Root of Good – A Million Dollars in 10 Years

Root of Good – A Million Dollars in 10 Years

Today on the Financial Independence Podcast, Justin from joins me to talk about how he and his wife were able to save over $1,000,000 in under a decade!

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  • The tax benefits and true costs of children
  • How to have a positive net worth after graduating from college
  • What is interest rate arbitrage
  • How to amass a million dollars in ten years without six-figure salaries
  • Why you should quit your job before you’re actually ready to retire
  • How to easily get $4,500 in free travel

Show Links

Full Transcript

Mad Fientist: Hey, what’s up, everybody? Welcome to the Mad Fientist Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in the personal finance space to find out how they achieve financial independence.

I’m excited to introduce my guest today. But before I do, I just want to thank everybody out there who left an iTunes review. There’s a lot of really great feedback. I really enjoyed reading through all the comments. So thank you very much to everyone who did leave a review.

We haven’t reached the 200-review goal yet. We’re only about 30 short now, which is amazing. But yeah, if you haven’t left a review yet, and you want to have two shows per month for the rest of the year, head over to iTunes now and I’ll put a link in the show notes. You can leave me a review there. And as soon as we get above 200 reviews, I’ll start doing two a month.

So anyway, this month’s guest is Justin from I actually interviewed him back in February when I was being very productive and I front-loaded all of my interviews for the year. This one’s taken a while to get out there, but I’m really excited to release it.

Justin has been blogging over at Root of Good just probably almost as long as I have been. I think he came out maybe a year or so later. He’s been retired for a good few years now.

His wife has just joined him in retirement, which is really exciting. She had eventually worked herself into a job that she couldn’t quit either. So I’m excited to find out about how she was eventually able to pull the trigger and quit her job.

So let’s get right into it. Justin, thanks a lot for being here. I really appreciate it.

Justin: Thanks a lot, Mr. Mad Fientist.

Mad Fientist: Thanks! So yeah, if somebody out there doesn’t know about Root of Good, can you just tell us a little bit about yourself?

Justin: Yeah, sure! So my name is Justin. Like Brandon mentioned, I have a website, That’s where I talk about financial independence and early retirement at that blog, particularly my own journey, but also just general advice on how we got there and saving rates and withdrawal strategies, investing, taxes, finance, in general.

Just to go over a history of how I started and how I got to where I am today which is 35 years old and I’ve been retired for a couple of years now, I started saving a lot in college. I’ve saved probably half my income in the early years. As we got raises, that increased to 60%, 70%, 75% savings rate.

I’ve been a passive index fund investor almost my entire investing career. We’re talking low cost Vanguard index funds here primarily.

We live in Raleigh, North Carolina, so it’s a low to moderate cost of living especially compared to New York, New York City, Silicon Valley, San Jose, California areas.

Pretty modest housing prices out here. We have a paid-off house now. Just in the last year, we paid off our house after having a small mortgage on it for a while.

We have three kids. That’s another thing. it is possible to retire early even if you have kids. It’s obviously more challenging. Kids do present challenges and can have unexpected needs. But we’ve been fortunate to have three, healthy, relatively normal children.

Mad Fientist: Mm-hmmm… great tax benefits. You point this out quite a few times from your site. The little ones are nice for reducing your taxes as well.

Justin: Yeah, I think I’ve calculated it was something like $5500 per year in tax benefits just on federal income taxes. So, when you look at the cost of it, whatever they cost per year—mine is $5500—it’s actually the net cost of children. So that’s something to keep in mind when people say, “Well, it’s impossible to ever retire early if you have kids because they’re so extremely expensive.” Yeah, maybe. But you’re also including things you’re doing different things during the day that may be cheaper with kids.

Mad Fientist: Right, exactly. You don’t spend a bunch of money on booze and party and stuff.

Justin: Yeah! And the booze that you do drink is going to be probably at home more likely or at other parent’s houses, hanging out with the kids. A 6-pack of nice beer or a bottle of whiskey or something is the price of a shot for a single beer at the bar. So yeah!

Mad Fientist: It seems you’ve been pretty good with money your entire life though. If I’m correct in saying this, you guys left university with a positive net worth whereas a lot of people sometimes are living with six figures in debt.

