The financial independence retire early movement is getting a lot of attention lately. While it’s nice to see the movement gaining traction, I feel most of the major media coverage has been very early retirement focus. I think this is paints a very bad picture of what financial independence retire early (FIRE) is about. Furthermore, most of these FIRE stories are US related. As a Canadian, I want to hear more Canadian financial independence retire early stories. Therefore, I started an interview series with a focus on financial independence retire early in Canada..
If you are reading this and areCanadian, financially independent, retired early, or getting close to these major financial milestones, I would love to hear from you.
Recently, I organized a Vancouver personal finance blogger meetup and at the meetup, I had the chance to meet Phia who blogs at Freedom 101. It was really cool to find out that Phia and her husband Mike, both retired in their 30’s. I figure I must interview them to learn more about their story. Fortunately, Phia agreed to doing the interview.
Q1. That’s amazing that you and your husband both retired in your 30’s while living in Vancouver, one of the most expensive cities in the world. Have you always been interested in personal finance? What sparked your interest in personal finance?
Thank you! We are incredibly grateful for the lives we have, and very proud of what we’ve built together.
Mike and I both had pretty strong financial interests from quite a young age. For me, I had my first “job” picking cherries at a family friends orchard when I was 9. There’s nothing quite like picking cherries from 6 until 2, in the 30+ degree Okanagan weather, at $3 a bucket to teach a kid the value of a dollar.
That same summer, my Nana hired my siblings and I to mow her property. Our parents helped us pool our money, and together, we bought a trampoline, along with each having some spending cash left over.
We got endless hours of use out of that trampoline, and I put my remaining money in savings. Being able to make that big spending decision, feeling the satisfaction of delaying gratification to work towards a larger goal, and have savings on hand for future purchases gave me a huge sense of independence and freedom. After that, I was hooked. I almost always had a source of income, and became addicted to watching my savings grow.
Q2. Who stumbled onto the idea of financial independence retire early (FIRE)? Did one of you have to convince the other about FIRE? When did you realize that financial independence is possible?
When we started our plan, FIRE wasn’t the trend it is today. We hadn’t heard of it, and we definitely hadn’t planned on retiring. What we had wanted was to regain a sense of control over time, and to shift our frame of mind from having to go to work, to choosing to go to work. That degree of mental freedom was extremely enticing for us. So from that goal, the logical approach became to eliminate debt and build passive income streams.
But Mike had to convince me over many months that paying off our mortgage was a good idea for us. It took awhile. Initially, I was sure it would mean years and years of sacrificing everything, scrimping and saving, and not enjoying our life. Not to mention that at that time I firmly bought into the mainstream idea that it was always better to invest, as opposed to paying down a relatively low interest mortgage. Mike had to exercise a lot of patience with me.
Ultimately, it took time and a bunch of baby steps towards eliminating all of our debt to really shift my views and make us realize that Financial Freedom was feasible.
Q3. You have two little kids, how are you teaching them about money and do they ask why you and your husband do not go to work like their friends’ parents?
Teaching our kids about money is something we invest a lot of our time into. In fact, I recently wrote a whole blog series about the methods we use to teach them the principles of money management. But essentially we focus on giving them opportunities to build the skills of delaying gratification, developing a strong work ethic, and through graduated processes, teaching them how to make independent decisions regarding their saving, spending, and investing. We try to give them ample guidance and exposure to money, while also ensuring they have age appropriate opportunities to make independent decisions, and mistakes, with their resources.
Our 10 year old loves that we don’t go to work. He experienced various forms of child care over the years, so being able to come home after school, sit and have a snack with us, and have ample time to do his homework and chores, rather than racing from after-school care to activities, trying to squeeze dinner in somewhere, has been great for him. He also loves flexing his financial muscles, so when his friends ask why his parents don’t work, he’s eager to fill them in on the principles of Financial Freedom.
Our 2 year old has only ever known us both being home, so for him, that’s just his norm. It will be interesting to see how that shapes his views as he gets older.
While we weren’t planning to retire, the biggest factor that allowed that to be feasible was eliminating our debt. Doing so substantially minimized the amount of income required to sustain our ideal lifestyle post-retirement.
The “secret” in eliminating our debt came down to a shift in perspective on how we used our money. When we tell people that we lived off of 20-25% of our income, they often can’t imagine how that was possible. But we didn’t get there overnight. We took small baby steps, slowly evaluated our money habits, cut things that weren’t bringing value into our lives, and kept only the things that brought us our highest “happiness” return on investment. By being more intentional with our money, we actually found ourselves living a happier and more fulfilled life, while living off of much less.
