At Janice Henderson, we help clients define and achieve superior financial outcomes through differentiated insights, disciplined investments, and world-class service. Janice Henderson, investing in a brighter future, together. Investing involves risk, including the possible loss of principle and fluctuation of value. Please stay tuned for important disclosure information at the conclusion of this episode. Hi and welcome to the Long View.
I'm Christine Benz, Director of Personal Finance and Retirement Planning for Morningstar. And I'm Jeff Patak, Chief Rating Officer for Morningstar Research Services. Our guest on the podcast today is author and blogger, Jail Collins. He blogs about financial independence and other matters at jailcollonsnh.com.
Jail's first book, The Simple Path to Wealth, Your Roadmap to Financial Independence and a Rich Free Life, was published in 2016 and has become something of a Bible for people in the financial independence movement. His new book is called Path Finders, Extraordinary Stories of People Like You on the Quest for Financial Independence. Jail, welcome to the Long View. Christine, it's a pleasure to be back. Thank you for having me. Well, we're excited to have you back.
So we do want to talk about your latest book, Path Finders, which is a collection of essays from real people about how they found their ways to financial independence. Can you talk about the genesis for the book? Yeah, so I published The Simple Path to Wealth in 2016. And within months of that book coming out, I started to receive notes from people talking about how they were taking the principles in that book and adapting it to their unique situation.
And that was remarkable to me because when I was writing the book, I was writing it for one specific person. And that's my daughter. And she was in college at the time, so at the beginning of her journey. And she's also, of course, an American. So the book has an orientation of addressing someone at the beginning, and it's very US-centric.
And yet I was getting these stories from people all around the world, taking the principles that, of course, don't necessarily, some of the things I say in the book don't necessarily apply to them, like the nuances of 401Ks in the US. But they're able to look past all that, identify how that relates to the opportunities they have in their own countries, and adapt the principles.
And by the same token, people further on in their lives and in their journeys, who perhaps had some situations they needed to unwind in order to get on the simple path, were able to take this book that had started from the beginning for a beginning journey or in adapted to their situations. I just thought that was endlessly fascinating. And so for years now, I wanted to do a book like this sharing those stories.
How did you identify people to be contributors, and how did you decide which contributions would make it into the book? Yeah. So when I contracted with Haramon House to produce the book, you know, we started to flesh out just what it was going to look like. We decided that rather than the original concept that I'd had of like a dozen or maybe 15 case studies, we wanted a much larger range of perhaps shorter stories.
And so what I did is I reached out on my social media to my audience, and I told them about the project and invited people to send in their their tales. And of course, that was a moment of truth for Chris, my editor and myself, because we weren't entirely sure that we'd get enough for what level of quality they'd be or what have you. So it was a make or break kind of moment, but we got a great response.
And not everything was usable, of course, but we had so many responses that we had more than enough to come up with a hundred that made it into the book. And so yeah, it turned out to be a great source of material that came frankly pretty easily. So most of these people, I would gather all of these people are not professional writers, but there were some surprisingly good essays from a writing perspective.
Can you discuss maybe one or two that stand out as your favorites, either because you love the story or because you really enjoyed the writing? So so two, there's kind of two questions in their Christine. The one is the stories and the level of writing.
And a lot of credit goes to Chris Parker on this, who is the editor of the book because Chris and I went through these stories and just selected the ones we liked, but then because they're not necessarily written by writers as you point out, they needed to be cleaned up. And if I had done that, all of these stories would read as if they were in my voice. And that's not what we wanted. And Chris being the professional editor is he managed to clean up the pros and what have you.
And yet in every one of those hundred stories, you can hear the unique voice of the person who contributed. So huge task on his part and amazingly well accomplished. Now, as to my favorite, that's kind of like asking me who my favorite child is, right? I mean, I love them all. I went this morning actually, Christine and and reread the interview that my daughter, Jessica and I did with you that serves as a conclusion to the book. And I frankly had looked at that in a long time.
And so I fell in love with that again. You did such a masterful job with the questions that you came up with and let us through that interview amazingly well. But in the contributor story is the range is incredible. We had tearing something out of the headlines. We have a story from a guy in the Ukraine who was following the simple path to wealth. And as a matter of fact, in the last couple of days, he's invited me to be on a podcast that he does in Ukraine, which of course I'm going to do.
Well, we also got a contribution from a guy in Russia. So here's a country that's been invaded and is at war. And here's a country that's ostracized by the rest of the world and under an incredible sanctions. And yet both of these people are figuring out ways to adapt the simple path. But I think, you know, of course, I love the investor. There's a section on investing. I love those stories because investing is near and dear to my heart.
