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Jeremy graduated from college on a Friday, started working on cell phone design at Motorola on a Monday and worked 80 hours a week for the next four or five years. What fueled his work ethic was $40,000 in debt — $35,000 from student loans and $5,000 in credit card debt for food and other essentials.
But his desire to keep up with his peers led him, on his $40,000 salary, to buy a new car and a three-bedroom house, which turned his previous bike ride to work into a 40-minute commute. The added debt got him to focus on his finances, so he began making models of how he could pay it off, mapped out his trajectory to retirement at 65 and began investing. He then used credit card checks charging 0% interest for 12 months to pay big chunks of his mortgage, his student loan and car loan.
When he started working at Microsoft and moved from Chicago to Seattle, getting a salary bump up to $85,000, he made many of the same decisions (which he now calls mistakes) again: buying a house, having a long commute, and not taking a vacation. Three years in, a girlfriend convinced him to take his first real, multi-week vacation — to the Philippines. He spent the first week thinking about work, checking email. But the scuba diving, mangoes and and tropical drinks began to have an effect, and by the third week, he was wondering how he could live like this every day.
He sold his house, began renting close to work and biking to the office. With his costs slashed, he was able to save. At a conference in Beijing, he met his future wife, Winnie, who is from Taiwan and had been saving 50% of her salary in order to travel. Now, Jeremy, 40, and Winnie, 36, are financially independent, travel the world and blog about their envious lifestyle on GoCurryCracker.com. (The site is named for their rallying cry derived from their favorite snack on their honeymoon hiking Mt. Rainier in Washington, during which they endured bone-soaking rain and encountered mosquitoes as big as bats.)
Here’s the story of how they saved enough to retire in their 30s — Jeremy at 38 and Winnie at 33 — and how they’ve been spending their money and time since.
How did you achieve your early retirement?
J: While I was at Motorola, pretty much every penny of income went toward paying off my $40,000 in debt. If I had $10 at the end of the month, I paid an extra $10 to the student loan. I did contribute to my 401(k) but I took out a loan on it to buy a house and when I sold that house to move to Seattle, I had to pay that back.
By the time I changed jobs, I didn’t have much savings per se. But I was close to being debt free. At Microsoft, I started out at a high savings rate — I was contributing to my 401(k), maxing that out and saving more on the side. After I met Winnie and we decided to retire early, we started reading books like “Your Money or Your Life” and improved on that until we were saving upwards of 70% of income. My last two years working, we were depositing pretty much my entire paycheck into my brokerage account, because we were living off dividends and interest.
We lived close to the university and could walk everywhere, so we didn’t have a car. I was commuting by bicycle — 8 to 20 miles every day. We got most of our food at a farmer’s market and CSA. The biggest part of your income is housing, transportation and food, and those three things were cut really aggressively, so our monthly spend was less than $2,000 a month at the end.
I probably worked three years too long, or we saved too much. The goal was always that we wanted to travel, and once we quit, there was a year and a half of bouncing through Mexico and Central America, and then we came to Taiwan to have the baby.
How much were you earning?
Jeremy: When I started out of college, I was making about $40,000 a year, and that went up to more than $50,000 by the time I left. At Microsoft, I started at $85,000 a year and by the end of my 12 years there, I was at around $140,000.
Winnie: I worked in the same industry — phones and computers, and my last job was project manager at Dell. I was making about $32,000 in Taiwan.
Jeremy: We got married five years ago, so Winnie quit when we got married and moved to Seattle, so the last three or four years before we retried, when my salary was at its highest, she wasn’t working.
Winnie: I was a freeloader.
Winnie, when you were working for Dell in Taipei, what were your savings habits?
Winnie: The living cost here is quite cheap if you want to live cheaply, so I could save at least half of my income.
Just in a savings account?
We have something like a 401(k) but it’s run by the government, so I also maximized it, and the rest went to my personal savings account and my brokerage account.
So you invested it?
Yes.
Did you have a specific target amount of money that you were trying to save before you retired?
