colleagues aging quickly and that kind of thing and felt like we just didn't know that we could do that forever, that we could do it for a full career without it taking some kind of toll on our health. How old were the two of you when you got married? We got married when we were, I was 28. You were, I guess, 31. 2008.

Yeah. Oh, happy 10 year anniversary. Yeah, yeah, later this year. Exciting. And so at that point, were both of you still thinking that you would be in your careers for the next rest of your life? Yeah, I don't know if we had thought that far ahead. I think we had just bought our first place, just looking at where we were financially. You know, we had struggled for years to figure out how we were going to buy, you know, be able to afford to own a home even in the, in L.

L.A. where we were living at the time. So I think at that point, you know, while we knew, I think, in some very vague far-off sense that we know we didn't expect to work till 65 and get a gold watch, we didn't certainly have any specific plans to walk away from our jobs as early as we are. It was more like we kept, we always said we don't want to work forever, but we didn't have a clue what that looked like yet. Okay. So then what happened? Walk me through the timeline. At what point did that idea start to shift? About six years ago, we consider really the beginning of the journey, a little over six years ago when we bought our house in Tahoe. That was for us sort of a moment where I don't even think we had the full retirement vision put together yet, but it was the

moment when we said to ourselves, we want to work toward being full time in Tahoe and we know that that's a pretty stupid career move. Like there aren't the kinds of jobs that we have. in small places like this. You know, we needed to be in a big city. We knew that that was kind of career suicide. We knew that we were getting into a house that we wanted to stay in forever. And so that was the beginning of really the big shift in our thinking. And then it was about two years after that when we came across a book called How to Retire Early by Robert Charlton that laid out the math of how to actually retire early. And the Charlton's managed to do it in 10 years without ever making more than six figures combined. I think they never made six figures combined,

is what I mean to say. And they still did it in 10 years in Boulder, not a cheap place. So seeing that example, I think, was when we really put the very turbocharged plan into action. But we certainly weren't starting from zero at that point. We had kind of transitioned from one savings goal to another. Like after we bought our first place in L.A., then we kept saving to buy the place up here. And then we'd kept saving in the meantime. So we had been saving for several years, but certainly not as aggressively as we did once we had that clear vision. And so you were living in L.A. when you bought the place in Tahoe. Yeah. And when we first did that, we were expecting to be splitting time. We didn't know what that would look like, but we, you know, we both were telecommuting. So we figured, oh, maybe we'll

spend a few months in, you know, in L.A. and during ski season, we'll be up in Tahoe. And we weren't sure if we would rent out either place necessarily. But it's interesting as we're recounting this to see the way in which, even though we're not real estate investors, the way a lot of FI people are, the way sort of our real estate choices did end up sort of shaping the path we were on and our ability to get to think about FI and move to early retirement. So we were splitting time between L.A. and Tahoe, and we just found that we were less and less frequently getting down to L.A. We were just spending all our time up here and really loved it here, the community and all the things that we can do here. And so then, you know, we started jokingly talking about our 10-year plan

where, you know, we said, oh, it would be kind of cool, you know, like if we sold our LA place, instead of paying that mortgage, we could stock that into the market. And maybe we could retire in 10 years. But that was without doing any math, it was just thinking that, oh, that amount of the mortgage times 10 years would add up to a lot of money. And so then jokingly, I would shave a year off and call it, oh, we can, let's try our nine-year plan, our eight-year plan. But this was not really a plan. This was like a running joke. It took a while before it became a real plan, but then once it did, it ended up from start to finish having only been the six-year plan. Wow. What was the beginning of the actual planning, the hard planning stage? And by hard, I mean like the serious planning. Was that when you got the book by Robert Charlton?

Yeah. We are both definitely spreadsheet nerds. So we had both had spreadsheets for years. I had been really tracking the net worth side. And Mark had been doing. retirement projections from, I think even before we met, that's something that you always did. So he had been amazing at doing 401K from like a very early age in his career. I was a bit later, but still, I think, on the early side. So the plan that we created was really focused on taxable savings and on paying off the house in addition to continuing to do the traditional retirement savings too. But that was after the book that we assigned the numbers to it and kind of figured out what our magic, what we call phase one retirement number is the number that we need to get us until

59 and a half because it's our preference that we don't spend the tax advantage dollars now, but we save those for later. Should we need them for health care costs or so that maybe we can live a slightly nicer lifestyle when we get to our later years? Yeah, the spreadsheet at the time when we started, it was just looking at if we keep investing and keep market growth, how much will we have when I hit 59.5? It was never intended to see, you know, what can we? get to it an earlier date, what do we need to live on? It was just seeing how much money will we have when we retire at the normal retirement age. But then after Tanya, I think you gave me the book for Christmas, right? And when we started, you know, looking at what was possible and then we had