And you know, when somebody says, you know, I avoid it debt and then I'm living on less than I earn. And but I was investing for 20 years and I just wasn't getting anywhere. And then I discovered the simple path to wealth and now I'm financially independent. Well, obviously, you know, I love hearing that. But I think in some ways, the stories that are most meaningful to me are the stories that have come from people who have started with extremely humble backgrounds.
I mean, there's a story in there from a guy who was a migrant child laborer and who's now financially independent. And there's a story from somebody else who talks about how when they were growing up, the person with the flesh toilet was the rich person. And I think the reason those stories speak to me so strongly is ever since I started writing in 2011, the blog, there's been this pushback in the broader world about this idea of being able to achieve financial independence.
And it's, you know, this is only for, you know, high income, professional engineer type people and, you know, it's not for ordinary folks. And I couldn't possibly do it given my circumstances. And I tell people, if you read this book, you will never be able to say that again. Because I can almost guarantee anybody listening to us who reads this book is going to read about people who probably started further behind the eight ball than they are.
You may choose not to follow this path after you read the book, but you won't honestly be able to say that it could not be done or that you could not do it. And I, I respond to that. We want to go back to the book in a moment. But since you mentioned it, what do you think of the critique that financial independence movement is largely the province of well-educated people with high salaries?
You, you encourage people to save half of their salaries, but that's obviously easier to do with the income is say $100,000 and not $25,000. So do you think financial independence is attainable to people at lower income levels? Absolutely. And as I just said, if you read Pathfinders, you will read about people in those circumstances who have in fact done it.
The other thing I'll say is that, you know, I have met people who have extraordinarily high salaries who are never going to achieve financial independence because they've constructed an extraordinarily high lifestyle. And I can remember back in the 90s, I was having a lunch with a friend of mine who was in the financial business. And this guy is who just before Christmas, he just got his annual bonus. It was $800,000, which was real money back in the 90s.
And you know what he and I talked about a lunch, how he couldn't make ends meet with the bonus of $800,000. Now, that probably sounds absurd to most of the people listening, it sounded absurd to me. But when I sat back and listened to him talk about, you know, the houses, the cars, the private schools, the exotic travels, you know, this lifestyle that he cobbled together, well, he was right. $800,000 plus his annual salary was not enough for that lifestyle.
But the same token, I have an old high school buddy who has never made more than $40,000 a year. And he is financially independent. So it's important for people to recognize that financial independence isn't a set number. It's not you have to have this dollar amount. It's a combination of two numbers. What your requirements are, which you have a lot of control over and what your income and your total portfolio is, it's that combination.
And if you have that out of balance with too much spending, then it almost doesn't matter how much you make. On the other hand, you can achieve financial independence with remarkably modest incomes. So I want to stick with this topic of like what you call lifestyle creep in the book. And there's a whole section about about lifestyle creep, which obviously can be deadly to someone's financial plan. Maybe expand on that. Talk about why that is so problematic.
How many of us sort of find ourselves on this treadmill where you're, you know, constantly spending more, you're earning more, spending more. What steps can people take to beat it back? Well, I think the reason that so many people are on that treadmill is we live in a culture that encourages that. You know, we live in a very commercial culture.
And this is not some great conspiracy, by the way, but there are lots of companies out there, including the companies that I recommend people invest in through their index fund that are working hard to market their services and products. And that creates an aura of you need this. You need that your life will be better with this. Your life will be better with that. Or, you know, your life won't be any good without it.
Or you won't find anybody to love if you don't drive this certain car, whatever it is. So that is a huge drumbeat that encourages people to spend every dime that comes their way and worse to borrow money to spend more. So that's something that I think most people are not aware of. It's this undercurrent that is just kind of the way it is. It's stunning to me that it's accepted in the United States that it's normal to carry debt.
I mean, that's like being covered with blood sucking leeches from my point of view. I don't think it's normal at all. And you certainly can't achieve financial independence if you're carrying all this debt. So I think that's what lures people into lifestyle and patience. So you've come out of school. You start working. Now you're making some money and there's all these messages of what you can do with that money and all these messages that you deserve.
Your work card, you deserve this and you deserve that. So it's not surprising people get drawn into this. You have to become aware of it and you have to be willing to say, well, yeah, there are a lot of things I can do with my money. But one thing I can do with my money is I can buy my financial freedom. And of course, you buy your financial freedom by living on less than you earn and freeing up capital to invest.
