The father with a family of five celebrated his 40th birthday recently, and he’s interested in slowing down the pace of life while contemplating additional side gigs once he sees how this box company pans out.
Those might sound like two incompatible ideas, but they wouldn’t be if and when he leaves his full-time corporate engineering gig, which is something he’d like to do in the next five years or so if the math works out, and believe me, he’ll be doing the math.
What he’s approaching is what is commonly called “Coast FIRE,” or having enough money invested that you’ll naturally become FI over time thanks to investment returns as long as you’re able to cover your expenses with paid work in the meantime. Is he close enough to call it quits soon? Or would you hold out for that next million — they say the first one is the toughest to get — before coasting to full-on FIRE?
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Getting to Know You
Where are you on your financial independence journey? Have you crossed the halfway point in terms of net worth and/or passive income?
First of all, thank you PoF for the opportunity to tell our financial independence journey and test out my own writing skills.
The first thing I will say about our financial independence journey is that we are very blessed. Some might read portions of our story and think “they had a leg up” or “easy to do with that income”. Compared to some situations, maybe so. What I will say, and what I hope to have come through in my writing, is my shift in mindset over the years.
When you tell a story with the benefit of hindsight it can tend to sound like it may have been “easy” since it is a highlight of the positive milestones. When I get stuck or feeling down on financial progress or direction, I am working more and more now on looking back with the lens of gratitude as I am very blessed to have had things come together to where we are at today.
As for our financial journey itself, my journey started at a young age growing up in a rural small town farming community in the upper midwest. My dad was a middle school teacher, and my mom was a teacher by schooling, as well. Her job was full-time Mom at home with myself and two younger sisters.
My dad taught us a frugal lifestyle and that everything was negotiable. He also introduced me to investing at a young age, even though his own knowledge on the matter was basic, and it stuck. I opened my first Roth IRA account when I was a junior in high school with $500.
Through college, I added to that Roth IRA at times, not consistently or in large amounts, but doing so kept it in front of me and thinking about how I could save and invest more. I came out of college, in spring 2004, with my BS in Mechanical Engineering and about $10,000 in debt to M&D Bank (Mom & Dad), with a very appealing term of 0% for as long as needed. It may not have been a priority to pay off, but I didn’t want to owe anything to my parents, and I paid it off in full about 9 years later.
I started my career in 2004 as a Manufacturing Engineer for a large Ag equipment manufacture in the upper midwest making $45,000. I also started a 401(k) and put in 14% starting out with a 4% match from the employer and increased it to 15% after the first year. This started what I thought, and was taught, as my road to retirement. I went to school and had a good job; now it was on me to save and invest for the next 40+ years and I can hopefully retire…as retirement was the ultimate goal.
After 2 years I decided it was time to move on. It was a hard decision for a small-town farm kid to make to move to a large metro area. I made the move to work for a power equipment manufacture as an Advanced Manufacturing Engineer and continue to work at that same employer in the same engineering group.
I worked my way up the ladder a bit and became a manager within the group. I started at $68,000, a nice bump from my previous employer, but also my cost of living increased a bit moving to a large metro area. I was scared to death that I was going to be over my head from a spending standpoint and finding my way through life as a small-town rural kid in a big city.
It worked out in ways I wouldn’t have ever imagined. I rolled my previous 401(k) into my new employer account, but I pulled my contribution back to 12% because I was so worried about making sure I could pay the bills. I set it up to automatically increase 2% each year. In years that I received a promotion, I would keep 1% of the promotion and increase my contribution by the remainder.
That general equation continued for a number of years. It wasn’t all saving though. Over those years I purchased two brand new snowmobiles (snowmobiling is my personal financial black hole), two trailers, and one new-to-me used pick-up. Also that year I moved to the big city, two friends of mine and I started making yearly snowmobile trips out to Wyoming and mountain snowmobiling.
We were hooked and continue to this day 15 years later. A sizeable percentage of my potential FI money went to snowmobiling in my 20s and 30s. However, it is the one activity I get the most personal value from and the experiences over those years were completely worth it.
In the fall of 2010, I met an incredible woman that would be a major part of shifting my mentality on finances, health, and nutrition for the better. We were married in the spring of 2013, which started my opportunity to share my investing knowledge and aspirations.
We combined our finances after we were married, adding her 401(k) to our asset column (15% contribution) along with a large collection of cash. She was excellent at saving but didn’t have an interest on the investing side. I saw this as an opportunity; she saw it as risky, and we have been working through that journey together ever since.
