Beautiful Ecuador (photo from Above the Clouds Retreats)
“You look like a 13-year old girl who has just been invited to Justin Bieber’s birthday party!” said my loving and supportive wife
It’s true, I did. Fueled by the emotional equivalent of excessive cake, ice cream, and teenage hormones, I was running about excitedly and dancing around the room. “This is going to be so much fun!”
“Think of all of the cool people that are going to be there! Nobody talks about this stuff in the real world, but this time there will be a whole group of wealth and happiness minded people sharing and communing”
“And, wow! The Captains of the personal finance world will be there. Jim Collins! The Mad Fientist! Mr. Money Mustache! Paula Pant! And happiness guru Cheryl Reed is going to weave it all together with her empowering talk about passion and happiness. I’ve read their stuff for so long, it is going to be incredibly cool to meet them in person. ”
“And all of this is going to happen in the foothills of the Andes Mountains of Ecuador, where all of our new friends will zipline through a Cloud Forest, tour a bean to bar chocolate factory, and share our abundance with the local community in a day of service. With all of the great conversation, presentations, and one-on-one sessions, this is truly going to be an epic week!”
My brain sputtered, nearly exploding in the process of taking it all in
When I recovered, I replied to Jim Collins’ email asking if I would be willing to speak at this year’s Chautauqua
Oops, I did it again. Another year of nearly $100k in investment income, but with a very budget friendly income tax bill of $0
The same as last year, income was primarily from index fund and individual stock dividends, interest from a seller-financed mortgage on a property we sold a few years ago, and interest from our cash reserves and a municipal bond fund.
This year’s tax situation was a little more complex, since I violated Rule #1: Choose Leisure over Labor. The blog made a small income, so I learned a thing or two about self employment taxes in the process
Let’s go through our actual 2014 tax return, to see how we kept taxes low this year, and took action to minimize taxes in the future
Asset Allocation is a fundamental part of investing. Which investments should we own? What percentage of total investments should we allocate to equities, bonds, Real Estate, or alternatives? As an American, should I purchase International assets, or focus solely on US assets?
There is an incredible amount of research on this topic, considering factors from expected duration of retirement to personal temperament. Perhaps you’ve heard some of the sound bite versions of this research, such as “Hold a percentage of stocks equal to 100 minus your Age.” So if, for example, you were 40 years old, you would hold 60% stock and 40% bonds
Like most mainstream investment advice, it is targeted at people that plan to retire at 65 and live until they are 80. Which is why as an early retiree, this advice (and most mainstream advice) is harmful at best
Tossing conventional wisdom to the side, over the past several years I’ve been moving our asset allocation towards 100% equities. Let’s explore why
If somebody was looking for a great example of how to live lean, to truly be efficient in spending and maximize savings… we would not be it. Or at least, we wouldn’t be a good example today
It just takes a quick look at our detailed expenses to see that we are by no means a frugal household. We rent 5-star accommodations, eat out 2 to 3 times a day, and buy whatever we want whenever we want.
This is one reason that I find it a little humorous when the idea of early retirement gets some mainstream press, and people go nuts in the comments.
“Yeah, right. Like I’m going to live like I’m in poverty now, so I can save enough to allow me to live like I’m in poverty forever. No thanks. I’m going to work forever and live a little”
“Yeah, you can do that in Whereverville, but here in my high cost of living area it is impossible (turns on TV)”
Besides ignoring the effects of compound interest, or the value of time and freedom, this type of comment ignores the obvious. A person that lives well below their means can always choose to increase spending. A person that is already spending everything they earn has few options, in spending or in life
So I thought I would look back and see what we were spending while we were still accumulating, to see what 10 years of “living like we were in poverty” in a “high cost of living area” looked like
