A few months ago I started a financial independence interview series where I interview Canadians who are either financially independent, retired early, or close to these key financial milestones. The reason for the series is to bring more Canadian perspective as I feel there are so many American FIRE stories out there but not as many Canadian stories. So, if you are a Canadian and have reached financial independence retire early or close to this key milestone, I would love to hear from you!
For this post, I am happy to welcome two young couples called T & D who currently reside in Vancouver and are close to becoming financially independent in their early 30’s.
Q1. That’s really amazing to hear that you and your partner are close to becoming financial independent retire early (FIRE) in your early 30’s. Could you speak about your path on how you got to this point? What sparked your interests in personal finance and realized that FIRE is possible?
I’ve always had an interest in finance and frugality because I like to feel comfortable and secure, and I like being able to afford to do all the things I enjoy. As a result, I was pretty much always somewhat aware that early retirement existed, though it seemed very distant the first time I did some napkin math when I was 18. Fast-forward a few years to our early 20s, two years after we met. We were both working at really soul-sucking jobs, and while I was trying to figure out some alternative, I stumbled across Early Retirement Extreme. Suddenly, with a dual income household and life stability, the numbers were looking a LOT better, and we committed to it on the spot.
Q2. You mentioned that you have spent very close to $27,000 per year for the past 7 years. That is really impressive considering you are living in Vancouver, a high cost of living city. What do you do to keep your expenses so low?
I always tell people that we do exactly what Grandma would tell you to do to save money – there’s precisely zero aspects of our system that are complicated or sophisticated. Rent a cheap place. Cook everything you eat, and don’t waste any food. Fix stuff. Buy secondhand. Ride a bike or walk places. Don’t drink or do drugs. If you can do something yourself rather than pay someone, do it yourself. If you do all that stuff, your expenses will be low, wherever you are.
Tawcan: Very impressive that they only spent $27,000 per year while living in Vancouver. We spent $51,144.77 in 2017, while in the metro-Vancouver. But our circumstances are completely different (i.e. we have 2 kids), so it’s not fair to compare.
Q3. Sounds like maintaining the same lifestyle (i.e. avoid lifestyle inflation) and increasing your income really helped you to grow your net worth. So many people focus on trimming expenses, but I believe you can only optimize your expenses by so much. Why is it important to increase your income as well? What are some of the things you have done to increase your income?
The only thing we ever did to increase our income was get out of low-level retail-type stuff into more stable, “normal” office jobs. Neither of us has ever pursued a real career, or made particularly great incomes, since those were not required to reach early retirement. So while I think it’s great for people to increase their income and speed up their FIRE progress, I can’t really comment much on it, since it’s always seemed like unnecessary work to me.
Q4. You are considering moving to Vancouver Island or a lower cost of living city to become financial independence (i.e. geoarbitrage). Like you, we can be financially independent if we move to another city. What’s keeping you from executing the move?
Nothing’s really keeping us from it – we’ve just found ourselves in the position where it’s a possibility very recently, and are still doing research and planning. We’ve definitely been considering our options, and have scouting trips planned to investigate a few islands and tiny home developments this summer and fall.
Tawcan: Vancouver Island and the Pender Islands havea slightly lower cost of living in Vancouver for sure, but I I think you guys should look into geoarbitrage and check out the world.
Q5. Do you intend to continue working once you are financially independent?
Myself, probably not, unless some fantastic gig comes up. I will probably focus my efforts on lowering our expenses and managing our investments. My partner does some freelancing, which he enjoys and intends to continue.
Q6. How did you and your partner get on the same page financially? Are you both involved in the household financial planning? Do you have a joint account? Or do you keep your finances separate?
I was already living our current lifestyle when we met, so it was a lot easier for him to get on board with this type of living since he could see it in front of him and experience living it gradually. I think a lot of couples struggle with this because it can be purely hypothetical if neither of them has ever done it, which can make it seem pretty scary. As far as logistics go, we have separate accounts due to our belief in equality, along with the simplicity of it. But I manage everything financial for both of us – he is not involved in the process at all, which is a happy situation for us both.
Q7. What is your investing style? Do you invest in mutual funds, index ETFs, or dividend growth stocks? How are you diversifying your investments?
We have balanced index ETF portfolios with a robo-advisor. The fees are a bit more than an entirely self-managed portfolio, but in exchang,e we don’t have to lift a finger, which is important to us. We like to keep everything mundane in life as easy as possible.
Q8. Can you tell me some of your financial and investing mistakes and what you have learned from them?
I can’t think of any, to be honest. We basically came up with a very simple system many years ago, set it on autopilot, and sat back to wait for our retirement account to be fully loaded. Perhaps some people would say it was a mistake to not pursue careers, though it doesn’t seem to have harmed us.