We also steadily edged up our mortgage payments. The commitment to the weekly payment kept us from using that money elsewhere. We started with an increase of just $50 a payment, and anytime we cut expenses or increased our income, we would increase the mortgage payment by the equivalent amount. Ultimately, we doubled our weekly mortgage payment, which was the maximum increase allowable without penalty. Then we applied the same strategy by moving any extra money into a separate account that we utilized to pay an additional penalty free 20% annual lump sum directly onto our mortgage principle.
Because the transition was slow, we were able to seamlessly adjust our lifestyle, without feeling like we were sacrificing at any point. We still maintained our savings rate throughout. We even travelled, went to movies, and ate out. We just did those things in moderation.
Once the mortgage was paid off, we took all that money and instantly re-directed it to our investment accounts, giving ourselves no opportunity for lifestyle inflation. Our investments are split primarily between low fee ETF’s, high-growth dividend stocks, and real estate. Our investment strategy has always been about letting time do the work for us.
Q5. Was it a tough decision for the both of you to decide to retire from work in your 30’s? Tell me about what you went through mentality to reach this decision.
It was actually a super difficult decision. Neither of us planned on retiring. We thought we would just continue to build our wealth after reaching Financial Freedom. I don’t talk about it much, but the decision to retire actually arose after some health complications both Mike and I experienced.
In hindsight, it makes me incredibly grateful that we pursued a debt free lifestyle so intensely, otherwise the prospect of not continuing our careers would have had some serious financial implications for our family and our lifestyle.
It still made for a challenging decision process, with a lot of mental dissonance. We both got substantial value from our work, so the prospect of giving that up entirely took time to wrap our minds around. It also created a huge adjustment period for both of us in terms of cultivating other areas of our lives where we feel a similar sense of value, productivity and purpose.
A big one for both of us is that when we were younger, we mindlessly invested in mutual funds with absurdly high management expense ratios. Not taking the time to develop an understanding of why were paying those fees, and their impact on our future savings was a big mistake.
We both still cringe a little when we think about the long-term cost of that mistake, but we certainly learned to question everything when it comes to where our money is going. Sometimes fee’s are worth every penny, but now, we don’t let a single dollar out of our hands without evaluating what we are getting in return.
Q7. Why is financial independence retire early so powerful for the both of you?
For us, it’s always been about the freedom to choose what we do with our time. Our “working” days are far from over, but now we have the luxury of being able to invest our time into the things that matter to us, regardless of the associated monetary compensation. The power of that choice is huge.
Q8. Do you take advantage of TFSA and RRSP? Do you plan to withdraw early from RRSP before age 71? If so, what are you early withdrawal strategies to minimize tax penalties?
We absolutely do. We max out both annually, and also take advantage of the government match in our kids RESP’s. For anyone who is going to maintain even a median income throughout retirement, the tax-exempt gains within a TFSA make it an incredible investment tool. Because of that we focus our high growth investments in our TFSA’s, and keep our index investing within our RRSP’s.
We have structured our RRSP’s as a safety net investment that, pending anything catastrophic, we should never need to withdraw from in order to maintain our lifestyle. So our plan for withdrawal is far from set in stone. Dependent on market performance, and our income bracket down the road, we plan to start steadily withdrawing in our 60’s in order to minimize potential tax implications over time, and with the idea that we would use that money to fund some once-in-a-lifetime trips with our kids, and hopefully grandchildren at that point!
Q9. What is your daily life like now that you have retired? Are you “working” on different personal projects? What’s keeping your busy?
First and foremost our kids keep us pretty busy. They are definitely our top priority in terms of where we invest our time. We also really enjoy traveling with our extended family, so we end up traveling either to see them, or to various destinations with them, for about 2-3 months each year.
We both have our own side-gigs on the go. I manage and write the blog, Mike helps me a lot behind the scenes, and he writes an online sports column. I also like to do some DIY refinishing and sign making work, so I do that when the mood strikes.
We also plan to continue expanding our real estate investments, so we spend a fair amount of time keeping a close eye on our top markets, and actively looking for potential investments.
Between those things and a renewed focus on our health and wellbeing, our days are definitely full.
Q10. Do you feel that you have a better quality of life after retirement? Are you feeling more at peace and do you feel healthier?
While there have been challenges in retirement, there’s no doubt that our overall quality of life has improved. While life is still “busy”, things are far from hectic. I no longer feel like we are operating in survival mode, racing from one commitment to the next, and crashing into bed at the end of every day.
While it’s been a period of adjustment, I think we are both finally reaching a place where we feel a level of peace and contentment with where we are.
Having the opportunity to focus on our health and overall well-being has also been excellent. We’ve been able to achieve steady gains in a variety of areas, and that’s been incredibly satisfying.
Q11. Did you have a budget prior to retirement? If so, do you still budget now that you and your husband are both retired? Is there any difference between the two budgets?