to sort of create a whole, whole new version of that, where we sort of reverse engineered from what we thought we could live on, how quickly could we get to that magic number? And then for each additional year of work, or every year less of work, how much more would we need to save or how much less could we save to make it until we hit the, you know, we get to the 59 and a half and can start touching the nest egg. Tell me if I'm understanding this correctly. So you have two buckets, broadly speaking. You've got the money that is in your tax deferred retirement accounts, and that is money that

you intend to live on when you are 59 and a half and older. And then you also have money within your taxable brokerage accounts, and that is money that you would live on between the ages of where you are now, which is 38 and 41, respectively. until you are 59 and a half. Yeah, that's correct. There's one piece that we didn't mention, which was we only had the two places, both Tahoe and L.A. for a little while. And when we got smart and decided that we didn't want to just own two mortgages for the sake of it,

we sold the place in L.A. And then we used that to buy a rental near us that we rent to a relative. And so we did something that probably you, Paula, as a real estate pro, wouldn't approve of. but we did a 15-year mortgage on that, and the goal is to pay that off, not ahead of schedule, but on schedule. And so in 12 years, that will be paid off. And then that rent will be a good chunk of our cash flow as well. So we have a supplemental source coming in in several years to bolster up the taxable, should it not do great in the markets, or should any side hustles we try and not pan out? We aren't super reliant on that stuff, but I tend to be pretty conservative financially and like the idea of a lot of different contingencies and hedges. So knowing that we've got the rental, we've got the possibility

to earn a little on the side, it all makes me much more able to sleep at night. Nice. I absolutely approve of that plan. I think that's fantastic. Great. Yeah. I just met the 15-year mortgage. Oh, yeah. No, my primary residence mortgage is on a 15-year. Awesome. If you're not planning on taking out a whole bunch of mortgages, you may as well get a 15-year. Yeah, pay it off. If you only plan on having one or two, then yeah, take out the 15 and get it over with. Mm-hmm. Once you developed a plan for early retirement, how did that impact your day-to-day relationship with money? Did you have to start saving more? Did you begin side hustles? What happened next in the immediate term? What's interesting is we actually quit side hustling right around the time that we got on this track. Oh, interesting. And it was sort of just where we were in our careers. I had taught yoga and spinning for over 10 years as a very very busy side hustle, and I loved doing it, but it wasn't making a ton of money. It was also just a point in my career when I started needing to travel a lot more as a consultant. That's just kind of the deal you're traveling to see clients a lot. And so I really realized that if I kept doing my side hustle, it would actually hold back my earnings potential in my career. And so it really was kind of the time when we decided to really throw ourselves into work in a different way, where I think a lot of folks, when they get on the early retirement track, they pull back from work. They get into the sort of mindset of like, oh, well, I'm not going to be here forever. So why invest myself? I think we did really the opposite. We really invested ourselves more. We found a lot more meaning in the work, knowing that we weren't going to be able to do it forever, which helped us appreciate it more and feel what I have been calling sort of nostalgic in advance, knowing that things we're doing. It's like, oh, this is the last time I'll do this. Isn't this fun? Even if it's just like work stuff. By really committing ourselves at that level, I do think

we were able to boost our earnings more than we would have otherwise if we had just pulled back a little bit or continued the side hustling. And so for us, it was totally the right choice. Obviously, that's specific to our situation, but I definitely do not regret a thing there. Mark, did you do the same thing? So I had never had a side hustle, but I do think, I'm not sure if it was specifically because of our plan or because of just the economic environment when we made that decision. You know, when we came to the realization, it was we were still coming out of the recession. California was still sort of bumping along. And, you know, our company like some had had a tough

couple of years. I was at a place in my career where bringing in business was expected and had an impact both on my bottom line and the company's bottom line. And I had never really liked that part of the job. And so I'd resisted it. I did, you know, tried to do good work on what was put in front of me, but never bring in business to work too hard at that, even though that could, you know, lead to bigger pay in the long run. But I think, both because of our vision and because of kind of the recognition that there were other employees at the, you know, at the company who, you know, hustling a little more at my main job could help the company and help other employees. I maybe buckled down a little more and worked harder at trying to bring in

new business. And that did, I think, kind of do both of those. It definitely helped us get where we were trying to get a little faster than I think we thought possible off the bat. Interesting. So did either or both of you find yourself getting promotions, either more rapidly or to a larger degree, after the early retirement plan started? It's one of those things where it's hard to know what happened exactly why or when it would have happened otherwise. But yeah, we both did get promotions in the final four-year stretch. It was both great to get them and kind of weird knowing like, okay, last one. Nistalgia in advance. Yeah. And for me, it was a little, it was even a little awkward because I got promoted to partner at the end of last year. A year when we knew full well that we were giving notice at the end of 2017.

