BiggerPockets Money Podcast - 13: Achieving FI Before 40 Despite Breaking Every Financial "Rule" with Tanja from Our Next Life

Episode Date: March 26, 2018

Tanja reached financial independence (FI) and retired from her full-time, high-stress job at age 38—despite not being a natural saver, having purchased two brand-new cars in the past, and not maxing out her 401(k) in the beginning—pretty much breaking every FI “rule” out there. Tanja was not focused on early retirement or financial independence when she met Mark, but quickly got on board. Her 60-hour-per-week job took up all her time and "brain space,” and more than 100 plane trips per year made it very easy to increase her savings rate to be able to achieve her goal. Hear how she reached financial independence and parlayed that into early retirement in today’s episode of The BiggerPockets Money Podcast. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Bigger Pockets Money show number 13. He asked me how much I made on our first date. You can't do that. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by. Whether you're looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you're in the right place. This show is for anyone who has money or wants more. This is the Bigger Pockets Money Possible.

How's it going, everybody? I'm Scott Trench. I'm here with my co-host, Ms. Mindy Jensen. How you doing, Mindy? You know, Scott, I'm doing pretty good, but today is a very cold day. It snowed. I didn't pay attention to the weather, and it snowed like five or six inches up where I live, and it was kind of surprising, and the drive-in today was kind of bad. There was no bicycling today. No, I, well, I don't bicycle anyway. Nah, but yeah, it was freezing. It took me forever to defrost my car, miserable cold day here in Denver. However, yesterday it was 60 degrees, or two days ago, it was 60 degrees. Yeah, it was like 65. I love how, and it was super windy. So you know that there's a big storm blowing in when there's

super wind, but I still didn't put it together. And then I was surprised when I woke up the next morning. So enough about the weather. How are you? The weather does not affect our latest guest today, though, right? Which is Tanya from Our Next Life, who is retired and recorded the entire episode in her pajamas. Her mouse onesie. Her mouse onesie. Her mouse was yes. It was 1 o'clock in the afternoon for her and it sounded like she had been having a great day. So that's living the dream. That's exactly how I envision retirement. So I know this about Tanya. It didn't come out in the interview, but Tanya actually lives in a really beautiful house in Lake Tahoe, which she bought for like a dollar or something in 2011 at the very bottom of the market, the real estate market, you know, the recreation market, up by the ski resorts, up by the beach. Those always fall first because those are like, strenious expenses. You don't need to have that house to live. So she found this smoking deal and moved in and I'm a little bit jealous. Have you been to Lake Tahoe? It's just gorgeous.

No, I haven't been to Lake Tahoe. I've heard fantastic things, but I think we have some not maybe just as good stuff here in Colorado. So I've contented myself with that, things I can drive to. What's the lake up there? I get it confused with Great Salt Lake. It's not Salt Lake City. It's not Lake Salt Lake. It's the Great Salt Lake. I don't know. Anyway, But that lake is beautiful. Isn't this the largest freshwater lake? Yeah, we do not have anything like that here in Colorado, which is a little tough. We do have some good lakes.

It's a good mountain areas, but not. Yeah, not special. Still and reservoir. But yeah, I mean, this episode is a great talk for folks that earn high incomes. Tanya and her husband are double income, no kids. They lived in the high cost Los Angeles market for the beginning part of their career. And then they, of course, moved out to Lake Tahoe for the latter part. and she just crushed it with her career alongside her husband,

kept their expenses at manageable level and retired right around there. I think she's a little under 40 and her husband might be a little over 40. Yes, I believe she's 38 and he is 41. I think this is just a great episode for you. If you're interested, if you think your career has some high potential and how you can kind of parlay that into a early retirement if you're smart about things, even in a high cost of living area somewhere around the country. And one point that I really loved that she made was she wasn't always frugal.

She wasn't always this super saver who never spent on anything. And she met this guy who was. And she's like, oh, I could do that. You don't have to always be financially perfect to attain this early retirement and this lifestyle. You can learn how to be frugal. They sustained a smart system of finance throughout their career and allowed their financial position to scale what their career. instead of buying themselves into higher and higher lifestyles as their careers progressed. But by no means it doesn't sound like they were at any point ever really worried about that extra

dollar if they wanted something or wanted to go on a trip or a nice dinner out, things like that. Yeah, they did not deprive themselves. And that's really important. That's one of the things that I hear from a lot of people is, oh, I could never live like that. Well, you don't have to. Personal finance is personal. So, you know, make it what you want it to be. Yep.

Well, absolutely. So let's bring Tony in and here. straight from the horse's mouth. Okay. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance

tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves an needle.

Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code Pockets at Monarch.com for half off your first year. That's 50% off at monarch.com code pockets. I love Matt, said no one ever. Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes. But somehow, every small business owner ends up doing it.

