Guest Posting: Financial Independence … 23 Years Later

Foreword by Mr. Money Mustache:

A few months ago, a new reader showed up at this blog and  joined the conversation in the comments sections of the articles. It was a guy named Jim Collins. He was wise, funny, well-spoken, and skilled in the use of swearing. So I checked out his blog and learned more. It turns out he’s older than me (around 61 apparently), has had a long and interesting career in positions ranging from Tree Trimmer to Fancy Businessman and beyond.. and has been financially independent since around 1989.

Since that’s approximately the year I learned to drive a car, I figured this man would have quite a deep perspective on what life is like when you are not driven solely by the need to earn a paycheck. So I asked him if he’d be interested in sharing that perspective with us as a guest posting. “What has life been like since then? How do you fund your daily expenses, how has the  health insurance situation worked out, what do financial crashes feel like, and what is your overall advice for those reaching financial independence and/or early retirement?”

The following story is what he sent me in response:

It has Never Been About Retirement

For me it has never been about retirement.

I like working and I’ve enjoyed my career.

It’s been about having options. It’s been about being able to say “no.”

It’s been about having F-You Money.

It’s never been about this.
(Although, now that I’m 61 it’s getting closer.)

I started working when I was 13, even earlier if you count selling flyswatters door-to-door and collecting pop bottles from the side of the road for the deposits. For the most part I’ve enjoyed work and I’ve always loved being paid.

From the beginning I was a natural saver. Watching my stash grow was intoxicating. I’ve never been sure how this started. Might be hardwired into my genes. It might be my mother seducing me with the image of the red convertible I’d be able to buy when I turned 16. But that was not to be.

My father’s health failed and shortly there after so did his business. My savings went to pay for college and I learned it is a fiscally insecure world. Convertibles came later. To this day it stuns me to read about some middle-aged guy laid off from his job and almost instantly broke. How does anyone let that happen? Of course I know it is common, but still….

So, long before I heard the term, I knew I wanted F-You Money. If memory serves, it comes from James Clavell. In his novel “Tai Pan” (highly recommended BTW) a young woman is on the quest to secure 10 million dollars. She calls it her “Fuck You Money.” And 10m is far more than it takes, at least for me. But it put a face to the goal.

The other thing I quickly figured out is that financial independence is at least as much about being able to live modestly as it is about cash. Here’s my favorite parable:

Two close boyhood friends grow up and go their separate ways. One becomes a humble monk, the other a rich and powerful minister to the king. Years later they meet. As they catch up, the minister (in his fine robes) takes pity on the thin, shabby monk. Seeking to help, he says:

“You know, if you could learn to cater to the king you wouldn’t have to live on rice and beans.”

To which the monk replies:

“If you could learn to live on rice and beans you wouldn’t have to cater to the king.”

Most all of us fall somewhere between the two. As for me, it is better to be closer to the monk.

Enough F-You Money isn’t necessarily enough to live on for the rest of your life. Sometimes it’s only just enough to step to the side for awhile. I first had mine at age 25 when I’d managed to save the princely sum of $5000. This after working two years at 10k per year.

It was my first “professional” job and it had taken me two long post-college years supporting myself doing minimum-wage grunt work to find it. But I wanted to travel. I wanted to spend a few months bumming around Europe. I went to my boss and asked for four months of unpaid leave. Such a thing was unheard of in those days. He said “no.”

Back then, I had no idea that working relationships were negotiable. You asked. Your employer decided and answered. Done.

I went home and spent a week or so thinking about it. In the end, as much as I liked the job and as tough as I assumed finding another would be, I resigned. I wanted to go to Europe. Then a funny thing happened. My boss said, “Don’t do anything rash. Let me talk to the owner.”

When the dust settled we agreed on a six-week leave

(which I spent riding my bicycle around Ireland and Wales)

and a month of annual vacation going forward. That got me to Greece the following year. My eyes were opened. F-You Money not only paid for the trip, it bought me room to negotiate. I’d never be a slave again.

Since then I’ve quit jobs four more times and have been kicked to the curb once. Blame my short attention span. I’ve sat on the sidelines for as little as three months and for as long as five years. I’ve done it to change careers, to focus on buying a business, to travel and, the time it wasn’t my call, with no plan at all. I did it again just last year at age 60 and the intention is to remain retired. But who knows? I do like getting paid….

My daughter was born during one of these, ahem, unpaid leaves. These things happen when you’ve time on your hands.

Now 20, she has grown up with dad sometimes working 18 hour days and constantly away from home, to dad sleeping late and lounging around. But she always knew I was doing, for the most part, exactly what I wanted to do at the time.

When she was in first grade I went to a parent-teacher conference. My wife introduced me and the teacher said, “Oh! Mr. Collins. How nice to finally meet you. You’re the father who’s never home.” A period of lots of business travel.

But then shortly after 9/11 my company kicked me to the curb.

Six months earlier our division president had taken me to a congratulatory lunch for a record-breaking year. We were explosively growing and embarrassingly profitable. Over a bottle of fine wine we discussed my very bright future. It was the best job I’ve ever had. Great team, great leadership, great fun. Great money. I had just cashed a bonus check for more than I had ever made in a single year before.

A year later my little girl and I were sitting on the couch watching a news broadcast. The concerned news crew was filming people standing in a depression era style bread line. They were, the reporter said breathlessly, the newly poor suffering from job loss in the dismal economy. I was still unemployed and licking my wounds.

