A few months ago, a reader from Vancouver left a comment on this blog, stating that he has reached financial independence at 38 years of age. He also mentioned that he decided to continue working despite being financially independent. Intrigued by his story, I reached out to him via email. After a few email exchanges, I decided I had to get him to do an interview and answering some questions I have.
Please allow me to introduce you a fellow Vancouverite D.
Q1. Wow, it is amazing to hear someone that lives in Vancouver that is financially independent at age 38. When did you become aware of the term financial independence?
It was Mr. Money Mustache who introduced me to the term. In April of 2014, the Globe and Mail published an article about some guy who retired at 30. Intrigued, I visited his blog and was relieved to finally find someone who shared my philosophy of how lucky we are to live where and when we do, how much we waste as a society, and how little it takes to focus the “firehose of wealth” towards a goal of FI. I was riding my bike to work the next week.
My push to FI started there, but I had been living a simple life since moving out from my parents’ house. I was unintentionally already close to the finish line when I read the article, but MMM pointed me to the tools I needed to cross it.
Q2. You mentioned that you asked about RRSP at the bank when you were 13. Did this event kick-start your interests in personal finance and investing at a young age?
I wouldn’t say that particular moment started anything except confusion. The teller laughed me out of the bank while I was trying to be smart with savings from my summer job.
It’s my mom who I credit for my interest in personal finance. We opened my first bank account at 6 or so, and she told me about interest and compound interest. Free money seemed amazing to me! And she had a ledger that she would write in 25 cents every week into the credit column for me, my pocket money.
Soon after, I used many weeks of savings to buy a crappy robot that was garbage. That taught me that money in hand, the anticipation of what you can buy, is often better than the reality of having bought something.
Tawcan: I can’t believe that the teller laughed at you, that’s so cruel! That’s cool your mom taught you about interest and compound interest, I was taught about the power of compound interest at a young age too.
Q3. You were introduced to a financial advisor when you graduated from high school. Was the advisor helpful? Looking back, are there things you wish you would have done differently? Given the options available today, would you have used a robo advisor instead if you are given the choice?
Yeah, my high school graduation gift from my dad was $1,000 invested with a financial advisor (smarter gift than a car!). The advisor was amazing: he taught me about setting financial goals, what investment product classes there were, and had me consider ideas like automating investing. I remember hours sitting with him at a whiteboard explaining this magical world to me.
I’ve never used a robo advisor, so I can’t say whether I’d go that route instead of an advisor. It certainly wasn’t an option 20 years ago! Looking back, my returns were certainly eroded by the expensive fees on the funds I carried with that advisor, but I needed that initial conversation to get things started right, and I have spent probably over 40 hours with him. At some point, the fees exceeded the value of the advice, and that would have been a good time to move on.
If I were to change anything, it would be taking the time to learn about investing and have more responsibility for my investing choices sooner. To set up a simple online brokerage account with low fee funds would have “paid” me an hourly rate more than my regular work does (investment return increase divided by hours of research).
I imagine that an advisor or mentor is still a great first step for a new investor, as long as they have your goals and best interests in mind. Although perhaps online research now would be enough to start without an advisor, considering the easy access to ETFs, and good investing blogs.
Tawcan: Here are a bunch good invested related articles I have written.
Q4. You are still working although you are financially independent. Has the meaning of work changed since FI? Do you find yourself enjoy work more?
I only “hit my number” a few months ago so I’m still adapting. My career as a freelancer has the advantage of allowing me to have some control over when I’m working and when I’m not, and I’ve worked much less this year than those previous, but it’s very hard to do that.
On the good side, I am able to pick and choose the projects I work on and the people I work with, and so I will no longer need to choose projects for how I perceive they’ll affect my future career, I can just enjoy the process of working. Thus the working environment is better.
However, there’s a bunch of new challenges. Learning to say no to projects is a skill that I’m working on, but old fears die hard; fears around needing money, and ego, and validation. It’s an alien feeling to recognize that success at work doesn’t define me as a person, and that I need to work on valuing myself more for other things, like helping others. I’m working on a new mission statement for myself.