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all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BPMoney. All right, Tanya, welcome to the show. How you doing? I'm great. Thanks. Thanks, you guys so much for having me. Thank you for coming on the show. Well, let's start from the beginning. When did you kind of discover the concept of financial independence and how did you, you know, begin to move towards it? My husband, Mark and I, I think, have always had, even though we've worked really hard and definitely did well in our careers, I think we did always have a little

bit of like a, we don't want to do this forever mentality and had the kind of jobs where we could never unplug, could never be unreachable, and I think just really took a toll on us. Like, it took a toll on our health and our mental health and our relationship. And so really from very early on, we've, we've been married almost 10 years now. We were together a few years before that, but we've always tried to think about ways like, how could we not work forever? How could we find a way out of having to do these careers until we die? And that was always just kind of a running joke. And then it was about six years ago when we really got serious about retiring early. And that came from just understanding some of the math. A few years ago, a great book by Robert and Robin Charlton came out called

How to Retire Early, Self-Published Book on Amazon that I love recommending to folks. And that really broke down a lot of their math. And once we saw that, we went like, oh, yeah, we can totally do this. And so we started saving pretty boring approach, mostly, just index fund investing and continuing to max out our 401K, that kind of thing. And yeah, so that was, I think, in total, we saved for six years, really four of that in a very focused way. So I have a question really, quick before we get started down more of this. Did you and Mark discuss finances before you got married? Oh, we did. This is like a fun fact about Mark is he asked me how much I made on our first date. You can't do that. I know. He totally did that. Did you make more? Was it a pass fail?

No, I made like half of what he made. I mean, I am three years younger and so when we started dating, I was, I think, 25 and he was 28. So those are kind of a big deal set of years in terms of earning. But yeah, no, he, I think to be honest, it was him attempting to not be like anti-feminist and offering to pay for the date. It's like a weird way of saying like, you're kind of broke. I can afford this. Let me pay for it without insulting like your status as a strong, badass lady.

But yeah, no, we talked money from day one. What was your position going into the marriage or I guess at the time what were you doing as a job? And then how did your finances evolve at the time you did get married? We actually are both totally anomalous in our generation of having had essentially the same job for our whole careers. So Mark just retired at almost 20 years, even though he's only 41. And I had 16 years in the same job. So we had those jobs when we met each other. That's how we met. And we kept them until we retired. There, I would say, before we. we got married, my finances were definitely not great. I financed a car at 100% a brand new car and had some credit card debt, had a little bit of student loan debt, even though I'd had a really nice college scholarship. And so that was all stuff, though, that we really wanted to take care of before we got married. So I paid off all the debt. We saved some money together. And we definitely viewed our finances as collective, even though we didn't technically combine anything until

we got married. But we were for sure in it together. We were just splitting stuff 50-50. Like Mark paid all the rent while I was paying off my debt, for example, so that I could hurry up and get that knocked out. And so, yeah, going into marriage, we went into it with no debt, although we bought a place in LA pretty quickly after. So then we took on some big debt and, you know, just kind of went from there. But I do think talking about money openly and viewing it collectively from the get-go really did set us up to be able to get on an FI path. Okay, so you said you combined finances after you got married. Derek Olson wrote a book with his wife called One Bed One Checkbook. And I really believe that you should combine your finances because you're married. You're a cohesive unit now. I have had

some good arguments on the other side. Did you ever consider not combining your finances or was it just always a done deal that you were going to do it? I just don't even think we would have gotten married if we weren't going to combine finances. We would have just, as we jokingly called it, lived in sin, like there would have been no important reason to actually physically tie the knot. And so, especially because we don't have kids, we've never really planned on having kids. So there isn't that same kind of legal imperative. And we live in California where we could get domestic partnership rights. Like, I think for us, marriage was as much about the money piece as it was about the romantic

love piece because, you know, you just want to be able to operate as a unit and to be able to think of everything in a team sense. And that's not to say that that's the only way to have a healthy relationship or a healthy money relationship. But I think for us, it was never really a question. So it sounds like outside of a few purchases like a finance car in your 20s, you know, you really entered this marriage in a really strong financial position. What was the difference between being relatively good with finances and then aggressively pursuing financial freedom? When did that shift happen? And what was your kind of position going into it when that shift happened?

It's funny. I actually would not say that I was particularly good at money. By the time that Mark and I got together, he was already really maxing out his 401K. So he was doing a lot better than I was. I think when we started dating, he maybe even had to talk me into saving enough in my 401k to get the employer match. Like I was not doing all the right stuff. And I have always been susceptible to, I would say, I've never bought a lot of clothes, but I've often bought a lot of home stuff.

For a long time, I actually had a DIY house blog and definitely had to like follow the trend. and home decorating. So I think for us, like what I love talking about is just the fact that I think you don't have to be naturally frugal or a naturally amazing saver to be able to retire early or to save for a big financial goal. I think it's just finding the right system for you. So this actually happened before we started pursuing FI, but I had discovered that if I had my paycheck split by my HR department and had some of it go into savings, I never missed that money. And that was me accidentally stumbling upon the concept of paying yourself first and the concept of automation. And so I really just started ramping that up. And then Mark and I both did that together.

