BiggerPockets Money Podcast - FIRE at 50: The 4-Year Journey That Made Early Retirement a Reality

Episode Date: November 15, 2024

Could a few years of aggressive saving put you in the fast lane for financial independence? Is the grind even worth it? Today’s guest was well on his way to a comfy retirement but had never thought about retiring early. Then he discovered the FIRE movement, and with just four years of all-out hustle, he was able to retire at fifty! Welcome back to the BiggerPockets Money podcast! In 2020, Eric Reinholdt experienced a financial “awakening” that set him on a death march to FI and early retirement. For four years, he minimized his spending, maximized his savings, and threw every extra dollar at his investments. Today, he’s “chubby FI,” has a paid-off house, and is recently “retired”— working just ten hours per week on his own business while preparing to travel the world in 2025! But was the glamorous destination worth the grueling journey? Should Eric have started earlier or slowed down to reach his FI number? Tune in to hear about the major lifestyle changes he and his wife made to accelerate retirement, the different levers he pulled to grow his nest egg, and the steps you might need to take if you want to replicate his success! In This Episode We Cover How this entrepreneur reached “chubby FI” by the age of fifty When to slow down and enjoy the journey to financial independence Flexing your “spending muscle” while saving for an early retirement Why building your own business gives you a huge “buffer” for FIRE Why you need monthly financial check-ins with your significant other What Eric plans to do in retirement (and why he’s NOT giving up work entirely!) And So Much More! Links from the Show Mindy on BiggerPockets Scott on BiggerPockets Listen to All Your Favorite BiggerPockets Podcasts in One Place Join BiggerPockets for FREE Email Mindy: [e-mail] Email Scott: [e-mail] BiggerPockets Money Facebook Group Support Today’s Show Sponsor, Connect Invest, the Alternative Way to Earn Passive Income Through Real Estate Buy Scott’s Book, “Set for Life” Find Investor-Friendly Lenders FIRE by 50: How to Have FUN on Your Journey Toward Early Retirement (00:00) Intro (01:25) Discovering FIRE (05:01) Major Lifestyle Changes (14:15) High Income + Low Expenses (22:53) “Retired” at Age 50 (27:08) Eric’s Investment Portfolio (33:35) Life in Retirement (37:14) Connect with Eric! (38:06) A “Cheat Code” for Wealth! Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-581 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

Eric Reinhold built an architectural design business over the past 10 years. He's the face of the brand. He built the core products and he makes all the content. His business would be hard for him to sell. But he was able to leverage the business to achieve fire anyway and is now set to travel the world in 2025 at the age of 50. Today, we are going to hear his story, how he pivoted to achieve fire, built a portfolio that comfortably sustains chubby fire, and now runs.

his business on 10 hours a week or less. A very nice cherry on top. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen. And with me, as always, is my FI like Eric and me, but not yet 50 co-hosts, Scott Trench. Thanks, Mindy. Great to be here and love the mainstream way that you and I achieve by different than Eric's. All right, Bigger Pockets has a goal of creating one million millionaires. You are in the right place if you want to get your financial house in order because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting, including if you want to build a so-called lifestyle business to help you dramatically accelerate that path to fire. This episode is brought to you

by Connect Invest, Real Estate Investing simplified and within your reach. Now, let's get into the show. Eric Reinhold, welcome to the Bigger Pockets Money podcast. I am so excited to talk to you today. Likewise, thanks, Mindy. It's good to be with you and Scott, and I've listened to you guys for years, so it's super fun to be here. I love when we talk to people who have listened to us before. Then you know all the jokes and all the questions we're going to ask. So let's jump right into it. Eric, how did you first discover the financial independence movement? So I was, I was on a phone call catching up with a lifelong high school friend of mine. And he mentioned, we were 46 at the time. And he mentioned that he was getting ready to retire in a few months. So when he was 47. And

I was like, my jaw hit the floor. I was like, I can't believe this. Because, you know, for a 46-year-old, retirement seemed like this far-off destination. You know, it wasn't even on my radar screen. And so when I learned that fire might actually be an option, you know, I was all in. And my wife can attest to this because it's kind of all I could talk about for the next kind of three or four months. And then I just started kind of running some rough numbers. And I think this is probably similar to you, Mindy, you and Carl, where, you know, we kind of looked at what we had accumulated at the time, which I think was, you know, our liquid net worth at the time was kind of like a little under a million dollars. And we started running some numbers and set like two and a half million as our fine number. And so I thought, okay, well, this isn't like 20 years in the future.