I can say that I work with an odd assortment of wonderful, unusual people and I tend to value my time with them more. There are a lot of times that work still feels like a grind, but I think that’s true of everything, no matter whether you’re getting paid or not.
I started in my field because I enjoyed the work, and did it for free for a while to learn. I feel a bit like I’m in that scary but fun part again, when everything is new while I learn this new phase.
Q5. Do you think you will continue working for the next 10 years?
Very likely. My girlfriend won’t be FI for about that long anyway, so it makes sense to balance my time with several things: interesting paid projects, volunteer work, travel, and whatever else I find myself doing. There is a bit of a luxury being a freelance worker, in that I can taper off the work as I choose. Ideally, work will slowly take less of an important role as I incorporate other projects.
If I stop enjoying my work, then I’d be open to something drastic like selling up and travelling full time.
I’ll admit that there’s an illogical part of me that has trouble believing that FI will actually work. Even with a detailed spreadsheet that shows expenses over the last few years compared against investment income, it’s hard to actually make the transition to relying on that. That’s where the “one more year syndrome” manifests for me, I think.
Tawcan: Having a FIRE calculator is useful but we need to remember that it is s just for simulation.
Q6. What is in your investment portfolio? Are you still using the financial advisor from high school for investing?
I am kind of mixing a dividend appreciation strategy with a couch potato strategy. I have a lot of Vanguard funds, both Canadian and some US. The new “active” Vanguard Value fund is very interesting to me (VVL), but I have a lot of the passive funds as well (VTI, VCN, VIU, etc, as well as bond ETFs). I have bought a lot of individual Canadian stocks for dividend appreciation, but in the US I have only the Vanguard ETF that works on the principle (VIG). Your blog has been a source for information on good individual stock choices. I also have a small amount left with my advisor, which adds a layer of diversity and investment protection by being in multiple insured institutions.
I’ll be shifting to a focus on income over the next few years, but with no hurry.
Q7. Since you are FI but working, are you spending 100% of the working income on expenses? Or are you saving still to increase your retirement margin of safety?
I don’t spend much so it’s easy to keep saving. I’m not even sure what I would do to spend 100% of my working income. The added savings do increase my safety margin, and also opens up room for more luxury things like fancier trips (but I’d probably have as much fun doing a cheaper bike tour with a tent anyway).
Q8. What are your biggest secrets for becoming financially independent at age 38? Having a high savings rate? Gambling on investments? Winning $50 million Lotto Max? Please share!
As everybody respectable in FI literature will tell you, savings rate and time are the keys. It was true for me, too: I had no insider tips, no secret sauce, no magic beans.
Even before knowing what FI was, I always tried to keep my overhead low, so that if I had trouble finding more freelance work, I’d be okay. I’d try to make it so that if I could work four days a month my bills would be covered. Another week of work would pay for the next month with some left over. I just stuck with that spending model as my income grew. That made for a very high savings rate: before discovering FI my savings rate was probably about 50%, which ramped to about 80% when I was saving aggressively.
Something that helped with this was starting my own company. By having the money I earned stay in the corporation, I pretended that the money wasn’t mine to spend. I still pay myself a very low monthly salary, and that’s what I live on. If all my investments and company burned, a minimum wage job would keep me afloat.
The road to FI for me started with fear, being worried that I wouldn’t get another gig for too long and putting money away for rent. But the feeling of months, then years, of spending in the bank was a security that I loved, and kept increasing. It was only 19 months from learning about FI from Mr. Money Mustache to becoming FI, when the years of security became self-sustaining through investment returns.
I did win the lottery: the lottery of being born in Canada to a nice, reasonably well-off family in the late 70s.
Tawcan: Living in Canada and not having to worry about health care is very beneficial compared to our friends down south.
Q9. 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?
Yep, maxed RSPs and TFSA for sure. My company has a bunch of investments at a favourable tax rate, too. Since I haven’t started drawing down yet, I’m still learning about what the best tax setup is for me. I haven’t found a lot of literature on how to organize a corporation for FI! But I like the idea that the company earns dividends through investments, pays me a salary, and then I invest what salary I don’t spend in tax-advantaged accounts. That can keep going as long as I work a bit each year.
