Tag Archives: Financial Freedom

10 Questions For: Retire By 40

Joe Udo and Baby RB40 Photo courtesy Retireby40.org.

Joe Udo and Baby RB40
Photo courtesy Retireby40.org.

Today I’m kicking off a brand new feature on Pretired.org. It’ll be an occasionally recurring piece called “10 Questions For”. For the first one, I felt it only appropriate to feature the man who is basically my blogfather: Joe Udo of Retireby40.org. Joe’s blog is more than a detailed primer on how to escape the corporate treadmill, but is also an inspiring journey. Go back to his first post and read your way forward the way I did and you’ll be drawn in by his complete transparency and you’ll share his joy as he finally makes the move and quits his job. It’s a great blog and I recommend it to anyone considering pretirement. But I wanted to know more so I asked him 10 Questions.

How old were you when you decided to “Retire by 40”?

I think I was 36. Before that point, I was just planning to switch jobs or try to find a job at a different company.

I imagine there was a certain moment when you realized that you were throwing your life away working at a big corporation. Can you share that turning point?

It was a gradual process for me. I started getting some mysterious illnesses like dizziness and panic attacks when I was 35. The doctors never found anything conclusive, but I figured the stress was getting to me. I hated walking into work every day and that’s not a good way to live.

You figured out the path to financial independence earlier in life than most people in America. To what influences do you give credit for learning how to get there?

Actually, we’re not quite there yet. Mrs. RB40 is still working and that’s how she likes it. Our next target is to be able to function without her paycheck and save all of it. I think starting the Retire By 40 blog really helped me figure out how to quit my job. I had to research all the articles I wrote and the more I wrote, the more I learned. I was already reading a lot of personal finance articles, but writing my own blog was a big step toward financial independence.

You could have decided to “retire by 45” or “retire by 50”. You chose 40. Did you ever think about working a few more years to pad your retirement?

Not really. I already stayed at my old job longer than I wanted to. I figure if I couldn’t make it work, I could always go find another job. We also continue to save so our net worth is still increasing. We are not drawing-down yet so all-in-all we are doing fine.

It’s fairly unusual for the male in the relationship to be the one who stays home to raise the child. How did you and your wife decide you’d stay home? How does she feel about it?

She loves that I’m able to stay home with our kid. She knows she can’t be a stay at home mom because she likes to work and she is not the most patient person in the world. It’s not for every family, but it works well for us.

At what age does your wife plan to retire? What are her plans?

I think she’ll keep working until about 60 or so. She is restless and she likes being in the workforce. Perhaps she’ll cut down on the hours if we don’t need her salary anymore.

Your last day at your old job must have been amazing. What was that like?

It wasn’t dramatic because I wasn’t going in much in the last week. I worked from home and just took care of a few things. It felt great to drive away from the office for the last time, though.

Many, if not most, people are afraid to leave corporate life at such a relatively young age. What fears did you have before and do you have any worries now that you’re a stay-at-home dad?

Of course, I was afraid we wouldn’t be able to make the cash flow work. You can plan, but you never know how it’s going to turn out. Things are going really well, though, so I don’t worry much about the finance at this point. 

Do you think everyone should try to retire by 40 or is it only for people who hate corporate life?

It’s more applicable to people who don’t enjoy their job anymore. However, you should still plan ahead even if you love your job/career. You probably won’t love it forever and it would be good to have an alternative plan.

What are your plans for when your son goes off to school? Obviously you’ll have a lot more time on your hands.

I’m still trying to figure it out. I would like to start some kind of micro business or just work more online. How about you? Do you have any plan for when your son starts school?

See folks, this is how nice of a guy Joe is! I’m asking him 10 Questions and he turns it around to find out more about me! But I’ll answer anyway: I’m not sure what I’ll do when Pretired Baby goes off to school. I’ll be 50 by that point so it’s going to be pretty hard to get a real job at that point, even if I wanted to find one. Ideally I’d have a little business of my own or maybe we’ll just do a lot of travel and sort of home-school him from the road. Short answer is I’m not sure yet, but it sure is nice to have options!

Thanks again, Joe! And for anyone who hasn’t already discovered Joe’s excellent blog, be sure to head over to Retireby40 right now!

I’m sure Joe will be stopping by at some point so feel free to say hello in the comments as well! 

Online advertising: Another piece of the pretirement puzzle?

Should I fill Pretired.org with ads?

