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Paying It Forward — An Early Retiree Case Study

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In our April Best of the Web post, I shared an interview with an early retiree who was a long time reader of Can I Retire Yet?. It was the most clicked on selection that month. This showed me the desire of those figuring out their own transition to retirement to hear the real world experiences of others on a similar journey.

Mark Trautman

So today, I have a guest post from another long-time reader of the blog. Mark Trautman has a relatable backstory, growing up without a strong foundation with matters of personal finance. It took many mistakes, years of trial and error, and self-education to learn basic principles of wealth building and retirement planning, despite spending his career in the financial services industry. He made a considerable turnaround with his finances and retired at age 50. 

Mark describes a simple and replicable path that many readers can utilize to achieve financial independence. Now he’s sharing the lessons he’s learned by promoting financial literacy to those in his local community who most need it. 

I asked him to share more of his story with our readers. Take it away Mark . . .

I believe most paths to financial independence begin with a “money script” or “money mindset” – mine was no different. 

My money script certainly shaped my path to financial independence and led to my desire to teach the next generation the primary tenants of financial literacy. My wife and I found our own way through trial and error and I hope to give my daughter’s generation a head start through financial literacy education at our local public school.

The Money Mindset

There was a recent What’s Up Next podcast discussing the topic of money mindsets. Often people have money scripts that were developed from a challenging childhood experience relating to money issues. They may have experienced money insecurity or scarcity, for example, which formulated a desire to improve their circumstances and strive for a better life financially.

My money script is somewhat different, although it will be familiar to many other people born and raised in middle class America. My father’s parents both immigrated to the United States and worked hard to open their own bakery in Brooklyn, New York. 

My father was the first in his family to go to college and always wanted to better himself financially. He was living the American dream, but as many do, was always trying to keep up with the Joneses. 

The money script that shaped my childhood mindset was more and bigger is better and always strive to emulate the lifestyles of the next level above, or even that of a few levels higher. As many people in the financial independence community are aware, that mindset will often leave little room for savings and may also lead to a life of indebtedness. 

It also leads to the reliance on the next paycheck or a steady (and ever increasing) source of income. My learning experiences evolved from times when our family’s income was interrupted by employment gaps and later from a failed business venture. 

My father always kept a good game face and had an everlasting optimism that things would work out, but these issues obviously affected and ultimately formulated my money mindset.

An Inflection Point

An inflection point for me came while I was working for my father’s company shortly after graduating college. The business was running into trouble and unpaid bills were mounting quickly. I was the bookkeeper, among other things, and this was really stressing me out. 

I saw that my father wasn’t taking a paycheck and I too was asked to delay my pay at times. This was taking a toll on my parents, as well as on me and my wife of one year. 

At the same time, my wife and I were leading a similar lifestyle – a leased car, student loan debt, credit card debt from financing our wedding and honeymoon as well as other discretionary expenditures. Simply put, we were living well beyond our means and reliant on an uncertain source of income.

Just as my wife and I were determining that this was not a path we wanted to continue down, we stumbled upon two books that were very influential, The Millionaire Next Door and The Wealthy Barber

Here we were, thinking that the rich households were those with fancy cars, big houses and all of the other things associated with being rich in America. These same households that my father aspired to emulate included members of his country club and families of the private schools I had attended. 

The Millionaire Next Door peeled back the cover on the true millionaire households in the United States – they had financial wealth and modest but comfortable lifestyles, living well below their means. The Wealthy Barber confirmed these findings by outlining a logical path to financial security. 

In simple terms, both books profess that the mantra of living below your means, while saving and investing the excess, is the path to financial security and independence. This was the “ah-ha” moment for us – the fire was lit.

Enlightenment From a “Ski Bum”

Another defining moment that served to brighten the flame came about after reading a skiing magazine article as we were sitting in our weekend ski vacation rental home – paid  for with credit cards mind you – while asking ourselves why we were digging this hole? 

The article highlighted a well-educated couple who quit corporate jobs to be “ski bums” and lived out of their car to save money – perhaps the original Van-Life couple even? While living in a car to be frugal was not necessarily our aspiration, there was a significant learning moment imbedded. 