Like I just started having my paycheck split and have that money increase each year. And I started doing more automated investing. So to me, it was really what I called hiding money for myself. Like if I didn't see it in my checking account, I didn't feel like I had it to spend. It wasn't that I was so motivated to save. I just like over time Mark and I together started upping the amount that we were having hidden from us. And that got us to, you know, Over time, constraining our lifestyle, it got us to a really massive savings rate without it feeling like we were actually saving anything. Okay. You touch on a couple of really great things. You don't have to be a natural saver. You don't have to be naturally frugal to embrace this idea. And that's really important because there's a lot of people who are like, oh, well, I'm not frugal so I guess I could never do that. You absolutely can. And I love that you said that. And also, the hiding money from yourself, if you're not a natural saver, if you're not naturally frugal, you don't miss what you've never had. So every time you get a bonus, you just put that back into your

savings account. Every time you get a raise, you up your savings to reflect that. So you're not getting anything different in your paycheck and you're just forcing yourself. I love that so much. Nice job. Thank you. Yeah. I'm a huge fan of what I call lifestyle stagnation, although I think that sounds really bad and boring. It's really more just like. Yeah, we need another name. Yeah. It's resisting lifestyle inflation. But so like for the last 10 years of our career, we increased our automatic deductions at the end of every year when we got a raise and then we banked every bonus. And so we're living on what we'd earn 10 years prior, which was still plenty and was still very comfortable. But people forget that compounding doesn't just apply to your investments. It also applies to your

earnings. And so if you get like a few percent a year pay increase, over time that stuff adds up. And if you can save it instead of spending it, it is crazy how fast you can save. You know, that's a really interesting point because a lot of people are trying to pursue FI and they live in expensive markets. I think you mentioned Los Angeles is where all this was going on. And yeah, it might seem really difficult right now to save a lot of money. But what you're talking about is, okay, over the course of a decade, you're forgetting that if you're in one of these areas and working at a career and giving it your all, as you guys clearly were. You both had very successful careers. You know, your earnings potential will go up.

And if you can just maintain that same level of spending, you're automatically going to approach that high level of of a high savings rate, which can make this all possible. Absolutely. I think that's totally true. So taking advantage of compounding in your income, which, as you said, in high-cost areas, you're much more likely to earn more. So you can take advantage of that. I think it's also creating kind of a culture with your social circles of not spending money.

Like we moved six years ago from L.A. to Tahoe, which folks will go like, oh, yeah, well, no wonder you saved quickly, you moved to a rural area. Like, well, actually, Tahoe is the fourth most expensive place in the country. It's not cheap here at all. A dozen organic eggs costs $9 to $12. It costs a fortune. But the difference is in L.A. if we went out to see friends, it would be $100 a person to go to a restaurant, like, pretty easily before anybody even batted an eyelash. Whereas here, people are much more likely to say, like, let's go for a hike or let's have a picnic at the park, or let's do some things that are really cheap or free.

And I think having that kind of a social circle and that sort of spending expectation with it has been a huge. part of being able to save faster in the last six years. In-and-out burger is not $100 a person. Oh, no, that's for sure true, but that is problematic for someone like me who has celiac, which is also part of why our groceries cost so much. Yes, I forgot about that. They'll do the lettuce wrap if you're like really dying for a burger. Yes.

So, yeah, Tahoe isn't rural. It's just hard to get to. It's actually the most accessible ski area in the country other than maybe like the mountains around Salt Lake. I'm just doing a little tourist plug for my home region. And there's no Costco. There's Costco down the hill in Reno, which is only a half hour away. Oh, and eggs there are $12 a dozen?

No, no, no, they're cheaper there. I'm talking about like up here in Tahoe. I was just thinking there must not be a Costco if things are so expensive. But go ahead. I digress. So you were living in L.A., which is not the most frugal place to live. What sort of income were you at versus what your expenses were, your housing, your, I mean, your fixed costs are pretty similar all around, except obviously

in Lake Tahoe where it's way more expensive for eggs. But, you know, the cost of, the cost of living in L.A. isn't that much different than the cost of living in Chicago or Denver in terms of like gas and eggs and bread and milk and like your general things. Maybe gas. I shouldn't say that. Yeah, gas is significantly more in California. But yeah, the other stuff in L.A. is pretty, pretty close. Although, yeah, there is just what we all call like the California surcharge. Everything's a little more for no reason, even though we grow all the food and we get all the gas from the ports. But for some reason, it gets cheaper the farther it gets from here. Yes, that's definitely the law of supply and demand. So what sort of income were you making? Like top 10%, bottom 4%. I think in terms of household income,

We were probably at that point in LA, like top 10%, both kind of low six figures. I'm trying to remember at what point I crossed into it, because Mark was certainly in six figures, like way earlier than I was. This is where you ended your career versus when you started, right? Yeah, well, I think L.A. ended six years ago, so that would have been lower earnings at that point. But yeah, we both definitely ended in the six figure zone. But, you know, not like Wall Street level six figures, just like normal people six figures. Yeah.