So I was very grateful for that, but I also walked out feeling a lot of guilt, knowing that it was going to help, you know, set us up for what we were trying to do. But at that point, I couldn't. It was just too early to share the news and, you know, risk, you know, losing the job that was helping us get there. So it was kind of awkward. You know, I'm very grateful for that promotion, but I definitely felt some ambivalence and givolence in walking out with it and knowing that I couldn't say anything for another nine months. Mark, how did you deal with that? How did you work through that? I was careful not to, you know, I wasn't asked to kind of sign anything, to make any commitments,

anything like that. I think I was actually really lucky because I, you know, if I was ever asked to commit to anything beyond 2017, I wasn't going to do that, you know, disassemble or be dishonest about, you know, my future plans. But fortunately, I think just luckily, I never was at a point where I had to commit to anything long term or sign any kind of contract or anything like that. That would have been because then I think I would have had a real problem and either needed to say something or sooner than we were comfortable saying, you know, outing ourselves or because I just wouldn't have been comfortable, you know, being dishonest. And I think like this last year, you know, when there were moments where we had colleagues where like if their value was

questioned or like when you thought about having future conversations at, you know, the firm, we both had a lot of like telltale heart moments where we kind of like felt like we needed to share our secret. And I think it's still a little bit miraculous, especially for me, that I managed to not spill the beans early. Yeah, because since we both work in politics and me especially with campaigns, you know, getting near the end of 2017, you're lining up business for 2018 and, you know, signing on to campaigns, things like that. So by September, it did get to the point where it was the the weight of it of having the secret was definitely starting to weigh on me and when we finally did give notice in October. That was a huge relief for sure.

Were there any points throughout that journey when you doubted or questioned your decision to retire early? Speaking for myself, I don't think the decision at all ever. Getting closer and closer to the date. I started worrying more and more about the math, even though our spreadsheet said we're fine. And Tanya has a long list of contingencies if things don't go the way we need to in the market. But it's pretty hard to not come up to this, jump off this cliff and come up to the edge without feeling some nervousness around it for sure. Yeah, I think there have been some circumstantial things that have been challenges to our thinking, particularly seeing that this bowl market is still continuing. We know very well the risks of sequence of returns and all of what

that could mean if we retire at the wrong time and just happen to have like a really crummy market for a few years. So I do think there have been moments that haven't made us rethink what we're doing, but have maybe made us bolster aspects of it. So like we're going into this with a bigger cash cushion than I think we probably would have chosen to have a year and a half or two years ago. And we've also, I think one of the things that was hard for me was thinking about giving up charitable giving. And so we've really tried to make that a priority. And we got a bit ahead of schedule actually with saving the last few years. But we did save a little more, but we also just gave more charitably. And we were able to just fund our donor advised fund. So that, I think, gives us both peace of mind that we can still give even if we don't necessarily have like extra cash each year. Since we can't get that many back now, we have to give it. That's what it's for. And I think we have really. evaluated whether we're willing to do any sort of of the current work in retirement. Hard time consulting, I think two years ago we would have said no way, you know, in the midst of the last election when we were both working 80-hour weeks. I think we would have said no way in heck, whatever we need to do.

We'll teach skiing, go back to yoga, instructing, whatever it is to, you know, make a few bucks here and there. If we need to, we'll do that. But then I think getting a little closer to it. And as Tanya talked about seeing where the market is and the health care uncertainty, we are an planning to do some part-time consulting, hopefully very part-time, but just enough to assuage some of these concerns. Smooth out the edges. You mentioned you have a large cash cushion. How many months' worth of living expenses does that represent? Two years. Wow. Yeah, and it could stretch longer than that if we need it to. If we see that the market takes a big dive, we'll cut our spending a bit, and we could stretch it even longer. But yeah, it's about two years of average spending.

And are you keeping that in a savings account? Yes, we have a big chunk of it out of our normal bank over at Ally, so it's at least earning like a tiny bit of interest. I think we're up to a point in a quarter. And then we have what we call our Life Happens Fund at USAA where we do our regular banking. So that's more accessible. But yeah, it's in savings. I know it's losing spending power every day, but it feels like an important hedge just given how high the markets are. I mean, maybe they'll stay high.

maybe they'll keep climbing. Maybe we'll feel like big idiots for keeping all this money in cash. But if it dives, we'll feel pretty smart. With the money that you have in investments, are you assuming a 4% withdrawal rate when you go to live on that? We are not actually. We have done a number of projections. Mark talked about the projection he's had since before we met that he's updated many, many times over the years to reflect what we expect to need at this point in time and especially getting to 59.5. I've separately done my own projections. So we have our own spreadsheets that we use as kind of checks and balances on each other to make sure that we're we're thinking of everything. But we've actually based it on conservative market growth rather than 4%.