Before we retired, we had a very basic budget. We had a set budget for our fixed expenses, and then we had separate bi-weekly budget for everything else. Some weeks we would be under our target, and others we would be over, but as long as our bi-weekly budget averaged out to be at or under our target goal over the course of the year, we were happy. We apply the same approach now, but with an increased bi-weekly budget.
While this approach worked really well for us, I wouldn’t recommend it to people who are just starting out. Utilizing a more structured approach can be extremely beneficial at the onset of any financial plan in order to identify areas of over-spending, as well as to help build realistic budget targets.
Q12. What do you see yourself in 5 years and 10 years from now? What are the top 3 things you are looking forward to?
It’s hard to forecast to be honest. I feel like so much will change between now and then, that it’s difficult to know how things will look.
I suspect we will be continuing to invest a lot of time into our kids, although at that age, they might have a different opinion about that! I also envision us having acquired 3-5 investment properties over that 5-10 year time horizon, and developing a larger plan on how we can help others in a way that optimizes our skill sets.
But the 3 things I’m most looking forward to are continuing to travel with our families and facilitate the growth of strong relationships between our extended family and our boys, having the luxury to watch our boys grow into young adults, and ultimately the increased independence of our kiddo’s so Mike and I can explore what our financially free life will look like when it’s just the two of us.
We definitely don’t advertise our status amongst our social circle. It’s part of the reason that we stay relatively anonymous online. Overall, our families have been very encouraging about it, but that’s not always true of certain friendships.
I think in general there is a strong resistance to the idea of “early retirement” because people equate it with doing nothing. But for many seeking early retirement, it’s rarely about doing nothing, and more about no longer having our choices dictated by our financial needs. Facilitating the freedom to do the things we’ve always wanted to do, whether or not we get paid for them.
Unfortunately I have found that some people get quite offended when we talk about Financial Freedom. As though, by choosing a different path, we are judging them for the money choices they are making in their own lives. I think that internal reaction has a lot to do with why finance is still such a taboo topic in society. People fear judgement, even when there is none, and money is an area where, as a society, we have a lot of insecurities.
In reality, Mike and I don’t care what financial approach other people take, if it’s meeting their personal needs and goals, that’s great. We do like to use the blog as a platform to talk about Financial Freedom, so that people who are interested in pursuing it can see that it is possible, and so they can cherry pick thoughts and ideas that work well with their overall personality and financial/life circumstances. But there’s certainly no one size fit’s all approach.
Q14. What would you tell someone like me who is trying to achieve financial independence? Do you have any advice for financial independence retire early in Canada?
For people like you, who are already on the path, my best advice is to find a lifestyle that is sustainable for you now, while still working towards FIRE. When people go to extreme measures to make FIRE a reality, the journey can quickly feel like a grind and the resulting lifestyle can be unsustainable over the long term. (With the caveat that extreme is really subjective. Living in a van would be extreme for me, but for someone else, that might be their ideal lifestyle.)
By working to identify and live your ideal lifestyle now, it ensures that your target goals for income in retirement will be sufficient, AND facilitates a less shocking transition when you do FIRE.
Also, I am a big fan of mitigating risk. So aiming for a higher income in retirement than you will likely need allows a nice buffer for the unexpected curve balls that life can throw our way. It can also serve to facilitate some bigger unknown “wants” that may arise down the road, and results in a portfolio that continues to grow after retirement, rather than simply staying stable, or slowly decreasing over time.
While it can seem like that takes a bit longer, working even just an extra year (or electing to work part-time for a few additional years) beyond what you “need” to reach FIRE can make a big difference in your financial trajectory and security over the long term.
For the people who look at FIRE and their immediate gut reaction is “That might work for you, but that WILL NEVER work for me”, I urge you to consider it with an open mind.
Because that was me. It was exactly my gut reaction to the prospect of paying down a massive, Vancouver style mortgage.
It would never work. I didn’t want to sacrifice my entire lifestyle. I didn’t want to eat rice and beans. I liked eating out. I liked going to the movies. We didn’t make enough money. The list of reasons was endless.
It took a lot of work, and slowly shifting my perspective to get from a “We can’t” to a “We get to choose” mindset.
Maybe you have some work to do before FIRE can feel like a realistic goal. Maybe investing in yourself, increasing your income, and paying down debt are all goals that need to be achieved first, before FIRE or Financial Freedom can seem feasible.
I equate it to aiming for a PHD when you’re in elementary school. Some people love the big lofty goals that act as their guiding principle (I’m talking about you Elon Musk), some people, like me, need to break our goals up into much more realistic chunks in order to view them as possible. So maybe instead of reaching for the stars right out of the gate, it starts with a goal of graduating high school, then getting accepted into post-secondary, then an under-grad, etc etc.
As the saying goes, “How do you eat an elephant? One bite at a time.”
