Episode 9: The FIRE Movement

00:06

Hello and welcome to Revamping Retirement, a podcast brought to you by Cammack Retirement Group, where we tackle the retirement plan related issues plaguing fiduciaries and plan sponsors. Our host, Mike Webb, has more than 25 years of experience in the retirement plan industry and is a nationally recognized subject matter expert. We hope you enjoy Revamping Retirement.

00:30

Thanks, Kara. Kara McCauley, our producer, as always. I’m Mike Webb, and this is Revamping Retirement. So glad you can join us out there in our virtual audience. We have a very, very special guest. He’s founded not one, but two of the leading personal finance websites out there. His latest, Budgets Are Sexy, which I love the name, by the way, has been featured in the New York Times, Kiplinger, Time, MSN, US News, Forbes.

00:58

I’m sure I’m leaving some major publications out. Welcome, please, to the podcast, Mr. Jay Money. Jay, welcome. Hello. Thanks for having me. I like the hype there. I need to take you around with me wherever I go in my real world. Let’s get to the important stuff first. Do you prefer Jay, Mr. Mr. Sexy?

01:21

Do you have a problem? I like all three of those. I’ve never been called Mr. Sexy on a show before, so if you’d like to lead with that, but I’ll answer to everything except the bad words. So, your choice. So Jay, our audience may not know you, and there’s going to obviously be some people who are fans of the website who will be tuning in, but there’s some people who are going to be retirement plan sponsors and participants in retirement plans. People who are actually even unfamiliar with our topic today, which by the way is the fire movement.

01:50

How would you introduce yourself to people if they didn’t know anything about you? Well, first and foremost, I’m basically just a blogger and a regular guy. started Budgets are Sexy 11 years ago just for fun. I bought a house at the peak of the market, no money down. Didn’t really know what I was doing financially and I stumbled across the financial community online and I was just blown away by how transparent and friendly people were.

02:15

And there was bloggers just sharing their story, right? Their daily progress on their savings, on their debt, investing. And I kind of got sucked in. said, Oh, I can blog about that. know, I was, you know, a bachelor. I was, you know, going out to parties, trying to save money, drinking beer, you know, the important stuff. Um, the one thing led to another. And I became, you know, people, I got advertisers. didn’t know you could make money online. Um, and so basically for the last decade, um, I’ve, I’ve been writing my thoughts on money every day.

02:45

The fire movement came out four or five years ago and some other minimalism kind of became popular over the years. I bought houses, sold houses, started companies or other projects, sold projects, had three kids. It’s amazing what happens in a decade and what’s cool is it’s all recorded on my thoughts, on my blog. So if you like money and you like reading real life stories, I think that’s the basis of Budgets Are Sexy.

03:14

and pretty much the whole financial blogging community. I think you hit on an important point that you’ve been doing this for 11 years now. Are you kind of like one of the older people in the FIRE community now? you feel or do you? Yeah, I still feel like I’m in my 20s, but I’m almost 40 now, which is really strange to say out loud. You know, actually we have an award show every year and I think three years ago when I was seven or eight years into it.

03:39

I received a lifetime achievement award. that tells you like how old I am in internet years. For those of you not familiar, FIRE stands for Financial Independence Retire Early. We’re kind of joking around here about how long people have been around. But I think to me, it’s never too late to at least try to adopt some basic FIRE principles. I stumbled on your website when we started our blog. I’m practicing things in FIRE. I think what you’d probably call mine is called FAT FIRE, where I’ve just kind of taken the best of the best.

04:09

and and disregarded the rest. What do you think? Is there ever a point where it’s too late to start adopting some of these principles? Yeah, no, I don’t. mean, there’s people, most of my audience, because of the way I talk and the transparency stuff, I think a lot of it skews younger, 20s, 30s, 40s. But I have people that are in their 50s, 60s, actually had a 76-year-old, I want to say, email me the other week. It’s like, oh, man, I just haven’t been paying attention my whole life. And I start now, and I’m like, wow, like that, you know?