So we have the amount we know we need to live on. We did all these projections where we only need to get like 2% real gains in order to be okay with no other income to get to 59.5. And then we are planning, as he said, to work a little bit, especially while health care is so up in the air. I think if we feel good in a few years that there's a health care solution and that the price is sustainable and that it's politically going to stick around, we might feel comfortable dialing that back. But yeah, it's unfortunately a little harder to tell the story of how we arrived at our numbers because we aren't using a 4% rule or any sort of basic percentage. And the percent of our whole net worth is just not super helpful because a big chunk of it we're saving for later. But I will say like something that that's helpful to think about is the amount that we're planning to live. on now, if we have normal market returns or even significantly below historical averages, but

still positive market returns, by the time we hit 60, we'll be able to increase our spending by at least 50%, possibly double. So we have created a little bit more of a lean plan for ourselves, although we still think it's going to feel plenty luxurious because we'll have all this free time. But then we can live it up a little bit more once we get to traditional retirement age. If you average our spending in the pre-59-5-half period and the later retirement years and what we have in the market now between stocks and bonds, based on what we're expecting to spend averaged out again, should be like three and a half percent or so. Over all the years. So that's not accounting for rental income or social security over the long run. So our math is, we made it a little more complicated maybe than it needed to be, but we were.

looking at it more in like a three and a half percent range, figuring that if we have a little more cushion later, that's only a good thing. Let me repeat back what I think I heard from you. And you can tell me, do you want us to try and do that again more concisely? No, no, not at all, actually. It was pretty nonlinear. No, this is interesting and it's difficult to ask follow-up questions without going into numbers, but that's a welcome challenge because it forces me to try to really understand this in a very conceptual way. So talking specifically about the bucket of money that is in a taxable brokerage account, the money that is outside of retirement funds, traditional retirement funds,

with regard to that money, as long as it sustains growth that is inflation plus at least 2%, oh God, then what? As long as it is inflation plus 2% on average between now and 59.5, will be fine without having to have any additional income. So not counting our rental income, not having to backdoor Roth any of our... Or Roth, convert Roth. Yeah, thank you. Convert any of our 401k to Roth. And I guess our security is relevant because we're talking about the early part.

So, yes, inflation plus 2% return on our taxable accounts should get us there. Or, what is that? six, right, did you do the math 16 times? Yeah, I think that's a helpful way to think about it. So, we have 18 and change years between now and when we can get into Marks 401K. And we have 16 to 16 and a half times our annual living expenses saved. So we just don't need a ton of growth over all those years to have enough and then supplemented with rent, supplemented with any other side income we do. We know that to a lot of folks, this will sound bonkers, conservative. And that's just something, you know, like we just don't want to risk it. We have until recently been making a really good living. And we want to

make sure that we have a really good cushion and just have a ton of security. Because the last thing we want is to go into retirement and be stressed about money. I see. Okay. So you have 18 years in between now and when Mark turns 59 and a half. And over that 18 year time span, you have 16 years worth of living expenses saved. Is that correct? Exactly. Yep. Yeah, then you don't need very much growth. Yep. That's the hope. We'd love to be wrong and we'd love for it to outperform, obviously. And then if we can spend a little more some years, that's great or if we can give more charitably. We'd love that. We wanted to make sure that we were going to be pretty rock solid and without continuing to work one more year and one more year, we think that we are there. Yeah, it's easy to

fall into the one more year syndrome. Yeah, we were lucky in that sense of having the election cycles to dictate some of this so that we felt really strongly that we didn't want to work another election that made it really, really powerful not to work one more year. That would mean another cycle, and just that's when our marriage took the biggest hit from just the stress of all that work and the stress of being apart from travel a lot. So we didn't want to put ourselves through that. We'll come back to the show in just a second. But first, do you have fitness schools this year?

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dot com slash Paula to check out the go banking rates sixth annual best banks rankings. How did you determine what you believe that your cost of living will be in retirement? Do you think it will change significantly from what it is now? It's funny because I think it will change in some important ways and we are probably relatively unique in that we expect some of our costs to go up actually. I have traveled so much for work in the last several years that I've had a lot of my meals paid by work and by clients. And so we actually are going to have to buy more groceries. I might, you know, we're sort of known among some bloggers for keeping our house really cold. We keep it at 55 degrees in the winter, like, we'll be home more. We might need to actually turn it up a little bit.

And so natural gas is a lot here and firewoods a lot. So there are a couple things like that that we do expect will cost a little more. And then some other stuff we can definitely trim back on. Like, we can also do a lot more of our maintenance on our house ourselves. We can make some things food-wise ourselves. So we'll save a little grocery money there. But then I think we want to be really realistic that we do want to travel a lot. And so that is going to be a big expense. But we're going into retirement with about 3 million travel miles across all our accounts. So we do expect to be highly subsidized on the travel front for many years. Leia, you get right now, Tanya, you get, you're traveling so much for work that when you're home and have a break, we often, you know, just want to spend it here.

You know, we move to Tahoe because we love it here. And we like to ski and mountain bike and rock climb and hike, and we very rarely get to do the things we want to do here. You know, when you're back from all your work travel, it's not like the first thing we want to do is go on a road trip or fly somewhere else. Whereas, you know, once we're retired, we'll have, if we choose 365 days a year here, so we will want to be traveling more. And then that, you know, our miles notwithstanding, that travel won't be paid for through work anymore. Other than traveling, what else do you want to do in retirement? We have pretty different answers for this. You want to go first? So my answer is a lot along the lines of all the things I said that we moved here to do that we don't get to do right now.