Maybe we could pull that in quite a bit. And so over time, like you, we adjusted that number up pretty significantly. So that's not where we landed on. But, you know, I think what we generally agreed on, my wife and I was kind of a number in the chubby fire range, which is kind of like between two and a half and five million dollars for our fine number, which kind of sets it in context of, you know, we can do almost anything that we want, but we can't do everything that we want. want. So once I made up my mind that like five was the goal and retiring early could be an option, I just treated it like you guys did like death march to fie. Here's here's the date that I want to to reach five by and you know, here's the number that I want. And, you know, if you guys remember that kind of long slide down in the markets in 2022, I was like, I was getting pretty miserable.

You know, I could see the date coming and I could see the portfolio even though I was investing religiously. It was just dropping and dropping. And so I finally, I just kind of had to, to step back and accept the fact that, you know, I really needed to just focus on fundamentals. And that was just keep investing, be mindful of our expenses, and then just try and continue to grow my income where I could. And eventually we did hit our FI number in June of this year, so 2024. So it actually worked out in spite of all my anxiety and hand-wringing. So you just dropped. I love all those Phi community Easter eggs that you dropped there. Thank you. I think I got most of them.

You seemed to be saving for something before you reach financial, before you even heard of financial independence, which is, you know, very similar to Carl and I. We were saving for the future. What were you saving for? I mean, retirement was felt important, like, but at some very far future date. And I think, you know, maybe a lot of people can relate to this. You get, you're in the messy middle. You have, you know, we have two boys. And at the time, I found the fire movement. They were teenagers. So we had just come out of the messy middle where you've just you're done with the daycare costs you're done with all the kind of sports things and camps and all that kind of stuff and you're finally earning more and we you know

we saved for retirement and we loaded up our pre-tax accounts every year but beyond that we were spending you know whatever we were earning more we were just spending it we got more spending with vacations we started you know we bought vehicles and like it was a little bit of lifestyle creep but we weren't saving with the express intent to retire early. So it was just like retirement's important, but also let's have some fun now. So you used a bunch of fun phrases earlier, like Death March to FI, which we've covered in previous shows here. But what I want to understand is there's this pivot point in your journey where you discovered the fire movement from your friend. And what changed? Like how did your lifestyle change in a more tangible way that we can understand?

before and after that, aha. I think what we were doing, you know, we were smart, we were always saving for retirement. So I think we were pretty good with finances. We're making smart financial decisions. We didn't carry a lot of debt. And, you know, we had been saving since our first jobs out of college. And so I don't want to pretend like I hit our phi number, like this death march to the phi. It didn't happen in like four years necessarily. It did take a lot of time and accumulation over those other years. But, you know, we did make some pretty aggressive changes once we found the FI movement. And, you know, I would say knowing that most of our net worth in 2020 when we found it

was in pre-tax retirement savings account. I had a solo 401K through the business. She had, my wife had a 403B, but we weren't saving outside of those. So we made too much to contribute to a Roth directly. So that was kind of a mistake. We didn't know, we weren't savvy enough to know about the backdoor Roth. So that was an option that we weren't taking advantage of. And we didn't even have a taxable brokerage account for savings.

You know, we'd just kind of, like I said, max out our retirement accounts every year and then we'd just kind of spend the rest on our life. So once FI became the goal, we really started about what it would look like not only to just reach FI, but maybe retire early. That was more my idea than my wife's idea. So the first change we made was just recognizing we need a bridge account to cover expenses between, you know, when our earlier retirement date was and when we could access our pre-tax funds. So we just ended up using a taxable brokerage for that because at the time, our income just didn't make sense to do Roth conversions. We weren't going to even consider that. Second thing we did was my wife had access to a 457B plan, which is basically deferred compensation plan. And that made sense for us to take advantage of that because of the tax bracket we were in.

So we started taking advantage of that. Next thing we did, which a lot of people criticize is we paid off our mortgage. And I know that wasn't really an optimal financial move necessarily. But for us, it just made it possible for us to be really aggressive savers from 2020 to 2024, which is, you know, when we hit our phi number. Eric, you mentioned a chubby fire range of two and a half to five million dollars, which I think is a great definition of chubby phi on there. Do you include your home equity, your paid off home in that number? No, I don't. No, because we need a place to live. And so we, no, we do not. So it's two and a half to five million in assets that are liquid, liquid investable assets, not your home equity. Awesome.