04:37

But like, you know, I think as long as you’re open and a lot of these changes too, I mean, obviously if you’re 75 and you haven’t saved anything, like you’re in trouble, right? And you’re not, you’re already past retirement age. So, um, but, but all the money stuff and the fire movement, everything that I’ve learned over the years, you know, myself is that it just comes down to like your lifestyle and what you want that to look like. So even if you are older, have no money, like you can start implementing lifestyle changes, which really at the end of the day is what money is, is for, right? It’s not for hoarding.

05:07

When I started my blog, one of the first blog posts I did was how I wanted to be a millionaire. And like, here’s all the steps I’m going to do to have like a million dollars. Right. And it was just totally just so I can say I’m a millionaire. Like that was like my prime reason. I thought it was cool to be a millionaire. Right. Um, but like now in my wisdom, right. And having kids and being a father, I realized this is about living and how you want that day to look. Um, so I think as long as you’re focused on that.

05:33

You can change a lot of stuff over the years, no matter what age you are. To build on that concept, when I think of the fire, to me, mean, the retire early part is, nah, to me, it’s more about the FI. Yes. Being able to be independent, regardless. Because, mean, we try to tell people in our industry, retirement plan industry, you don’t necessarily say, hey, I’m 65 now, or I’m 55, or I’m 40. Now I’m going to stop working. I’m just not going to do anything to earn any income. That’s not how it works, is is it? Right.

06:03

Yeah, no. And that’s really where like, you know, people start kind of looking down upon fire. And the crazy thing is most people that achieve fire, like, you hear these stories, right? I’m 28 and I’m financially independent or I’m 38 or 48. Like they’re all super young, you know, but most people, like if you’ve reached financial independence, you are not lazy and, and like, you’re going to sit around and do nothing because like you had to like to get to, to reach financial independence that young.

06:29

Like you really have to be motivated and smart and or lucky or combination of all three. Right. So those people, what that means is yeah, they’re financially independent. They don’t have to work if they don’t want to, but they’re still going to be doing stuff, especially at that age, right? Like you’re still going to be enjoying life. You’re still going to be having ideas and projects. And so you’re always going to be working on stuff, but the deciding factor really is like you, get to decide, right? Like it’s you, you don’t have to do it for money anymore. And ironically,

06:57

A lot of bloggers that don’t need to do it will make a ton of money or entrepreneurs because they’re not doing it for the money, right? They’re doing it for like the passion or the idea or whatever it is that it’s driving them. And then naturally the money comes because you’re not, you know, trying to make money all the time. So it’s a really interesting concept, but yeah, yeah. The FFI is the most important part for a lot of people and myself included. I’m not retired early. You know, I’m not, I’m not fine either. I’m not, I still have to work. Um, but I believe in the, in the mantra.

07:27

We’ve talked about the results a little bit. Let’s talk a little bit about how you get there. There was a survey of actually what our industry calls super savers, but what I call fire folks. People who save a lot of time and plans who are always maxing out. And they said if they had to teach somebody else to do what they do, meaning max out their retirement plans, max out their savings, the one thing that no one would say is live within their means. What do you think about that?

07:52

Yeah, I think that’s true. And I think like, you know, obviously if you want money faster and, and, you know, I think cutting back even more is, one of the biggest ways, you know, to get there. And again, it comes to motivation and how much you actually care. There’s a lot of people that say they want to be retired or they want millions of dollars, but they really, when it comes down to like making the changes, they don’t. So I think the first challenge is really making sure this is what I want. Right. And a lot of people think it’s deprivation.

08:21

to not have Starbucks coffee or not have a second car or whatever the case is, but whatever is important to you, like you can still get those things and then you just cut back on all the stuff that like you don’t care as much, right? Like Mr. Money mustache is really good. I’m sure a lot of people have heard about, um, but there’s a lot like he’s really big into, if you like cars, spend on cars, but spend less on your housing, right? If, especially if you’re not going to be there or you’re traveling.

08:46

I love coffee. Every day I spend three or four dollars gladly. I love coffee. I like being in the atmosphere of coffee shops. So I spend every day on coffee, you know, but I’ll save and close that I don’t care as much about. Right. So I think as long as you’re doing the stuff that’s most important to you and then cutting back on the other stuff, that’s not as, is a really easy way to at least get the process going and cutting back on your expenses.