You know, I want to ski 100 days a year. I want to spend a lot of time mountain biking, rock climbing, summiting peaks. There's just so many awesome things to do in Tahoe. You know, we've lived here six or seven years and we still have friends who will tell us, oh, yeah, I went for a hike on whatever trail last weekend and we don't even know what that trail is. So, you know, we're locals, but we don't, sometimes we feel like 12. tourist in our own town. So I really want to feel like, you know, like a local finally and get to do a lot of that. I also am actively involved with the Sierra Avalanche Center, which is a nonprofit here.

And that's a pretty, I'm the president of the board. And that's a pretty heavy time commitment, about 20 hours a week during the winter and spring season. So that's going to, I get, I'm looking forward to spending a lot of time with volunteering with that organization. Yeah, we, we joke that Tahoe is a place where we sleep on the weekends, just because that's how it felt when we were working and traveling so much for it. But I share all of those outdoorsy goals, although maybe minus all the mountain biking. But yes, on the rest of it. But I think on my side, it's a bit more on the creative side. So I definitely am excited to keep blogging. And I will probably end up being a serial podcaster just because radio was something I did when I was younger and tried to make a career out of it

didn't quite work out then, but now it's something that I can do and not worry about whether it's successful in a traditional monetary sense. And so that's a really fun thing that I'm looking forward to doing more of. And then just writing more and figuring out, like, the biggest thing is, I just want to figure out what I want to do when I grow up. Is there something else that really sparks my passion that we just haven't discovered yet? And I think that's something we want to leave a lot of time for is just discovery and adventure and kind of letting magic happen. And One thing that strikes me when I talk to you is that it sounds like both of you have been on the same page the whole time. You know, you both took to the concept of early retirement and have been on this journey together.

Am I understanding that correctly or was there ever a point where one of you was more into it than the other one? I think once we got to the point of discovering early retirement and realizing that that was possible for us, we were 100% on the same page. And certainly we may not have been in lockstep at every moment about exactly how to do that. Like I think we've had, we've kind of gone back and forth on who wanted to be more frugal at what point in time. And we've had a little bit of misalignment there, but we have been in total, total agreement on the end goal of retiring and our date and all of that stuff. I think going back to the earlier days before we figured out early retirement, like when we first got together, we had slightly different ideas about spending. But even then, I don't think we were ever way out of alignment. We just were in kind of different places financially when we met.

Yeah, I think once we started the early retirement journey, yeah, we definitely agreed on the vision. I think we swapped maybe even a couple times in terms of sort of our confidence level in our plan and the amount of money we thought we needed budgeted. I think early on I was only half-jokingly pushing us from the nine-year plan to the eight-year plan to the seven-year plan. and saying, oh, yeah, no, we can save more, we can live on less. And your, Tanya's naturally more conservative in terms of finances, at least, right? But then as the dates started getting closer and, you know, it sort of felt like a point of no return with giving notice, then suddenly I was probably the one who was much more rethinking all of our assumptions. Is this enough? Yeah, we're a year

ago. I was like, can I quit now, please? But then I went from the one pushing the date to, well, maybe we should do the one more year and really pat it and make sure we're really set. Whereas Tanya was then, yeah, had, this is our date. We're done. One of the themes that I hear coming up as I talk to you is the fear, fear of scarcity, fear of not having enough, which is common in pretty much every story of every early retiree. Were there any other things that you had to grapple with at an emotional or psychological level, as you, particularly as you approached your early retirement date? I think you were totally right in calling the fear. And I really think it's important for folks to recognize that, that that's a natural tendency, the scarcity kind of mindset, and to figure out ways to overcome that. And we've really tried to beat that by building in really strong systems that

help us and support us. But I think the other things that we've grappled with, a lot of them have been not financial. They've been more emotional. Like thinking about, you know, Mark is someone who thinks of himself as really a provider. And so what does that mean then when you don't have a paycheck coming in every month or if the paycheck's not bigger than mine or any of that stuff? And I've struggled a lot with the question of relevance. Like I like to be valued for my contribution and my thoughts on things, which is something that I've gotten a lot of through work. So thinking about how do we still get that somehow without having to have traditional jobs or even maybe without working at all, that's all stuff that I think has taken a lot of grappling with.

But I also think that's doing that work ahead of time and thinking that through, I think, is really worth it so that you don't get to retirement and go like, oh, my gosh, now I feel irrelevant. Or I lost my whole identity and I wasn't prepared for that. And I think, yeah, the things I've wrestled with have been a little different, and I don't know where it comes from, but certainly some level of guilt, I would say, honestly, from being, you know, in a lot of ways we're incredibly blessed, of course, to be able to do this, to have successful careers that we both kept through the recession when our companies did make layoffs. And of course, a lot of companies did. So, you know, now, you know, we're in an era when millennials are coming out of