Yeah, home is in addition to that. We consider that in our total net worth, just like our vehicles and things like that, you know, assets that we're not going to liquidate our home to fund our lifestyle because we need a place to live. We need to take a quick ad break. While we're away, we want to hear from you. Do you either already have or have an interest in starting a business? Answer in the Spotify or YouTube app. 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 tax refund can make the biggest impact.

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So I'm not surprised to hear that even though you said it's not a controversial point in the fire community. I think you're going to find that that's very common. Yeah, it's nice not to have to include that fixed expense in your fine number. So that's kind of why we did it. And then from there, we looked at the Delta and we just set up some monthly savings goals, like pretty aggressive savings goals. We spread sheeted out what it would take to reach our number.

We looked at our current expense. and, you know, that was our investment target each month. And this was, you know, we haven't talked about this, but I started a business back in 2013. And that's really where we took most of the earnings from the business and used that to kind of supercharge our savings. We ended up just kind of living off of my wife's salary because we could do that. But then we just, you know, we had the discipline to say, okay, every year, at the beginning of the year, we're going to do our backdoor Roth.

And then we're going to work through and fully fund our pre-tax accounts. And then everything else we're going to put into. a taxable brokerage account and just keep building that bridge so that it'll, you know, last long, you know, longer. And then the last thing that we did, the last kind of aggressive change that we made was I was sitting on a lot of cash for the business in 2020. And I was doing that because I was just, you know, I was so fearful of having to go back to work for an employer. I didn't want to do that. And so I built this kind of excessively long runway that just was not serving us. And so, you know, part of this kind of financial awakening and learning about personal

finance was like, hey, cash is, if you want to have a 40 or 50 year retirement, cash is not your friend. You really want to be in equities. And so, you know, we started moving cash into the market on a regular cadence and just having a monthly financial check in. My wife and I would say, okay, how are the savings targets this month? And we just have that as a regular part of our discipline. Were your savings targets a percentage of your income or were they a dollar figure? A dollar figure. Okay. And would you say you hit it most months or exceeded it? We did. Yeah, but you know, that long slide down in 2022. And I describe it as a long slide down. It's, you know, in terms of market corrections, it's not, it wasn't that long, obviously. But, you know, just looking at that those numbers, the further you get away from that number and the close of the time horizon is, the bigger those numbers get. So it's, it's a really unhealthy way to do it, I think, because what I ended up doing was, you know, the death march defy aspect was I was probably sacrificing things. in service of getting to a FI number.

Like every dollar that didn't go into an investment account, I looked at, you know, as taking me further and further away from FI. And it's a pretty toxic mindset. And I think it's easy to fall into when your extreme focus is just on a number and a date. And so I wouldn't recommend doing that. I second that, not recommending doing that. That's exactly how we did it. And you get there, but you don't enjoy the journey.

So you said this was a. really unhealthy way to do it. Knowing what you know now, what would you do differently starting four years ago? You discover the Phi movement. What would you do differently so that somebody who's listening who isn't quite Phi yet can learn from your mistakes? I mean, I like coming up with the aggressive savings target. And I like giving, I think one of the healthy things we did was giving every dollar a job. But I think what was unhealthy was I didn't plan for spending in the same way that I plan for saving. I think a lot of people don't consider that in the fire movement.

It's very easy to save. But then you reach this fine number and now I'm facing this myself. You know, in another couple of months, I'm going to start potentially drawing down the portfolio. And if you haven't built the spending muscle, it puts you in at a disadvantage. You know, I would design the kind of life that I want to have between now and the future. And, you know, that you have to make space for all of those things. There has to be room for saving, but there also has to be room for a life that you're designing

that you're excited about and that is, you know, fun for you and your family at the time that you're living it because, you know, that space and I'll talk about the messy middle again because I found that hard for myself was, you know, the space between here and your fine number is that is your life. It's not just like a, it's not the death march to five. That's the most important thing. It's designing a life that you care to live. with your friends and family and enjoying the time that you have now because we're not promised

that future Phi date necessarily. And that's a hard thing to come to grips with if you're someone who's a really aggressive saver and you get into that habit of it. But I would encourage spending as a muscle to flex too. Absolutely agree with you. So it took you approximately four years from the time you learned about financial independence and were intentional about reaching it to the time you actually reached it. How long do you think it would have taken you if you would have exercised your spending muscle and loosened up a little bit instead of this death march? Oh man, I haven't thought about that, really. You know, certainly if I could have gone, if I could have rewind the clock and started investing more aggressively when I first started my

business, you know, back in 2013, even if it was like a quarter of what I was, it was doing, you know, between 2020 and 2024, that would have been a much longer lever, you know. So time is really, really the lever that I wish I could go back and change. But, you know, I would probably stretch it out maybe eight years because it got pretty aggressive there for a while. And I developed some pretty unhealthy habits. So it's hard to go back, you know, with hindsight, it's easy to look back and say, oh, yeah, I'd start investing, you know, 11 or 12 years earlier, but you just don't get that luxury. I got two questions on this.