Winnie: When we got married, the idea was that we’d quit that day and start traveling, so that’s why I quit my job here. But Jeremy said, I think we might need to wait another three years. He liked the project he was on.
Jeremy: I didn’t want to quit in the middle of it. The very original version of the plan revolved around being scuba bums — traveling to the best scuba diving sites around the world and having a partial income from working as scuba instructors.
Winnie: We were trying to think of what we could do for income while traveling.
Jeremy: Then, we talked to real scuba bums who were trapped in the developing world because they had no money and couldn’t afford a plane ticket home.
We would go to the library and get books on investing and learned about the 4% rule [which says that withdrawals from retirement saving of 4% will primarily be from interest and dividends, which would help maintain a balance from which funds can continue to be withdrawn for a number of years], so we built milestones on it. We could see when our investments could, for instance, support us living full-time in the Philippines. Then they would support us living full-time in Thailand. We worked our way up to the point where it could support our lifestyle in the U.S. That was just a straight up 25 times our annual expenses.
What was your lifestyle? And what did your friends think?
Winnie: We’d do potlucks where people brought their own food.
Jeremy: We also did happy hours. Some of our friends had a beautiful outdoor patio area where we did group dinners, and we also did quite a bit of hiking. There was a beautiful outdoor area 20-30 minutes away, and you’d go out there and have a full day’s entertainment for a few bucks of gas. A lot of our friends would spend ridiculous amounts of money compared to what we were spending. When we said, hey, would you want to come over to our small apartment near the university and have Winnie’s home-cooked food, they would rush over. Winnie could compete quite well on Master Chef. It was: Hey, do you want to spend $50 on brunch? Or would you like to come over our house and have this amazing six-course meal?
Our apartment was 900 square feet. We did, for a time, live in a 400-square-foot apartment. It was definitely too small. We were definitely testing our boundaries. Nine hundred square feet is a beautiful size for two people live in, but the average home size today is something like 2,400 square feet. I think we would just feel lost in something like that, like in a giant cave.
One of our friends has a 6,000-square-foot home on the lake. Our friend who did the outdoor party on the patio — his place is 1,800 square feet. For our friends’ places, 1,800 to 2,000 square feet was probably typical. We were paying $980. Rent for a smaller apartment in the hipster neighborhood would probably have been $1,800, and renting a house probably would have cost us $2,000-$3,000.
What was your investment strategy?
Jeremy: It evolved over time, but the vast majority of it was just index fund-invested. Much of our money is just in the Vanguard Total Stock Market Index Fund and the Vanguard Total International Stock Index Fund. I read some online forums for early retirement, some Jack Bogle, and Warren Buffett’s advice on focusing on passive index investing. And then you take standard modern asset allocation theory, which says, keep a small percent in bonds, a small percent in REITs [real estate investment trusts], and the rest invested in a split between in total market and total international. And partially because we are looking at a hopefully 60+ year retirement, we have the vast majority of our assets invested in stocks, to get long-term growth to ride us out for our lifetimes.
When the financial crisis hit, how did that affect your plan?
Jeremy: On paper, we lost $400,000, but I was mostly upset that I didn’t have more cash to buy more stock. I looked at it as a fire sale on stock, and I wanted to buy more at a discount. I had a little cash and used all of that to buy more stock. I even wondered, should I take out a loan to buy more stock? Two years later, we were far more wealthy than we were at the beginning of it. As long as you don’t panic and sell at the bottom and get out of the market completely, the overall market shouldn’t affect you much at all. We’re maybe even stronger for it. Maybe the psychological effect was that I worked a few years longer, and that’s why I said, hey, there’s this really interesting project at work. I partially wanted to ride the market crash out and save a little bit more.
When did you know you had enough to quit it all? How much did you have when you retired?
Jeremy: We knew we had enough after that three-year period. I’ve never talked about net worth publicly before, but we share every penny we spend and highlight how much of a net worth can support that. We can fund our whole lifestyle on $1 million. We’ve been spending $40K a year, minus one-time baby expenses last year.