EPSON scanner imageWhen I threw this site together back in March, I had some things to get off my chest and I wanted to keep my mind sharp as I began my life as a semi-pretired stay-at-home dad. In my mind I pictured my two teenage nephews listening attentively to my every word and learning how to be financially independent and living rich, full lives. In reality they couldn’t give a crap about any of this so they’re more like me at that age than I like to admit.

It started as a very personal blog. I never really expected to have, you know, readers. So to make it look the way I wanted and to best represent the clean, efficient approach that is the secret to financial freedom, I chose the most minimalist blog theme I could find. Ample white space, lots of of clean lines, minimal decoration. And no ads. I was so sure I would never put ads on my site that I chose a layout that doesn’t even have a natural place to put them.

I’ve enjoyed sharing what I’ve learned, including even my dumb mistakes. It’s thrilling to think there may be a few people out there that could avoid some of my errors and live happier lives because of words I threw up on the web in the middle of the night. I’ve also enjoyed getting to know some of the other financial bloggers out there. Best of all, by exploring the world of personal finance a little more deeply, I’ve been learning even more.

But now I feel like a chump. And a hypocrite! I’m supposed to be writing about how to live without a corporate job and I’m ignoring a potential source of side money! Almost every site I visit now has a nice mix of ads and affiliate links. Many (like this one) have also been sharing their monthly earnings and I feel like I’m missing out! The traffic to Pretired.org has been continually growing over the past four months. I never thought I would have this kind of audience. Feeling all these eyeballs on me makes me want to take this more seriously. It makes me want to write with more care, explore new topics and put myself out there a bit more (never easy for introverts such as myself).

Will you still come by?

If I put online advertising on my site, I don’t want it to turn people away. I’m still going to write first for myself, but every writer craves an audience most of all. Of course I would avoid anything too annoying (you’ll never see a pop-up here). And I would do my best to restrict spammy garbage ads from the site, realizing that’s always an imperfect science.

My other concern, of course, is to place ads where they’d be seen, yet unobtrusive. Somehow I need to find nice, little places on my site to tuck the ads in where they won’t upset my chi when I look at my own site. Naturally I’d disclose when a link is an affiliate link so you can take what I’m saying with the appropriate grain of salt.

I guess my other worry is that I don’t really want to become a servant to Pretired.org. I’ve been having fun, but if it becomes a job then it starts defeating the purpose. I in NO WAY consider blogging or other online moneymaking activities to be truly passive income. But, if you’re semi-pretired or pretired and just want a little extra side money, why not put some free time into sharing what you know? That’s where I want to keep it. If it becomes drudgery, I might as well go back to an office job and make the big coin again.

What works and what doesn’t?

While I have a lot of experience in all manner of online marketing and communications, one thing I haven’t done a lot of is generating money via blog ads. For those of you who are already quite successful in this area, what’s working for you? How much effort is it taking each week to keep the money rolling in? Any other tips for a neophyte such as myself?

Sorry to go meta twice in a row! I do hope those of you who have explored online advertising on your own sites will share your thoughts in the comments! 

Pop your own housing bubble

Is it time to downsize?

It feels like a million years ago now, but the massive real estate crash of 2008 was only a few years ago. I saw the collapse up close and personal. Well before the crash, my wife and I bought a fairly large fixer, planning to move in once the bulk of the work was complete. Part-way through, we decided we hated the place and decided to complete the work and sell it. It’s what I call our inadvertent house flip.

Once we put it on the market, we had one (ONE!) interested buyer. No one else had really even given it a serious sniff. The housing market was cooling, but a total meltdown was yet to occur. But I could tell a bomb was about to go off. I just didn’t know how big the bomb was. My heart was racing nearly every day. Even as our buyers got squirrely, we did everything they asked, even suddenly replacing the furnace just days before closing. And we survived! With our asses intact. We didn’t lose any money but didn’t really make any either. All we lost in the end was a year of very hard work. We felt like winners as we watched the house’s Zillow rating drop by $200,000. That was late 2007. I think it was close to a year later that the stock market collapsed and all hell broke loose.

So that’s how I found myself sitting pretty when the big crash finally hit. I still owned a lot of real estate with rapidly declining value, but I had equity in everything and was cashflow-positive on the investment side. Plus I was working at a stable healthcare company. While the company was experiencing a brutal income drop as workers lost their insurance, it was getting through just fine. In fact, the crash may have helped that organization shake itself out of its complacency and begin running a much more lean operation.