Considering my low annual spending, I haven’t read about any huge penalty for using RSPs, so once I’m no longer working I’d consider withdrawing some.
I’m happy to hear from your readers if they know of any good resources on tax strategies for corporations with FI minded owners!
Tawcan: I made some assumptions previously. We are seriously considering withdrawing from RRSP early.
Q10. Do you keep it a secret to co-workers and friends that you are financially independent? Do they feel uncomfortable whenever you share with them about your financial success? If so, why do you think money is such a taboo subject in society?
I do feel uncomfortable telling people about my financial status. There’s a huge stigma against both being “rich”, and being “frugal”. Only a couple of friends have an inkling of where I’m at financially, and it seems to make them uncomfortable. I’ve tried to show them that FI is possible for almost everybody in our amazing circumstances (the majority of Canadians), but I’ve only been able to encourage small changes. At worst, being FI seems to make others resentful or depressed. I think a lot of people have trouble seeing that they are in control of their financial decisions and can work towards FI too.
My mom recently told me she is proud of me, even though I’m not successful financially. That took me by surprise, since I feel very financially successful! But she doesn’t know, she just sees me driving the same car, living in the same condo in my old clothes. And I realize that most people would see me the same way. As a society, I think it’s assumed we’re spending almost all we earn, so our value is shown by the price of our lifestyle. So we spend more than we earn to look more valuable. Thus, the taboo: most of us are faking wealth, and we don’t want others to catch on.
Tawcan: It really isn’t a surprise to me that so many FI’ers don’t look “successful financially.” This is mostly due to them focusing on purchasing things that would provide the most values to them, rather than purchasing things to show off.
Q11. You mentioned that you live simply but not to be frugal. Why is it so important to find that personal balance between saving and spending?
I think, for most people, personal balance is important. My girlfriend did a sort of personal frugal-challenge to see how low she could get her spending. It was really empowering for a couple of years but, in the end, she likened it to a long fast where she pulled out her credit card sighing “Oh thank God, ice cream!” and ate the whole tub. Luckily, she’s found a better balance now. During that time her FI goal was a lot closer but we learned you can’t base your financial future on spending habits that aren’t going to hold true.
For me there’s not a lot of balance required, it comes very naturally to not spend very much. I’ve always equated money with the effort required to obtain it, and so have thought through every purchase as a value transaction. Every purchase, even a chocolate bar. I’ll usually not buy the chocolate bar, but have no problem going on a trip somewhere.
From a young age, I saw the cost of things as a cost of time, not money: going to a movie would cost two hours of work (about a 1:1 ratio of entertainment to work), while a video game would cost almost a whole day (but the many hours of play could provide a ratio of 20:1). I don’t think of things as a ratio anymore, but there’s a reflex to think about the actual act of working for money when I’m looking at a purchase. And if I spend my money on crap, then the work I did to earn that money was for nothing.
It means most of my possessions last for a long time. I’ll look at buying something new, but often decide that the thing I’ve got will last another few years. My furniture is mostly from when I first moved out 20 years ago; I try to only drive when I need to go beyond the city; I prefer eating at home.
Simple living is just a reflection of what I enjoy. A perfect day is a bike ride, a picnic, some time with friends, a perfect pot of tea at home, that sort of thing. It just so happens that what I enjoy tends to be very cheap.
Q12. What would you tell someone like me who is trying to achieve financial independence?
I’d say, “Congrats! Enjoy the journey!”
I have found FI to be more of a philosophical pursuit than a financial one. The success is from learning to be happy without spending, to appreciate the important things that are free, to understand that swaddling your ego with stuff won’t fix your insecurities. I think it would be very difficult to achieve FI without learning to be grateful for what you have.
You can be independent by reducing your need for money. For example, I had a friend in my 20s who worked 5 hours a week and lived on $300/ month in Winnipeg. To me, she was already free without saving anything. She was happy, with plenty of time to be an active member of several great communities. She wasn’t trying to be FI, but her low spending made her independent anyway: she could live her life on her terms. She got the philosophy long before I understood it; she had “enough”.