So, could you talk just a little bit about that, how you were able to do that when everyone else is probably just racking up a bunch of loans?

Justin: Yeah, sure. We had a slightly positive net worth. And part of that was luck and part of that was being smart and working hard during college and taking the right steps to get to that point.

We did take on student loan debt during college at very favorable interest rates. We still actually have some of that debt today at 0.75% interest rate. We never intend on paying it off any time soon because I will take as much debt as anyone will give me at 0.75% interest rate.

Mad Fientist: Absolutely!

Justin: You can invest it in treasuries and double that yield or triple it. It’s actually an arbitrage opportunity if you can find a good interest rate out there.

But during college, we spent carefully. We actually bought a place in college instead of renting a place because it’s in North Carolina and it’s significantly cheaper to buy than it is to rent many times. That’s not always true everywhere, not always true even locally. But for us, it was cheaper to buy a place instead of rent.

We bought at the bottom of the market in 2001, and ended up selling it. We’re doing pretty well in terms of gains after making some DIY improvements around 2005 I believe.

So, we made a little bit, a few ten thousands of dollars off of this real estate transaction. And so that gave us the blues going into our post-college years and starting out working.

I think that real estate transaction, deciding to buy instead of rent certainly gave us a head start on that path to net worth creation.

And I think if you go back to where we’re at in college, even back then, we were thinking long-term net worth growth. I didn’t really have any idea in my mind about early retirement or even really like a concrete concept of how to grow my net worth or what it even means. But I knew at the time it was cheaper to pay a mortgage and maintain your own property and pay taxes on your own property instead of paying rent.

And we could also be in a nicer place where we don’t have a college loan landlord renting out to us. We’re actually in our own place. It can be nice if we want to be—

And we also had jobs off and on during college. I had progressively more—I guess I’d say jobs that were oriented towards my college major so that they tended to pay better than just washing dishes or being a waiter somewhere. I was a research engineer teacher assistant in my discipline. I had a grant at one point to do research as an undergraduate. I also got a lot of scholarships just from doing well in school.

They’re kind of the things that you could do if you’re reasonably smart and apply yourself and try hard. A lot of those things, it generated an income for us during college. It actually allowed us to not really need the college loans, but the rates were so good, we took them anyway because it was a financially smart decision.

And then, yeah, once we got to graduation, all those career-oriented jobs that I took on ended up helping me get a good job right out of college. I think it’s just a lot of thinking about where you want to be in a few years when you’re in college. It’ll certainly help pay off in terms of your financial position when you leave college as well as your career position when you’re leaving college.

Mad Fientist: Absolutely! That’s great stuff. So you left college, and you guys both went on to do law degrees. Did you jump into that right away or was there some working in between?

Justin: I went straight from undergrad to law school. And my wife, I believe she worked for between a year, maybe a year and a half, between undergraduate and law school. So that’s another thing. She did have that brief break between undergrad and law school where she did have some income there.

I think that’s probably how we got that loan on our house that we lived in. I can’t remember the details of it. It’s been 15 years now roughly. But that’s got to be how we qualified for it. And credit was pretty easy at the time too, from what I remember. I just remember being shocked that someone would give us a loan for $70,000 or whatever it was back then when we were virtually broke college students. My wife had a job back then. It’s just, “Wow! This is a lot of money. It’s more money than I’ve ever seen in my life.”

Mad Fientist: Yeah, exactly. The same thing happened to me when we moved from Scotland back to the States. We sold our house in Scotland. I was looking in Boston where we were living at the time just to see if I wanted to buy something there.

I was working for a Scottish company remotely on a month-to-month basis. My wife was back in school because she had to get her optometry degree in the States. And we got approved for like a $400,000 loan, $450,000 or something crazy. It was $400,000 or $450,000. It was just like, “Are you crazy? I could be out of a job tomorrow. My wife is not working.” It’s just like, “What are you doing?” But this was right when the whole world was about to collapse, and they’re going to pay for all their sins. But I’m sure it was still even bad earlier than that.
So when did you finally launch into your own main career then?

Justin: I worked in engineering, transportation engineering, doing mostly consulting engineering for a private firm with private and government clients. So at 2004, I graduated law school in the spring and started working. We were on our honeymoon for a week, and then came back and started working the very next day after graduation actually.