college with tens of thousands in student loan debt. We've been lucky to have these great careers. And I think to some degree, I feel guilty walking away, like it's looking a gift horse in the mouth or ungrateful for the opportunities we've had or I've had. On the flip side, of course, that means there's an opening for somebody else who's hungrier and more ambitious to move up. And so that's certainly a good thing. But also, you know, the work we do, you know, because we're in politics and kind of social change, you know, we don't just do it because it's a job. We do it because there are issues we care about. I think, you know, right now walking away when it's a really tumultuous period and there are a lot of, you know, national issues that we work on, the

timing is a little, a little weird. And I think I feel a little guilty walking away when it feels like our work is maybe more important than it was a year or two or ten ago. And so how have you worked through that? How are you processing that? I think part of it is these things kind of moved together. So as we realized that we wanted to still stay connected to the world in some way and feel relevant in some way, it was about the same time we were accepting that the bull market was probably going to continue and we were very likely to have a recession early in our retirement. So there was a single answer to both of those, which was to keep working in some small way that both could help hedge.

our nest egg and could give us some of that gratification that we'd like to get from work. I also think it was really very much about figuring out like how can we still have a purpose. And I think you talk about this a lot, which I love. It's the idea of what are you retiring to, not just what are you retiring from. And really putting in a ton of time thinking about what that that thing that we're retiring to looks like and making sure that it isn't just fun, but it's also filled with purpose, filled with meaning, filled with contribution to the world. So some of the stuff we haven't talked about yet is how we want to actually not just volunteer for organizations here locally, which we both do, but also to coach some of the other nonprofits to do their work more effectively on the blog. I've

really taken a mission of trying to push the FI community to be more generous. It's a community with tremendous wealth and resources. And so encouraging folks to put that to good use in some small part. So thinking about ways that we can still help to be a positive impact in the world, even if it's not directly through a traditional job. What was the reaction from family, friends, colleagues when you made the announcement? Well, so our families had known, our immediate families had known for a while, and our friends in Tahoe, we had told. But in our professional circles, I had only told one close friend at work who I've worked with for 18 years. It was a surprise for almost everybody at work. My boss was definitely jocced. Couldn't at first, I think, get his head around what I was saying. What do you mean retired? How old are you again? And, you know, that living in a, my company is based in D.C. It's an expensive area to live. So the idea of retiring early there would probably be a lot more expensive prospect. Certainly in the, you know, the circles that both of our colleagues run in where you're paying for nannies and housekeepers and going out to dinners a lot. And if you're not, you're probably doing takeout. So the

idea of retiring with that kind of budget is pretty hard to fathom. Of course, we're talking about a very different lifestyle. So that was right at the top. But then rest of my colleagues, I would say, for the most part, very surprised at first, but then, you know, a mix of sort of admiration and jealousy and certainly understanding. I mean, nobody who I work with fails to understand why you would want to have some more work-life balance than our jobs really afford. I got a notification from one of my credit cards letting me know that there had been fraudulent activity. And so they're shutting down that credit card, a whole bunch of stuff I have to deal with. You better believe I'm going to be watching my credit really closely.

And I'm going to be doing that through this awesome website called Credit Sesame. Will and I are both members of Credit Sesame. We've had accounts with them for years. Credit Sesame is a website in which you can check your credit score for free, plus get personalized credit tips to better manage your credit totally free and updated monthly. They're creditceseamy.com and they do not require a credit card or a debit card for you to sign up. So you can check your credit score for free and you get personalized financial tips based on your specific situation and you can use this to improve your financial health. With your membership,

you also get free identity theft insurance worth up to $50,000, which could be a life-saving, in the wake of the Equifax data breach, or a lifesaver, if you, like me, find yourself in Ecuador and are trying to deal with some fraudulent activity on your card from out of the country. And if you ever need it, there's a live helpline where you can talk to identity restoration specialists for free. So check them out. They're totally free, and it's great to know your credit score and to get educational content. Creditcesami.com. Yeah, and I would say on my side, my original boss, who I told first, first definitely had some of that shock and disbelief for a moment, but then very quickly got to a

really supportive place. And I've, in fact, been completely overwhelmed by how supportive everyone was and how many people said some version to me of, you'll never regret this. And these are from folks who devoted their lives to this type of work. So that really meant a lot to me. And then I think friends and family all have been universally supportive. I do think it is sort of the the mythology out there of folks asking you like, oh, well, won't you be bored if you retire early? And I would say a couple of strangers have probably said things like that to us. But everybody I know who is interested in early retirement is so multifaceted and has so many different interests and could do so many things that people who know us have had no doubt that we'll have plenty to fill our times.

Like my immediate supervisor, who I love and will miss working with, said to me, well, this makes sense. You're just a person who could do a lot of things in life. And I can see how you wouldn't want to spend your whole life in one career path. And I was really touched by that. But I think that sums up pretty well a lot of the reactions we got. But I think it did seem maybe particularly shocking to a lot of the people we work with because there, you know, the fields we're in are full of very ambitious driven people who don't have a lot of hobbies outside of work sometimes. In a way, you know, we've always wanted to have more work-life balance than we can. You know, we've wanted ski and hike and climb and camp and all that and just haven't really been able to make the time.