And for me, of all the things that I could spend my money on, spending it on my financial freedom was priority number one. I think we're going to want to go back to the topic of debt, which you mentioned a little bit later in the conversation. Before we did that, I wanted to ask another question about sort of saving, spending lifestyle creep.
I think you've told people that keeping tabs on the big three categories of spending, those being housing, transport and food is a good way to ensure that lifestyle creep doesn't cause trouble for a financial plan. Do you think there are other off the beaten path categories that can wreak havoc on a budget? I think that maybe one of the contributors in the book had mentioned kids sports as an example. Are there others that come to mind?
You name the big three and of course they are the big three for a reason, but sure, there are lots of things that can, I mean, travel can be one of them. Kids sports can be one of them. You know, again, we live in a culture where the opportunities to spend money are almost without limit. So it's a matter of priorities. As I said earlier, you know, I don't think anybody can read Pathfinders and honestly say that they couldn't do it.
Now, a lot of people are going to read Pathfinders and perhaps say, you know, I don't want to do it. And that's legitimate. I mean, if there are other things in your life that are more important than your financial freedom, I personally have trouble understanding that. But nevertheless, that's true for a lot of people.
And if that's the case and you make the decision that you would rather spend your money in different ways, well, it's your money, it's your life and you can, you can do as you choose. The only thing that I hope with my book, The Simple Path to Well, the Now Pathfinders, is at least people will be aware that there is another path other than the path of just spending everything. Now whether they choose to walk down it or not is entirely up to them.
So contributors shared their own specific paths to financial freedom and independence. Several of them mentioned something that was kind of new to me, which is this concept of geo-arbitrage. Can you talk about what that is and how it can be effective for people who are aiming to control costs and target a high savings rate? Yeah. So, you know, we were talking earlier about high incomes and of course a high income, if you deploy it well, is obviously an asset to achieving financial independence.
And I can't remember exactly which story it is, but there's a story in the book of a couple who are in Silicon Valley and they're in the tech world and they're making big salaries, but they manage to live as cheaply as possible out there and accumulate money and they were both originally from Ohio and at a certain point where they had enough money, they left California and moved back to Ohio, which had a considerably lower cost of living. And that's geo-arbitrage and a nutshell.
You earn your money where you get paid the most and then you spend your money in a less expensive part of the world. It could be a less expensive state in the United States or it could be an entirely different country. And geo-arbitrage is now very popular with the rise of what's come to be known as digital nomads. So these are people and my daughter is one of them actually who have jobs that pay well, but she works remotely. She can work anywhere in the world.
So she can choose where to live so there are people who will travel to inexpensive parts of the world and earn high incomes and that's geo-arbitrage or they'll just continue non-stop traveling. Or as my daughter is chosen to do, they'll live in a less expensive part of the country for a while and then try a different part of the country. I wanted to ask you about maybe what's the inverse of that.
But I think that one of the contributors said that moving to the more expensive area was a decision that had paid off for her family because they had better schools and could be out and about in the neighborhood. The point was that sheeping out on a home's location isn't always a great decision. Even if the overall goal is to keep costs down. Do you agree with that? Well, again, that becomes a matter of priorities. So certainly you can go as this Silicon Valley couple I just mentioned.
You can live in expensive parts of the country, your expensive parts of the world and find ways to do that economically. And certainly, for instance, if you live in a large city, a New Yorker Chicago, there are certain parts of that that are going to be more expensive. Rents, mortgages obviously come to mind. But then maybe you don't need a car. And I spent the first decade of my adult life in Chicago. I'm a Chicago native. And I didn't have a car.
And I lived in an unfashionable part of the city where Rents were a whole lot lower and that worked out just fine. And yet I had access to all of the walkability and wonderful opportunities that a big city offered. So sure. But it's easy to convince yourself that you have to live in that area. And then you have to have a certain kind of apartment. And you have to have a certain lifestyle. And well, the next thing you know, all of your money is being taken up in that.
And again, if you're clear that that is the decision you're making and that you're buying that rather than buying your financial freedom, then I'm not going to argue with you that's your choice. But I would hope that everybody after reading my books is clear on what decision they're making when they do that. So we've previously talked with you about home ownership and mortgages and so forth. We're at an interesting juncture where interest rates have risen very quickly.
And many people find themselves with mortgage rates that are well below prevailing mortgage rates if they were to go out and get a new mortgage. So a lot of people are just kind of stuck where they are. So a question for those folks is how would you kind of approach the decision about whether to prepay the mortgage if say you have like a 3% mortgage interest rate and yields today interest rates on fixed rate investments are much higher than that?