Starting out, we opened a Roth IRA for her and in 2013 we committed to maxing both of our Roth IRA’s out every year. We also refinanced the house that I built in 2009 to a 15 year fixed mortgage. That helped us build equity in it quickly.
We also purchased two brand new vehicles, one in 2014 and one in 2015. I know, I just lost credibility from the FI community (at that time I hadn’t heard of the FI community). Trust me, new vehicles are not something you do growing up with my Dad and neither was taking vehicles to a mechanic. Growing up, we bought used, worked on them ourselves, and drove them until you couldn’t.
However, my wife saw the opposite model where you bought new, and if the dealer said that was the best price, that is what you paid. So, we found a balance; we bought new with the stipulation that we would drive them until we couldn’t (or at least more than 10 years).
In 2016, I started maxing out my 401(k) contributions along with her now 18% contribution in her 401(k) and maxing out both Roth IRAs. We continued this pattern through the birth of our first daughter in 2016 and our second daughter in 2018.
However, in 2017, we decided it was time to slow the rat race down a bit and my wife stepped down from her full-time lead Speech Therapist job at a large metro hospital to be at home full time with our daughter. In order to bring in some income and keep up her skills, she worked as needed (she was always needed) two weekends per month.
In 2019, I started shifting my thought process around finances after a few years of reading and listening to several different blogs and podcasts in the FI space. So in 2019, I cut back on 401(k) contributions to around 14%. I took the dollar amount after tax and automatically set it aside in a “wealth capture” account.
I had an interest in investing more into cashflow-producing assets. Something that threw off some cash which was useable and preferably as passive as I could possibly make it being we had 2 children and a third on the way!
With child number 3 pending, we also started seriously looking at buying a new home. That terrified 20-something kid in me was creeping back up, scared to death that lifestyle creep was at work and we would spend way too much on the home that we really wanted. We were within $100,000 of paying off our existing home. We didn’t need a different house, but with three, it was cozy!
In fall of 2020, with three children under the age of 5 during a pandemic we finally found a house that fit all of our criteria and worth an offer. I was terrified by the number, but we could do it without sacrificing any current saving and investing. We secured a very favorable 30-year mortgage at 2.6%. It was a great move for our family! We have the space, privacy and outdoors that we value while still being near some neighbors. The old thought process me would have wanted to put the entire amount of equity from the previous house down on the new. However, the newer cash flow investing me decided to put 25% down (best pricing terms while avoiding PMI) and we added the cash to our wealth capture account for a future investment.
Little did we know at that time, that an investment opportunity was going to crop up quickly. During the process of moving, we found a service that provides re-usable plastic moving boxes. They deliver them to your door, you pack and move, and they pick them up at the new address.
Well, I got to talking to the owner as he picked them up in October 2020 because I wanted to pick his brain on rental units he mentioned he had. Only to find out he was looking at selling the moving box business.
My wife is now fully “retired” from the hospital and running the moving box rental business from our home. I deliver or pick the boxes up on my way home from my engineering day job. My wife is the sole member owner of the LLC which is elected as an S-Corp. She receives a reasonable paycheck from the business, and the business rents a portion of our detached shop as storage space from me.
This has brought us to a net worth of about $1,300,000.
Our business is not currently passive by any means. However, we are working on getting the right systems in place to make it as passive as possible. As it looks right now, we are on track to be able to hire a driver next year, taking me out of the active work equation. I have some ideas and connections to build a small cleaning system for cleaning the boxes that could potentially be fully automated one day. That would leave managing the orders coming off the website, which should be mostly automated this winter with our new website, and scheduling delivery routes which we can do via our logistics application anywhere we have an internet connection.
We closed the asset purchase on April 17th this year and it appears we will end this year with net operating income of around $25,000.
Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?
Our family lives in the upper midwest on the outer edge of a large metro area. We are a family of five including me (40), wife (36), daughter (5), daughter (3) and son (18 mo). We are not currently supporting anyone outside our immediate family.
In what field are you working? How is your career going? What do you like best and least about your chosen profession?
I currently work as an Advanced Manufacturing Engineering Manager for an outdoor equipment manufacturer. My career in this position is going well, and I really can’t complain. It has provided for us consistently over a number of years, and for that, I’m grateful.
I am a hands-on, work-on-projects kind of person, so the aspect of my profession that appeals to me the most is building a product. I think that is why I really like the aspect of building a business and have enjoyed figuring out the systems to put in place to make our small business run as passive as we can make it and run more efficiently.