No, that's awesome. So what you're saying is this approach is repeatable for folks that are in these, you know, expensive areas as long as you're being reasonable with your spending. You know, you're not sacrificing everything. It doesn't sound like to me, the correct bit from wrong, that you were biking to work or, you know, living in the basement of a duplex or anything like that. You were living a pretty solid lifestyle, but working on your careers and allowing that to compound over the course of the better part of a decade, maybe a little longer concluding the time before you're married. Yeah, that's absolutely right. I think it's the secrets of our success are not about massive scrimping or sacrificing. Like we have never been in the mustachian school of bike everywhere. We have two cars. We bought both of them brand new. I know a lot of people will slap my wrist for that. I know, Mindy's like making a face right now.

The same face she made when you were not contributing to your retirement account and getting the employer match. I have to say both of my cars were bought brand new too. See, see, it's possible. You know, but like one of them is a 2004. the others of 2012 and we will keep them both until they die. So I think that's an important difference. I think it's been about not splurging on stuff that doesn't bring us happiness. So like we have definitely splurged on some major things. I've blogged about this before. Like we spent a thousand dollars on one meal once at per se in New York and it was worth every penny and I don't regret it.

But that was like a thing we did once in our lives and not something we expect to do twice a year or something like that. And similarly, I own six pairs of skis, but I use them and they bring me happiness and I wouldn't spend money on trendy clothing or new shoes all the time or, you know, fancy handbags or like things that I don't know, other people spend money on. So it's for us been about kind of getting really focused on our why and what we were aiming for. And then that made it very easy to make the decisions on what to scale back so that it was never about like going from a big spending lifestyle to a skrimping one. It was about gradually trimming some of the stuff that didn't make us happy, but but continuing to spend on the stuff that did like travel and skiing.

and outdoor stuff. Okay, so that's my mantra too. You don't worry about the things that don't make you happy. You save when you can so you can spend on things that really are important to you. But going back to you were making six figures, you weren't spending six figures. You were saving six figures. You were saving six figures because you had dual income at this highway. And that's great. So, so and when you went to that $1,000 a person dinner, total, total, not a person. Oh, I'm sorry. When you went to the $500 a person dinner, did you have to, like, not pay rent to do that? Did you not pay your utility bills? Well, you don't pay utility bills anyway.

You keep your house at a balmy four, whatever ridiculous temperature you keep your house at. But you weren't doing without to do this. And I think that's really important to make that distinction, that there's, there are people that, oh, well, I can't really afford my rent this month, but I'm going to go to the boat gambling, or I got to get this new iPhone. You don't. You can have a flip phone or no phone. I mean, I'm not going to go down the road of saying, like, anybody who doesn't do what we're doing is making bad decisions.

I think everybody's doing their best under the circumstances. And I also think, like, this is a world where you kind of need a smartphone for a lot of jobs and need computer literacy and things like that. But we were in the very lucky position of earning more than we needed. And I think for others who are in a similar position, you can make the decision. You can decide, like, do we want to spend all the money now for immediate gratification? or do we want to save it a little bit and get much bigger gratification just a little bit further down the road? I mean, like for us, it was, I think if we had seen, let's say, that a high savings rate would have let us retire in 20 years, I think it would have honestly been hard to make the decisions that

we made and not splurge more than we did in the final years. But because it was such a short timeline, it was very easy to see that light at the end of the tunnel and to say, like, okay, this is worth doing. And I think, like, certainly I recognize not everybody could. save in six or four years and certainly not everyone can save in that kind of timeline in an expensive place. Not having kids for sure helped accelerate our progress. We also just got really lucky in that we were able to buy our house in Tahoe in 2011 at the bottom of the market. You know, that was just dumb luck. But I think you can still apply all the same principles and just put them in your own

situation and it might be a very different timeline, but it's still very, very possible to at a minimum secure or retire securely in your 60s, but probably to shave plenty of time off that time. timeline. I think it's fantastic. I think there's four ways to go through about this thing that I like to describe as the four ways to achieve financial freedom. You can save, you can just keep your income the same and save more of it. You can increase your income and keep your spending the same. You can invest to achieve greater returns on the capital that you've already accumulated, or you can create assets or businesses, which produce passive income. All these ways work, you decided it sounds like, to focus on we're going to live a happy lifestyle at a level that we are comfortable with, and then we're going to

focus our energy on our careers, and we're going to invest pretty passively in index funds, that kind of stuff. It sounds like tax advantaged accounts, but then we're going to focus really heavily into our careers, and it sounds like you had some tremendous careers that were very successful over this time period and allowed you to scale, and that was how you got there. So can we maybe dive into that point, which, if that's correct, can we dive into that career aspect? what do you think are some things that allowed you and your husband to excel in your careers throughout this time period and advance your income that much? Yeah, and I actually love the way that you broke that down into the four.

And we really did a bit of each one is the true answer. But I think to your career question, irony is I actually think of one of the best career decisions I made as when I quit my side hustle, which I think is the opposite of what a lot of advice is focused on. And I'm completely grateful that I had my side hustle in my 20s. I taught yoga and spinning on the side in addition to working full time or more than full time. But I think there is a really important thing to notice. And that's when you hit the point in your career when a side hustle might actually be holding you back.