Yeah, so I actually wrote about this a few years ago when interest rates were much lower. And I think just as a and this is not what I'm about to say is not carved in stone, but just as kind of a guideline. My way of thinking about it is. If I have a loan that is at an interest rate of 3% or less, well, that's a very valuable asset, especially in this environment of much higher interest rates. So I would be inclined to pay that off as slowly as possible.
And rather than any money I would have taken to blow out that debt, I would turn around and invest because as you point out, I can simply get a better return and that's the smart financial thing to do. I think if I had an interest rate that was 6% or higher, then I'd be more inclined to be aggressive about paying it off. And I would do that for two reasons. One is I just don't like debt. So I'm more comfortable not having it at all.
And the other thing is when you start talking about a 6, 7, 8% interest rate guaranteed, that's pretty nice guaranteed return. And of course, when you pay off at debt, you're basically getting in a sense to return to whatever the interest rate is. So now, if I can get 6, 7, 8% guaranteed by paying off that debt, then that seems to me to be the obvious move.
But then between that, say, 3% and 6%, depending on where you fall, and depending on your own emotional feelings about carrying debt, and also your feelings about the risk of investing it outside of paying off your debt, I think of then it becomes a little tougher call and more of a personal call.
And so I analyze it along the lines of how much do I want to be rid of this debt, how confident am I about the return I can get if I keep the debt and invest the difference outside those kinds of variables? Whether to take on college debt is a huge issue for many young people and their parents as we know, when is it advisable, if ever, to take out student loans and how can people make sure they're being smart about whatever amount of student loan debt they're taking on?
Wow, Jeff, that's a tough question. And in some ways, above my pay rate, I just hate what's happened with the easy availability of student loans. There wasn't the case when I was young. And the reason I hated is you have a situation where these loans are guaranteed by the government.
So lenders are happy to extend them and they are basically pushing them on young people who barely know what a loan is and who too often fall in the trap of graduating with tens of thousands, sometimes hundreds of thousands of dollars in loans. And I just, I think it's deplorable. And of course, whenever you take anything and you figure out a way to let people borrow money to buy it, that thing is immediately going to become more expensive.
So when I went to college, you know, I went to the University of Illinois, I paid for it myself because that was doable in those days. But the accommodations were just very basic. I mean, I lived in a center block dorm the first year. When my daughter went to college back in, let's say, I think she started in 2010, I was a little stunned, first of all, how much more college cost, but also at how much more lavish the living conditions were.
And of course, the schools have spent tons of money on their buildings and what have you because they have figured out a way to get people to pay a whole lot more for the product. So I don't know what the answer is. I would certainly just say, be very, very cautious in taking on whatever debt, any debt you take on, be very cautious, but especially with the student loan stuff. I too was in that same center block dorm complex at University of Illinois.
We want to talk about investing and you referenced higher yields earlier, jail. You're generally pretty pro equities, but higher yields do make bonds and cash instruments look a lot more attractive today than they did a couple years ago. How should that affect how people approach their asset allocations? Well, I don't think it should affect it all that much.
And the reason I say that is when interest rates rise, and of course, this is not the first time I've gone through interest rates rising in the 70s when I was first starting out, inflation was high and interest rates were high and the returns on fixed income were high. You could get a 15, 16% return on a money market fund in those days. But what people lose sight of is that the reason for that is inflation is high.
And so the raw interest rates you get from an investment is not the end of the story. You have to compare that against the lost purchasing power due to inflation. So when interest rates and money market funds for 15% inflation was running at 18% or something. So you have to look at the real interest rate. The other thing that is striking is that high inflation is actually good for stocks.
Ben Carlson who writes a wealth of common sense just a few days ago, maybe last week, had a great post analyzing just how stocks performed in different inflationary environments. And the fact is that stocks perform much better in high inflation environments. So yeah, you're getting a higher return on your bonds or your money market fund these days. But you're probably also over the years going to see a higher return on your stock portfolio.
So I'm going to stay with the same kind of allocation recommendations that I've made for those reasons. At Janice Henderson, we help clients define and achieve superior financial outcomes through differentiated insights, disciplined investments, and world class service. Janice Henderson investing in a brighter future together, investing in Valsrisk, including the possible loss of principle and fluctuation of value.
