While we were off traveling, our dear friends over at Our Next Life issued a challenge. You see, the early retirement community is full of “Commandments” (as Our Next Life so hilariously outlined in their original post). This challenge called for a celebration of differences. A manifesto of what we’re doing differently. After I read it, I was immediately THRILLED about the opportunity to come clean. You see, Northern Expenditure is a fraud. I’m not sure why anyone reads us at all. We’re on the path to early retirement, but we’re doing everything wrong differently.
Why We’re Early Retirement Frauds:
- We don’t even know what we want! When we started this blog, we weren’t even confident that we could reach full financial independence at an early age. We picked $500,000 as an arbitrary amount we thought we might be able to reach. Would that money cover us for the rest of our lives? Nope. Would that money allow us to walk away from all employment? Nope. Even after our elaborate recalculations, we haven’t decided which plan to pursue. (Don’t worry, we do track everything with Personal Capital. If you aren’t doing that yet, you should!) Do we keep working until full financial independence? Do we attempt entrepreneurship with the added stress of needing to actually live off the profits? Or do we throw caution to the wind and live off of that presumed $500,000 until it runs out? We have no idea!
- We don’t choose high incomes. Mr. T works in software, but gets paid very little. He trades that money for amazing time away from work. Between June 1 and July 15, Mr. T worked a total of 7 days (instead of working, we went to Seattle, Portland, London, Paris, the UK countryside, and dipnetting). As we stood over our coolers full of salmon on an amazing Alaskan summer day on the beach, we had a long discussion about how amazing our lives are. Sure, he has to work most of the time. But the fact that he gets every other Monday off work and over 6 weeks of vacation time is worth that extra money for us. Our savings rates are lower than most. And we’re mostly okay with that.
- We don’t even have two full incomes! As you know, Mr. T works full time and I work part-time on an hourly basis. I work 10-20 hours/week. Mr. T choosing a lower income and me choosing to only work part-time keeps us well under $100,000 in annual income.
- We prefer Roths. Brandon, the Mad Fientist, is the expert of calculations. His traditional IRA vs. Roth IRA comparison is gospel. He even set up a real-time experiment to prove his point. Add to that his recent calculations about how, even with the penalty of early withdrawal, traditional wins and you’re over there shouting: “Maggie! You’re a researcher! You’re staring the numbers in the face and ignoring them!” I hear you. I do. But we still max out our Roth IRAs every year and even put a part of Mr. T’s 401k contributions in a Roth equivalent. (“BLASPHEMOUS!”). Why? Well, we justify it by living in a state with no income tax and by sitting pretty in the 15% tax bracket. Will we change our ways? Maybe eventually. We certainly plan to stay in the 15% tax bracket by upping our taxable contributions as we make more money. The real reason we prefer Roths? It feels like a better choice. Maybe I like to imagine that we’re millionaires of passive income in our retirement years. And maybe I’ll get over my “feelers” getting in the way at some point. But for now, we’re definitely adding this to the: “We’re frauds” category.
Those are the main ones. But, wait, there are more things we do differently (not all of them wrong!).
Other Ways We Save Differently:
- We have two cars – We’ve done the calculations and for us, it’s worth it. Mr. T does bike commute fairly frequently year-round, but we’re at peace with our two car lifestyle.
- We catch our own salmon – I know you’re sick of me bragging about this, but dipnetting helps our grocery budget significantly.
- We get paid to live in Alaska – The PFD is a tremendous help to our finances. It is one of the many benefits of living in Alaska.
- We have three kids – We got married young and had Penny before graduating from college. We knew we wanted a family and we didn’t wait until we could “afford it.”
- We pay a 10% tithing – 10% of our increase is paid to our church. For many, this make no financial sense (on paper, it’s obvious that adding that 10% to our savings account would speed us to financial independence). Paying tithing increases our faith. It helps us keep our priorities aligned and helps us be less greedy with our money.
- We haven’t maxed out a 401k – Only recently did we up Mr. T’s contributions to the full $1500/month that would max it out which means it won’t be maxed out until 2017.