And that's if you are focused on, you know, kind of a traditional career. Obviously, if you're doing something where you're focused on entrepreneurship or doing more of a gig deal, that might not apply. But I think for me, I hit a point when doing classes with. forcing me to say no to travel, which was making me miss opportunities. And it was also, I think, just like holding me back and showing my commitment to the job and how dedicated I was. Like I was having to leave sometimes or say like, oh, sorry, I have to get off this call to go like teach my class. And being able to eliminate that for my life, I'm more than made up for it for the lost income with what I was able to add to my earnings. So that was a big one. I think, you know,

part of it was just like really working hard and knowing that we were in careers that had earnings growth potential, which not every career has. I think if we hadn't been in jobs that we knew could continue to grow, we would have changed that. So some of it, you know, like we both got our jobs when we were in our early 20s. And I don't think that we both knew at the time like, okay, these are jobs that are going to let us become financially independent in our 30s. But I think once we were clear that that's what we wanted, we would have made the change if we weren't in the right line of work. Maybe we already touched this, but I can't remember if we mentioned it on the show or not. Can you briefly talk about what your career actually was, what you were

doing? Yeah, we're both political consultants and consultants for social causes. So Mark did polling and survey research and focus groups, that kind of stuff. And I did more on the communication side. So messaging and different advertising PR for candidates and also social cause campaigns. Like if you ever saw ads for not drunk driving or buckling your seatbelt, there was a good chance that I or some of my colleagues had a hand in that. Awesome. Saving lives. Favorite one was go belt someone today. I did not have a part in that one. Yeah.

That was from the early 80s, and they would show people like buckling each other up, but they would sing this go belt someone today. And it was just very funny. I'm so happy we got to hear you sing today. But you'll notice like that I think seatbelts are an interesting study to think about because back in the day, all the seatbelt ads were like, oh, you're going to die. Oh, it's going to be terrible. that kind of stuff. And it was in the last decade or so that the messaging really shifted to be about

money. Like, here's how much the ticket costs and here's how much pay you might lose if you have to take a day off of work to go to court to fight this seatbelt ticket. And I think it's an interesting parallel with kind of the FI movement of like putting off instead this scary doom and gloom message of like, hey, you're going to retire one day and not have enough money saved, which feels like very far off and abstract to like very immediate terms of you could save that money today and be done working forever in like just a few years. I think that's fair. I mostly just want you to sing another jingle, Mindy.

Well, let's, let's, as we progress further, I'm sure I will sing something else. I think terrible singing voice. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money. is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal

isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves the needle. Achieve your financial goals for good with Monarch, the all in one tool that makes

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You had this passion. Things were going well. You were working long hours, but, you know, it sounded like good, rewarding work that was fulfilling. When did you decide? that you were ready. How did you know that your financial position was approaching that point where you're ready to find? What was that mentally like breaking with these careers? Oh, gosh, so many things in that question. We realized math-wise that we hit technical FI. You know, that's kind of how I think about it, about two years before we actually quit, which just meant like we wouldn't die if we couldn't work. We could cover our basic expenses. We couldn't do much else, but we could at least survive. And knowing that really just helped me mentally get to a place where I felt okay about doing it.

The biggest thing that we did is we set a timeline. So we said we were going to quit at the end of 2017, pretty much no matter what. We decided that I think three years before we actually quit. And that was, I couldn't ever share the reason on the blog when we were anonymous why that was, but it was because we didn't want to work another election cycle. So we didn't want to get into the 2018 election. We wanted 2016 presidential year to be our last. And oh my gosh, now with how the world is and how nasty politics has gotten, we're feeling really good about that decision. But that was basically it. We said, like, we're going to pull the plug at that point. We had a magic number. We hoped to hit. We actually exceeded it by a pretty good margin, both because, you know, the market's helped us a little bit, but also just because we were able to save more than we expected. And I think that really helped knowing that we were ahead of our number. And also, Mindy, you and I have talked about this before, but it also really helped me personally to know that we had enough that if we had to split up, which we don't plan to do. But like, I think this is not something that's talked about enough in FI circles, that if we, for some reason, divorced, we could each still be separately financially

independent. We wouldn't be forced to go back to work by a split. No, that's not to say we could live exactly the same lifestyle because certainly you get many economies of scale in a couple. We only have to have one house. We only have to have one set of utility bills and all those things. But we, I don't know, I take great comfort knowing that like we'd be okay if something unexpected happened in that way. I would like to point out that if you split. it up fairly amicably you could each separately be FI. I have a friend who's going through a really ugly divorce right now and a lot of his retirement was kind of wiped out because of it because it wasn't an amicable. It was really ugly. Fair enough. Fair enough. I'm making a 50%. Just don't split up.

Yeah, no, no. That's not in the plan. Not to worry. But I think the concept is really important and interesting that you that you've discussed this it sounds like with your husband and said hey if we do get divorced because you know we like obviously the plan i'm sure is to stay married forever that's the right but the numbers out there will say that a significant portion of marriages breakup and it's like you had this discussion with that in mind obvious and do you think that that increases your ability to manage money your relationship with your significant other your odds of success all those kinds of things? Oh, totally. I think people have this weird superstitious view of divorce that somehow like talking about it makes you more likely to do it. And I think that's crazy. Like not talking about

the possibility of divorce to me feels like a major communication hurdle and a sign of larger problems in the relationship. And so yes, I think it's really essential that you talk about it if you're married and that if you're aiming for FI, that you know what your plan is if you should split up. Because I think a lot of folks go into it and just assume sort of the economy of scale number and assume like, okay, four percent rule on our expenses as a couple and don't factor in like, okay, what happens if we split? And I think that's a big mistake because, yeah, Scott, as you said, like, what's the current rate? It's lower now for millennials and for Gen X than it was for baby boomers. But it's still almost one in three marriages, right?