So many of the contributors to the new book were outside the US and discuss their struggles to invest in the ultra low-cost way that we can do so readily here in the US. Do you think US investors are maybe a little spoiled in terms of their access to very low-cost index funds and ETFs? Absolutely. And I don't think most of us are aware of it because most of us don't have any
exposure to what it's like in the rest of the world. But when I would travel to Europe, give talks over there or other parts of the world, and I'd hear these stories. And of course, I didn't know until I started doing that how lucky and privileged we were in the United States. But you're absolutely right. I mean, this is the best country in the world to be an investor in, partially because of the economy we have. By the way, it's the only country
in the world where you can invest just in this country. It's the only one that has a large enough economy for that. But also because the tools we have available and how low the costs have become are just incredible. And other people and other parts of the world have a much more difficult time that the expenses tend to be much higher. The options tend to be much fewer.
And that's one of the reasons that I'm fascinated by those particular stories in pathfinders and how those people, even with those obstacles, and even with those differences between their countries markets and those of the United States are able to take the US centric book that I wrote in the simple path to wealth and say, well, yeah, you know, I can't necessarily invest exactly the way this guy's recommending. But I can see how I can apply it to the situations that we have in our
country. I think that's incredible. And it warms my heart candidly. So I wanted to ask about geographic exposure. You mentioned that the US market is a market where one could reasonably put all of their equity exposure into it and be well-diversified. How about people who are living in smaller markets? How would you suggest that they approach their geographic exposure for the equity component of their portfolios?
I think for those people, assuming that they have access to it, what they want is a world fund. And you have to be a little careful here. It's not an international fund. And those tend to be funds that exclude the US. But if you buy a world fund, you're basically buying every market in the world, including the US. And you certainly want to have that in your portfolio.
So if that were available to those folks, that would be my recommendation. And in fact, when I've given talks overseas, and we start talking about specifics, that's exactly what I recommend to those people. They could, I suppose, if they had access to it, invest in VTSAX as an example, which is Vanguard's total US stock market fund. But I don't know. I think if I were living in Germany or the Netherlands or what have you, I don't know how comfortable I'd be putting
all my money in some other country. And I know that's probably not entirely logical, because it is the same investment that I'm in. But I think for those people, if I were in those countries, that go to a world fund. You just mentioned Vanguard Total Stock Market Index fund, which gets repeat mentions in the book. It does seem that some former Vanguard fanatics
complain about customer service and other aspects of investing with the company. How would you advise people to decide which company to do business with? Yes. So I have my own issues with Vanguard. There is no company that is perfect. I wrote a blog post a number of years ago. I want to say it was titled JL versus Vanguard. And that was based on
my decided to accept their offer for a financial advisor to make recommendations. And the recommendations that were made were a suite of about four or five, I think it was five or six different funds. And when you really sat down and analyzed them, I mean, they simply duplicated what I recommend in VTSAX, the Total Stock Market Index fund, and VBTLX, the Total Bond Market Fund.
So it was just kind of silliness. So I do recognize that Vanguard has its issues. They just revamped their website and I find it very difficult to navigate in ways that it didn't use to be. Having said all of that, I'm still going to keep my money at Vanguard. And the reason for that is that Vanguard has a unique and important characteristic. And that is that it is owned by the people who own the funds. So Vanguard's interests are directly aligned with those of us investors.
And that's unique. So if you go to any other company, and by the way, you know, somebody wants to invest in fidelity or T-Roy price or whatever, those are all fine companies. But there are divided loyalties because if you're in fidelity, which is privately held, fidelity is trying to serve two masters. It's trying to make money for the people who own it, which is a perfectly reasonable thing to do. That's what every company does. And it's also trying
hopefully to make money for us investors. T-Roy price is a publicly traded company. So obviously, it's trying to make money for its shareholders and also take care of its customers. But Vanguard is unique in that its investors and its owners are one in the same. And that's the way Jack Bogle, the founder of Vanguard, designed it. And that's the reason that Vanguard's core mission is to drive down costs, whereas any other investment company is going to want to raise the amount that they can
charge for their products, just like every company wants to. There's nothing inherently wrong or evil about that, but it's just not quite as aligned with my interests as an investor as Vanguard is. So we've touched on some of the key themes of the book and the book is organized by theme. One of them is family and the role of family and kind of thinking about family and the realm of
our financial plans. I smiled to myself because you made a casual reference to something that you called drag-delong spouses who you noticed at some of these financial retreats that you'd hold. So these would be like partners of people who are very engaged investors, but the partners aren't into it at all. So do you have any thoughts on how people with disengaged partners can
get their partners were engaged? It's something I think about a lot because I talk to a lot of people who are the engaged person who want their spouse to come along for the ride. Yeah, well, just like you just did a little bit ago, you're asking me a question, Christine, that's a little bit above my pay grade. You know, when we experience it, it should talk
what, which are the retreats that you're referring to. What's really interesting is these drag-delonges spouses as we've come to call them show up in there a little uncertain and sometimes you know, even in cases where they're even a little bit hostile. And I think they come expecting that this is going to be a week of people talking about spreadsheets and all the boring stuff they don't care about. And instead, what they find is about 30 people deeply engaged in living life in extraordinarily
creative ways because that's what financial independence allows you to do. And when they see that, they see the, instead of the, you know, the numbers side of it and maybe the, the effort side of it, you know, they see the fruits of the labor, so to speak. And that makes almost instant converts. I don't think we ever had a drag-delonged spouse who left without a changed view of what this stuff was all about. So I think with that in mind, if I had any advice to give, it would be to
to get your partners out to FI events. And when I started, you talk about in 2013, I started it because I couldn't find any to go to or speak at. And now, of course, there are lots of them. And I think that's a great way to get your partner into the environment, so to speak, and to meet other people who are doing it. And, you know, just see the joy and satisfaction and opportunities that pursuing financial independence opens up.
