Lessons From My Financial Independence Journey

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Over the past few months, I’ve been having different members of the Abundo Wealth team contribute regular blog posts. They’ve focused on different technical topics we encounter with clients.

Statue of Liberty

For this month’s Abundo contribution, I’m switching things up. I asked one of my colleagues if he would be willing to share his personal story.

Jeremy Zuke, like me, stumbled into the world of personal finance through the Boglehead and FIRE communities. His casual interest developed into a passion to educate and serve others.

I invited him to share:

  • His keys to achieving financial independence at a young age.
  • How he determined he had “enough.”
  • The decision making process behind leaving the pay and prestige of his original career.
  • What drives him on the other side of FI now that he has enough financially.
  • Any financial details he was comfortable disclosing that may help others. 

Take it away Jeremy….

My Hope For This Post

If you feel stuck in a corporate job you don’t like or just aren’t passionate about, I hope our story encourages you to see a real life example of how FI can be successfully disconnected from RE. I see many FIRE skeptics. They think jobs come in two speeds:

  • High paying jobs that suck
  • Then no job at all.

Jobs pay in many currencies – money, time flexibility, passion-enablement, and enjoyment. It took me a while (even post-FI) to move my mindset away from money as the only target. Hopefully this helps both those who are aggressively pursuing FIRE and those with “one more year syndrome” to live with more balance, joy, and purpose.

Starting Down the Path to FI

My real interest in financial independence started with a chance landing on the Bogleheads Forums. I had a vague idea about the value of saving and investing, but didn’t know much about the details. The more I read about index funds and the man behind the movement (John Bogle), I was drawn to the idea of just how simple investing could be. 

Related: Review of John Bogle’s Little Book of Common Sense Investing

I felt like I stumbled onto a cheat code. You mean I can beat 90% of professionals with this one simple trick? Just by using our great savings habits, we could have the option to retire decades earlier than expected?

Readers of this blog may be familiar with the multi-year rabbit hole that followed. International investing. Asset allocation. Safe withdrawal rates. Factor investing. Expected returns. Retirement calculators. Tax optimization. 

Once I caught the bug for personal finance concepts, I spent hours every day learning about and discussing these topics. It became a true hobby and passion. It probably even crossed over into a mildly unhealthy spreadsheet obsession, if I’m being honest.

Accelerating The Path

Whenever I catch myself making 5-year or 10-year plans, I try to remind myself of just how shockingly wrong every past plan I made would have been.

For example, I typically factored in 3% annual raises to be conservative. In reality, our collective incomes grew at a nearly 20% compound rate from ages 25 to 35. That was a helpful lesson about the limitations of spreadsheets with a single view of the future and how conservative assumptions can stack upon each other.

We each had tremendous career success (me in marketing, my wife in consumer insights) that came with promotions, pay increases, enhanced bonus opportunities, and eventually equity-based compensation. 

Our combined gross income increased about 5x during that time. We were well on our way to FI with 50% of our target number saved in our mid-30’s. My 10-year projection using a very simplified 3.5% withdrawal rate suggested age 45 would be our FI date.

Reaching The Goal (With a Bit of Good Fortune)

Remember my terrible track record with 10-year projections? Well, it struck again. The company I was with at the time got acquired. The equity shares I had pushed our assets beyond our FI target about 8 years earlier than expected.

It was a very surreal moment. Up until this point, FI was just a fun spreadsheet and daydreaming exercise. Now in the blink of an eye, it was our reality. 

It’s also a great reminder about the role of good fortune. One part of our success – how we got to 50% of our goal – is coachable and replicable. How to grow in a career, manage a budget, and invest wisely. And while I certainly set myself up for success for the second 50% with hard work, so do 99 other people who don’t have the same lucky outcome.

A Shared Journey

My wife and I have always shared our finances completely – at least for as long as I can now remember. We use only a joint checking account, joint savings, the same credit cards, and treat all income and debts as “ours”.

Jeremy and wife

We met freshman year of college, and she pushed me into the business school. This turned out to be a great choice. I got a job in Chicago after college, and we went there together despite her not having a job yet. That was the first major sacrifice one of us made for the other.