In order to follow their desire to ski as much as possible and fund their lifestyle, this couple lived by a simple motto: “Make a Little, Spend Less, Invest the Rest.” My wife and I looked at each other and said “That’s It!” it is as simple as that and we decided to adopt this motto for ourselves.

Unfortunately, I have never been able to find a copy of the article, or identify the couple interviewed so I could touch base with them and thank them for their inspiration. If you are out there, or if anyone has a copy of this early 1990’s magazine article, I would greatly appreciate making a connection!

Our Journey to Financial Independence Begins

From this inflection point forward, my wife and I decided to live well below our means, aggressively eliminate our debts, and once complete, save and invest a minimum of 20% of our gross income. Over time, we modified the original motto to match our goals. 

Since improving our earnings has always been one of our objectives, we changed the words “A Little” to “Some.” In addition, in order to prioritize saving and investing over consumption, we further modified our motto to read “Make Some, Save & Invest, Live on the Rest.” 

It has served us well to live by this simple mantra. When faced with a tempting purchase, for example, one of us would simply utter “Make Some…” and we’d refocus back to reality and our financial goal.

Finding Our Way

Back then, we were completely on our own, learning everything as we went along. We didn’t have any mentors or anyone to model. There was no FI community or FIRE movement, and internet groups and forums were certainly non-existent. 

All we had to guide us were the core teachings from these two books and a motto to live by. We figured it just made sense – eliminate our debt and avoid it in the future, save at least 20% of our gross income and invest it, then live on the balance. 

Do that and we should be good, everything should work out well. Over time we did increase our savings rate closer to the 30% mark, but never to the north of 50% level prescribed by many of the current FIRE bloggers.

In hindsight, we could have reached financial independence much earlier by increasing our savings rate as our incomes trended higher, rather than keeping our savings rate essentially level and allowing That Lifestyle Creep In

If we could turn back the clock, I think we would let our savings rate fluctuate with our level of earnings (subject to a minimum of 20%-30%) and maintain a relatively steady (or slightly rising) spending level. However, we still achieved financial independence in our mid 40’s, although we weren’t completely aware of that fact at the time.

I ultimately retired from full time employment at age 50, prior to learning about the financial independence community. I was just tired of my occupation, which was relatively the same monotony for the previous 20-25 years. 

I estimated that we had enough to at least take a long break and maybe do something else in the future. 

Continuous Learning

During my final year of work, I enrolled in a prerequisite education program to sit for the CERTIFIED FINANCIAL PLANNERTM exam. 

I had always been interested in personal finance and thought that this knowledge would be helpful personally for my family at the very least. Besides, I thought, maybe I would be interested in being a financial planner as an encore career.

After completing the education requirement and having left my job, I decided I might as well take the CFP® exam. This would require another 6 months of full-time study to prepare myself for this difficult test. Fortunately, I passed on the first attempt. 

Having worked in the financial industry my entire career, which included being a financial analyst at a Wall Street brokerage firm and an analyst and portfolio manager for a small mutual fund company, I was able to submit my work history to satisfy the 3-year experience requirement and received my CFP® certification upon passing the exam.

What to Retire To?

Shortly thereafter, I stumbled upon the financial independence community and the various blogs and podcasts that have evolved. One of the first resources I found was Can I Retire Yet? – how appropriate, considering I had been asking myself this same question. 

After much reading and numbers crunching, I determined that I actually had enough not to have to work another day in my life if I so desired. Similar to the experience Darrow has shared in his writing on this blog, I didn’t know what I was retiring to and it took a while to figure out where I’d find purpose and meaning during my retirement years.

While deciding whether to pursue an encore career, I did some volunteering, such as becoming a member of our local homeowner’s association board, but still felt that I had no specific purpose.

Gaining Clarity

While I contemplated the idea of starting a financial planning business, I wasn’t really interested in helping high net worth individuals and families optimize their investments, taxes, insurance, estate plans, etc. 

I really wanted to help average individuals and families who are typically not well versed in the basic aspects of personal finance and are frequently at the mercy of the investment advisor industry.

I was also interested in passing along as much financial knowledge as possible to my daughter, who was in high school at the time, and would be forging her own path to adulthood in the very near future. I had written her a letter that summarized the important things I wanted her to know financially. 

My niece and nephew, who had recently graduated from college and were just starting out on their own life paths, also were interested in learning more about our financial story and how I was able to retire early. I was (and remain) encouraged by their interest in furthering their financial knowledge. 