How important is financial compatibility for couples? It seems like a lot of VSAs alluded to the fact that the two partners were generally on the same page in terms of prioritizing savings. And you said that you and your wife are quite financially compatible, hence the question. Yeah, I think it's pretty critical. I wrote a post early on with, I don't know how certain it was
to my daughter, you know, certain key points to keep in mind. And one of the first key points was, you know, to be careful who you marry, you know, don't ever marry anybody who's fiscally irresponsible because they'll happily squander your money after they've squandered their own. And interestingly, I got some pushback on that. I had people respond saying, how dare you, you know, who you marry and who you love has nothing to do with money and how crass.
Well, I'm sorry to break the harsh reality to you, but financial conflict is the biggest conflict in marriages. And so you are going to be well served if you take some time to make sure that you and your potential spouse are on the same financial page. You know, you mentioned my wife and I are. And I used to tell the story that that was just a happy coincidence that, you know, she and I never really discussed any of this stuff until we got married. And then it turned out that we had
this great compatibility. Well, I told that story in front of her in front of Jane one day. And she looked at me and she said, what are you talking about? She said, on our first date, you started telling me I needed to say 50% of my income. So, so I guess maybe we had conversations that I didn't remember. But yeah, I think it's pretty important. So, you know, you referenced fire and financial independence and financial freedom a few times during this conversation. You've been called the
Godfather of fire. But you've said subsequently that you're passionate about the FI piece, the financial independence piece. You're kind of indifferent to the retire early component. Can you expand on that? Yeah, well, so first of all, that nickname of the Godfather of FI and was FI rather than fire because that is where my focus is. That comes from a Christie Shen who is the
author of quite like a millionaire. And she was also a speaker at our Shatokwis. And I, you know, probably five, six years ago now she, one of the Shatokwis, she started referring to me as the Godfather of FI. And I candidly, I kind of cringed at the time. But I've grown to love it. And it's, you know, it's a great bit of marketing. And so I'm now I'm pleased whenever I hear people say it. But yeah, I like the fire acronym because it's clever, you know, it's a financial independence retireer
early fire. It's, you know, but for me, it was never about retiring early. I mean, I'm still working and I'm in my seventies and working on books and that kind of thing. But I've always loved working. I was interested in having initially what I call FU money and then financial independence because I didn't want to have to work all the time. And I wanted to have the freedom to step away from jobs. If for whatever reason I got tired of it or whatever, I just wanted to go do something else.
And that was the hallmark of my, my corporate career during those years. But I, I never particularly was interested in retiring early. And a lot of people do it. And I have no problem with that. But the other thing is that this whole retirement, this word retire, seems to be a pretty low to term. And there are so many people who push back at the fire community saying, well, you know, if you quit your job and you retire and then you start doing something else that makes money, well,
you're not retired anymore. And it's Mr. Money Mustache coin, the, I think it was he the coin, the term, the internet retirement police. And so, you know, retirements kind of this buzz word that gets a lot of people bent out of shape for no particular reason. I mean, for me, financial independence just means that you have more options. And if one of those options is, you know what, I'm done working. I want to go, you know, put her around the house in garden or I want to travel
the world or whatever you want to do. That's fine. But the other thing I'll say is that as I've met a lot of people in this community, if you're focused enough and hard working enough and smart enough to achieve financial independence, it's almost inconceivable to me that you're just going to sit on a beach somewhere and do nothing going forward. And a lot of times when you start doing those other things, they wind up paying you money. I always thought that was a good thing.