It’s really the same goals as a corporate profession. However, what I’ve noticed about it for me since I’m actively doing both. With our own business, if something doesn’t work out quite right, you adjust and improve it… done. You don’t have meetings to talk about it, see how much it might cost, question if it is really going to improve it enough to cover that cost or if it will ensure that the problem will never ever happen again. You just try it and see. Do some experiments and adjust if they didn’t turn out the way you wanted.
Do you feel you’ve come to a crossroads of sorts? If so, tell us about it. What options are you contemplating?
I do. I have really shifted my thoughts away from a W2 worker and more to a producer mindset. Where can we provide value? Is building or creating that value exciting to me? If so, do I think I could or would like to pursue something around that?
Also, with our oldest starting school, I really am wanting to buy back more time. Time to be involved with our kids and their education and learning experiences. I am learning more and more about myself in that the traditional education experience I had wasn’t ever really that enjoyable for me. I believe more and more that was the case because it wasn’t really the way I learn best.
I want to make sure as we enter the next phase of life that I can have the time to devote to that educational experience. Not sure exactly what that looks like yet, but I know that it’s a priority.
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How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?
- US Stock: 72%
- Int’l Stock: 13%
- US Bonds: 5%
- Int’l Bonds: 2%
- Alternatives: 4%
- Cash: 4%
Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?
The majority of our paper assets are in my and my wife’s tax-deferred 401(k) accounts ($710,000). The next largest account is our taxable joint brokerage account ($95,000). Then, each of our Roth IRA accounts ($155,000). I have some RSU’s from my employer that are now fully vested ($16,000). Last is some experiment money with Worth Financial in Worth Bonds ($1,000).
Do you have investments in an HSA? How about 529 Plans?
We have also maxed out our HSA account for a number of years, which is now at about $40,000.
What has been your best investment?
My best investment has been investing in my own knowledge in nutrition, health/wellness, investing, real estate, and negotiating. Without continually seeking out more and more knowledge as well as taking action, testing ideas, and learning from experience, I wouldn’t have ever built the wealth we have today.
Buying the assets and starting our own business is probably the closest thing, which we haven’t had long enough to say if it is the best or worst. When doing my due diligence, in the worst-case scenario and it’s a flop we could always part out the business and sell off the assets. I estimated that we could re-coup close to half of what we bought it for. So, we would be out $15,000-$20,000. Not something I would be jumping up and down about. Also, not something that would break us either. I was OK chalking that potential loss up to a learning experience on how to start and run a business to apply to the next adventure.
Your worst investment?
I really haven’t ever done a lot of individual stock investing other than my company stock (which I’ve sold most of). I also haven’t started getting into individual real estate deals, so I guess I don’t really have a worst investment.
At a more philosophical level, I do a lot of research on things before acting. That might be my best and worst investment (of time) as I can easily get stuck taking in information but not taking action and applying it.
Into the FIRE
Numerically, what is your FI goal?
With my change in mindset, I’ve noticed I slowly don’t pay attention to a FI number or accumulation. I tend to focus more now on a number of potential revenue streams and how passive they could potentially be, thinking through if the work involved (since nothing is truly passive) is something that I could be excited about.
That said, our numerial FI goal is around $2.5M.
When do you suspect you will achieve financial independence? Will you retire from your career once you’re comfortably FI?
Running some various investment scenario plans, we should reach our FI number in about 6-8 years.
Yes, I will definitely “retire” from the corporate life when we hit our FI number. I grew up always hearing my dad and his brothers talk about getting to retirement in the traditional sense. It was this all or nothing digital decision.
I heard conversations talking about investing, and I knew they all were pretty frugal, so the traditional accumulation approach to retirement was all I really knew. What they didn’t ever really talk about was the fact that they all had some other forms of income, that as kids, we were not really aware of. The main one being that my grandparents left them each sections of farmland. So, at a minimum, they all had land rent coming in.
It really was a couple of years after my dad retired (at 52) from teaching that I realized that he didn’t accumulate enough to carry him from 52 on. He did the same thing most of us are looking to apply, having other income streams supplying enough to cover their core living expenses and the accumulation as a backstop to fill the gaps, if needed.
So now, when I talk about retirement, I always talk about retiring from the corporate world. I’m not going to fall off the retirement cliff and do nothing. I’m just going to buy my time back and be able to choose to spend that time on the things I value.
What are your post-FI plans? How will your life change? What do you look forward to the most?
This is the area that I still need to get clear about. I have a general image or picture of what I would like to do. Even a general idea of what I would like my days to look like. However, I haven’t gotten really specific.