So, May 2004, I started working the consulting engineering thing for around six or seven years. I then spent a few years at the State Turnpike Authority building toll roads for a few years.

I quit working in 2013.

So, a little bit less than 10 years in my full-time career, plus seven or eight years of those random odd jobs that got progressively more advanced as I went through college.

Mad Fientist: Nice. Yeah, you have a great post on your site called Zero to Million in 10 Years. I’ll link to that in the shownotes. You just lay out exactly how you took your salary and your wife’s salary, what it looked like and what additions you made on your portfolio and how your net worth grew to pretty much zero to what it is now, $1.5 million if I think I looked at the latest number on your blog.

Justin: It’sa little bit less than that today, but I’m pretty sure it was around $1.5 million.

Mad Fientist: And we’re recording this in February. There’s been a lot of downward pressure on the market recently. And today is no different.

Justin: To circle back to that Zero to Millionaire post, yeah, it went viral and was all over. I think it had a million views at Business Insider. They picked it up and shared it.

I think the reason that people liked it is because we’re not making these ridiculous 6-figure salaries. We’re not making half a million dollars a year as investment bankers in New York.

Mad Fientist: Your household income topped out at $150,000, is that right?

Justin: Yeah, yeah, I think $141,000 earned income, plus another $9000 in dividends. So, my income was around $70,000. My wife’s income was also around $70,000 at our peak, the most that we ever made.

We started working I think $148,000. Back in ’04, my wife I think at $38,000. It’s in the article that you’ll see in this post.

So, we started out working $80,000, $90,000. We worked our way up, and we ended up at $150,000 of combined household income. Lots of people earn that much as just one person in a professional career.

And so, to say, “Well, we can’t do it because we only earn average middle-class college degree holder salaries,” you can do it. You’ve got to make sacrifices at some point, but I just wanted to throw that out there that we never had the big dot-com IT-tech salaries or investment banking salaries or attorney salaries for that matter.

Mad Fientist: Right, absolutely.

So do you think your success just comes simply from your savings rate and making those lifestyle choices that allowed you to have such a high savings rate? Is that what you would say?

You said a little bit of real estate investing early on. You then had a business. You’re sort of entrepreneurial at some times. But looking at this section of the spreadsheet that you put into this post, it just seems like you’re really just pumping a ton of your earnings back into your investments. Is that what you would consider your biggest reason for success?

Justin: Yeah, I would say smart moves early on during college and right after in terms of starting a business and real estate. That helped probably 8% to 10% maybe of our total net worth. And obviously, that money was in the market early, so it’s invested longer. But I think probably half or more of our net worth is from actual savings put into investments and not long-term growth because we’re only talking about 10 years or so for this money to actually grow.

So, I think it’s just we were saving half or more of our income. Unfortunately, it’s not magic. There’s no way to get around it in terms of finding some secret strategy to success. It really just comes down to spending less than you make and investing whatever you have left each month.

The higher your savings rate, the faster you’ll have enough invested to support yourself to live off of indefinitely.

Mad Fientist: That’s great! You could see why it’s such a viral hit. There’s nothing in the story that people say, “Oh, I couldn’t do that.” You’re just persistent and patient, and it’s definitely paid off.

Can you talk a little bit about the end of your career? How did you decide to finally call it quits? And what was the transition like?

Justin: Well, it was sort of a bittersweet ending. We originally had planned on maybe working another year past when I quit working. I worked for the Turnpike Authority here in Raleigh. It’s a state agency, but we didn’t have any state government employment rights like most state employees have.

So we were pretty much at will. And they exercised that clause to get rid of about a quarter of the staff at the Turnpike Authority. I walked in one morning and the boss man said, “Hey, pack yourself. Here’s your dismissal notice. We’ll escort you out the door.”

It was not completely unexpected because during the weekend, I saw a co-worker got let go the previous Friday. And so I was like on notice that Monday morning may be a very interesting morning for me. And when I saw the boss man walk on the door, I was like, “Oh, this is probably not good news.”

So, I packed my stuff up, walked out, got in my car. On the 10-minute drive home, I was like, “Hmmm… what now? What am I doing? What’s next for me?”

So, I called my wife and said, “Hey, I got let go, by the way. I’ll talk to you tonight about it.”