The idea that financial literacy education was paramount for young people was always top of mind for me. I just didn’t know how to expand the teaching to a larger audience in addition to my family.

A Passion is Discovered

Then one day, our high school guidance counselor, knowing I had retired and that I had previously worked in the financial industry, asked if I would volunteer to teach basic financial literacy to the local high school seniors. Considering my daughter was going to graduate from that same high school in short order, and that I felt this was a topic that needed to be taught in the schools, I immediately agreed to it. 

The first year I taught directly from the material that was being used, but also added some of the knowledge I acquired from my CFP® certificant education. That summer, I was asked to expand the curriculum to include the additional items I was teaching in my classes and formalize the material so that other volunteers could teach the same lessons. 

Over the past three years the program has evolved into a seven module lesson plan that includes: tracking income and expenses – with an emphasis on paying yourself first; the net worth statement – all aspects of assets and liabilities; compounding; credit reports and credit scores; protecting yourself from the risk of financial loss – insurance, identity theft and fraud; income taxes and filing a tax return; and a summary of key concepts learned – all distilled down to an index card.

I can honestly say I have now found my passion – teaching the next generation financial literacy. In addition, I offer to help community members with financial education whenever I am asked and as my time permits. 

I don’t get paid. I don’t ask for any compensation. I genuinely enjoy sharing this knowledge with anyone who wants to learn it to prevent them from having to figure this out on their own (if at all) and avoid many of the mistakes I made on my path to financial independence.

The Best Compensation Ever Received

I can say that the best “pay” I have ever received is the feedback I get from the students, their parents and community members who appreciate and put into practice the knowledge that is shared. For example, a parent recently shared a story with me that their son came home one day and wanted to discuss the economic value of a particular college and its return on investment given its cost and potential earnings for a specific degree. 

I have also had students come up to me a year after participating in class and say that they started a new Roth IRA with the earnings they made the prior year. One student, who confessed they really didn’t understand anything about finances prior to taking the class, told me that they keep their index card in their wallet to remember the concepts we discussed in class more than a year prior!

More recently, I have been inspired to start a blog, initially encouraged by Darrow and later by my family, to help spread financial literacy to a wider audience. 

I was further energized this summer after attending my first CampFI event which brings together people at all stages of the financial independence journey. The topic of financial literacy for the next generation was widely discussed among the group and I am proud to be among those promoting it, especially within the school system. 

Now, I feel as though I have retired to something. You do not necessarily need to have a plan in place for something to retire to. You may find that it finds you. Just keep your eyes and options open.

Our Community of Inspiration

On a final note, I wish that when I was young, someone had taught me the tenants of financial literacy and I didn’t have to learn these lessons in isolation through trial and error. Today, we are fortunate that there are more options for learning about personal finance through the many books that have been written, blog posts, podcasts and forums. 

Two recent books that I believe are helpful for those interested in financial independence include The Simple Path to Wealth by J.L. Collins and the soon to be released ChooseFI – Your Blueprint to Financial Independence by Chris Mamula, Brad Barrett and Jonathan Mendonsa (and no, they did not ask me to promote their book, it was only after reading an advanced copy that I wholeheartedly recommend it).

Had these books been available when I was young, I would likely have reached financial independence much earlier having made far fewer mistakes along the way. However, it may be a blessing in disguise as I may not have retired to my current passion of teaching financial literacy, but to something else less beneficial to others and less rewarding to me. 

I feel that this information is critically important especially given the DIY society we are in today, where every individual is responsible for their own financial destiny. 

Pensions are nearly extinct, social security will likely remain in some form, but replaces only a fraction of one’s working income and workers are required to be their own investment managers, or worse, rely on investment advisors who may look after their own best interests instead of their clients’

I also look forward to helping promote financial education in the school system as much as possible. I know that some individuals and groups within the financial independence community are working to get curriculums approved at the state and national level. I enthusiastically applaud those efforts and look forward to a day when this education is standard practice.

You Can Make a Difference

Something I believe everyone in the Financial Independence community can do is to promote financial literacy by being open to discussing financial matters with family members, especially with those in the younger generations. Each and every one of us can be a role model, mentor, teacher, or guide for those just starting out on their own financial path. 