It's not like this is some rare unicorn event. And I do think it's important to plan for that possibility, even if it's not what you actually hope will happen. I think that's a very wise advice. And I think that a lot of people are going to have a lot of trouble taking it and acting on it and discussing that. But I think that that's something really to consider. I mean, it just sounds like something so important that's so frequently ignored. I agree. And I will say, too, one of the questions that I get pretty frequently via email from the blog is guys writing to say,

hey, I can't get my wife on board with FI. How can I persuade her? The thing, though, that I do really try to stress for folks is, you know, you need to actually, if you're trying to convince a partner of this, you need to show them how they will be okay if you don't split up, because I do actually suspect that's part of what some partners are resisting is this idea like, okay, we're looking at what we spend as a couple and planning this whole future around that and then saying goodbye to our solid income and our stability and all those things that feel really safe and secure. And I think that feels terrifying to a lot of people. And I think if you can show that instead, your plan is based around you guys being okay, kind of no matter what, whether you're together or not, I think that

it's so much easier to bring somebody along to the plan. I think it's great. Can you talk a little bit about where your income comes from nowadays? Is it just all from these investments in index funds? Or do what are the sources of income for you guys? She's retired, Scott. She doesn't have a job anymore. Yeah. So right now, it's funny because we're only a few months in, and so we have yet to actually put any of our plans into action. But we've always based our plan around not needing to work, so not relying on any future outside earned income to be able to get by. So we have enough that we could just sell off shares of index funds. We actually are a little bit unusual in the

FI world of having a two-phase retirement. So we have mostly just regular taxable index funds that will tap until Mark turns 59 and a half and then we'll shift to selling 401K, which he's now rolled that over to a Vanguard IRA. So selling off tax advantaged accounts at that point. And we also will be able to increase our standard of living pretty significantly once we hit kind of traditional retirement age. So we're looking at it as like our leaner early retirement years and then our slightly cushyer traditional retirement years.

We also do have one rental property that we bought specifically to rent to a relative. and so that's on a 15-year mortgage. And so right now it's pretty much just cash flow neutral, but in about 12 years it'll be paid off. And then that will be a good chunk of our cash flow. And so that's built in there as well. But I will say right now we're actually doing some fun side stuff. So like I'm doing some paid speaking gigs

and Mark's been doing just a couple limited consulting things that have felt really fun. And so we haven't actually had to sell any shares yet. So it is interesting that that does seem to be the path for a lot of people who blog about FI. They don't in the end actually end up living off the stuff they put into place. But for me, just being very risk-averse, it does help me sleep better at night to know, like, okay, even if the market loses 40% tomorrow, we're going to be okay.

Yeah, I mean, it's just, it's not talked about that it's so ridiculously, incredibly conservative to retire at a 4% rule before the age of 40 and be like, oh, yeah, I'm going to just live off my shares forever. I mean, just nobody that has the hustle or drive to do this seems capable of just living that way, at least indefinitely. I want to dive into what you just talked about here with your two fires. You have one that's lean now and you have another one that's going to advance when you hit retirement age. Would you have accumulated more in the IRA if you could have?

If you hadn't reached these limits about, I think it's $18,000 per year. And is the reason why you have this two-pronged approach mostly because you were saving six figures a year, maxing out these accounts and then had a ton left over? Yeah, it's a couple factors. So one is we just got a really good head start on the 401Ks. And when I say we, I really mean Mark, obviously. He started maxing out, I think, when he was like 25. And so by the end of it, his 401K was just very sizable.

If you look at maxing plus compounding and some good market years in there. And my 401K is definitely good size because I started maxing after we got together. But yeah, as you said, after that first date, right? Yeah. Not quite that quickly. But it's hard to know. because the limits were there. So we didn't really think about like, oh, what if we could save $50,000 a year in tax advantage?

For us, it just became sort of a no-brainer to say like, okay, well, let's not make ourselves jump through all these hoops of Roth conversions and all of those things and building the ladder and whatnot. I will also say a large part of the logistics of our plan are built around the fact that I'm just super risk-averse. And I have some health care issues in my genes and know that our later years could be extremely expensive. I think that health care uncertainty has to be a major concern for anyone thinking about early retirement. And frankly, anyone thinking about traditional retirement, they're now talking

about getting Medicare. And beyond that, Medicare is still expensive anyway. The average Medicare recipient right now is still spending more than a quarter million dollars between when they get on Medicare and when they die. And that's something you've got to find the money for. So it has been a great comfort to me. And it's something that let me walk away from work and still sleep at night by knowing that we have a bigger pot of money there for our traditional retirement years. So I think just the idea of like the conversion ladder wouldn't have appealed to me anyway because that would mean potentially taking money away from our older selves. So I like having that money there and knowing that we're not touching it for a long time.