So this death march to five concept, this grind, what I'm gathering that this was coupled with this, this coupled a large amount of income that required an intense amount of work to drive and a very modest level of spending in tandem for a very prolonged period of time, which results in tons of work and no enjoyment around this. Can you confirm whether that's true? true and then give me some details, if so, on what your lifestyle actually looked like during this type period from an expense standpoint and what your business income look like. I would say, yeah, it would probably look like that at the outset to someone on the outside.

But my wife was running her own research science lab. She had NIH funding. She was compensated. I would say she's highly compensated. So that bought us freedom to be able to have a life. that we were comfortable with. We agreed, and I think part of her getting bought in on financial independence, retire early as a concept, was that we weren't going to change our lifestyle a lot. We knew we had a limited time with our boys in the house. So they were both teens at the time.

Our oldest was getting ready to go off to college in two years and our youngest in four years. So we knew we had, you know, a limited window of time that we could make memories with them. And prior to that, we had, we had always spent on vacations and experiences. We, we prioritized that. So that was important to us enough to preserve. But I will say, you know, we didn't at a time when our friends were looking at expanding their house and, you know, going on even spendier vacations than we were, we didn't do some of those things.

And now that we have an empty nest, like, I'm kind of glad we didn't do those things. But we're still in our same starter home. We still have a lot of the same furniture that we, you know, had when we first built it in 2007. So I think our, you know, to an outsider, our lifestyle doesn't look like we expanded that. But to us, it doesn't feel like we, we scrimped on a lot. So, you know, our living expenses are between, you know, 10 to 12,000 a month in terms of just operating a basic lifestyle. And during COVID, we haven't talked about me starting my business yet, but during COVID, the course side of my business, which ended up kind of really taking off in 2020, was making

about 50K a month. So that's a pretty big shovel to be able to save. That was just one component of your business. You had other components that were generating on top of that too. Yeah, exactly. I had a client services side of the business, and I had a whole product side. And the bulk of the product side was the course and digital products business. So we're talking 600,000 to a million at least an income from the business that you that during this period. Yeah. So it's significant. You know, that's a big shovel. So you can do a lot with that. Was the business and also creating an asset? Did you sell the business? No. Nope. We're going to continue to to run the business into retirement. And that's kind of, that's another kind of controversial thing.

You know, we're going to be recreationally employed is the idea. But, you know, my wife will be stepping away from her job in January of 2025. And we're going to change the way I run the business right now. The business used to take clients and build products and services on top of that client work. And we are no longer taking clients in the business. It's purely a products business. So we're going to change the number of hours. Like you said, it does take a huge time investment to build up all the content for the YouTube channel and make the products and courses and also work with clients. And I didn't want that kind of lifestyle heading into a retirement or post-fi at least. I wanted to redefine what work was going to look like.

And so, you know, all of that investment is going to pay hopefully for many years. And we're going to continue to ride on the back of those investments for, you know, at least five years is my hope. So how much time do you spend in the business currently and how much time will you be spending once you like change and pivot? Yeah. The current business, I would say I probably can run in 30 hours a week. I've stopped working with clients individually. And I've just really, I hired an agency last year to help me kind of reinvent and design marketing and automation systems so that in preparation for us entering early retirement and wanting to be able to travel around the world yet still operate this business, I hired them to say, okay, let's turn this business from an active time investment.