We operate as a team, and we keep doing that no matter how high the amount of money increases (and it has increased a lot). I wouldn’t have achieved what I did without her, and I know she feels the same about me.

Our first shared act of financial independence was moving to New York City to pursue an amazing career opportunity for her. Operating as a team and having gratitude for past sacrifices made it an easy choice to pursue. I often reflect that if we kept our financial resources and goals separate, we wouldn’t have been able to turn our shared money into freedom and opportunity nearly as easily.

So we sold our Chicago condo and moved to Manhattan in 2021 where she is (still) excelling in her career. It’s a good thing she is, because as any Manhattanite will attest, living here certainly takes a bite out of anyone’s ability to save!

Related: A Strong Marriage in Retirement

What To Do When You Can Do Anything?

The programming to keep advancing on the career ladder is strong. Even though we had reached FI, I couldn’t give up the idea that I was supposed to keep rising and keep making more money (for what purpose I wasn’t sure). 

I took one final promotion at work. For the six months while I was in that job I was very often complaining about it. I thought a lot about the “Peter Principle”; that I had just been promoted to my point of incompetence, at least in that particular corporate environment.

My wife and I love to take walks – it’s probably our #1 hobby by time spent. One of those walks a few years ago we both remember quite vividly and still point to the intersection where it happened. 

She just stopped me mid-complaints and asked why the hell I keep working at a job I don’t like for money we don’t need? It was equal parts obvious and enlightening.

To hear her say it – not my spreadsheets – was what I needed to detach myself from the hamster wheel. It’s just kind of sad to draw up a list of pros and cons for a job where the “pros” side lists one thing: I get paid a crapload of money. From that moment forward, we started planning an exit.

Finding the Passion

I absolutely love financial planning. I hate the current financial advice industry. It’s one of the few topics that animates my normally calm demeanor into a fiery rage. 

Paying 1% of your assets (25% of your retirement income, as I prefer to call it) to a financial advisor forever is ridiculous before even getting to the conflicts of interest. Life insurance salespeople shouldn’t even be called financial advisors.

I started down the path of creating my own “Boglehead-style” solo planning firm. That’s a surprisingly difficult venture though – lots of bureaucracy and you have to sell yourself. 

Jeremy and Eric

Through a friend of a friend I got connected to Chris who generously volunteered his time to tell me about his similar experience after recently joining Abundo Wealth. Abundo is an advice-only, index fund supporting, low-cost firm. Checks all my boxes.

I reached out to Eric (the founder) and thought he was amazing and his mission equally amazing. Since I had secondary skills from my marketing days and money wasn’t my main goal, it was a great match for a growing low-cost firm. I now get “paid” in a mix of salary, time flexibility, location flexibility, and (most importantly) a sense of purpose helping others achieve their goals in a field I love talking and learning about.

Oh, and a subtle-but-important financial benefit of working: we won’t have to worry about the ACA in the future. Abundo offers health insurance, so we can Roth convert to our heart’s content without managing the counterpunch of higher ACA premiums. That will have big value in the long run.

Related: Maximize ACA Subsidies to Minimize Health Insurance Costs

The Comforting Math Behind a Lower Paying Job You Love

People struggling with high paying jobs they don’t like might take solace in this fact: a kickass $40,000 job with annual inflation raises enables similar annual spending capability as a $1M portfolio using the 4% rule-of-thumb.

So if you’re an early retiree looking to fill the 30 year gap from say age 40-70, finding a lower paying job you love and can stick with would replace quite a bit of portfolio value (and open the doors to quitting a job you don’t like sooner!). If you have a $2M portfolio goal to support $80,000 of expenses, you can slash that goal to $1M with a $40,000 passion career. The entire “boring middle” just got kicked to the curb!

Here is an alternative view of the same benefit. If you reach that $2M portfolio goal and are planning to take out $80,000 annually for expenses, that same $40,000 passion career could demolish any concerns you have about running out of money. Instead of hand-wringing about whether a 4% initial draw rate is too much, you just instantly knock it down to 2% while simultaneously finding a joyful way to spend time.