What's a day in the lifelike here for you now that you've moved on? Like do you do you wear your pajamas all day? You know, how does how do things go? Yeah. You guys have been nice not to mention that you can see on video that I'm wearing a mouse onesie. Can you tell me why you're wearing a mouse onesie? Is it because you think it's so cool? No, it's because I slept in this and there was no reason to change clothes. Oh, I thought it was because you didn't turn your heat up to.

It's also because our house is very cold. I will say so far there has been no typical day. We are still trying to figure out if we are going to have any structure in our lives that dictates kind of the flow of things. but yeah, some days we'll get up at like a reasonable, responsible time and we've had days where we're sleeping till noon and just trying to make up for all the sleep we lost in our career. And so, yeah, some days I get up and do a bunch of productive stuff, which is mostly writing and doing stuff for my podcast. And then other days get up and make pancakes and eat them on the couch and watch Netflix all day and try to make up for a lost time of all the TV shows. People have been telling us for years we needed to watch and are behind on. I am so far mostly through the Crown and the Great British Baking Show, and we also did Westworld,

but we're not really past those things yet. Okay. And you've said you haven't been retired very long. Can you remind everybody when you did, in fact, quit your job and when Mark quit his job? Yeah. So December 15th was his last day. It was mostly my last day. I had to work two days at the very end of the year just to get the 401K match from my company.

So that was a lot of just like tying up loose ends. But yeah, that was almost two months ago. So I think he is 67 days in according to the ticker on the blog. And I'm a couple fewer than that. Okay. But you know what? Working an extra couple of days for your 401k match, totally worth it. Oh, yeah.

It was like a $6,000 match. Why would you not work two days for that? And get paid those two days. Oh, yeah, exactly. I haven't talked to a lot of people, maybe like five or ten, who have quit their jobs. And it seems like there's this like almost six months, sometimes. 12-month period where there is this like a large amount of decompression. You know, you may have a couple side projects, but you really do it exactly what you're talking about and just relaxing,

especially when you come from a career that's as demanding as it sounds like you guys just were. But I'll be very interested to see what you guys do next because you are such hustlers and creative people that I can see working on some cool projects over the next couple of years. I'm going to take that as a very big compliment. Thank you. That is a couple of it. I am super excited to see that too. And I think it's the same. Like the emails that I've gotten from folks or the comments have been that it takes six months to a year to really decompress and figure out your new rhythm. So I would not pretend to be there yet. We are definitely still in the kind of like kids who get to run around the house unsupervised stage of early retirement.

I will say six months to a year or more. Or more. Yeah. We'll see. Some people that we know have not yet started to decompress. Nice. Well, with that, let's move on to our famous four. These are the same four questions that we ask every guest.

And some of them are extremely important. So I hope you've planned ahead and are well prepared. Mindy, you want to take the first one? Yes. What is your favorite finance book? Your money or your life. No question. That book was super life-changing for me.

Seeing your money as an extension of your life force, I think, was totally a game changer and made it very easy for me to not take out the credit card at stores. Yeah, that's a really great book. Yeah. Awesome. What was your biggest money mistake? You know, I don't think about a lot of stuff as mistakes just because I feel like I've learned from all of my past money behavior, but I definitely think if I had it all to do over

again, I would really love to have bought less crap in my early 20s, like stuff that I just thought I needed to make my home look a certain way or things that I bought to try to project. a certain image at work, I think was just focusing on the wrong stuff. And so, yeah, I think I'd take some of those purchases off the table. You know, I like that you say that because there are so many people who are, they have this mindset, oh, well, I can't do that because I'm not frugal. I can't do that because I already made some mistakes. So you made some mistakes, learn from them and move on. Absolutely. I think like it's so easy to kick ourselves for stuff. But first of all, that just doesn't accomplish anything. I think try to figure out what you can learn from it and then move forward and do the

best you can today with the info you have today. Perfect. What is your best piece of advice for people who are just starting out on their FI journey or on their debt reduction journey? I think the biggest thing that everyone should do is just start tracking where every penny that comes in is going so that you know. Because I think even for people who are very good savers, the biggest thing is like we just spend a lot of money mindlessly. And I know that this has talked about endlessly in the latte factor and I would not tell anybody to cut out lattes. if that is the best part of your day. Like having that coffee is like your big relief from stress.

Like great, keep doing it. But once you actually know where all your money is going, you can actually look at it and say like, okay, these are the things that are bringing me happiness. These are the things that are adding no value to my life. And then it's so easy to cut that stuff out. But if you just say like, okay, I have to save $500 a month, that's a really hard abstract place to start.

And it's hard to find that money. But if you start from the spending side, looking at it, what brings joy and what doesn't, it's so much easier. I absolutely agree with that. Scott, your favorite question? This is my favorite question. What is your favorite joke to tell at parties?