We’re still wonderful humans even without stuff, perhaps even better because we’re not distracted by how impressive our new phone is.
Working on the philosophy has a better happiness outcome than being FI.
Being FI doesn’t change your happiness directly. If you have a savings rate that will allow you to become FI, then the financial stresses should already be gone… you’re already saving enough to protect against future problems. And there will always be things that limit you, whether you’re working or FI. The key is to be able to enjoy what you’re doing within those limitations.
So take care not to find yourself miserably saving for the mythical Nirvana of FI. The good stuff is already within reach.
Tawcan: Love it! I mentioned some of these points in this controversial post.
Q13. Do you have anything else you would like to share with me and my readers?
I really enjoy games, so I made a game of the process of becoming FI. There’s plenty of examples out there (budget trimming challenges, minimalism challenges, etc), but I love working on my FI spreadsheet and watching the numbers change in my favour. I also enjoy trying to find new ways to think about the core concepts. One example would be imagining FI as a currency, which I call Perma$. Every $25 buys you one Perma$: a dollar that regenerates itself every year, forever. This is just a twist on the 4% rule, but helps put little purchases into perspective. That dinner cost three Perma$, darn.
Regardless of the method you have for achieving FI, you’ve got to enjoy the process. It’s going to take years of discipline to become FI, so why waste those years?
Also, thanks for reading, and a salute to all who are working towards their own financial goals!
Thanks D, some excellent insights you have provided to me and my readers! Dear readers, did you enjoy this interview? Please also check out the other FI interviews I did with fellow Vancouverites.
46 thoughts on “FIRE Canada Interview #3 – Why I decided to keep working despite reaching FI at 38”
Excellent interview. Keeping up with the Joneses is probably the biggest mistakes Americans make when it comes to finances. I didn’t know it was such a problem in Canada, too. Americans are the worst when it comes to showing off.
After a while, I got tired of trying to impress people and decided to bank and invest my money instead. The latter choice opened up so many possibilities plus a sense of financial freedom that I didn’t have in the past.
Also, I think the comment his mother made shows just how we feel pressured by even our loved ones to look rich. I rather have a big bank account than a bunch of expensive, depreciating “things” to impress other people. To each his own.
This portion of the response to Q4 sure struck a chord with me! As someone who is recently gone to part time work as a result of hitting FI I underestimated this aspect.
“However, there’s a bunch of new challenges. Learning to say no to projects is a skill that I’m working on, but old fears die hard; fears around needing money, and ego, and validation. It’s an alien feeling to recognize that success at work doesn’t define me as a person, and that I need to work on valuing myself more for other things, like helping others. I’m working on a new mission statement for myself.”
FI in VA is sweet. If you can do it, we can all do it. Thanks for the inspiring story!
Interesting interview. I am always fascinated when people who reach FI want to continue working for money. Of course you expect to have hobbies and personal goals that contribute to society, but the idea of continuing to work for wages after you reach FI always seems unnecessary to me. Great to hear a bit more of the thought process behind the decision.
Thanks MissSaraBee, glad that you enjoyed reading the interview.
Hi Misssarabee, thanks for reading! Even though I’m getting paid to do what I do, the work can have a meaningful impact on society, so the focus for me is on that and not the paycheque. Adding the extra layer of security to the plans is the icing on the cake.
Great interview. Being born in Canada is a winning ticket for sure. The US is great too, but healthcare is a huge problem for early retirees now.
Congratulations. It sounds like you’re doing great.
Since you just reached FI, are you worried about the stock market? The US stock market seems very high. Also, are you worried about lifestyle inflation? What about kids? Annual expense will go up.
I’m so glad that we don’t have to worry about healthcare in Canada. I don’t understand US healthcare. 🙂
Since we do plan to live abroad one day, we probably will have to look into travel insurance, but that’s a project for later.