09:10

And I think you really hit up on an important point there. It’s not about the deprivation to me anyway. mean, like I said, I’m not a full fire practitioner, but I do put a lot of the concepts into play. It’s about simple things like, Hey, I’m not going to full price for using cable or satellite or insurance or all those bills that I have. You know, I can save money on it’s not going to negatively affect my lifestyle. If I go from, you know, paying for a satellite to streaming, for example, but

09:38

I’m going to save a lot of money doing it. And I can then take some of that money. I they penalize you like crazy I don’t have to take all the money I saved and save it. But if I take at least half of just what I saved and save it, I’m going to be ahead of like 90 % of the people out there. Yep. Yep. And even back to your point of the investing, like in your 401k, like that’s what really clicked with me, saving money, put away and then compounding and then getting the employer matches. Like that was mind blowing because you’re so used to putting it in savings.

10:07

And then transferring it back after a month and putting in the savings. Like you play this weird transfer back and forth game, or at least I did growing up. I really feel like you’re saving, but you’re not. Um, and so the 401k or any retirement was so big because a, it’s like, they, penalize you like crazy to pull it out. So you’re not tempted to pull it out. And then with the matches and everything in the compounding, like that was really for me, like when I saw it get to like 5,000 and $10,000, I was like, Oh my gosh, it’s just going to keep going up as long as I don’t pull from it.

10:36

which I’m not, and then as long as I keep contributing. And so I think once you start seeing that, and that’s why I’m big into tracking net worth, once you see the trends going up based on your actions, it really changes everything because then you’re not automatically, like every time you go to buy something or sign up for a service, your brain is always like, oh, that’s going to be reflected in my net worth graph at the end of the month, right? Like I need, like you start thinking about it first before just doing things automatically.

11:02

Um, you know, and really if you max out your 401k every year, what is it now, like $19,000 or something?, like that alone after 20 years, you’ll probably be a millionaire, right? Just based on, you know, compounding, you know, so that’s all you have to do really, which is easy to say, hard to do at times, but it really is simple. It’s really, it’s just a mind game. Everything’s just in your mind. You hit upon another important thing, tracking, tracking, spending, tracking your net worth. I can tell you my own personal experience when I started tracking my spending.

11:31

I wanted to vomit. And let me tell you what, because I was just like, oh my goodness, what am I spending money on? It was just like the biggest revelation ever. Let me know if you disagree, but I think if everybody out there just did one thing tomorrow to improve their finances, I think tracking their spending would be pretty high on the list because when I started tracking my spending, I automatically spent less. I no compromise to my lifestyle. was spending money on silly things and I stopped. Yeah, yeah, yeah. And I’ll say too, I’ll add to that,

12:01

Tracking especially in beginning you’re right like even if you could track every transaction Right whether you’re putting stuff on credit card whether you’re doing checking whatever it is I think it’s good for a couple months and then I think after that once your brain is more settled I don’t think you have to necessarily track every penny for like every year of your life Which I think a lot of people kind of start burning out because they you know, it gets boring after a while But I think as long as you do enough to get that first instinct epiphany

12:27

You know, you’re really good. actually over the years, mean, even though I have budgets in my blog name about halfway through, I’d say six, five or six years of blogging, I stopped personally budgeting and I just merely focused on net worth, which is a lot simpler to track. And it took like five minutes a month, but that was enough motivation for me where I could see at a glance, how well I was doing overall. Um, and so I don’t even budget anymore.

12:52

Right. And so I think, and some people do, and some people believe in it and I believe in it at different stages, but don’t get scared that you have to track every penny for the rest of your life, especially if you’re someone that like hates numbers, right? Like that’s not the goal. Like the goal is to track it enough to get your epiphany and then track something over the long term, where you can see your progress and look back and track it off. think that’s a good point. I mean, you know, got to educate yourself first. And I think that’s where the tracking gets in.

13:22

In beginning, think it’s important to educate yourself as to how much money you’re throwing away. But once you’ve developed the discipline and you’ve developed the model, I think it’s kind of like, okay, I don’t need to go through the torture of tracking this anymore because clearly now I’m tracking my net worth or I’m tracking my overall income versus expense every month through a program like Mint or Personal Capital or something like that. And now I’m a well-oiled machine. I’ve become a scholar of my finances. think, you know… I like that. Yeah.