Do you need to move to a foreign country to make this lifestyle work?
Winnie: Even in Seattle, we spent $40,000 a year.
Jeremy: When we were in Mexico, we were spending less than $3,000 a month, we had a three-bedroom house in the middle of San Miguel de Allende. We almost bought a house there to use as a base. We would eat out two to three times a day, go out for drinks with friends, we had a gardener and a housekeeper, and all of that was $2,500 a month. Trying to transport that lifestyle to the U.S. would certainly cost much more, but we’d substitute things — we wouldn’t go out for drinks. You don’t pay $15 for a martini. You make one on the front patio. Certainly taking that lifestyle to Manhattan would raise the price.
Do you have any income now?
Last year, the blog made $2,000. It’s a hobby that has the server fees paid for by the ad income. But all of our income comes from dividends and interest. We just live off them. I do a pretty active tax management of those assets, so in 2013 and 2014, we paid $0 tax while also converting about $20,000 a year to our Roth IRA to make that money tax-free forever. I’ve published our actual tax returns on the blog the last few years to show what that looks like in practice. Our plan is to, over the next 30 years, to convert our entire 401(k) into a Roth IRA so we pay no tax going in and no tax going out, so overall, we’ll be looking at $3 million in income over the next 30 years all tax-free.
We track expenses pretty closely, just so we can report them for information and education purposes on the blog, but otherwise, I never really pay attention to it. If we want something, we buy it, if we want to do an activity, we do it.
What do you do for health insurance?
I have no insurance, but Winnie and the baby are covered by the Taiwan healthcare system while we are here. It’s roughly $25 a month. I choose to pay cash and invest the savings. When I have health expenses in the future, we will have the money. We used to have a high-deductible health plan in the U.S. just in case we developed a disease that was expensive to treat and we decided to treat it in the U.S. We had that before Obamacare, when insurers could decline to cover you if you had a pre-existing condition. Now that insurers can’t deny coverage to people with pre-existing conditions, we decided not to keep our health care and simply pay for it in whatever country we are living in. We actually qualify for subsidized health insurance in the U.S., but choose not to have it. We can’t use it abroad, and it seems unfair to accept subsidies we don’t need.
What have you done since retiring?
Jeremy: We went to Mexico with the idea that we would study Spanish and travel through Central and South America. We thought we’d be in Mexico for two months, but nine months later we were still in Mexico.
Winnie: We’d make friends with local people.
Jeremy: We’d practice the local language. When we were in San Miguel de Allende, which is a Unesco World Heritage City, we took Spanish classes for a month. Winnie took jewelry making and painting. The whole reason San Miguel de Allende developed was silver mining, so there are all these small silver jewelry artisans there, and Winnie was working with one of them. I was doing quite a bit of hiking, and we did a 900-kilometer bike ride around the island.
Winnie: In the beginning, we were very ambitious, like we’ll finish the whole continent in a year or two, but then we were like, we have 60 years.
Jeremy: It was an interesting change. Before then, all of our vacations had been two weeks long.
Winnie: I just threw away the list.
Jeremy: We went at a much slower, relaxed pace. We went to Guatemala for a few months, we went to Belize.
Winnie: Cuba.
Jeremy: Then we went back to the U.S., did camping and hiking around Western Washington and Oregon and then we went back to Mexico. Then we had the biological-clock-is-ticking conversation and then we came back to Taiwan to do in vitro fertilization, because here it costs 20%-30% of what it costs in the U.S. The thinking was we’d do IVF, start traveling again and have the baby in Europe, but we had some early miscarriage scare stuff, and Winnie was put on bed rest for a while, so we decided to play it safe and stay put till the baby was born. Our plan is not to stay here.
Winnie: We change our plan every 10 minutes.
Jeremy: We’ve been working through different ideas — spend a year in Spain, take an RV and drive around the U.S., or drive around Mexico. We’ll see how the pregnancy goes and see how our child’s personality is.
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