I’ll let D answer the other questions you have. 🙂
Thanks Joe, and those are all great considerations to keep in mind. My situation allows me to not worry about the record highs in the market… I’d welcome a drop, because I could ramp up my work again for a bit and buy some sweet cheap equities! Kitces did a great post on sequence of returns risk, which put that concept on my map early (https://www.kitces.com/blog/understanding-sequence-of-return-risk-safe-withdrawal-rates-bear-market-crashes-and-bad-decades/). So my continued work in this most dangerous time for my portfolio protects me from that. Also, when my mortgage finishes soon, I’ll be around a 3% SWR, which adds another cushion for a crash and/ or lifestyle inflation.
Kids aren’t in the cards, and I have no desire for a bigger home, but expenses will likely go up, as you suggest, as I get antsy and want to do more things while I’ve got free time. While I’d like to keep that limited, there’s enough safety margin that I can assess discretionary spending as I go, and unless things go terribly wrong, a bit of work will allow for an increase in spending.
Perhaps most concerning is the possibility of grinding low returns for more than a decade. Again, I’m young enough that a little work can fill in the blanks, and in the meantime, DRIP and dividends should protect me against that. Especially compared to a straight S&P500 portfolio. (Would all you clever people agree? I’d welcome feedback! Always nice to get shown your blind spots!)
Good planning. I think it’s good to keep working for a while and pad it a bit too.
If you’re not planning to have a kid, then it should be much easier. Kids take up so much time and energy and money. Keep at it!
I loved the interview. Very informative and honest!
Thank you, glad that you enjoyed the interview.
“I did win the lottery: the lottery of being born in Canada to a nice, reasonably well-off family in the late 70s”
Love this! While I wasn’t born in Canada, being able to immigrant to my favourite country in the world is a huge privilege!
I agree with this post that becoming FI doesn’t mean you have to quit your job. It just means you can CHOOSE to. And having chooses and freedom is what Fi is all about. Congrats on becoming FI, D!
Same FIRECracker. I’m so glad I don’t have to understand how health care works when living in Canada. This is definitely very different if you were to live in the states.
Thanks FIRECracker! And I’m glad you pulled that quote. To me, it’s about gratitude. I hope we can all reflect on our “lottery winnings”… I think most (maybe all) readers of this blog have won the lottery, given the odds across all human history and around the world.
Nothing wrong with continued working if it’s not causing too much stress or there is nothing else that you are currently passionate about and want to spend more time on. D is so young I can understand why he wants to work a little longer. I actually work part time from home and probably will for a few years just because it’s easy and simple. I can do what I want when I want and still make an income.
I think there’s nothing wrong with working a little longer if you enjoy what you do. That will keep you busy and active. 🙂
Fantastic interview Tawcan and D! Sounds like you have a terrific attitude that will hold you in good stead regardless of the paths you take from here. Love your comment on not miserably saving for the “mythical Nirvana of FI”. I worry that too many people see this as an escape hatch from a difficult life (I also did once many many years ago), but you have to find a way to enjoy your life today, regardless of your bank balance.
That basically inspired me to write this post. 🙂
Thanks Frankie! I certainly was in the “escape hatch” mentality for a bit, even though I didn’t feel that my life was difficult. But when I discovered FI, it was like seeing a “meta-goal”, something beyond the career path I was on. I thought about it way too much while learning more about investing and the FI concepts. That wasn’t the healthiest approach.
I remember the Mad FIentist wrote about having a big crisis while nearing FI, which had him terribly depressed and nearly ruined his marriage (can’t find the link, sorry). Thankfully he got past that! But perhaps the escape hatch mentality is really common? Part of the reason people get on board with FI in the first place?
Bravo, Vancouverite D! 🙂 I love the idea of being financially independent but still choosing to work. That’s a good yardstick to know if your job actually helps you achieve happiness/meaning. 🙂
I like that idea too! 😀
Thanks, Mrs. Picky Pincher! I’m hoping that my ego will allow me to move on sometime, that I can be okay watching my competition move on to career greatness while I sip tea. There’s useful stuff to be done without getting paid, and I’d like to learn more about it! Currently I’m worried I’m allowing work to give me too much of my meaning.