I was hoping you guys would forget to ask this question. Never. You know, I'm more of an observational humor type. I don't have any actual jokes. But I always can find some zinger when like somebody's doing something funny. Yes, you're very clever. Well, in that case, I'm going to shout out a listener who sent me a very nice note right here to the office. And at the bottom of that note, he had a PS, which was, what did one ocean say to the other ocean?

I have no idea. It just waved. We'll go with that one. That's such a dad joke. Thank you to Ben. I appreciate that, Ben. Oh, my goodness. Now you're going to get people sending you jokes.

So when our... If you've got a really great joke. send them to Scott. What email address do you want to put? Send them to Scott at biggerpockus.com. Or you can bail them to the office if you want to be creative like then. And I will give you a full name mention if you give you permission to do so. I'm not mentioning this person's last name because I don't know if they want me to shout

that over the air. I love jokes. So then when our guest cannot come up with fun, Scott will read your amazing, wonderful, fabulous, super funny joke. But enough with the jokes. Where can people find out more about you, Tanya? The main place to go is Our NextLife.com. And there you can link to all the social stuff.

I especially do Twitter, which is at Our underscore Next Life. And you can link over to the podcasts so far. Just the Fairer Sense is up, which is a podcast I do that's mostly for women with my friend Kara Perez. And Mark and I have another one that will probably be launching this summer called Adventures in Early Retirement. So stay tuned. Oh, that's going to be a good one. Yeah. It's not going to be financial at all.

it's going to be silly because we can't help it. We're just silly. That's great, but just be fun things you can do as early retirees with millions of travel miles. Indeed. Which you can also rack up without having to fly all that by credit card hacking for folks that are listening. Yes, but it's better when your employer pays for it and then gives you the points. I actually work for somebody who wouldn't let us keep the points. That is so unfair.

I have just like a moral problem with that because you're doing all the butt in seat miles and like you're away from home. You should have a little bit of benefit from it. Yep. I don't work for them anymore. Good move. All right. Well, Scott, shall we get out of here?

We don't want to keep you any more than you need to. We know that you have a busy day full of sitting around in a mouse onesie. I know. I really need to get back to the couch, guys. All right. Well, thank you so much. This is fantastic. Learned a ton from you and appreciate it.

Oh, thanks so much. It's always great talking to you guys and such a delight to be here. Thank you for your time. Now go back and watch what is it the British cooking show? Yeah, the Great British Baking Show. The Great British Baking Show. I haven't heard of that one. We have different tastes, sounds like. All righty. Well, thank you very much. Thank you, Tanya. Have a good day. All right. That was Tanya from Our Next Life. Great episode. What did you think, Bindy? I love Tanya. I met her a couple of years ago. And I love her story.

I love that she wasn't a frugal person. She was able to do this anyway. She never felt deprived. And she led the life she wanted to leave while she was working. And now she has her whole life ahead of her. She can lead whatever life she wants to lead now. Just by making a few simple tweaks. I mean, they were making six figures each and living on six figures in L.A.

That doesn't seem like a real big sacrifice. No, I mean, they, it sounded like, focused on their career. had, they were doing everything else right. They were keeping their expenses reasonable. They had a smart investing plan. It sounded like they had some side projects that they were ready to dive into when they did leave full-time work, but it sounded like they worked really hard in their careers and allowed them to scale and took advantage of that and all the perks that came with it, like the travel miles and that kind of stuff. Yeah, the travel miles. That pile of miles that they're sitting on right now, I'm a little bit jealous, I got to say. Yeah, absolutely.

Well, I hope that that episode was really relevant for people that are living in these high cost of living areas. And, you know, the tradeoff with that is you are probably going to need a solid career with a lot of upside potential if you are in one of these areas. If you want to pursue a path like Tanya and her husband, Mark. But it is achievable. And there should be those opportunities, maybe in greater abundance on the career front in those markets than maybe some other places where there's lower cost of living. Yes, it is achievable. And you don't have to feel deprived all the time. I know I have mentioned Jacob from early retirement extreme before, and he chose to be very extreme

in his early retirement. And that's his choice. That's what he wanted to do. It was worth it to him. Tanya said, you know what, this isn't worth it to me. I'm going to go have a $500 person meal, and I don't regret it at all. But she wasn't harming her future by having that one meal. I think if she did that every single day, she'd soon run out of those lean FI funds and would

have to start dipping into some other savings. I really want this meal. I'll ask her what the name of the restaurant again. I can't remember. SoFi, so me, so may. Yeah, we'll have to check it out. We'll put it in the show notes. Yeah, we'll put it in the show notes.

Absolutely. Okay, Scott. Well, before we get out of here, I'd love to just remind everybody to leave us a rating or review on iTunes if you enjoyed the show. We appreciate them. We read every single one. They matter to us. We take your feedback.

So please do give us. of those ratings and reviews. Yes, please leave us a rating and review. That's how our show gets spread. That's how we show up in the new and noteworthy on iTunes. And that's how you show up in the top business podcasts. I think we're in the top 100 business podcast, which is kind of sweet. Yeah, that's awesome. Okay. From episode 13 of the Bigger Pockets Money podcast, this is Mindy Jensen, over and out.