Stop Running From Your Financial Goals

On this episode of The Long View, Julien and Kiersten Saunders discuss advice on financial success, their blog richandregular.com, and new book Cashing Out: Win the Wealth Game by Walking Away.

Here are a few excerpts from the Saunders’ conversation with Morningstar’s Christine Benz and Jeff Ptak:

Evangelists for Financial Wellness

Jeff Ptak: You two became evangelists for financial wellness and began to pay a lot of attention to how you were managing your household assets. Who or what were your main influences on that journey? You mentioned Tanja and Paula--it sounds like they were pretty pivotal influences. Who or what else influenced you as you made your way on that journey?

Julien Saunders: That’s a great question. I think, like a lot of other Americans, I remember reading Rich Dad Poor Dad. But I wouldn’t call that an influence; it was really just like an entry point and something that introduced me to personal finance. But I will say Dr. Dennis Kimbro, who is a professor, but in many ways in the Black community, seen as almost like the godfather of personal finance. He certainly was a huge influence on me. A couple of books that he wrote, Think and Grow Rich, which is a bit of a play on Napoleon Hill’s book, but he added one with a bit of a Black focus, which was really intriguing to me. And it was one that was recommended by several mentors. And the next one was The Wealth Choice where he really just brought it to life, and that was important for me because it helped me to more sharply envision myself as some of the people that he was writing about and interviewing and sharing insights into the way that they thought and the way that they managed their money. I don’t know if you had any other influences at the time.

Kiersten Saunders: It wasn’t so much a person; it was more the lifestyle for me. It was more of a what than a who. I’m very reward-driven and so the idea of being able to do things like sleep in, which was at the time very important to me, pre-children. Those were the things that I looked forward to. I looked forward to taking vacations and not having credit card debt on the back end and being able to splurge on the things that matter to us. I was more focused on the rewards of money.

Lean FIRE

Christine Benz: You two retired from your corporate careers before you were 40. And I want to talk a little bit about how you did that because there’s this whole gradation of people in the FIRE movement where you’ve got the, I guess they call it Lean FIRE, the extreme frugality people and then the people who have high incomes who somehow made their way to FIRE, but maybe they have a little higher-cost lifestyle. How would you plot yourself on that spectrum of FIRE practitioners?

Julien Saunders: For sure the latter end. I’m not a big fan of any of these labels. I really don’t use them because they’re pretty widely accepted within the community and in the media. But, for sure, we credit having high income and discipline as major sources as to why we were able to accomplish what we were able to accomplish. And I just remember thinking at the time, you know when you’re not earning, I remember when I was earning $40,000 a year and it was like the most amount of money that I ever thought and then was earning $75,000 a year and that was like a dream come true. Because I remember reading job descriptions and thinking, what do people who make this much money do with all this money? I just couldn’t imagine it until it actually happened.

Even in those moments I would look up the organization and look around and think about people who made even more. And I just found myself continually asking this question, what are we doing with all this money? And quite honestly, why are they still working? I just couldn’t understand it. But yeah, all that to say, for sure, we were very fortunate to have earned high incomes and we would see people who earned even higher incomes but made very different choices as a bit of a cautionary tale, because we didn’t want to be in our 50s and 60s and still needing to work to make ends meet or to help make up for decades past.

Where Did You Depart From Conventional Financial Wisdom?

Jeff Ptak: As you embarked on your journey to financial independence, were there any key areas where you departed from the conventional wisdom about how to do it?

Kiersten Saunders: I think the biggest area that we departed from was this idea of having a rigid number or a rigid timeline before we considered ourselves financially independent, or maybe a better way to put it is able to take advantage of the benefits of financial independence. So, while traditional, conventional wisdom says you have to have 25 times your annual expenses before you’re financially independent and can quit your job, we realized that even if you don’t have 25 times your annual expenses, there’s still a whole lot of leverage you can do between working every single day for a salary and enjoying a life where working is optional. And so, we’ve decided to pursue a creative career--I guess you can call it a career--after we left the traditional workplace and were able to do that because of the portfolio that we have.

Setting Up Retirement Goals

Christine Benz: How did you set your target for how much you would need to have set aside before you could quit those corporate jobs?

Julien Saunders: Well, that part was pretty simple. It was really just a matter of guesstimating how much we think we would need on an annual basis and looking at how much we would need in our portfolio today and then allowing that to compound over a number of decades. It was really just a matter of saying how much is enough, if you will. To be able to say, yeah, we’ll have more than enough based on what we anticipate we would need during reaching our traditional retirement ages, or when we can safely withdraw without penalty from our retirement accounts. It’s a moving target for a number of reasons for us—one because we have a child, and the costs of children is so wildly unpredictable. But even now with respect to supporting a parent—my mom is financially insecure and so we do support her financially today. And we’re lucky that we’re able to do that quite comfortably based on the number of income sources that we have.

