If you’ve been keeping up with finance news as of late, you’ll know that many Americans have not saved enough for retirement. Poor planning, spending frivolously and a struggling economy are all factors behind why many of us worry about financial security when we reach our golden years. But wait! Some of us are going against the norm and building an impressive portfolio of retirement funds that leave the rest of us asking, “How’d they do that?”
A few years back, we met Carl, who created a blog dedicated to his retirement savings. When we first interviewed him, Carl was 39, and aimed to retire in 1500 days, hence the name of his blog, 1500Days.com. Today, Carl is 41, and is on track to retire by the time he’s 43.
I wanted to follow up with a second interview, to see far he has come in his journey, and what advice he might have for others. (You can check out the original interview below.)
I see that you’ve already hit your goal roughly 1.5 years ahead of schedule. Do you consider yourself a ‘millionaire?’
Mr.1500: The numbers say ‘yes’, but my mind says ‘no.’ If you would have told me at 20 that I’d be a millionaire at 40, I would have thought that you were crazy. My family didn’t have money growing up and neither did anyone else we knew, so the concept is very foreign. I pinch myself daily to make sure I’m not dreaming!
I haven’t changed one bit. We live on a modest street that is a mix of blue and white collar folks. I still change my car oil and brakes. I mow my own lawn and fix stuff when it breaks. My oldest car is from 2003 and my phone is 3 years old.
None of my family or neighbors have any sort of clue about our wealth. Regarding the latter, some of our them are convinced that we’re poor because we don’t hire others to do things for us. This amuses me greatly!
With the amazing progress that you’ve made in just two years, are you thinking about retiring even earlier than expected? Or, are you going to continue working on growing your net worth?
Mr.1500: I’m financially ready, but I’m not quite there emotionally. I’m 41 now and have always worked. Before I could legally hold a job, I mowed lawns and shoveled snow. At 14, I started at my first real job.
I’ve never had more than a week off of work since then, so the idea of not working is very strange. I know that life will be better on the other side, so I just need to push myself off over the cliff.
It will happen though, most likely before my self-imposed deadline of September of 2017.
What is your ‘exit’ strategy when it comes time to retire?
Mr.1500: I will try to go part-time for a year before I take the plunge. I think this way would be easier, verses quitting completely cold turkey. I’ll ease myself off of work.
Once I quit, I hope to take is easy for a while. I’ve worked my tail off for the past 20 years and an extended vacation would be nice. We’re thinking of touring the Northeast for a month or two.
The great thing is that my body feels as good as it ever has. I don’t have aches. I can ride 100 miles on a bike. I feel good. It will be nice to go out on top when I’m still able to enjoy the physical activities in near peak form.
Looking at your investment strategy, you seem to be highly aggressive on individual stocks, especially in taxable accounts. What’s your strategy for the taxes on your capital gains?
Mr.1500: I need to sell some of these stocks, as I’m very overweight in some. I’m going to wait until I retire though. That way, I won’t have to pay any capital gains if I spread the sales out over a couple of years.
At the same time, I feel like I’m playing a dangerous game. At least 1/3 of my portfolio is tied up in tech stocks, which are volatile (Nokia and Blackberry, where are you now?). No company lasts forever and tech stocks are the riskiest. It’s a good thing that I enjoy a bit of drama and uncertainty!
How do you plan on spending your time after you’ve hit your retirement goals?
Mr.1500: My list is miles long. I plan on walking my daughters to school every day. I have 100s of books that I’d like to read. Exercise will become a part of my daily routine, instead of whenever I have time.
I enjoy coding (my full-time gig) and have some mobile apps that I’d like to develop. When our girls are out of school in the summer, we’ll travel extensively.
I believe that I’ll be busier in retirement than I am now, but it will be by choice and I’ll be pursuing my passions. This makes all of the difference.
Have you thought about the measures you’d have to take in the event of a market downturn?
Mr.1500: This is something that I think about this every day! Currently, I have almost no income-generating investments like dividend stocks or real estate. We may pick up a rental property before I hang up the keyboard. That would provide for steady income in a downturn.
I also plan on having between $50,000 and $100,000 in cash, or something similar. If market valuations are high like they are now, I’ll live off stock sales. If the market takes a huge hit, I’ll dig into my cash pile a bit.
For us, living frugally is key. Since we can easily live off $40,000 per year, it doesn’t take much to move the needle.
While others may not agree with the way we live, I love my life. We had someone tell us recently that driving a 12-year-old car is a compromise. Maybe, but I think working until you’re 65 is a much greater compromise.
The Original 2013 Interview…
Tell us about your early days and how your parents raised you.
Mr.1500: As far back as I can remember, I’ve always been a saver and an investor. From a young age, I always had jobs, but it was more fun for me to save the money and think about what I could do with it than it was to actually spend it. I’m not sure why I’m such a saver.
Growing up, my parents weren’t very good with money. Also, it was something my family never discussed. However, there were no handouts. My sisters and I had to earn any spending money through chores or actual jobs. When you have to earn the money yourself, it makes you appreciate it so much more.
After high school, I didn’t know what I wanted to do with my life. However, I liked science, so I studied biology, chemistry and math. After graduating, still not knowing what I wanted to do, I entered a pharmacy program. It didn’t take me long to realize that I didn’t want to work as a pharmacist. Through a serendipitous turn of events, I wound up going back to school to learn computer programming and I’ve never looked back. 15 years later, I consider myself extremely lucky to be able to work in something that I truly enjoy.