13:48

You you just did an exercise on your on your blog, which I thought was fascinating, where you actually invited people in to a decision you’re going to make about buying a Mercedes Benz. And it’s funny, it’s not going to laugh and say, what, is everybody going to leave the audience?. I was like, how did this guy talk about frugality and fire and talk about my favorite names? Tell them a little bit about the story. It’s not really a brand new Mercedes Benz, is it? Yeah, no, it’s 10 years old. I mean, it looks

14:17

It looks fabulous and it’s really well maintained. It’s only $5,000. It’s a family friend that’s selling it to family and if not, he’ll list it for around $7,000. So I mean, even frugality wise, up there. The mileage is the kicker. The mileage has $140,000. It’s an ML320 diesel SUV Mercedes. And really, like, here’s another example of being stuck in your head, right? Like, this was like a dream car of mine a decade ago.

14:46

You know, when I started really caring about, you know, just a lot of, you know, fanciness, I guess. Um, and, I liked the way, you know, I liked a lot of the things, like I drive a Lexus and I appreciate the car itself. And so, but this is the decision, right? Like me as a finance guy, you know, coming home to a park Mercedes in the driveway, right? Like that’s crazy. Um, but is it a good deal? Is it not? And so I’m, I’m, I still don’t have the answer, whether I’m going to buy it. Maybe by the time this show goes, you know, live, we’ll have an answer.

15:16

Um, but yeah, I mean, and the same thing, it kind of goes back to your point too, of the happiness level. Like I used to drive a really beat up, um, old school, like 93, think it was Cadillac DeVille really old hammered, you know, it was just like a beat-up, you know, I called it Frank and caddy. Um, and like that level of happiness with that car, even versus Mercedes or even a $50,000 car, right? Brand new, like my level of happiness is the same in either case.

15:46

And so that’s a matter of like, well, what are you spending? If the spending is the same, it doesn’t really matter which one you go. Obviously in a $2,000 car versus $50,000 car, it’s a big difference. And so I think if you can get in the habit of where your happiness levels are, you know, I think that’s a really good identifier. Jay, also for our audience, in terms of getting to know a little bit more about the fire movement, are there any resources or anything you might want to suggest?

16:13

Yeah, a lot of blogs online will have blog roles that like have our favorites. If you go to budgets are sexy.com slash blog role, you can see a lot of my favorite sites that I follow. A lot of them are fire movement. Some are minimalism, but it’s a nice kind of like a curated list of other sites that I think are really good or entertaining. And I think that’s the trick, right? Is finding a site that you resonate with and that keeps you interested.

16:43

And you’re learning at the same time, but it’s something that like sucks you in and gets you to, to take action. Right. Cause a lot of stuff out there you can learn and it’s theory, but if it doesn’t get you to actually do something, you know, like, that’s, that’s the important part. So when you’re looking for sites, you know, latch onto the ones that really gets you to take action. And that’s an important point because there’s so much out there. And I think you really got to try things and see what works for you and what doesn’t. And then take it from there because you got to start doing stuff.

17:12

Because the only way you’re going to build momentum towards having a comfortable retirement, having a comfortable lifestyle is to start doing. So do something, build momentum, take it into the home stretch. Do it and track it, right? Exactly. Boom. One, two punch. I want to thank so much our special guest today, Jay Money. He can be reached at budgets are sexy.com. For Kara McCauley and our entire production team, I’m Mike Webb, and this has been Revamping Retirement.

17:45

The content in this podcast is for institutional investors and plan sponsors. The information is intended to be educational and is not tailored to the investment needs of any specific investor. All examples of investor gains and losses are hypothetical and intended to illustrate the importance of early saving and consistent retirement contributions over time. Investment decisions should be based on an individual’s own goals, time horizon, and risk tolerance. Nothing in this content should be considered as legal or tax advice and listeners are encouraged to consult their own lawyer.

18:14

accountant or other advisor before making any financial decision. Thank you for listening to Revamping Retirement.