What did I miss? How else are we early retirement frauds?
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Kalie @ Pretend to Be Poor
I love this post! We are similar in many ways. We have no idea what/if/when we’d retire early and what it would look like. We want to stay open to a variety of options. We also have chosen to limit our income for me to stay home while our kids are little, and have passed on career opportunities for my husband because we didn’t want to move our family or get tied into an all-consuming work schedule. And we “tithe”–though we don’t really call it that. Doing what’s best for your family is awesome, though–that’s what money is really about.
MaggieBanks
Thank you, Kalie. We are really enjoying our life right now. Yes, it would be greater if we had MORE freedom… but our kids are young and freedom now is worth something too!
The Green Swan
You’re not frauds, just perfect examples of how there is more than one way to skin a cat (I have no idea why anyone would want to skin a cat though). Thanks!
MaggieBanks
Sometimes it feels like we’re not skinning the cat at all! (Though again, weird phrase!)
earlyretirementnow.com
Great post! I always say that the FIRE community in non-conformist. That doesn’t mean that we all have to achieve FIRE the same way. Instead, we’re all going to be non-conformist within our movement as well, all with our own little niches. It looks like you’re nicely set up in Alaska and achieve already 80% of the quality of life gain that complete FIRE offers. In a way the real frauds are some of the rest of us, working like mad to achieve FIRE a year or two earlier and forgetting what this is all about. But I have the feeling you knew that already. 😉
MaggieBanks
Ha ha ha. I’m certainly not claiming to be LESS of a fraud than people working like crazy. But yes, for us, it’s been more about the journey. We have a lot of freedom now that we don’t want to give up!
Kate@GoodnightDebt
I’ve been so hesitant to declare anything in the FIRE community because I enthusiastically agree with you on #1! What do we want! I don’t know! When do we want it? *shrugs*
Thanks for adding your voice to the conversation. It’s fun to see where everyone else falls. The high earning, super frugal, engineers scream loudest in this space and it’s great to have other opinions!
MaggieBanks
In the end, we will have still created possibilities and worst case scenario, we can still completely retire in our mid-40s. But if we choose to do something else entirely along the way, I’m open to that as well!
Ms. Montana
Boy, can I relate! We also don’t know exactly what we want, don’t have high incomes, aren’t duel income, contribute to our Roths, have 2 (gasp +) cars, 5 kids (double gasp!) the first we adopted when I was 22, give 10-15%, and generally save the Roth max, not the 401k max. =) Mr. Mt would love the fishing! But we get a few deer a year, so that definitely helps the food budget.
For us the goal was never really early retirement. But more freedom, more choices, more opportunities for adventure, generosity and time with family. We hit “work optional” and are taking a year off. But after that, who knows. =) All I know for sure is that it will be on our terms.
MaggieBanks
That’s awesome! It’s so great to be able to do things on your own terms. And that’s precisely what we’re seeking to do around here as well. We just need to start drafting what those terms are… 🙂
Jen@FrugalSteppingStones
I might have to jump in and give my 2 cents too. No doubt we are “frauds” in our own way. I like to think we are taking baby steps to get there.
MaggieBanks
I agree with you Jen. The way and the timing may all be completely different, but we’re all somewhere on similar paths!
Tawcan
Great stuff Maggie. It’s totally OK to be different, that’s why this PF/FI community is so fabulous.
We have maxed out both RRSP and TFSA each year. We only have 1 car because I need it to get to work. The key different between us and many FI bloggers I that we invest in mostly dividend paying stocks where the norm is index fund.
MaggieBanks
Right. I just feel like we’re especially odd in so many ways (and maybe more than just outliers in the FI community!). 🙂
Mr. SSC
Man, I didn’t know you were such frauds! Well there’s one less email to read per week, and on Saturdays – unsubscribe… Haha kidding. 🙂
We just took a 6 figure pay cut for more time over money and more life satisfaction for Mrs. SSC, even though on paper you’d think, how in the hell does that make sense? For us, we’ve realize that there are more important things in life than earning more money.