How did you begin your blog, 1500 Days to Freedom?
Mr.1500: Early in 2012, I read an article about someone who retired early, in his mid-40s. I thought it was interesting and it was something that I had never given much thought to. I just assumed I would work until I was 62, have a nice going away party and then move to Florida.
The thought of early retirement intrigued me though, so I started researching the topic in depth. I ran the numbers and figured that I would need about $1,000,000 and no debt, not even a mortgage, to last the rest of my life. I played with more numbers and figured out that it would take me about 4 years, or 1500 days to reach the goal. I’m 39 now, so I plan to be retired at 43.
At the same time I was thinking about early retirement, I read a blog post where the author advised that if you have a big goal, make it public. The idea for the blog was born! I love having my goal out in public. It motivates me and holds me accountable. If I succeed, the world will know about it. If I fall flat on my face, the world will know about that too. Being in the public eye makes me reconsider all financial decisions.
In addition to posting regular updates on my goal, I also write about various personal finance topics. The different ways that people manage their money intrigues me and I enjoy writing about them.
What does retirement mean to you?
Mr.1500: When most folks think about retirement, they picture people up in their years playing shuffleboard in Arizona or Florida. For me though, it’s really about freedom. Even if I succeed at my goal, I may still write software or work at a job. However, if I do so, it will be because I want to, not because I have to. Big difference. For me, it comes down to being able to live life completely on my own terms and having to answer to no one (the wife may argue with that last one!).
What smart money decisions are you most proud of?
Mr.1500: Saving early. Starting with my first job out of college, I have always maxed out my 401(k). Since most employers match at least part of your contribution, it makes perfect sense to contribute.
Learning home improvement: Before the economic implosion of 2008, my wife and I flipped houses. We would buy older homes in need of some work, fix them up and sell them for a hefty profit. Learning how to do things like lay tile, plumbing and basic carpentry saved us lots of money. These projects can be intimidating, but you study the skill and just take your time. After you’re done, the second time is less stressful and you have a skill you can use over and over again. We’ve saved at least $100,000 in labor doing projects ourselves.
Living frugal while young: After college, many of my friends went out and bought luxury cars. I kept the same car that I had purchased for $2400 and drove it for another 100,000. This decision alone put me years ahead on the retirement schedule.
If you could turn back time, what would you have done differently?
Mr.1500: I would have studied computer science as an undergraduate. This would have allowed me to enter the workforce a couple years earlier and save a bunch of money on loans for pharmacy school.
How do you plan on managing your money after retirement?
Mr.1500: We are going to concentrate on three areas:
Rental properties: We plan on purchasing at least two rental properties in the very near future. We have been landlords in the past and had good experiences. The key is to screen people very carefully. It’s much better to have a property sit empty for a month than to get the wrong tenant.
Peer-to-peer lending: I’ve been a lender on Prosper and Lending Club for over 2 years. Despite being very conservative, I’ve maintained an interest rate of at least 10% the whole time. By retirement, we would like to have at least $100,000 invested in these services.
Traditional investments: We currently have about $300,000 in pre-tax investments (401(k)s) and the same amount in after-tax investments. Over time, I’ll move some of our portfolio from growth stocks to income generating stocks.
If you don’t have an IRA set up yet, don’t stress out. Here’s how to set one up in 10 minutes.
Being a father, how are you teaching your kids about money?
Mr.1500: This is a topic near and dear to my heart since I have two young girls, 6 and 3 years of age.
No handouts: Except for birthdays and holidays, our children don’t get frivolous stuff like toys. Showering children with everything they want teaches them nothing. As soon as a child is old enough to ask for things, they are old enough to learn about money. Our children have chores and they earn an allowance. They can then buy things with their own money. It works too! Our 6 year old will think about a purchase for a long, long time. Almost always, she’ll decide to save her money for another time.
Three piggy banks: Each child has 3 piggy banks. One is for spending money, the second is for saving and the last is for charity. It is fun to see where they decide to put their quarters.
What about piggy banks for adults? Here are the best savings accounts to save more for retirement.
Stocks: We want our children to learn about investing, too. Our 6 year old already knows what a stock is. Starting this year, we let her choose from two companies she knew, and we bought her a share of stock in that company. This year, she chose McDonald’s. We are going to show her how to follow the company and check up on her stock. She gets a big kick out of “owning” part of McDonald’s.
What advice do you have for others?
Think about money in the long term. For example, if you have an extra $20, you have a choice. Buy something now or put the money to work for you. Historically, the stock market has returned about 10% which means that an investment doubles about every 7 years.
If you invest the $20, in 7 years you’ll have $40, 14 years you’ll have $80, 21 years it will be $160 and $320 after 28 years. Now, think about what you can do if you opt for the cheaper car instead of the luxury version and put that $20,000 to work for you? Give it time and before you know it, your money will be working very hard for you.
In 2012, my investments earned me more money than my job. I put in about 2000 hours at my job. I spent less than 8 hours managing my investments. I’d rather have my money working for me than me working for my money!
If you are unsure where to start when it comes to saving for your golden years, visit MyBankTracker’s retirement page to find the best type of savings accounts. Start with our information-packed retirement basics.
Mr. 1500 and his wife write about personal finance, their goals and dreams at 1500Days.com. Find their family enjoying life in their beautiful home state of Colorado. If you can’t make it out to the mountains, find him on Twitter at @RetireIn1500 and at Facebook.com/1500days.