And sometimes they even wind up paying you more money than your regular career job did. So, I think that's the reason that I focus more on the FI part. Yeah, maybe in a similar vein, do you think that some fire proponents are unreasonably negative about paid work and that they think of work as something to be sort of slug through and
and gotten over with as soon as possible? What would be your advice to people who are working long hours and jobs that they hate just so that they can retire sooner? Well, so when I have those conversations with people and frequently I have them at Chautauqua, they kind of center around this idea of what's come to be known the 4% rule. And so I'll be sitting with somebody and they'll say, I'm in this sole crushing job.
And, you know, I can't stand it, but, you know, if I retire now, I'd have to withdraw 5% to meet my needs. And, of course, that's higher than the 4% rule. And so I have to keep slogging, well, to those people, I say quit that sole crushing job. Because first of all, if you look at the Trinity study, 5% has a remarkably high success rate in and of itself. So you're probably going to be all right from that point of view, especially if you keep an eye
on the market and adjust things if the wind turns into your face. But also, as I said a moment ago, the odds that you are never going to make a dime again are very unlikely. And so let's suppose that you've had you've got a million dollars invested, which implies you can spend $40,000 a year at 4%, and you're spending $50,000 a year, and you're in this sole crushing job. My question is going to be, do you think you could figure out a way to pick up another 10 grand during the year?
And again, maybe not everybody can figure that out, but anybody who's gotten to the point of having a million dollars of investible assets, I'm pretty sure they can. And so, yeah, I think with a sole crushing job, you sort of want to stay in it as short a time as possible. Of course, the corollary of that is I have people who achieve financial independence and maybe then some and they say, you know, I mean, I don't need to work for money anymore, but I like my job.
I don't want to have to give it up. I'm like, well, you don't have to. That's the whole point. This is not about, you're not required to quit your job when you reach financial independence. It's just one of the options. So you've referenced Shatakwa a couple of times. Can you talk about what goes on there? Sure. Well, the first thing I have to, I have to sadly report is that last year was the last year of Shatakwa. So I just,
I did it from 2013 until 2022. Of course, missed a couple of years with COVID. I loved every minute of it. It was one of the great highlights of my life. But, you know, it's a nervous amount of work. It would be 14 consecutive days because we tended to do two week long events back to back of, you know, being on. And I was always committed to making sure that my interaction on the last day of the second week of Shatakwa was as positive for that
attendee as the first. So that was, it's just gotten a little bit beyond my capabilities at this point in my life. But with that said, Shatakwa was a week long event. We limited the number of attendees to 30. So we had this very small group of people. We've got some really cool exotic place. And we'd hang out and have cool conversations. And we'd show them a little bit of, of the countryside. We've done it in Ecuador and Colombia, in England, in Greece and Portugal.
So we'd show them a little bit of, a little mini tours around wherever we happen to be. We always have a pretty cool venue. And, and people really bond it in ways that I didn't expect. In fact, I can remember the very first Shatakwa that I did about midway through the week. I could tell people were having an incredible time. And so I made it a point to walk up to everybody and ask them, you know, what is it about this event that is really speaking to you that's so cool. And, of course,
I was hoping they'd say, oh, well, Jay, all of it was your talk. And I have to report not a single person said that. What they all said without exception was that it was the other attendees that, you know, they were with these people. And we had incredibly diverse attendees come to this diversity of every kind you can imagine. I mean, racial, age, economic status, you know, sexual orientation. So incredibly diverse people. But they all had this one thing in common. And that
was that they were walking this path towards FI. And for most of us, that makes you a unicorn in your day to day life. And they'd come to Shatakwa. And suddenly as diverse as this group was, they were surrounded by people who got it. They didn't have to explain themselves. They could start having conversations at a higher level. And I, that's what made it so powerful. And that was something that, frankly, I didn't expect when I was putting it together. I expected the cool
location. And people do love that. I expected the presentations from the four speakers. And people love those. I expected the one on one sessions would resonate with people and they did. But the single biggest thing was that they got hang out with like-minded people.
I want to go back to the book and talk about some of the contributions in the book. Were there any in the book that really surprised you where someone made you think about some aspect of financial independence or getting to a healthy financial life in a way that you hadn't thought about it before? You know, Christine, not really. And I think the reason is, as I said towards the beginning of our conversation, I've been hearing these kinds of stories for years. I mean,
ever since the simple path to wealth came out. Now, not these specific stories because we solicited them at a certain point in time. But stories very, very much like them. I suppose the ones that surprised me the most was again getting this story from Ukraine and from Russia, given what's going on in that part of the world. That was unexpected. The stories themselves are not as unexpected as you might think, but just that they came from those countries that war was still stunning to me.