We don’t do IRA’s traditional or Roth. We have mainly just avoided them because we don’t qualify for traditional and for Roth, we feel that since we’ll be well outside the 33% tax bracket when we start withdrawing, why pay the high tax rate now instead of then when it’s going to be SO much less? Maybe it would grow enough to cover that amount, but if we just dump it in a non-IRA account, then we feel better about it, so I hear you on doing things that feel better vs what numbers might say. 🙂
As far as skinning cats – yeah, that’s one weird phrase when you think about it.
MaggieBanks
That’s why I’m so proud of Mrs. SSC’s bold move to take a giant pay cut in order to live the dream NOW! I’m a big fan of that!
Fervent Finance
Haha I’m definitely a fraud – so it’s nice to see how others are frauds too. Makes me feel better about my FIRE “sins” 😉
MaggieBanks
Ha ha ha – I would NEVER go so far as to call them “sins”! 🙂 Especially when the reason is to enjoy life now and in our case, make sure not to miss the childhood of our children!
allroundbetterme
LOL! This post makes me happy. I have never really felt like I’m a part of the FIRE community because I don’t have a plan to retire early, and I don’t really adhere to any of the “traditional” FIRE rules. Ha ha! Yes, I would like to retire early, and sometimes I dream… but so far I’m just trying to learn how to make the most of the money we are earning, and get a good plan in place for regular retirement… Once that is in place, then we can work on making it happen earlier…
In any case, you are doing you perfectly, and that’s all that matters. 🙂
MaggieBanks
Thanks for the encouragement! We’re all about freedom… we just have to figure out the form that will take for us! 🙂
Kate
I’m with you on #1 – at this point just the option of ER is what I’m trying to achieve. No specific plans if I did retire early but wouldn’t it be great just to have the option? I guess this would better be described as FI? Either way, I’d love to have the option of leaving the workforce well before 67.
That’s what’s so great about the PF blogging community — there isn’t one specific path and, at least for me, I love reading about the various possibilities. It’s definitely opened my mind up to different ways of living life 🙂
MaggieBanks
I agree. At least if we save a bunch of money for a couple of years and then choose to do something else entirely, we’ve set ourselves up for way more freedom no matter what we choose to do! Money is a tool… we all agree on that. It’s not the end-all.
Mr. PIE
We feel like frauds to be walking away from work when our kids are still quite young. 11 and 9 respectively. And I will be leaving a lot on the table in terms of additional benefits, but that really pales into insignificance relative to what we will be gaining.
The free time we will have to enhance their childhood experience and to be honest relive a bit of our own childhood (!!) with even more of the fun stuff we do already as a family is going to be nothing short of awesome.
More time with kids, family fun, a life of slower living – I will join the “Fraud” club any day 🙂
MaggieBanks
I’m sure your kids will HATE your fraudulent lifestyle! 🙂 You guys are living the dream!
Mrs Groovy
We’re frauds too. We could be living high on the hog retiring in October, on a large pension, with healthcare, if Mr Groovy had kept his NY job. But for 10 years we both would have died a little every day.
You loveyour life, Maggie. You already won!
MaggieBanks
You’re right. We have won! And congrats to you for winning too!
zeejaythorne
Sounds like you’ve made all the perfect choices for your family. Catching your own salmon is cool as all get out!
MaggieBanks
Thanks! And I agree. 🙂
NZ Muse
Ha I love this!
I think of myself as being part of the PF crew but not FI. Not a high earner. Live in an expensive city and have a sizable mortgage. Saving less than 10% for retirement ATM.
MaggieBanks
If you’re happy and setting up your future self to be happy as well, then it’s a win-win!
Josh
I prefer Roth IRAs as well. If nothing else, it’s nice knowing that you will not have to pay taxes on withdrawals. It’s one less calculation to do and I would rather own Uncle Sam money today instead of several decades from now.
MaggieBanks
That’s sort of how I feel! 🙂
Harmony Smith (@CMK_Harmony)
I loved this challenge! It’s really interesting to read all of the different ways that people are applying the FIRE concept. As you know, our goal is only semi-retirement because we have to pay off debt before we can really start with the high savings. The one thing that ties us all together is the desire to build something different from a “traditional” life.