So the thought of it from the world that we come from is I think was a little, I mean, I don't know that, you don't know anybody else at work who said, oh yeah, I know somebody else who retired at 40 or somebody who did this, right? Like, I just don't think anybody had met a model of that like you might in engineering or computer science or a lot of, you know, the fields where you do have some early retirees or at least it seems like from the blog world. Excellent. Well, is there anything that I haven't asked that you'd like to emphasize? Yeah, I think the thing that I just feel like has been so essential to our journey, because there's a lot that we haven't gone into, you know, like in the years before we got onto this path, we were saving, but we were also spending a ton. and we have always been folks who just like to say yes to things and say yes to experiences.

And so if friends said like, hey, we're going to go out to dinner at this expensive, trendy place, do you want to come? We'd say, of course. And if there was an opportunity to do a trip or take a cool vacation, we would do that stuff. That was before we got a little smarter about doing that through a little bit of travel hacking. We wouldn't call ourselves pro hackers by any means. I think we definitely have never thought of ourselves as like whiz savers. We are not the super frugal folks for whom saving a high percentage of our income comes naturally. In fact, when we have tried to budget, we have failed rather miserably at it. So I think a big part of our success has really been about not defining ourselves by some of those failures, but recognizing that all that was was really just not having the

right system. So the key to everything that we've done, other than just buying less house when we move to Tahoe or when we bought the Tahoe place, then we could have. The banks would have happily lent us three times as much as we ended up borrowing, but we didn't want to pay that much. Other than that, it's really been about automating as much as possible and what I always call hiding money from ourselves. Like, we've for years split our paycheck so that a big chunk goes to savings and then another big chunk goes into our investments automatically. So we don't have that decision fatigue every month of like, oh, well, we could invest this money or we could go like have a really nice trip or do something else, like buy some new skis. We just remove as many of those questions

as possible. And then over the years, as our income has gone up, we've been very diligent about banking raises and also banking bonuses so that we don't budget for that stuff mentally before we have it. When our income's gone up, we don't let ourselves feel that raise and suddenly think that we need to spend more, that we deserve a new car or whatever it might be. But that's not about us being super disciplined, which I actually don't think we are. We're both, you know, when left to our own devices, very likely to sit on the couch and eat junk food if we don't tell ourselves to do something better. So that, I think, is just something that is talked about a little bit, but I would call systems the entire secret of our success. And I really can't overstate that at all. Like, I think

anyone who doubts their ability, like, you just haven't found the right system yet. So keep playing around with systems until you find the right one for you. And when you say systems, you're largely talking about automation, so automatically diverting a portion of your paycheck into savings and investments, for example. Yeah, exactly. And the other way to talk about that or think about it that I think Tanya's written about a little is it's all, what we sort of did was lifestyle deflation, where, you know, when we first started on this journey, we realize as people in the FI community have, that, you know, as you get raises, your lifestyle inflates to fill the money. You start without even thinking about it. You know sort of in the back of your mind how much, you know, you're

paycheck, what you can do with your paycheck each month. And you find a little bit more to do to spend it. It doesn't mean you're going out and, you know, suddenly buying a Mercedes, but you're probably buying that appetizer and dessert instead of just the entree when you go out. And so when Tanya first started blogging, there was actually some questions and discussion about should we try and live on our retirement budget while we're still working. And I think we had, we had some debates about that. Oh, yeah. Because we could save a lot and we could still live a pretty comfortable lifestyle. and we said, well, why, you know, we need some of these outlets while we're working. So instead, what we did, we sort of did the opposite of lifestyle inflation is we would, yeah,

just hide the money from ourselves, like Tanya said. And we found that we would, without setting ourselves on a strict budget, we would unconsciously just spend the right amount each month instead of having to dip into savings. Once that money was gone, we just, we weren't going through our budget and picking categories that we needed to shave or even analyzing probably how much we spent in different categories. We just found we knew once that money was gone, we could naturally align our spending, and we sort of slowly tightened the belt and ratcheted it down. So I haven't looked at it closely. I think we're living on pretty close to our retirement budget now. Yeah, and full disclosure, we did have kind of an expensive last quarter of last year doing a couple of things we knew we couldn't do after we retired.

So we got Mark a new mountain bike, a new used mountain bike, I'll say. we bought a couple of plane tickets for this year and did some things like that that were a little more expensive. But if you take that stuff out, yeah, we're totally living at that level. But we didn't try to go from like baller spending to retirement spending all at once, as he mentioned. It kind of gradually deflated over time. And then we never let it inflate back up again. And I think we are both people who would feel very deprived if we noticed that our life all of a sudden felt very different. So it was more like, As we tracked, we kept seeing like, oh, you know, do we still need this thing where suddenly when we'd see the progress we could make with it, that didn't feel important. But we never tried to like do all of that at one time. Or we'd pick an amount we wanted to invest each month. And then we'd notice, okay, it's been two or three months and we actually had a little extra. And or we, you know, splurged when we didn't need to. Well, let's up our investment then to make up for that slack that we spent because we had it or bank that instead and sort of again slowly tighten the belt. So it never felt suddenly deprived. Nice. Go systems. Well, thank you so much for coming on the show. Where can people find you if they'd like to know more?