I went home, I sat down and I started thinking, “You know, I think we’re good. I think we’re 95% already. Let me check my spreadsheet. Let me go over my plan that I already had written out.”

And so, pretty quickly, within the day, I’m retired. I don’t have to work anymore. We’re financially independent. My wife doesn’t need to work anymore. She can obviously plan her strategy to exit a little bit better than my strategy.

Mad Fientist: How did it feel? Did it feel good? Or were you apprehensive a bit? Did you get excited by the prospect of it once you realized that you’re there and you’re just going to chill out from now on? What were the feelings like?

Justin: It’s weird just because I didn’t plan on—the timing of it was weird. So, I think the first six months, it was still a little bit surreal. It was a little bit like, “Is this really where we are? Am I going to get bored with this or decide to go back, work somewhere and then leave on my own terms later just because that’s how I want to go out of the working world?”

So, it’s a little bit like—I don’t know, I had one foot out the door, but a small pinky toe is still sticking in the door just to see what I’m actually going to do. But as that time went on, the first six months or so, I was getting into that decompression, relaxation, enjoying life a lot more understanding, getting comfortable with, “Yes, we have money in the bank. We can live off of it.”

My wife, she was planning on leaving very soon after. And this is 2013. She was thinking about leaving the end of 2013, beginning of 2014. I guess we can talk about her work right now.

Mad Fientist: Yeah, I really want to. She has a very similar situation as I’m in, so I’m excited to hear more about it. I know there’s been some recent developments. So yeah, please tell us a little bit about how your wife has tried to retire.

Justin: Yeah, I’m so excited because this is a guess final chapter in her career.

It was late 2013. She’s thinking about pulling the plug in 2013. She gets a bonus in the spring in 2014. She knows it’s going to happen. I think it was really big. I think she got like a $5000 bonus and maybe a $5000 or $10,000 raise or something because they really wanted to keep her. She’d been hinting in late 2013, “Hey, I’m not going to be here forever. I might be retiring pretty soon.” So, anyway, I think they hook her up to keep her onboard.

So, in 2014, she gets another four weeks of vacation time. The beginning of 2014, she got the fat bonus and raise.

She asks for her 3-month sabbatical, paid sabbatical, that her company offers in 2014 for the summer, so she could spend the summer hanging out with the kids and we can go travel some for a month or so or something like that.

They don’t give her the full month off—I mean, the full three months. They did give her five weeks of fully paid time off as a mini-sabbatical with the promise that she’ll get her full sabbatical in 2015, the following year, to kind of string her along, keep her onboard as long as they can.

So, she took off half the summer. In 2014, we went to Canada for a few weeks with our 2-year old and our other kids. So that was an adventure.

But then she went back to work at the end of the summer in 2014 kind of was like, “Okay, I can work until the spring, see what happens. Maybe quit, maybe not, maybe get my sabbatical next year.”

She continued in 2015, got another bonus, another raise in the beginning of 2015. She immediately put in her request for her official sabbatical, the three months off. She got that approved, so she spent the whole summer, almost the whole summer in 2015 not working and getting paid.

Mad Fientist: And you guys went to travel around Mexico, right?

Justin: Yeah, we spent 7 ½ weeks traveling around Mexico with our three kids, which was an adventure again. But it was easier with a 3-year old than with a 2-year old, much easier. And it was a lot slower pace. I know you’re a fan of slow travel, and so are we. It would have been very difficult to do any kind of fast paced travel with a 3-year old and have a good time. So, that was pretty awesome.

My wife went back to work in August and was kind of like, “I’ll just take it week by week.” She put in her resignation letter in September and said, “That’s it! Peace out, yo! I’m gone.”

They came back and said, “Well, what can we do to keep you on here?” She fully intended to quit. It was her official resignation letter. She was out the door. They offered her working from home four-ish days per week with the understanding that as long as the work gets done, it doesn’t really matter how many hours she actually puts in.

So, she’s like, “Okay, I’ll give this a shot now, but I’m still planning on leaving. So I just wanted to let you know that, employer. I’m not going to stick around too long.”

So, we’re in February right now as this is being recorded. Since September—what is that? Four months. For the past six months, actually—almost six months now—she’s been working two, three, sometimes four days a week, burning up her vacation time. She hasn’t worked, I don’t think, for the past two weeks. We’ve been out of the country on vacation for a while now.