into something that we can run in like, let's say, 10 hours a week. So my wife and I would be combined total working on this, you know, each working 10 hours a week, which is, which feels like such a change from the 50, 60, 70 hours a week that we might have been running it like from 2020 to 2023. It's been quite a dial back. So I'm trying to kind of transition so that it's not falling off a cliff here. But, you know, 10 hours a week is going to feel that's definitely going to feel retired to me. Open the conversation. We're talking about chubby fire. But you also have an asset that you have chubby fire just in your stock portfolio. You've got another asset here that's worth hundreds of thousands or millions or maybe even eight figures. We have no idea because we don't have the income numbers here on top of that. So you're really in this way into this fat fire or obese fire range when you really think about it in that context. It's weird. Yeah, it's weird to think about that, though, because the business itself is a personal brand. So it's not, it's, you can't sell a personal brand in the same way. I mean, you can certainly value that even in, you know, on an annuitized basis, right? Is that kind of what you're talking? Like, if we're thinking this thing is throwing off $600,000 in passive income a year, you put a multiple on that and say, okay, this is part of your net worth. Is that what you mean? I guess there's the component of it's not actually worth a multiple of income. If, if, if, if the, if the, you know, the business is truly valueless without you behind it.

But that's like, but that's another component here. I think like, how do we, how do we define that? Like, like, I think most people who are thinking,

I want to be chubby or fat, fie. Um, like, I think most people who are chubby fie are probably like thinking, oh, I'm a higher income earner. I'm going to amass a nice amount of assets,

pay off the house, do a lot of the things you talked about. But then there's this kind of fat fire world or obese world that's more around the, the concept of, of owning a business like this. or selling a very large business, for example, and getting into that. Like, I would imagine, like, let's use a $600,000 mark. It sounds like there's a different number there around that, but $600,000 plus a two

and a half million dollar portfolio is going to generate $700,000 in ability to spend on an annual basis. And so I just want to, like, think about, like, how do you, how do you bridge? You are obviously approaching your spending and your situation from the concept of thinking about chubby fire and you have this huge other asset at play. So how do you bridge that mentally and think about your position? I think it's important to say that we never included the business cash flow in our projections. So like if this business shut down on January 1st of 2025, our fire plan still works. So we always wanted to design a plan that wasn't contingent on

me working in the future or my wife working in the future. And so is it great? Is it a great buffer to have passive income that is going to help minimize sequence of return risk? Yeah, it's an amazing thing. Can we let the portfolio season more if we are not drawing down on any of those assets? And we have some kind of asset, which is producing cash flow to fund our lifestyle in the present. Yeah, that's, and to me, I look at the business as a buffer. I never looked at it as an asset that I was going to sell because, you know, it's connected to a YouTube channel where I make videos.

And it's me. It's my name connected to it. So I think that, you know, as an asset, it's not the kind of thing that you look at and say, this is an easy thing to sell. But in terms of a cash flow, you know, buffering our cash flow, yes, it's huge. It gives a lot of security and confidence to the number that we set. but it is not reliant on that cash flow to make our retirement work. Well, you've got to take one final break, and then we'll be back with Eric. 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 in a needle.

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Do you consider yourself retired if you're still working 10 hours a week? Yeah, this is a big, on my YouTube channel, two sides of five, when I mentioned that I was going to be making this transition into retirement, but or we had hit our five number, I was not going to be stepping away or closing the business, you know, people gave me a real hard time about it. There's a lot of pushback. You know, oh, I knew he'd never retire. You know, and, you know, for me, reaching FI is just, it's, I get to decide what retirement looks like for me. And, you know, if you transition from working 50 hours a week and you have all these demands from clients and outside actors on your time, and then you move into a space where you're making all of the decisions and

you have all of the agency for what the next business moves are. And, you know, It doesn't have to be about money. That feels a lot like retirement for me. And, you know, retirement doesn't just have to be about not working. It's about choosing the things that you want to work on that, you know, excite you most and bring you the most joy. And I expect that to change. I don't think anyone is going to step into retirement that has one singular definition.

I could see if, you know, for certain people who want to get away from a job and it's a true grind and you just, you know, it's boring. you're not excited by the work. But I don't have that. I built myself, I designed myself a job that I'm pretty happy with. And so I think the challenge for me is just kind of transitioning that away from having to earn into, you know, other creative endeavors. And yeah, it's hard. Okay.

So I asked that on behalf of the internet retirement police who can stuff a sock in it. But I think you hit that right on the head. Like you're not doing things you don't want to do. It is really rewarding to create something that people comment on and say, hey, this was so helpful. This changed my life. This was I learned something new. Great. And all I did was open up my computer and talk into my camera.