While discussing this topic is often taboo or frowned upon, I guarantee that whomever you help will ultimately benefit from and appreciate it. You may feel that they are not listening or don’t care, but in my experience, as a father and teacher of young adults, they definitely do hear you, even if you don’t believe so at the time.

 You will be rewarded with gratitude one day – the best compensation ever!

Editor’s Notes

Thanks to Mark for sharing his story and for the work he’s doing to make the world a better place by improving financial literacy. 

Money is the most powerful tool in our society, yet few people understand even the most basic concepts. Many people are buried in debt from student loans, car loans, and credit cards from a young age, limiting their options in life.

I find Mark’s story of spending his adult working life in the financial industry, yet not being aware of simple wealth building and financial planning principles that enable financial independence and early retirement fascinating.

Many financial professionals are trained as specialists, focused on investment management, a specific aspect of tax law, etc. Few are trained to look at the big picture and most are subject to the same biases as those with no financial training at all. 

I’ve witnessed parallels to Mark’s story among a variety of financial professionals who at first glance we would assume to be experts in personal finance. I emphasize this point in my forthcoming book as well.

One of my co-authors, Brad Barrett, and his wife Laura were both CPA’s, yet they never connected the dots on the simple yet extremely powerful tax reduction strategies that are now widely accepted among the FIRE community until seeing them explained by FIRE bloggers with no formal financial training.

I applaud Mark’s efforts and encourage the many readers of this blog who are in similarly fortunate positions in life to find a way to give of your time, money or both in early retirement. As he stated perfectly, the rewards that come back to you are “the best compensation.”

Leave any questions or comments for Mark below and check out more of his work at Mark’s Money Mind.

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[Contributing Editor 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. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris' writing has been featured in MarketWatch, Doughroller, Business Insider and RockStar Finance. He is also the primary author of the forthcoming book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

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Comments

  1. Thanks for the inspiring story Mark, and for your contributions to the next generation!

    • I enjoyed writing it. Thank you for the opportunity to share my story with your readers. Hopefully it was inspirational for others to share their own financial experiences and wisdom with the following generations.

  2. I was hoping for more specifics, something these “FIRE” articles always seem to be lacking in. Where do you live? Do you own or rent? How much were you saving every year (in dollars, not percentages)? Where were you investing your savings (401(k), IRA, Roth IRA, brokerage account, etc.)? What is your asset allocation? How large is your investment portfolio? What is your annual budget? Do you have health insurance, and if so how much does it cost you? Do you have children? Do you have an emergency fund (and how much is it)?

    I could ask 100 more questions, but I’ll stop there!

    • Thanks PG. It would be worth checking Mark’s blog (https://marksmoneymind.com/) for some of these answers.

    • I’ll second that, more details would be better. I know it’s not considered polite to discuss how much money one makes or has but for this blog I think it is helpful and appropriate. If an author is retiring early on $50k/year and a reader feels they need $100K, I want to know the writers’ perspective on how much is needed is different than mine.

  3. Great story Mark. I try inspiring my kids (and others) whenever appropriate by my financial missteps and what I’ve learned along the way. I will share your story as part of this effort. Thanks.

  4. Great article to pass on to my adult kids! And thanks for the link to the tax article from January. Somehow I missed it back then. With our pensions now being taxed and no way to diminish the impact (but I am NOT complaining as we wouldn’t be retired without them) and later 85% of our social security taxed, I am working on this aspect of our beginning journey into retirement and desiring to stay in the 12% bracket as long as possible. Convert now and pay taxes or perhaps hit a torpedo after 70. Keep the thought-provoking articles coming.

  5. William Corriveau says

    This is all excellent information.

    As a millennial seeking insights to expedite my retirement, I always appreciate when people can share the educational resources that guided them to their goals.

    Thank you for all you do.

  6. Carla Stadtmiller says

    Thanks, Mark. I, too, learned financial lessons through trial and error but did manage to achieve my goals and was able to retire a little early. I enjoy passing along what I learned to my children, sisters and even my parents. Would you consider recording your lessons and making them available on-line?

    • Carla,

      I have been planning to create a blog post series that details the financial literacy classes I teach to our local high school students. You have provided further inspiration for me to bring that to fruition. Keep an eye out for it to be posted at http://www.MarksMoneyMind.com in the near future.