But she’s just been working a very small amount and working from home. So it’s very, very flexible in terms of what she’s been able to do. And she’s still being paid full-time for her work.

So, for the past six months, it’s been kind of like semi-retirement in terms of hours per week and flexibility. But she did just recently put in her notice to resign again. And today, she’s working here from home and tomorrow is her last day.

Mad Fientist: No kidding! Tell her congratulations.

Justin: Thanks! I will do that. It’s early February. Her last day will be tomorrow. And I think she’s excited, but also ambivalent, just uncertain of the future, that sort of thing. I think she’ll have a little bit of an adjustment just to get used to the full early retired life here.

But she’s had a good introduction to it just from the sabbaticals over the past few years and the last six months of lots of 3- to 5-day weekends and multi-week periods of not working here and there.

Mad Fientist: That’s amazing! It’s impressive she’s able to follow through with it. My employer has definitely just sucked me into staying for a while now. Yeah, I’m the same sort of situation. As long as the work is done, it’s fine. I work on another continent from every other employee that I work with. Every other colleague is in America, and I’m here in Scotland. So it’s like full autonomy and full flexibility. I’m still doing work that I enjoy. It’s like, “Well, I’m getting paid a full U.S. salary.”

So, it’s weird. I just really struggle to see when I’m going to actually call it quits just because I’m actually really enjoying myself. So it’s impressive that she was able to get into such an amazing situation and then still have the ability and the drive to call it quits. So I applaud her for that and for working her way into such an amazing situation.

Justin: Yeah, it’s been kind of unexpected, the situation that she ended up in. I think to get to that point and to actually pull the plug—I mean, for her, it was a huge relief. She didn’t actually tell me before she put in her notice.

The second time, they had been stressing her out just not knowing that date, not having any particular date to look forward to, but knowing that she’s planning on leaving very soon. She just composed the email, hovered over the send button for a second, clicked it, and then forwarded the email to me and said, “Hey, look what I did…”

Which is fine! I mean, we’re fine financially. We don’t spend that much money, so if we ever do have to go back to work, it really won’t be that hard to find something with our backgrounds and college education that will produce some kind of income that will probably cover our living expenses even much less than full-time.

And it’s a win-win situation with very little downside risk of running out of money. Even if we do take a big hit to our portfolio and it goes down by half or more, we’re not going to have to go get a job overnight. So there’s a lot of flexibility.

And I don’t think jobs are bad necessarily. I think a lot of small parts of jobs are bad—the deadlines, the schedules, the stress, the coworkers that are difficult, bosses or employees that are difficult, policies, all the workplace BS. That’s the not fun stuff. Commuting, those are all things that suck […] No one likes those things.

But when you get rid of the commute and you realize that, hey, you don’t have to keep this job if you don’t like it, you can ignore annoying coworkers, you can ignore some of that that stress, you can tell your employer, “I want to help out, but I’m now in a position where I don’t really want to do X, Y or Z anymore. Can we renegotiate our terms?”

Mad Fientist: Absolutely! That’s been the best part of the whole journey for me actually. I accidentally just sort of—like your wife, I guess, I don’t think she planned to work herself into that amazing situation. It just sort of happens and then you realize, “Whoa! This is amazing! You can just get rid of everything that you hate about something, and keep only the good parts.” And yet they’re still trying to make you even happier by giving you raises and things.

Mad Fientist: Yeah! And she’s been planning to quit work in the next three months, but she’s been planning to quit for three months the last 2 ½ years. I bet people probably thought I was full of crap when, on my blog, I’m like, “Yeah, she’s going to quit the next three months… three to six months…” because we really did think that she was going to hit that next milestone, the next bonus or the sabbatical or whatever, and then she would just quit.

And she did quit, and then did six more months, she worked. We’ll know when this goes live and it’s broadcasted, but I’m like 99.9% sure she’s done, this is it, as far as her last day.

But who knows? They might call back and say, “Can you contract 10 hours a week and we’ll pay you a lot of money?” She may do it, and she may not. That’s really up to her and whatever she wants to do whenever that opportunity comes up.

You don’t have to define yourself as, “I’m retired, and I can never, ever work” or “One hour of paid employment equals I’m not retired.” Okay, yeah, whatever. It’s just a label.