Fear and debt

During that time, I talked to many of my coworkers about their finances. And they were SCARED. Scared shitless. One friend had decided to let the bank take his condo back after they announced massive assessments and he realized the value was never coming back. But most folks, many in their 40s and 50s, just had that blank stare of someone who is beyond panic. I had just two words of advice for them: Shed. Debt. These were good people, nurses and techs, who would wipe up your bodily fluids without thinking twice and give you a hug on your way out. Better people than I’ll ever be. They’d worked long, hard careers, but most of them had very little financial security.

That was when I realized just how much debt people were actually carrying. It was stressful for me just talking to them. Massive house payments, car payments, credit cards, school loans and on and on and on. I had just one good friend who was on track to having her house completely paid off and wasn’t even that worried after her husband was laid off. Good for her!

That’s not to imply that I wasn’t freaked out, though. I had three mortgages I was responsible for. Would have been four if I hadn’t unloaded that other home! I had to drop the rent price a few times and had a few periods of vacancies, but really it was not that big of a deal looking back. But, still, I was pretty spooked by the whole thing. That’s why I was so anxious to get mortgage-free as soon as possible and to reach financial independence as soon as possible.

Instead of reinvesting the cash from that home sale like we should have, (DAMNIT!) my wife and I decided to finally buy the house we really wanted, leaving my starter home behind. We also bought way too much house. Too much room, a nicer view than we really should justify given our financial goals and more yard than I can maintain.

That’s not to say we don’t love it. We love our neighbors. The house is wonderful. Our neighborhood cannot be beat. But it was probably well into 2010 before we realized how much this house is holding us back. So as we sit here in our beautiful cage contemplating our pretirement, we’re rethinking things. Hopefully many of you are as well. That fear that so many of us felt was driven by our over-inflated lifestyles. The good news is that we now have a chance to restructure things so we never feel that fear ever again.

Time to pop your own housing bubble?

It occurs to me that that the real estate market has largely recovered (at least here in Seattle), that it may be the right time for quite a few people to make strategic adjustments to their housing situations. Pop your own housing bubble, if you will.

Now on one hand, real estate appreciation could mean we’re in the perfect situation. Just ride up with the market, sell at the right time and be loaded! And that might be where we end up. Our neighborhood could very likely appreciate by 10% a year for the next few years. Don’t scoff, it’s true. Right now, houses are selling on their first day in my neighborhood and prices are rising rapidly.

On the other hand, depending on when a person purchased their home, they may already have significant equity but prices in general are still somewhat deflated, particularly if they were to move to another area. But more importantly, by downsizing, a family could move from being saddled with too much mortgage and back-breaking maintenance to a debt-free lifestyle with a fast-track plan to pretirement!

As always with real estate, whether this is possible for you depends on your situation.

Let’s say a family owes $400,000 on a house valued at $600,000 and are still paying on their original loan. They could dump the giant house, buy a still-very-nice $400,000 home and be paying on a mortgage of just $200,000. And with the low interest rates of today, they could enjoy an additional boost in their savings. And using my patented mortgage payoff acceleration plan, they could be mortgage-free in just a few years! Or they could rent awhile and put all of their equity toward their pretirement funds. That invested money could even generate enough income to pay a good chunk of their rent if they were so inclined. If the house can be rented to cover the mortgage or close to it, you could still pop your bubble by renting our your house and moving yourself to a cheaper place.

Can someone without a ton of equity also pop their housing bubble? Of course! Renting a fancy apartment way bigger than you need? Move! Only have a tiny bit of equity but know you bought too much house? Works for you too! You might want to wait a bit for the market to run up a bit more, but as soon as the timing looks right, sell it off and downsize!

The bottom line is that if you’re a normal American, you are living with way more than you NEED. By downsizing now, while you can, you may be able to greatly accelerate your pretirement. It’s time for a difficult conversation with yourself (and your spouse): How much do you REALLY love your house? I figure that by buying such a luxurious home cost us at least an extra TWO YEARS of working.

What will we do? I don’t know. We’re talking about it now. We’ll be here at least another year or so and then we’ll make the decision. We may rent a cheaper place for a time and pocket the difference (our current house could rent for quite a bit). We may even keep living here awhile. And, who knows, maybe we’ll change our minds and decide to take the hit and just live out our days here. It may be a cage, but it’s a damn nice one.

In the meantime, we’re getting this place ready to sell or rent. Even if we decide to stay here at least we’ll have all these projects done!

What about you? Are you thinking about popping your own housing bubble? 

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