      Thanks,
      Mark

  7. Bog Glavan says

    Mark,

    Thanks for sharing your story and glad to see you found meaning in your financial literacy education. I share a similar passion for that and am involved in our children’s schools, I would be interested in learning more about your program you teach and the 7 modules. If you are willing please let me know as I see a similar need in our school system. Thanks!

    Bog

  8. Mark, thank you for teaching financial literacy to young people. And thanks for this article. I’m curious as to whether you’ve done financial coaching with individuals or couples one-on-one?

  9. BINGO! The Wealthy Barber started my path to saving and living below your means. Great book, story format, and all the aspects covered. After reading…I mean “attempting to read” the tombs on finances out there…the Wealthy Barber was the best book I ever found at the time. And then the Millionaire Next Door came out shortly after I started reading big time. It was a great book about the difference in image and reality. One other book, The Automatic Millionaire by David Bach, was the other one of the finance triangle for me. Once you got past his first chapter on selling his seminar, the information and data tables were great. I even printed out a couple and framed them to remind me of making informed choices. All the books focus on one core theme…choice. Everyday we make choices on whether to spend or save. Real simple…one choice at a time.

  10. Thank you for sharing your story, Mark. As a (somewhat) early retiree who might be interested in following in your footsteps, would you be willing/able to share your teaching materials and/or advice on how to reach out to find receptive audiences?

  11. Biggest mistakes was to not pay attention to investments, relying on financial advisor, and obtaining hot tips from magazine articles. Best financial instrument was the companies automatic 401k savings with match. Was lucky to find a good fund “Contra” and just stuck with that over the years. It was good for me to simplify investments, being that my competence level was low. I guess my investments were risky, but didn’t really think much of the loses as the account was increasing given the auto save feature. Also, utilized a MBA calculator for getting a better understanding of time value of purchases. Realised buying items on sale and in bulk had tremendous rate of return, Got in the babit of minimizing monthly payments. All the little expenses add up and make a big difference in wealth over the decades.

  12. Please, you are sharing the tenets of financial literacy. Not the tenants of financial literacy, as you keep repeating. Tenets are principles or beliefs. Tenants are people who rent your house. Or better yet, and less wordy, just say financial literacy.

    Apologies for sounding pedantic. While you promote financial literacy, which is a truly wonderful thing to do for others and will change their lives, one of my retirement interests is promoting literacy.

  13. “Back then, we were completely on our own, learning everything as we went along. We didn’t have any mentors or anyone to model. There was no FI community or FIRE movement, and internet groups and forums were certainly non-existent.”

    There have been internet forums on frugal living and personal finance since at least the late 1980’s. Open discussion groups on Usenet, which really was quite valuable in the days before AOL opened up “the internet” to anyone with a home computer. You hopped from group to group discussing whatever topics interested you at the time. There weren’t any “communities” or “movements” on any topic. Just good information.

    It seems like such a long time ago, and I guess it was.

  14. Mark’s blog does not allow comments, so I will compliment him here on his content and his apparently successful RE strategy. I found his post about attending an outdoor event called “Camp FI” and discovering that of all the attendees, he was the only one actually living the “RE” part of “FIRE”, to be very interesting and insightful.

    • Larry,

      Thank you for your comment and I appreciate your compliment.

      I too was a little surprised that I was in the vast minority of full-time RE at CampFI. However, I presume most people who have fully figured out FI / FIRE many not necessarily be the ones who might benefit most from attending a CampFI event. Most of the attendees were trying to figure out their own path to FI / FIRE and were looking for insight and guidance. I found that I was more often a teacher/mentor there, but I certainly did benefit from attending – primarily from meeting other like minded people and making community friendships. My wife and I will be attending again next year.

      Mark

  15. Emily Booth says

    What a wonderful story: teaching & giving back to the next generation! My “finance” teachers were savers. I read Humberto Cruz who had a nationally syndicated column on savings, Amy Dacyczyn, author of The Tightwad Gazette & Vicki Robin & Joe Dominguez “Your Money or Your Life”. All changed my money mindset and my life. I only wish I had known way earlier what I learned.

  16. Great story I enjoyed it!! Thank you for sharing.

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