Another comforting fact about taking a lower paying job: net income is more comparable than gross income. Take a person who makes $200,000 and pays $80,000 in taxes on that income. That’s easy to do when your spouse still works.

A $40,000 passion job is not a $160,000 pay decrease. Net pay is what matters, and it’s possible to keep about $35,000 of that $40,000 by using retirement savings vehicles. The net pay decrease in that case is only $85,000. About half as much as that person’s gross pay appeared to go down!

Related: The Amazing Tax Benefits of Semi-Retirement

Our Investing Approach

Age-based rules of thumb about asset allocation are not a great thought process. I see the platitudes thrown around far too generically.

“You’re under 40! You’ve got time to recover. You should be super heavy in equities.” Well, that’s true for a lot of younger people because their future human capital (work earnings) far outweighs their low-to-moderate financial capital.

Don’t Follow Standard Advice If You’re Not On a Standard Path

But when advice is given to the average person, it’s always important to ask how you are different from the average. We now have a lot of financial capital and at the same time much less future human capital (with the FI acceleration). We immediately started de-risking our portfolio because the upside of more stocks was no longer needed.

As far as the portfolio specifics, we don’t think in terms of a percentage in fixed income. The percentage is an accidental outcome.

Asset-Liability Matching

We think about fixed income as offsetting specific spending liabilities. Just like someone who plans to buy a house in 3 years might buy a 3 year CD for the down payment, we treat all future anticipated expenses as liabilities due in a specific year.

I have a spreadsheet that calculates the expected gap between income and expenses every year. So if we have a $30,000 expected gap in 7 years, we buy a 7 year TIPS bond (using the iShares iBonds ETFs for simplicity) that will yield $30,000 of real value at maturity. 

Our 2030 TIPS has about $500,000 in it. You can guess the purchase we’re intending to make that year!

The asset-liability matching approach means we can more or less disregard interest rate changes in the market. They don’t impact the long-run expected value of these bonds at all except for slightly changing the coupon reinvestment rate of return. Another nice way to SWAN (sleep well at night).

Note: If you’re considering a similar approach, 2024 has been a pretty good year to start. With real interest rates above 2%, getting $10,000 of inflation-adjusted income in 5 years only costs about $9,000.

For all expenses that are 10+ years in the future, we have an aggressive index portfolio of about 90% equities. The stocks are 60% US / 40% non-US since we are big believers in diversification and avoiding recency bias. 

We also consider our risk capacity high enough that we take the extra risk of a small value factor tilt. About 20% of our equities are in factor funds, and that’s now a locked in life-long decision in our Investment Policy Statement so we don’t fall victim to bailing on the strategy.

Related: Creating and Adjusting an Investment Policy Statement

Our Strategy For Saving A Little On Taxes

That modified fixed income ladder approach can be optimized by what I call the hidden bond trick. Even though we need the income soon (and therefore holding it in taxable would be the simplest choice), we can instead hold those funds inside a retirement account where the ordinary interest is tax-protected.

When we need to access the money from each year’s maturing TIPS ETF, we use a two step process: (1) sell the TIPS ETF and purchase VTI or VXUS in retirement accounts and then (2) sell VTI or VXUS in taxable to raise cash. The VTI/VXUS purchases and sales offset, and the net effect is that we sold the TIPS ETF and got spendable cash while mitigating taxes along the way.

A Case For Simplicity

Rick Ferri has a great quote about indexing that I love. “A successful index fund investor goes through four phases: 

  1. Darkness – takes advice from everyone;
  2. Enlightenment – realizes a market return is superior to their return; 
  3. Complexity – overdoing everything to find optimal;
  4. Simplicity – invests in a few total market funds.”

That applies so perfectly to my Financial Independence journey. 

  1. First, I knew nothing about it. 
  2. Then, I realized it was possible. 
  3. Then, I got a PhD in the Big ERN safe withdrawal rate series and every other withdrawal method and blog. 
  4. Now, I just look for the big learnings and themes.