So how hard is that? If you stop making videos, your channel will continue to go on for a long time. You can even release, if you decide I'm going to go travel and I'm not going to do anything for a month. You can re-release some of these older videos that your newer viewers haven't seen yet. I've seen it done and it works great. But retirement isn't just about not working. I don't think that the majority of people who get themselves to the point of financial independence can be comfortable, just their personality, can be comfortable not doing anything.

And way back in 2018 when we started this podcast, Scott said, when I finally retire, I am going to play video games for six months straight. And I'm like, well, maybe, but I bet he doesn't. And I think he's altered that comment now. I'm sure he'll play video games more than he does now. But I think that Scott Trench would be bored silly, sitting in front of a computer and playing video games for six months. And maybe I'm just projecting my own self because that would really be my definition of hell. I don't know. A lot of good games come out in the last six years apparently. Not according to me. Yeah, especially if I lived in, where is it in Maine, Eric, that you live? Mount Desert Island, yeah. Yeah. So that, you know, I, uh, I don't know how

as long as there's a good internet connection there, the four months of winter or six months of winter or whatever. Long cold winter, yeah. Maybe I would get invested in video games if I had a six month winter. Probably not, though. There's other things to do. Yeah, the retirement police is just an interesting discussion because, you know, even when you tell people, you're thinking about retiring early, everyone wants to project onto you what their vision of their own retirement is. And, you know, it doesn't have to be mine. And I'm, I'm really comfortable with however you want to define it for you. And if that involves a little bit of work and a lot of play, cool. And, you know, it's going to change over time. I don't know. I've seen my co-host who retired five years

ago. He's changed a lot in what, what he's done. And he's been able to just kind of follow the threads of interest that he has that aren't beholden to the work schedule, which is what most of us you know, have to live the majority of our lives doing. So let's talk about what you're investing in. You discovered financial independence in 2020. You were already investing in some things. Did you, what are you investing in? I'm not looking for stock tips, although if you've got a hot one.

No, we're boring investors here. You know, we had always, we had been 100% equities up until about 2021. And then, you know, we're just doing our research thinking, it probably makes sense to get maybe a little bit more conservative. And I know there's lots of differing opinions on that. But for us, we just thought that would make sense to kind of dial it back a little bit. Presently, it turned out it was the worst time to get into the bond market, probably in history. Our current asset allocation is just 80% equities, 15% bonds, and 5% cash.

And that's just for, you know, the cash is just in a money market fund. the bonds are split between VGIT and BND and the equities are all in VTI. So it's just like boring, Boglehead investing stuff. But, you know, having the business here, I can't ignore that in this whole equation because having the business income helps us just manage our cash flow here allows us to be a little more aggressive with our asset allocation than, you know, if you read like Kitsis or something, you know, he would say, you know, make a bond tent. And we didn't make a bond tent.

And there's a reason that we didn't do that is because, you know, because, you know, we can use some of the cash flow that's coming out of the business to help mitigate some of this, you know, sequence of returns risk that you face in early retirement. So, yeah, that's all we have. We, like I said, we don't have credit card debt. We had a little bit of student loan debt from my wife and our mortgage, which we paid off in 2020. And, yeah, we kind of talked about that. I think it's nice not having the mortgage. The additional benefit not having the mortgage in early retirement is if you ever wanted to kind of game, you know, your,

Magi for qualifying for ACA premium tax credit, you could do that. That's going to be hard for us to do, I think, given what the business is earning right now. But that's another advantage to having that taxable account that you can control income that way. Awesome. And do you withdraw anything from the portfolio at this point? Or is it all just allowed to continue compounding because of a business income? Yeah, that we're just going to work. As long as the business income supports our lifestyle, that's kind of how we're going to approach it.

And we do have, I didn't, I don't think I mentioned. this, but we have kind of a 60-40 split between pre-tax and taxable assets. So we do have some flexibility in there. And at some point, we'll probably do Roth conversions in the far future, but that won't be for a while. And nearly all of the after-tax position has been built in the last four years, right? Yeah. Yeah. Totally. What about cash? How do you think about cash in terms of annual or monthly spending? In what way? Like how much cash relative to your monthly or annual spending do you keep on hand as part of your portfolio? Yeah, we keep 5%. of the total portfolio in cash.

So, and we just do that. So it's just kind of dry powder. It's take care of, you know, we can have some opportunity. If there's an opportunity there, we can do it. But we're not like stock picking or anything like that. I'm not big into crypto. We have a small crypto position, but it's not, it's not really even an emergency fund. And maybe you'll tell me, Scott, that that's kind of a dumb idea.