At first glance, FIRE can definitely look like an elephant, but if you think it’s something that aligns with your values and life goals, don’t just walk away, break it up into small bites.
Thank you very much Phia and Mike for participating in the financial independence interview! I really enjoyed what you have shared throughout this interview.
Dear readers, are you enjoying the Canadian Financial Independence 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.
- FIRE Canada Interview #1 – Vancouver reader J
- FIRE Canada Interview #2 – How I became financially independent at age 32
- FIRE Canada Interview #3 – Why I decided to keep working despite reaching FI at 38
- FIRE Canada Interview #4 – Cash flow is the oxygen of financial independence
- FIRE Canada Interview #5 – Creating a long term plan
- FIRE Canada Interview #6 – Create a net worth statement
- FIRE Canada Interview #7 – Do Absolutely everything and never sacrifice or struggle at all
- FIRE Canada Interview #8 – Building a rental property empire
- FIRE Canada Interview #9 – Relocating to Spain
- FIRE Canada Interview #10 – Kids are as expensive as you let them be
9 thoughts on “FIRE Canada Interview #11 – Vancouverites retired in their 30’s”
Bob – thanks for another great interview. Love the FIRE interview series.
Phia – congratulations to you and Mike on achieving FIRE. Look forward to reading more of your story on your blog.
Another great interview! Everything is possible with the right mindset and taking small steps at the time. Good for Phia and Mike achieving FIRE so early. Having the extra time to spend with the kids is a blessing. This reason alone is enough to pursue Freedom. Thanks, Bob, to make this interview happen. Hoping to read many more of FIRE stories 🙂
Thanks German! We were really excited to have the chance to do this interview with Bob! And we couldn’t agree more with you about the extra time with our kids being a blessing. We are thankful everyday that we have this time with them 🙂
I prefer to put my extra money towards investments instead of my mortgage so I’m curious to hear what the reasoning is for paying down the mortgage first.
Hey Heather! Yes, the age old personal finance debate of investing vs. paying down debt 🙂 I think it’s a topic that really underscores the personal in PF. If you are interested, I wrote a whole post on why we went with the paying off our mortgage route, and I’ll leave the link at the bottom, but I’ll try and give you our Coles notes answer here.
Undoubtedly when we were looking at this question from a strict numbers perspective, the “right” answer was to invest. If by “right” we were solely looking at what would leave us with the biggest $ figure in the bank over the long term.
But in our case, we came at it from a different angle. We knew what our “enough” number was in terms of how much cash flow we wanted per month to comfortably sustain our lifestyle (with some substantial wiggle room), and we also wanted a dramatic change in our life. Not in 25-30 years, but ASAP.
We also took into consideration our financial personalities. Both Mike and I are not fans of carrying personal debt, so we felt that we would be more aggressive and disciplined in paying off debt, then we would be strictly investing. For us, the psychological win of being entirely debt free had huge value. And, in hindsight, that undeniably impacted our comfort level when the decision to retire ultimately arose.
Not only that, but when we started our journey, our financial savvy when it comes to investments was dramatically lower than it is now. We didn’t feel confident about investing, and the financial advisors we interviewed didn’t leave us feeling all that confident either. So while we were paying off our mortgage, we spent a ton of time educating ourselves on investment strategies, and ultimately coming up with a game plan for the extra money once the mortgage pay off was complete. (I should note however that we were still maxing out our RRSP’s and TFSA’s through conservative investing during this process, so it wasn’t entirely a one or the other approach.)
When taking all of the above factors into consideration, it was clear it wasn’t just an apples to apples comparison of the numbers for us, but rather weighing the less easily measured aspects of the psychological impact and our own money personalities to choose the option that would be most efficient to achieve our financial goals. When we did that, paying off the mortgage became our clear answer.
I have no doubt that had we applied the exact same level of enthusiasm, dedication and discipline to investing as we did to paying off our mortgage, it is very likely we would be further ahead from a numbers perspective. But realistically, I can’t honestly say that we would have applied ourselves in the same way, nor do I think we would have been happier with the outcome.
And I really do think that’s the crux of the whole question/debate. What choice is going to get you to your end goal, in a way that leaves you feeling motivated during the process, and happy and contented with the outcome.
Hope that answers your question, but here’s the link to my article if you want to dig a bit deeper into our thought process 🙂 https://freedom101.ca/2017/10/16/our-most-impactful-choice/
Thanks for your comment!
Thanks so much for for interviewing us Bob – it’s been lovely to get to know you better! Looking forward to the next meet up 🙂
Thank you Phia for the interview. 🙂
Another great interview, thank you both! I really like reading through these and getting different perspectives.
I’m from Mississauga Ontario so enjoy the Canadian side of things 🙂
Glad to hear that you enjoy the Canadian perspective.