Tawcan: You are lucky that you couldn’t think of any financial and investing mistakes. Hopefully with more and more personal finance and investment blogs & books out there, the younger generations will be making less financial and investing mistakes than us.
Q9. Where do you see yourself in 5 years and 10 years from now? What are the top 3 things you look forward to once you have more free time?
Well, we will be long retired by then! I think we’re most looking forward to 1) no alarm clocks, and 2) being able to do longer trips where we can go somewhere for a month and really live the local lifestyle. #3 is a bit of a weird one, but we’re looking forward to living somewhere where I can breathe properly (I’m sensitive to air pollution) and he can sleep properly (he’s sensitive to noise). We’re basically not really cut out for city living.
Tawcan: Ha, just wait till you have kids. Then you don’t need alarm clocks to get up. They are the alarm clock!
Q10. Are you taking advantage of tax-sheltered accounts like RRSP and TFSA? Do you plan to withdraw early from RRSP before age 71? If so, do you have any early withdrawal strategies to minimize tax penalties?
We both max out our RRSPs and TFSAs every year. We haven’t hammered out our exact withdrawal system yet, but given our low expenses, even if everything was coming out of the RRSPs, the amount we withdrew would most likely be below the personal amount or just slightly higher, meaning taxes would not really be an issue. Simulated low income, so to speak.
Tawcan: That makes sense. This is similar to our financial independence tax assumptions.
Q11. So many people think that FIRE is only achievable for people with high income. Both of you have pretty average incomes yet you are close to becoming financially independent. What would you say to these doubters?
Run the numbers! If you’re ever wondering if something financial is possible, whether it’s early retirement or anything else, the solution is to get out your calculator and do the math. Numbers don’t lie.
Tawcan: Great tip. The early retirement financial independence calculator that I developed is a great tool for running different simulations.
Q12. How do you find the balance between saving for the future and enjoying life today?
We don’t try to balance anything. Our goal is to do absolutely everything and never sacrifice or struggle at all. Rather than trying to figure out ways to balance spending and saving, I think it makes more sense to figure out how to do everything at the same time. In our case, we live in a great apartment, do all the activities we like, eat everything we like, travel to five or six countries a year, and also save 60-70% of our income.
Q13. Both of you are very involved in the MMM community. What are two or three common trends among people in the MMM community?
One trend that’s been quite interesting is that people are starting to use the principles behind MMM for things other than early retirement, like being able to reduce their hours at work, become self-employed, go on some epic travels, or do pretty much anything that requires a big stack of cash.
I’m not too sure how I feel about this second trend, but the MMM community does seem to be getting more mainstream over time, and I feel like it’s drifting away from the founding principles. In a way that’s good because it means more people are getting on board and improving their lives, but it’s also getting somewhat watered down – I’m seeing a lot more people in the forums complain about swearing and facepunches, for example, and there seem to be a lot more people with SUVs than there should be.
Tawcan: I think as the FIRE idea spreads, more and more people are comparing with each other. So, instead of keeping up with the Jones, now people are competing who has a higher savings rate, a lower monthly expenses, and fastest net worth growth, etc. It’s a scary trend since we are not the same. It’s simply not possible to have a fair comparison.
Q14. Do you have any extended travel plans once you are financially independent or retire early?
We definitely plan to do some longer trips and more slow travel post-retirement. We travel a ton now as well, of course – in 2017 we went to Thailand, China, Portugal, Spain, France, Mexico, Vegas, and a handful of Canadian getaways, and that was a pretty typical year. So we’ll pretty much take what we do now and ramp it up even more.
Q15. What would you tell someone like me who is trying to achieve financial independence retire early?
If you set things up such that your life is awesome while also maintaining a very high savings rate, FIRE will come very quickly and easily.
Q16. Do you have anything else you would like to share with me and my readers?
Seriously consider unorthodox lifestyle choices. If you’re interested in FIRE, consider going outside the box and looking at different or unusual things to do. Many people find ways to make all kinds of different housing situations work. Whatever lifestyle you can come up with, chances are someone is doing it. Maybe this thing or that thing isn’t for you, but try to figure out something else that you would be able to do.
Thank you T&D for this great interview with lots of great answers. Dear readers, are you enjoying the Canadian FI Interview Series? Are you a Canadian that is financially independent or retired early from your career? Or close to reaching this key financial milestone? If so, I would love to have a chat with you. Give me a shout!
And in case you want to read the other interview series.
- FI Interview #1 – Vancouver reader J
- FI Interview #2 – How I became financially independent at age 32
- FI Interview #3 – Why I decided to keep working despite reaching FI at 38
- FI Interview #4 – Cash flow is the oxygen of financial independence
- FI Interview #5 – Creating a long term plan
- FI Interview #6 – Create a net worth statement