MaggieBanks
I think we are all capable of so much more than we think. I’m excited to see what we all actually accomplish!
Guyon_FIRE
Great post! I would not say you are ‘doing it all wrong’. The beauty of life is that no two individuals have the same path. I cannot wait to see how your story unfolds. Keep up the good work.
The most important thing is that you are working towards a goal! So what you do not have an exact number yet. Both of you are saving and investing in the hopes of achieving something great. Imagine if you spending aimlessly, living paycheck to paycheck and taking on consumer debt?!?!
Also, I am with you when it comes to the ROTH IRA choice.
MaggieBanks
I’m glad I’m not the only one that completely ignores numbers on the Roth front! And I’m dang excited to see those amazing things we end up doing as well!
Guyon_FIRE
My current tax rate is ~10% (thanks to real estate) and the Roth just feels right. I have a hard time believing my taxes will be this low in a few decades.
Keep it up and feel free to check out my site.
Our Next Life
If you guys are frauds, then we’re all frauds. 🙂 No one has all the answers (ESPECIALLY not those who claim to), so we’re all just figuring things out as we go along. Sure, we may have more of a vision of when we’ll reach ER and what we’ll do with it, but that could still all change. Or our plan could be BAD and not work — these things are not outside the realm of possibility! 😉 But let’s add a few more things to our fraud list, just to make you feel better: we aren’t frugal, we achieve our high savings almost entirely based on earnings, we have and will always have pets (apparently an FI no-no), and during the years when we could have contributed to IRAs and Roths, we contributed nothing. Not one cent. Still feel like frauds? 😉
MaggieBanks
Ha ha ha. Yup. We’re still frauds. You’re reformed. It different! 🙂 But I was just thinking about how we’re actually perhaps LESS frugal than before I started blogging. I feel a post coming on…
Our Next Life
But did you read the part about how we contributed NOTHING to our IRAs when we had the chance??! 😉 Frauds all around!
MaggieBanks
“REFORMED”
Our Next Life
Tell that to my grocery bill. 😉
J @ Hey, It's Just Money!
I refuse to even think you’re frauds! You’re just different and creative! We’re similar in not knowing exactly what we want (we don’t even know if we want to retire early) and in choosing jobs that don’t pay high incomes. We chose to stay where we are working now because our employers are very considerate when it comes to time off, especially sick days. When my boyfriend’s dad got sick, he had to go back to his home country and he was allowed to be away for at least 3 months, no questions asked. As for myself, you might know that I get migraines quite frequently and my boss is aware of this and he lets me take as many days I need whenever I get them. We value this privilege more than money. Maybe it will change in the future, when we have a mortgage to pay, but this works very well for us now.
I’m still jealous of your dipnetting adventures!
MaggieBanks
Oh man. It sounds like you’ve got GREAT employers. That’s worth a TON!
a woman
am you are running to catch several rabbits in same time 🙂 ( contribute to pension plans, pay down the mortgage faster, invest etc – everything in same time)
Good job, dear family. Maybe you are not doing as expected, but you are acting and this is most important.
MaggieBanks
Yes… we’re all about chasing all the rabbits! If we ignore our retirement funds, we’ll regret that when we’re done paying off the mortgage. If we ignore the mortgage, we will be paying it for a really long time! I’m excited for the day when the mortgage is gone and we can start consolidating our efforts! But that’s another 2.5 years away or longer.
Ellie @ The Chedda
Hi Maggie! I just read through a bunch of your older posts and just really like your writing style 🙂
Part 1 of this post really struck a chord with me! My husband and I made a goal of getting to $500k in 5 years (now 3 more years left) and that was it. No idea what will happen when we get there, but it seemed like a good round number. Anyway, I don’t think you’re a fraud! You’re doing great by the looks of it!
MaggieBanks
Thanks, Ellie! I’m getting ready for another hard look at our plans in the next few months. 🙂 Good luck to you on your journey as well!