If the business is my cash position, I should have the rest of that in the market. Oh, there's no dumb right or wrong answer for cash. I have found that entrepreneurs and folks who own businesses tend to have a very large cash position in a relative sense. And often there's this completely. Yeah. So I, wait, let me just make sure I heard you said. Five percent of your portfolio is in cash and how much is in the business in cash? That's, it's one and the same for me because I'm a sole prop. Yeah. Okay, one in the same. Yeah. So a lot of, a lot of folks seem to like separate the two in their minds. So I'm, glad you combine it. That seems like super reasonable. Many entrepreneurs seem to have a lot of cash relative to other investors. If you're buying Facebook ads, for example, or you're paying an agency, you really need that. And you've got taxes that you're saving for. So that's just something I've always held. Yeah, Scott, you just said there's no right or wrong answer for cash. And I want to clarify or ask you to clarify, if I consider it cash, then it's not in the market. It's,

It can be in a high yield savings account. I might even say, you know, it could be in bonds, but I don't consider money in the stock market to be my cash because let's say that I put money in there and I don't know, it's 20, 22. And every time I put money in, the next day it's worth less. That's not what I'm thinking cash is for. Cash is for I need to pay something now. And it could, you know, be in a I can't get it for a month account, but I don't think it

be in an account that's like flexible like that. What's your definition of cash? Cash is is, for me, money in a savings account, a checking account, or in a money market account, something like that that is really intended to be a cash position. And to be clear, a 5% cash position for Eric is a pretty conservative position. Let's use that $2.5 to $5 million range. You're talking $125,000 to $250,000 in cash in this particular portfolio, depending on how that range shakes out. So that's a big cash position, but it's not, that's not incongruent with what I've seen from a lot of entrepreneurs here. It's about one, it's somewhere from one to two years expenses based on his $10,000 to $12,000

expenses there. That's right on the money for what I, what I would expect for someone, like based on what we've talked about from, you know, based on previous interactions with entrepreneurs like Eric in the past. But that's what I think, I think that's what you mean by cash, right, Eric? Yeah, I keep that in a money market fund. It's just right in my taxable brokerage. And it's, you know, I have it in one or two days.

And, you know, I'm just, all the spend for the business goes on just a business credit card. So we can get all, we're gaming the points there. But, yeah, the cash sits in a federal money market fund. You don't meet a lot of people who have more than about $250,000 in cash because then you start bumping up against the FDIC limits. So that's another reason folks. start moving that into more illiquid investments at that point. There's kind of a forcing mechanism there because you're like, you know. Okay.

So, Eric, thanks for sharing all this. This has been a really fascinating window into your journey. And congratulations and all the success in the retirement. Do you have any kind of, can you give us a preview of some of the things that you're going to be on that journey to, you know, what do you think you're going to be doing next? Or what is the next year going to look like for you? Yeah, the next year, my wife and I have, I mean, I was just talking about, this with my co-host of my show that I've kind of taken work out of my schedule and I've filled it in

with travel. So I don't know if that's a good thing or not, but we have a very aggressive travel schedule for the next 12 months. And my wife kind of referred to this as the period of hedonism. So we're going to just, we're going to probably blow it out for the next 12 months and, and see where we land. We have a lot of big trips. We have our 25th wedding anniversary coming up. So we have a big trip to Japan that we're planning and lots of other fun things that, you know, we've been delaying because, I mean, we came back from this trip from Europe in the fall here. And this typically for my wife would have been, I wouldn't have seen her for the next four months. And because she's doing the off ramp from her job, I'm able to, you know, spend time with her.

And we're able to go hiking together and biking and all these things and traveling. And so that's kind of what I'm filling my time with. I'm looking for the next project. I'm probably going to continue, you know, the podcast that I'm doing and continue making some videos for my own business without all the financial strings attached to it and kind of see where it leads me. There's a high synergy between owning a business and traveling a lot, given the amount of money that goes through a business on a credit card, for example. Have you found that that is aiding in your travel plans for 2025 at all?