That is one area I have a hard time with. I don’t know exactly what I like to do. Also, I’m someone, as I mentioned, that can get stuck in ideas, researching and planning. Ultimately, I am actually someone that really likes and needs to just take action. Usually, I don’t know exactly until I can or do just take action.
I equate it to when I was finishing the basement of our previous home. When I was framing it, I had a vision for what it would look like when finished. I knew where the walls would be, what walls the plumbing would run in, etc… However, when I would get to a specific corner or feature I could get stuck measuring and figuring out exactly how I should frame around it, planning the layers for sheetrock and trim. At times, I would get stuck in that and distracted by other things like planning out the electrical wiring. Those were things that were way down the road and not relevant to right now. It would hold up or slow my progress in the framing.
The same is true for me when planning out FI. We may not be to FI quite yet, but I feel that at some point I will need to take a leap of faith that I will be able to figure out what I will do and go for it.
The thing that I look forward to most is having the ability to give myself permission to not maximize everything at all times. Some of that is inherent to me and will not completely go away. However, I do feel that once I’ve made it to a point where I can see that we actually can cover our costs with our assets. There will be some sense of weight off my shoulders that might allow me to just pursue things that I want to in the moment, profitable or not.
Have you made any major changes in your lifestyle or investments to accelerate your FI path?
In the moment of those changes that we made throughout our journey, I would have said that they were all major! Looking back over the last five years and thinking through them, they don’t seem nearly as drastic or scary.
The largest change was when we made the decision for my wife to stay home full-time with the children. I ran numbers every way I possibly could. I wanted to know for sure that we would still be able to pay the bills and not sacrifice our saving and investing.
That was a massive value increase for our family that I would do again in a heartbeat. Those first few years of that phase of life was also close to our largest FI acceleration as well.
Are you facing any unique challenges making FI or RE more difficult?
I don’t think we are facing any unique challenges. For me, my biggest challenge at times is the lack of patience.
My goal is that I would be able to “RE-FI”. I am actually hoping that once all of the kids are in school full-time, I could step away from the corporate world and “retire”. That would be in about 5 years from now and put me at 45.
My thought is that my wife will go back to working in some capacity — either working more on our business if we still have it or pursuing some other ideas she has that I think are great business opportunities.
Looking over the last 5 years of Personal Capital data, we have been trending up in expenses and are now at an average of around $6,500-$7,000 per month.
If my wife and I could each make $30,000-$40,000 working part-time or seasonally or whatever it might be, our business should easily be able to generate another $20,000, and we could cover our living expenses.
That would allow me to retire from my corporate job. Our investments would be on track to still get us to FI even if we didn’t invest another dollar.
I think my biggest mental challenge in that is not knowing if we can we realistically keep our expenses at that level. Where exactly will the money to pay the bills come from? What will the mechanics of that look like? These are not questions that anyone else can specifically answer for our situation. However, other success stories are always inspirational to hear and potentially apply similar processes.
What advice do you have for others who are seeking financial independence?
I don’t know that I have any specific financial advice that people in this group haven’t already heard in the array of blogs and podcasts they take information in from these days.
I think one thing that I’ve realized for myself is that if you do start saving and investing early enough, you build yourself the space and the bandwidth to be able to enjoy and experience the different phases of life. You don’t need to worry if you’re filling every account or maximizing every dollar.
There’s another thing that I have to stop and remind myself at times when I’m feeling stuck or frustrated. We already met one of the levels of FI when my wife quit working a W2 job and took the position of Mom.
We lived the rat race of both parents working full days for the first year of our oldest daughter’s life. We understand that race, and I truly believe that a large percentage of families where both parents work could have one parent stay home with the children in those critical early years. It was not easy to see the trees through the forest when I was calculating those numbers and it was a leap of faith… but it was so valuable for our family!
I guess my advice would be to give yourself the permission and space to see the different phases of your FI journey, acknowledge them, and use that to stay positive and keep making progress.
Finally, is there anything under the sun that you’d like some help with? The hive mind would be happy to weigh in.
I think my main question revolves around hearing from people about how they have made that shift, mentally and financially, out of full time W2, golden handcuffs work to more of a lifestyle career.
My mind gets stuck on an assumption that I need to replace my current six-figure income with some other cashflow-producing asset(s) that give off the same useable six-figure income.
How did you create the space to make that jump?
Did you save enough in cash or liquid investments to cover a year or more of expenses, create the space, and then go for it? Or what did the mechanics of it look like?
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