I feel confident that any reasonable withdrawal rate is good enough, confident in our capacity to adapt, and know our spending will not be constant because no one’s is.

I respect that dying with too much is a risk just like dying with not enough. Now, I focus a lot more on how best to spend our other precious resource – time. There is peace to be found in stepping back from the financial rabbit holes!

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to chris@caniretireyet.com. Financial planning inquiries can be sent to chris@abundowealth.com]

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11 Comments

  1. Nice article Jeremy. I enjoyed reading your personal story. Like you, I stumbled on the bogleheads forum about 5 years ago. My first thought was, really? These bogleheads/people with financial knowledge are helping each other for free and there is no catch, not trying to sell me anything? I was shocked, but pleasantly surprised. Thus, I continued reading the forums since then and have also read 50 plus books on finances, including several of Jack Bogles and of course, Can I Retire Yet and Choose FI. Like you, personal finance became a passion and the knowledge I have gained has greatly helped. I probably won’t retire for at least another 10 years (will be 58) even though I will likely have more than enough. I really enjoy my job (university professor in exercise science) and get ample time off (all holidays, summers). Thanks for sharing your personal story and adding more to my fianancial knowledge.

    1. Thanks very much, Fred! That’s such a wonderful place to be – working in field you genuinely enjoy that provides you significant time flexibility and passion. Being able to choose is certainly what it’s all about, and it’s great that you’re able to keep contributing your skills to help young people advancing in your field.

      Perhaps a recommendation request from you: is there a Bogleheads equivalent for exercise and fitness? 🙂 As disciplined as I am with wealth building, it’s much more hit-or-miss on health building.

      1. Not aware of an exercise and fitness equivalent. Maybe I should start such a forum 🙂

      2. I recently found F3. It’s like the Pareto principle applied to fitness and community. As I navigate sorta-early retirement, the community part seems even more important.

  2. Great article. I like how you called out the importance of managing your finances with joint accounts etc. I’m always surprised when I find a married couple that holds separate accounts, checking, savings, CCs even splitting up paying bills. It just seems overly complicated to me for a married couple who should have joint goals. Maybe there is a reason that isn’t obvious to me why split things up.

    1. Thanks Wade! Like you said, our experience has been that sharing accounts is a simple and helpful way to act on the joint goals we have. It’s nice to just look at all income, expenses, and investments as part of a single pot. Very transparent and helps facilitate good conversations on how we can work together to optimize our plans.

      I do understand some situations like second marriages or very unequal starting assets that would make things a little different. And making sure each spouse has access to their own credit / credit history and maybe a small ‘what if’ checking account seems fair enough. But at some point it can become needlessly complex or even detrimental if it reflects an underlying mistrust or lack of collaboration.

    2. Hi Wade,
      As Jeremy said. Being in a second marriage with each of us having children from our previous marriage, leading to estate planning concerns is the impetus for keeping our money separate.

  3. Jeremy, your article exudes confidence and contentment, and reflects a life well-lived. A round of applause for your and your wife’s diligent efforts and success.

    I’m sure good reasons can be found for both combining financial resources and keeping them separate. More important to any couple’s success is a shared vision for the future and a commitment to the goals that will support that future.

    Your story is very inspiring – thanks for your willingness to share it!

    1. That’s very kind of you Mary! My wife Helen and I both appreciate it, and I’m very glad you found it inspiring!

  4. The tail end of this post solved my sequence of return risk dilemma for what will be my first 10 years of early retirement. While its not the first time I’ve come across building TIPS ladders, iShares iBonds, and reshuffling assets between tax buckets, the way Jeremy synthesized this information helped put it all together for me. Thank you!

    1. Really happy that part was helpful for your early retirement planning, Blake. It was a huge ‘aha moment’ for me when I realized that fixed income could be used this way to offset specific spending amounts every year. The iShares target maturity year ETFs (annoying called iBonds since that creates confusion), made it possible to implement very easily at a reasonable cost of 10 basis points.

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