Absolutely. Yeah. I mean, it's one of the great things about, you know, the government incentivizes running a business. There are all kinds of tax advantages to running a business. And so if we can run this from anywhere in the world, you know, I'm primarily. probably not going to choose to stay in Maine for the next six months where it's going to be snowing hard. I'm going to prefer being on a beach in Southeast Asia. So we'll see where that leads us. But yeah, that's a great benefit to having a business and being able to have your wife be

your co-pilot there. How frequently are you checking in on your investments and your net worth and your position? A lot less than I used to. So I think I developed, as I said, some unhealthy habits on the Death March Defy there. And, you know, it was like a daily thing. And I think probably a lot of people do that. And it felt like I could control what was happening just by checking more. And what I realized was, you know, I have zero control over that. And so what we tried to do was just put a really solid plan in place and just focus on the things that we could control, which was, you know, earning more and investing what we could. And so now I just, I try and resist that urge. Honestly, do I do a monthly check-in with my wife? Not as much as we used to.

I would do it probably more regularly than she would want to. But as you get to that point where you're going to make the transition and my wife leaves her job and the health insurance there goes away and we have some things to figure out, yeah, I'm probably checking in maybe more than I have for the past year or so. But it's not a daily occurrence like it used to be. Oh, daily. Gosh, you are just like my husband. I know. I was going to say, you can relate to this, right? I can. He still kind of does, but he also enjoys it. So I think it's, I think it's a little different. If you don't enjoy checking in on it, then don't. I mean, it depends. When the market's going up, it's a lot of fun. When it's taken a slide, it's, you better just, you're better off just going out for a hike. That's the what I've found. Yes, that is a true statement. Eric, where can people find out more about you.

Two Sidesify.com is where I share my journey on the path to financial independence and retiring early. Yeah, it's been great speaking to you guys. You have been part of, you probably didn't know this, but you've been part of my virtual personal finance MBA that I've gotten. So I appreciate all the content over the years. And this can be a real thankless job. And you don't get to hear from people all the time, especially in a positive light. And so I just appreciate, you know, you guys sharing your experiences and all the detail

you have and the advice over the years. It's helped me get to where I'm at now. So thank you. Thank you so much for sharing your story. Congratulations on the success. I hope you enjoy the next couple of years and make the most of it. It's an awesome, awesome situation. You've put yourself in and yeah, I look forward to hearing about your adventures. Cheers. Thanks. Thank you. Thank you so much, Eric, and we'll talk to you soon. Sounds good. Bye.

All right, Scott, that was Eric. And that was a really, really fun story. I wouldn't call his story a repeatable story, but it's definitely worth listening to. I think a lot of us have this idea that we want to create or start our own business. And you have this pie in the sky dream that it's going to generate all of this income for you. And Eric actually did it. So he kind of won life. Yeah. I mean, he's got a wonderful business that seems largely automated. He cut back all the pieces he didn't like. You know, a business like that, I have a little bit of skepticism that it's as dependent on him as he said it is. And I think that he might have a very big payday coming in a couple of years if he truly is able to automate the business and it keeps growing in this way.

So I think that he's going to have a huge cherry on top and that this guy ain't chubby-five. He is way past that into the world of fatfire. And I think that he's going to have a wonderful, wonderful situation bringing over the next couple years. And I think that it's just another vote in favor of thinking about that business component, especially if you have, if you have, like, one, if you can do what he did and have one spouse generated income that you can live off of and the other spouse can focus on building a business. I mean, it's just it's just a cheat code on the path to wealth if it works because it's producing

income that whole time and it's producing this enormous equity value that can be coming up or an annuity that can be built. So super powerful. And there's a whole bunch of other advantages besides the ability to set up your retirement plans, that credit card points. I mean, you only imagine the amount of money that that guy spends on credit cards and the amount of travel miles that racks up to allow them to. to probably travel the world for free.

He's probably going to have money piling up, and he's going to be spending nothing because he's got all these credit card points. He's racking up. So just a wonderful situation. Hopefully it sparks some ideas for folks, although, of course, not everyone that's going to be able

to build a business like that, even if they do go at it for 10 years, like Eric, there's a little bit of skill, a lot of luck, and a really good opportunity that needs to be combined. A little bit of skill,

a lot of luck, the opportunity, and also the team, taking action. He could have just sat there at his day job and never decided to go out on a limb and see if this online thing works. I know so many people who are making so much money online. There is absolutely a ton of stuff to be, a ton of money to be made online, providing information about the stuff you already know. So if you're thinking about starting your online business, this is your Money Mama Mindy's.

saying do it. And to the internet retirement police, please email me your thoughts at tell someone else at I don't care.com. Well, Mindy, should we get out of here? We should. Scott, that wraps up this episode of the Bigger Pockets Money podcast. Of course, he is the Scott Trench and I am Mindy Jensen saying, we can't linger, humming singer.