I like to think of it as more of like creating that lifestyle that you want. And if working a little bit and doing something—maybe not meaningful, but something that’s engaging and intellectually stimulating, if that’s what you want to do and it happens to pay money, that’s cool.

Mad Fientist: Yeah, absolutely! Is there anything about early retirement that surprised you over the last couple of years?

Justin: I mean, I thought about it and read about it a lot leading up to early retirement. Not too much, but it surprised me. I guess one thing that surprised me was that initial 6-month decompression period. I thought I was going to be different and just immediately jumped into it. It really did take about six months to get into the grooeve and just be like, “Alright! I can just do nothing all day, and it’s cool. Nobody cares. I don’t have anybody to answer to.”

Getting into that kind of feeling where—I mean, I still do stuff during the day. I’m still productive to some extent. But just agreeing to let yourself not have to do anything and feel like, “If you aren’t working on something, then it’s okay.”

So, that was a little bit surprising to me, but I think it’s pretty well-known and documented that most people go through that period a few months.

Mad Fientist: And you’ve been spending less in the last two years of retirement than you expected. Is that right?

Justin: Yeah, a little bit. I think we’ve underrun our budget by about $3000 per year on average in the last two years. Just to throw some concrete numbers out there, we have a budget of around $32,000 per year for spending. And that doesn’t include a mortgage, which we did have during the first year, but paid off during the second year.

So, $32,000 per year, we spent a little bit over that the first year in 2013 because we did a major house renovation project. But I was able to [bird dog] it the entire time. I worked with a contractor, made sure I’m getting a good deal, I get what I’m paying for, I shopped around, got a good guy. So, I think big retired certainly helped out and probably saved me a few thousand dollars on that.

So, we spent slightly over $32,000 in 2014. We spent I think $24,000 or $25,000 in 2015. And that’s inspite of going on 7 ½-week trip through Mexico.

Mad Fientist: That’s amazing, yeah.

Justin: Yeah, with five people in the family. Part of that is travel-hacking if you’re down with that—the signing up for credit cards, getting sign-up bonuses, getting free flights, getting free hotels. We did all that and cut the trip—I think we spent $4500 on the trip. It would’ve easily been $9000 or more without that travel-hacking, which is really just a couple of credit card sign-ups, not anything crazy ridiculous. Literally, a few credit card sign-ups translated into $4500 in travel savings.

Mad Fientist: Yeah, that’s so good. I’m the same. I don’t do anything crazy. I don’t want to get in the bad books with some banks and ruin future opportunities.

So, yeah, I just take it easy, a couple of cards a year. It’s amazing how much it actually saves you. Travel is such a big part of our lives, but such a small part of our budget.

Justin: Yeah! And we traditionally had budgeted $5500 per year in cash for 2014 and 2015. I think in 2015, we busted that budget a little bit. But I think we also went on two weeks worth of cruises and 7 ½ weeks of Mexico. So I don’t know how much we spent, probably $6000 or $7000 on travel.

It’s still a very, very modest amount. If I told someone how much we travelled and explain how much we spent, I imagine they would say, “Well, that’s clearly impossible.” But it’s just shopping smart, credit card travel hacking, whatever you want to call, going at the off-season for the cruises, for example, finding good deals in general, making the money go further by traveling to places where the currency is relatively weak like Mexico or everywhere else in the world right now in 2016.

So, yeah, we’re definitely spending less than I thought we would.

Mad Fientist: And you’re planning to ramp up a bit I think I read in a recent post of yours saying that you’re planning on trying to increase that in 2016?

Justin: Yeah. So just where we are financially, our portfolio has grown off to the point where we were kind of—I want to try to spend about 4% per year of our portfolio. And that will fluctuate up or down—I mean, the dollar amount will fluctuate up or down as our portfolio value increases or decreases.

So, in essence, if we have $1.2 million in investments that aren’t allocated to anything—let’s just say $1.2 million—I want to spend about 4% of that, so $48,000 per year.

We’ve not been spending anywhere near that much. I set a budget of $40,000 for 2016. I’m not sure we’ll ever going to spend that much, but at least increasing the budget intentionally with the goal being to say, “Justin, it’s okay to spend more money either here where we can get more value out of things, more value out of life, have more fun, do more things” and focus the money on those areas that do actually bring more value, more fun, more enjoyment.