The simple path in the financial independence movement more broadly generally rests on some time-tested concepts like living within your means and setting funds aside for the future. Have you pondered why it suddenly caught fire as something radical? You know, Jeff, that's a great point. And somebody once said, you know, this is the kind of stuff we talk about in the FI community is stuff our grandparents knew. You know, my book is certainly
not the first book written about it. There's a book I love called The Richest Man in Babylon. It's very short. It's very simple. It's kind of a parable thing. It was written a hundred years ago. And it basically says the same thing I say, which is don't go in debt, live below your means, and invest. So yeah, these are time-tested concepts that have been around for probably heans.
I'm not entirely sure why they have blossomed in the last decade or so. I think part of it is that when I was starting out and I started investing in 1975, there was none of this information out there, or at least it was not readily available. And I was kind of wandering in the wilderness, figuring this out for myself. And of course, I went down a lot of blind alleys. And I knew no one. This kind of goes back to the Shuttakwa conversation from a moment ago. I knew no
one who thought about this the way I did, who was walking the path that I was trying to walk. I mean, everybody else was buying the biggest house they could afford and drive in the most expensive cars. And they didn't seem to be the least bit interesting, this investing stuff. And I so was kind of a lonely journey. In fact, I questioned, you know, what am I doing? I mean,
is this, is this, you know, nobody else is doing this stuff? And I think with the internet, and frankly, blogs like mine and a lot of others that came out at the time like Mr. Money Moustache came out the same time I ended. And now a lot of blogs, it just more people are aware that they're not alone when they think this way. And again, that's one of the reasons Shuttakwa resonates so strongly with the people who attend, is they get to experience being with people.
Because it's not common in your day-to-day life. But with the internet and events like Shuttakwa, suddenly, you know, you're in touch with people. In the case of Pathfinder people from all over the world who are doing this. I mean, one of the things that's exciting to me about Pathfinder is, you can read the simple Path to Wealth and say, wow, you know, that really sounds great in theory,
but you know, does it really work? I mean, can ordinary people really do this? When you pick up Pathfinders and you're going to read 100 stories from 100 people who are doing it, from just incredibly diverse backgrounds. And I think that's kind of feel inspirational to anybody who's thinking about walking on the path or anybody who's in the middle of walking down the path. Because there are times it can be challenging. And you might say, jeez, I really want to keep
doing this. And you know, you're going to find these inspirational stories. So I wanted to ask where you get financial information in wisdom. It doesn't seem like you'd be the type to be watching a lot of CNBC, for example. But can you talk about your sort of must read columnists or bloggers or authors? You mentioned Ben Carlson earlier. Are there any others? Yeah. Well, I, so at this point in my life, Christine, I really don't seek it out so much,
because I spend decades sort of figuring this out. And I'm kind of comfortable with where I am. Ben is someone who came onto my radar relatively recently. I want to say sometimes maybe early this year. And I think his work is phenomenal. You know, it's, and he's very prolific. And he puts out a post every day. And you know, I used to think, oh, I got to save that one. I've got to save this one. And, you know, next thing you know, you're saving them all. Mr. Money must Ash, who I
alluded to earlier, he doesn't write as much anymore. I don't write as much anymore for that matter. But, you know, he's, he's got a blog filled with, with great content. You know, Christine Bryce, from Quit Lake, a millionaire, do great work. The mad scientist, he does very little anymore. He was, you know, in the early years, along with Pete, Mr. Money must Ash and myself. And so, but he's got a portfolio of great work that impressed me at the time. And well, I'm sure it would impress me
if I reread it. So, there's just a lend there. Of course, there are a lot of new voices out there that I'm not as familiar with as they should be, that are worth checking out. Well, JL, as always, this has been such a fun and informative conversation. Thank you so much for taking the time to be with us. And congratulations on the book. Well, thank you for that. Thank you for having me. Thank you for the great questions. This was a lot of fun for me too. So, I,
I hope our listeners enjoy it. I'm sure they will. Thanks so much. Thank you for joining us on the long view. If you could, please take a moment to subscribe to and rate the podcast on Apple Spotify or wherever you get your podcasts. You can follow us on Twitter at Christine underscore bents and at s youth one, which is s y o u th and the number one. George Castedia's our engineer for the podcast and Carrie Gretchen produces the show notes each week.
Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at the long view at Morningstar.com. Until next time, thanks for joining us. This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording, such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar
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