“Daddy,” said my little girl, “are we poor?”

She was gravely concerned.

“No,” I said, “we’re just fine.”

“But you don’t have a job,” she said. Thinking, I’m sure, just like those poor souls on the TV. It was, as they say, a teachable moment on the power of and need for F-You Money.

I like to think these experiences have taught our daughter the value of having money and the joy of work when you aren’t effectively a slave to it.

When she was about two her mom went back to school. It was during my business buying phase and I had lots of free time.

While mom was off evenings at school, little girl and I spent endless hours playing and watching The Lion King over and over. And over. I’ve probably seen that movie more times than all other movies combined. We still laugh remembering the tea-cup towers we built. These hours were the foundation of the relationship we’ve grown to cherish.

Even though I didn’t have a paycheck coming in, around then we also decided my wife should quit her job to become a stay-at-home mom. This was a very tough call for her. Like me, she’d been working since childhood and loved it. But the problem was mostly, without a job, she felt she wouldn’t be contributing. I was failing to convince her until I hit upon this:

“We have F-You Money,” I said. “We don’t care about fancy cars or a bigger house. If you kept working what could we possibly buy with the money that would have more value than your being home with our daughter?”

Far and away the best “purchase” we ever made, and we never looked back. So we had no working income. For those three years our net worth actually grew.

As for me, I failed in finding a business to buy. But the search morphed into consulting work and a couple of years into that a client hired me for more money than I’d been making at the job I’d left years earlier. Such is the price of failure in the USA. As Leo Burnett once said:

“If you reach for a star, you might not get one. But you won’t come up with a hand full of mud either.”

When we moved to New Hampshire my wife started volunteering in our daughter’s grammar school library. Their hours, of course, matched perfectly. After a couple of years they offered her a paid gig. It’s not the corporate job she’d been used to but it’s also stress-free and fun. She’s never looked back.

For the most part over the years we’ve been married (June 19th is our 30th anniversary) least one of us was working. That handily solved the tough problem of health insurance. During the early 1990s, when we had an over lapping employer-less few years, we bought a high deductible catastrophic health plan. It is too long ago to remember the details and they likely wouldn’t apply today anyway. But that’s what we’ll seek out if and when my wife decides to hang it up before we hit 65 and Medicare. For now she loves her school district job and the time off it gives her for our traveling.

On my own blog I’ve outlined what we own and why we own it so I won’t bore anyone here. If you check you’ll see it is the soul of simplicity. Three Index Funds and some cash.

You’ll also see I’m not a fan of the “multiple income stream” school of investing. Simple is, in my book, better. So no cattle, gold, annuities, royalties and the like.

My small pension from the one company where I worked long enough to qualify I took as a lump sum and rolled it into my IRA.

There are also a couple of leftover investments from earlier times. We’re burning those up as we need the cash. These represent the last remnants of the many investing mistakes I’ve made over the years. Most revolved around the idea that I could pick investments that would outperform the basic stock index. It took me far too long to accept just how vanishingly difficult a task that is. Three things saved us:

1. Our unwavering 50% savings rate.

2. Avoiding debt. I’ve never even had a car payment.

3. Finally embracing the indexing lessons Jack Bogle perfected 40 years ago.

Looking back what is striking to me is how many mistakes I’ve made along the way and yet those three simple things got us there. That should be encouraging to anyone out there who has made poor choices along the way and who is ready to change.

What a wonderful advantage a blog like Mr. Money Mustache provides. Set aside the specifics, just knowing that financial independence is possible short of winning the lottery is huge.

When my journey began I knew no one who was making the choices we made. I had no idea where it would or could lead. I had no one to tell me stock picking was a sucker’s game or, more importantly, that swinging for the fences isn’t needed to reach FI. That last alone would have saved me the $50,000 of my money Mariah International (a gold mining penny stock) burned thru while failing; and failing to make me rich.

So now I’m (again) retired and it feels great. I love not having to keep regular hours. I can stay up till 4 am and sleep till noon. Or I can get up at 4:30 and watch the sun rise. I can ride my motorbike any time the weather or my pals beckon. I can hang around New Hampshire or disappear for months at a time to South America. I post on my blog when the spirit moves me and I might even get the book I’ve always wanted to write finally done. Or I can just sit on the porch with a cup of coffee and read the books others have written.

One of my very few regrets is that I spent far too much time worrying about how things might work out. What a waste, but it is a bit hardwired into me. Don’t do it. Instead, live on less than you earn, invest the difference and avoid debt. Do just these three things and you almost can’t help but succeed.

But what if disaster strikes? My biggest fear these days, and this is evidently common, is a major health failure. That, of course, would derail everything. Moreover, if you live long enough it is inevitable. If accidents don’t take us, we all eventually sicken and die. Circle of life. (See, watching The Lion King over and over sunk in.)

The older I get the more real that becomes. My response has been to increasingly hold each day precious. I’ve become steadily more relentless in purging from my life things, activities and people who no longer add value while seeking out and adding those that do.

Financial disasters are less concerning. We can always adjust our living standard and we are open to moving to far less expensive corners of the planet. We might just do that anyway. It’s a big beautiful world out there. Money is a small part of it. But F-You money buys you the freedom, resources and time to explore it on your own terms. Retired or not.

Enjoy your journey.

You can read more neat stories from Mr. Collins in the areas of Business, Life, and Money (and if you search carefully, even Spaceships) at http://jlcollinsnh.wordpress.com/