And I believe the categories that received the highest increases were travel, entertainment. Those are the big ones, travel and entertainment—maybe electronics, I don’t know.

But essentially, those purely discretionary funds categories. Otherwise, we’re spending plenty of money in the cost of living in the required areas. But we’re really focused on trying to do more fun stuff.

But the weird thing is like this summer, we’re thinking about just staying at home because we’ve been traveling the past two summers, it’s been busy. The kids, they just want to hang out, visit their friends, go to the swimming pool, go to the park, go to summer camp, the traditional things that most kids do during the summer. So, I think that’s fair that, at some point, we need to just chill out, take it easy for a summer, relax, which we do a lot while we’re traveling, but it’s not at home, it’s different.

Mad Fientist: Yeah, I’m excited to see how you do because old habits really die hard. It’s something that I’ve found as well since I’m still working, just bonus income that I didn’t expect to have. It’s like, “Alright, let’s try to let loose and just go crazy for a year.”

And we did the same. We traveled all across Southeast Asia early 2015. We did a lot of trips in Europe. We rented an apartment right in the center of […], so we can walk to everything.

It was more expensive than we probably would’ve earlier in the journey. It felt like we were just going crazy. We’re eating out more because we were close to all these restaurants we wanted to try. It felt like we were going nuts. But then, it really barely moved the needle at all because all the other big things were taken care of and we’re not doing crazy, stupid things like having a big car payment or something like that.

So, I’m looking forward to seeing how your $40,000 goes.

Justin: Yeah! And it’s exactly what you’re talking about. We could easily afford to go on a year-long around-the-world trip, but our real constraint right now is the kids are in school for eight or nine months a year.

And that’s something we’ve looked at. We could homeschool and then go on a trip around the world. I think there are pro’s and con’s. And it could be really hectic for us. But that’s something that, a few years down the road, we’ll certainly have that financial flexibility to say, “Okay, this is the year. Let’s do it! Let’s go around the world. Let’s do this big, awesome trip that we’ll never forget, ever.”

And we can’t do it on $40,000 per year. It may be $60,000 or $70,000. I have no idea. I mean, I’m just making numbers up here. But it may cost more money than what we would budget typically in one year.

And that’s okay. If we’re under-spending now, it’s okay to spend more in one year and less than another year. I’m not strictly sticking to any particular number as long as on average, overall, we’re hitting this target of 4% of our annual portfolio value.

Mad Fientist: Yeah, absolutely. I think it’s a great exercise to do—at least for us. Like I said, we traveled a ton in 2015. And we actually found that we traveled too much. The excitements of the trips wasn’t as great. The enjoyment wasn’t as great. You’re a bit tired and tired of seeing the same sorts of things in each of the cities you’re in. We realized, “Alright, we thought we wanted to travel a ton. But actually, maybe we just only want to take a few trips a year, so we actually enjoy them.”

And I think that’s great, yeah, to plan for those types of years where you’re like, “Okay, I’m going to spend more” and you realize that, “Hey, actually, maybe it doesn’t actually make me happier” rather than feeling deprived like, “Oh, I wish I could spend $60,000 in travel,” you do it once and you realize it’s not that great. And then, when you get back down to $30,000, you’re like, “Oh, yeah, this is much better.”

Now, this one, this is going to come out of left field for you. I’m just reading a bit about your past work history. It seems like we had the same job when we were 16 years old, Jersey Mike Subs.

Justin: Jersey Mike Subs, yeah, man.

Mad Fientist: Yeah, man. I went to highschool down in North Carolina. I actually moved from Pittsburgh to just north of Charlotte when I was in the eighth grade. So yeah, the Jersey in Mooresville, North Carolina. I was an employee there for, I don’t know, most of highschool I think—or a lot of highschool anyway.

So, just to see how fresh that is in your mind, do you remember what the #4 was?

Justin: I was thinking as you were saying, “I believe #3 was like ham…”

Mad Fientist: …and cheese. Yeah, ham and cheese.

Justin: Four, was that like cappacuolo…?

Mad Fientist: Oh, you got it, man, yeah!

Justin: My God! This is like wasted space on my brain. This is 19 years ago, wow!