They can find us at Our NextLife.com and on Twitter at Our underscore Next Life. And we've got links there to all of our other fun projects. Nice. Like what fun projects? I'm doing a podcast with my friend Kara Perez who writes the blog, Bravely, called The Fairer Sense. that is about women, money, and equality. And Mark and I are starting a podcast sometime very soon called Adventures in Early Retirement that's going to be not strictly financial by any means, more about the adventure side of things. Oh, nice. Coming soon. Nice. Well, I can't wait to check that

out. Yeah, thanks so much for having us. This has been a blast. Huge thanks to Tanya and Mark for this awesome interview. I've really enjoyed this conversation. what were some of the key takeaways that came out of their story? First of all, when it comes to their finances, they did three big things well. Number one, they moved to an area with a lower cost of living. They moved from L.A. to Tahoe. Number two, when they bought a place in Tahoe, they bought much, much less of a house than what they could otherwise afford. As they mentioned, they would have qualified for a mortgage that was three times more than what they actually took out.

And number three, they automated the rest. They didn't worry about categories, a line item, like how much are we spending on groceries, how much are we spending on toiletries? Instead, they decided to build systems so that they would not suffer from decision fatigue. They would not let themselves get in their own way. They built systems. They automated it. By doing that, by taking care of the really big expenses and then automating and anti-budgeting

the rest, they got themselves to where they needed to be within only six years. So that was one major takeaway that I got out of this conversation is that if you build the right systems, you'd be amazed at how much is possible. Number two is to make a clear and informed decision as to whether it is more worth your time to start a side hustle and build multiple sources of income or throw everything you can into your day job if that day job A gives you a sense of satisfaction and meaning, which clearly it did for them. and B, that day job has the ability to give you significant promotions. As you heard them say, both of them got major promotions within the last four years of work, and a large part of that was fueled by the fact that they were enjoying their work more as a result of knowing that they wouldn't be doing this for very long. Where I think a lot of folks, when they get on the early retirement track, they pull back from work.

They get into the sort of mindset of like, oh, well, I'm not going to be here forever. so why invest myself? I think we did really the opposite. We really invested ourselves more. We found a lot more meaning in the work, knowing that we weren't going to be able to do it forever, which helped us appreciate it more and feel what I have been calling sort of nostalgic in advance, knowing that things we're doing. It's like, oh, this is the last time I'll do this. Isn't this fun, even if it's just like work stuff? Now, of course, this is an individual decision because it depends very much on what industry you're in and what job you have. The industry that I worked in, there was no way I was going to.

to be able to get a good promotion. So I knew, for me, when I was in the 9 to 5 W2 traditional employment world, I knew that it was far more worth my time to build side hustles rather than to try to earn more at my 9 to 5 because that just wasn't going to happen. But that's not the case for everybody. So if you are working in an industry or at a company that has good opportunity for advancement, that's something you'd want to consider. And then chief takeaway number three, use your retirement to express all of your talents and skills, not just the ones that you've been expressing at your day job. Everybody I know who is interested in early retirement is so multifaceted and has so many different

interests and could do so many things that, you know, people who know us have had no doubt that we'll have plenty to fill our times. Like my immediate supervisor, who I love and will miss working with, said to me when I told her, she said, well, this makes sense. You're just a person who could do a lot of things in life. and I can see how you wouldn't want to spend your whole life in one career path. As we chatted about, it's not about retiring away from something. It's also about retiring into something.

Mark already volunteers for a nonprofit 20 hours a week, and he's going to continue to do more and more of that. Tanya is interested in creative pursuits, and even if those creative pursuits aren't traditionally financially successful, as sometimes artistic or creative pursuits may or may not be, she's still able to produce and create in a way that she wasn't able to when she had a demanding day job. So that's the third and final takeaways. If you are interested in financial independence, ask yourself why, not just what are you trying to escape from, but what are you going into? Recognize some of the emotional needs that you'll have, the need to feel as though you're accomplishing something, then perhaps even the need to feel as though you're a provider for your family, and then find ways to be able to fulfill those needs and

get that external validation without a traditional career or a traditional job. Because those needs are never going to disappear, not unless you're extremely self-actualized. So in the interim, while those needs are still there, find ways that you can express those and fulfill those without having to rely on a traditional employer for that. Thank you so much for tuning in. Best of luck to all of you who are on a journey towards financial independence. I know many of you who are listening have incredible skills and talents and ideas to share with the world. And so I hope that those of you who are striving for financial independence reach it so that you can be your best selves in this world. My name is Paula Pant. I'm on Instagram at Paula Pant. Thank you so much

for tuning in today. If you like this episode, please share it with a friend and I'll catch you next week.