I think the fact that health care is taken care of is huge. Granted, far more in taxes (though if you ask me it evens out when you account for how much we wouldn’t be spending on health care); but I honestly worry about people who go FI and quit their jobs in their 30s. I’m not sure they understand just how expensive a chronic illness can be — even a well-controlled one — so I wonder how much of their independence is really ready for the onset of health problems as they get older. Maybe I’m wrong and they’ve wisely figured that into their budgets (though it’s reeeeaaallly hard to predict what will happen), but I remain skeptical.
The Canadian health care is pretty straight forward, you’re enrolled automatically as long as you are a resident. There’s no worry about predetermined conditions.
Hi Abigail, you’re certainly right that it’s easier in Canada than the US. It’s not quite perfect (financially), however. My spouse has a chronic condition that requires hundreds of dollars of prescriptions each month. Our workplaces cover almost all of that. In our case, my plan can keep supporting a huge amount of bills even in retirement (I can keep membership in the plan), but without that, FI would be much harder.
It’s a really good point that young folk should think about the medical ramifications of being FI, and what sort of expenses could come up after quitting… that’s true even in Canada.
Wow really like the perma$ idea – is there a post or two on the subject?
I’ll have to ask if D is up for expending the perma$ idea. 🙂
Glad you like the idea! I had been thinking that there was more to say about it, but didn’t want to bore everybody my odd thoughts. Happy to expand on it…
Fun idea, please expand!
And I am with you on having difficulty to rely on the spreadsheet, the one more year syndrome probably only vanishes after taking the leap
Thanks for a great interview Tawcan. It’s amazing what someone can achieve living wisely and thoughtfully. One of the standouts for me was that Vancouverite D let himself and his girlfriend meander their way to FI, no fussing with precision or ruthlessly pursuing frugality. Nice to hear about someone else do it that way!
To be truthful, the period after discovering FIRE was pretty ruthless, but that was a fun period of discovery, too. I liked the challenge of seeing how low spending could be without impacting happiness or standard of living. What I learned was that happiness is totally independent of spending!
Now, with that lesson learned, we’re back to meandering. 🙂 Thanks for reading!
Finding the right personal balance is the way to do it, rather than extreme frugality.
“The success is from learning to be happy without spending, to appreciate the important things that are free, to understand that swaddling your ego with stuff won’t fix your insecurities.”
I like this guy. He’s really got his head screwed on straight. Thanks for letting us get to know him, Bob. Cheers.
Thanks for your kind words, Mr. Groovy!
Thanks Mr. Groovy. D has provided lots great insights.
Really loving this series. Even though there are a lot of Canadian personal finance blogs I feel like a lot of them have more of a general PF focus, not so much FI. Its’ always nice to hear more about how ordinary folks are pursing FI in Canada. Anyway, keep the interviews coming (Canadian or otherwise)
Thanks Alana. I’ll have to see if I can find more ppl that are already in FI or FIRE’d that do not have a blog. 🙂
Nice story. A lot can be learned from it. I had the same challenges with freelance work. It’s hard to change old habits and turn down projects. Tom
Hard to change old habits for sure, but it’s definitely possible after a bit of practice. 🙂
Good interview. I like what he said at the end about gamifying finances. I did some of that too on my path to FI. If I met my savings goals or earnings goals I’d either reward myself or allow myself to “level up” to the next level of the game, which had new and better prizes!
That’s something I do to keep me motivated too.
Prizes! I’d never considered prizes! That’s next level thinking right there.
Great interview Tawcan! I can definitely see the advantage to working freelance. In my field most workers aren’t freelance, so it would be near impossible to “slow down” like this Vancouverite did. It was either 60 hours a week, or no hours at all.
I eventually made my way to 0 hours, but I can definitely see the attraction of a 15-24 hour work week.
There are advantages of working in freelance but I can also see the possible stress, always having to find the next gig. Now when you’re FI, that whole chasing the next gig disappears and I bet it feels pretty awesome.
While approaching FI, I saw how much of the blogscape is filled with people stressing about giving notice, this precise finality to the working period of life. That seems so scary, compared to easing up on the work on my own terms, and having the time to adjust slowly. Kudos to all you FI folk who pulled or will pull the plug so definitively!