And so all of that to say, for us, it was a matter of being able to reprioritize the things in our life that were important to us, which at this juncture is quality of life, health and our wellness, taking care of our son, spending as much time as we can with our parents in their golden years without having to worry about whether or not we are going to have enough in retirement. And so, we’re in a really comfortable spot right now and we’re still able to earn income, which makes it even a lot easier for us.

Kiersten Saunders: I think the term for our version of FI is Coast FI, where you front-load your traditional retirement and then you’re coasting in between your current age and traditional retirement age and you’re figuring out ways to cover your expenses and continue to invest.

Getting Off the Social Media Treadmill

Jeff Ptak: You mentioned enough a moment ago. In a lot of ways, social media seems to work against that concept when it comes to getting off, say the spending treadmill. As we know, social media can be full of people flaunting trappings of wealth. How would you recommend that people deal with that given that social media is a way of life for so many people?

Julien Saunders: It’s a great question. You used the word treadmill and I would say, getting off the social media treadmill is probably one of the best things that you can do, because you’re absolutely right, it sucks you in and it shows you a very curated and mostly false way of life in thinking, and even now we’re finding ourselves spending as little time as possible aimlessly surfing social media because there’s just not a lot of value there. And I think also given our platform, we really want to represent something else. We want to be a real-world example and social media algorithms don’t really cater to that. They want to see the sexy stuff, and the sizzle and all of those things. So, if you’re listening out there and you’re thinking that this isn’t something that you enjoy, I think honestly, just consider joining the group of people who actually just decided that they don’t want to do it anymore. And just continue to opt out because it can be very enticing and it’s only getting better or worse. The algorithm is getting better at feeding the things that you don’t want or need, but it’s worse for a lot of people who are spending time there.

Kiersten Saunders: At the same time, there’s the other side of that coin, where social media allows you to find community in ways that you wouldn’t be able to do locally. And for a lot of us who are pursuing countercultural means of financial progress, it’s the only way that you can connect with like-minded individuals through hashtags and communities. And so, I’d offer that piece of advice. You absolutely want to heed Julien’s caution and treat social media like the recreational drug that it is. But while recognizing that through the power of hashtags and challenges and communities, you can also find your next biggest supporter. We tend to lean on our friends and family and expect them to support every endeavor of our lives. But when it comes to money, sometimes that’s not possible and you haven’t met your biggest cheerleader yet or your accountability partner. I would encourage you to use social media for that, to join a couple of communities, tweak the algorithm, tell them you’re interested in money nerd stuff and the kinds of content that you want to see. And then let it work for you.

The Best Ways to Pay Down Debt

Christine Benz: That’s a great point. I want to talk about one of the most amazing parts of your story, which is that you had $200,000 in debt that you were able to pay off in five years once you both got serious about this FIRE thing. Can you talk about that? I’d like to hear specifically if you have any hacks to share with people who have debt that they’d like to pay down in a similarly aggressive way.

Kiersten Saunders: It’s a great question because when we were doing this back in 2012, it was when we started, or 2013, a lot of the apps and tools that exist today weren’t around. And so, our biggest hack was using paper. We had a countdown calendar that we would post on the refrigerator. I bought it off of Amazon—it was like 100-day countdown calendar. And we knew what milestone would be associated with those 100 days. And we could build little celebrations along the way. We knew that, if we were on day 89 in 11 days, we could have a nice bottle of wine or whatever the splurge was. And then the other hack that we used was we would move the money as soon as it came into the account. I remember, we’d wake up on Friday morning, see the direct deposit hit and we already knew where that money was going to go. It wasn’t like we were letting it sit—it went out of the account almost as soon as it came in and we were using the rest of what was left to spend.

Paula has a name for this kind of budget, but you’re basically paying your debt down first and then you have what’s left is your budget. You don’t have to categorize anything; that’s all you have. Those were the two things. It was frequent, we normalized talking about money on a regular basis. We were super engaged with it. We weren’t looking at our debt as a boogeyman. We really looked at it as a creative challenge that we could work together to get rid of.

Julien Saunders: I would add a bit of a counterintuitive hack was to build in many celebrations along the way because it can be such a long and strenuous journey, and Kiersten actually had to teach me to do that because I was much more willing to go the hardcore frugal route. But it can get boring and repetitive. And to build in these little treats along the way really help to make the entire journey feel worthwhile.