Mad Fientist: Right on, man! I figured #4 would be a bit difficult. It’s not like a #17.

Justin: #17, I know #17. No one forgets #17. It’s Steak and Cheese.

Mad Fientist: That’s right. So, I wasn’t as far […], but that was one of my favorites. I was like, “I’m going to see if I can get him with the #4.” That was awesome, dude.

Justin: Yeah!

Mad Fientist: The audience, “Okay, this is a lot of entertainment.”

Justin: I haven’t been in a Jersey Mike’s, I don’t think, since I worked there just because I ate plenty of free food models there. Yeah, that’s pretty wild, things that you remember after.

Mad Fientist: That’s good, man. So, I see we’re getting near the end. And I always ask my guests, “If you had one piece of advice for somebody who’s on the path to financial independence, what would it be?”

Justin: Hmmm… well, that’s tough. There are lots of things. Maybe if I can give two pieces of advice…

Mad Fientist: Oh, yeah. Yeah, give two.

Justin: And this might be one piece of advice to younger people, and one piece of advice to the people that are on the path already to financial independence.

Mad Fientist: For young people, obviously, save early and save often. Figuring out, becoming a master of investments and knowing exactly where you’re going to be 10 to 20 years out and understanding all that is largely irrelevant. Just start saving money when you are young. Figure out how to invest it as you go along. Figure out the planning aspects of it, how much you need to save, your budget, your withdrawal rates and all that. That’s a lot easier to figure out later in the game.

Even tax strategy, don’t worry too much about tax planning today. Start saving today, and then get smarter tax planning as you learn more, as you get along.

But saving early and saving often, it really is the only piece of magic that you can use to get to financial independence at a fairly early age.

And the piece of advice to the middle of the path people that has started already and understand savings and investments and the importance of all that, just stick with it. Perseverence, you may see your peers out there doing different things than you’re doing in terms of lifestyle choices and spending decisions.

Make your own choices, stick with your plan if early retirement and financial independence is a key goal of yours. Stick with those plans and do what you want to do for yourself because you want to do them and not because you’re buckling into the peer pressure of, “Well, everyone else is buying a Mercedes. Everyone else is having a kid. Everyone else is buying a big house. Everyone else is going on these crazy, expensive vacations to resorts in Tahiti.”

Just keep doing whatever you enjoy doing. And maybe that does include fancy cars and vacations in Tahiti, and that’s just part of your spending plan. That’s okay too. But do what you want to do because you want to do it and stick with your plan, persevere until you get to your end goal.

I think it can be tough when you get part of the way there and everyone else is enjoying their higher salaries and their careers, and you’re still on that path to saving. But another five or ten years later, you’ll be at your goal possibly in your late 20s, 30s, maybe 40s. You’ve hit your goal, you’ve pretty much done something that other people do in their 60s, but you’ve done it two or three decades earlier.

And it’s pretty cool! It’s a good accomplishment. Even if you keep working for a while, it’s something that you’ve got that money in your back pocket that you can pretty much name your terms of employment wherever you go in life, whatever you want to do, however many hours per week you want to work, flexible.

Everything can be flexible when you don’t need a job. It’s a good spot to be in.

And even if you’re halfway there, you have that abiity to say, “This job sucks! You can shove it. I’m going to walk away and do something else for a year, and then come back and find a new job, a new employer somewhere else.” There are lots of advantages to financially independence when you’re only halfway there.

So, just persevere when you can, make the money, keep saving. But also remember that that money in your pocket is a powerful tool that you can use to help you design that lifestyle that you want to have.

Mad Fientist: Absolutely! Two great pieces of advice. Yeah, you see people that are just paralyzed by fear. They start investing, and it’s like, “Well, yeah, even if you make a mistake and you lose half of what you put in, if you put in $10,000, you just have $5000, you have so little money at that stage anyway. Just get started and learn as you go.”

That’s great advice. And yeah, absolutely using the power that financial independence or even being 50% of the way to financial independence gives you, yeah, using that to your advantage and start making that lifestyle that you want now is awesome.

So Justin, thank you so much for joining me. This has been a lot of fun. If people want to find you, should they just go the and send you an email from there?

Justin: Yeah,, that’s the blog name. There’s a contact form on there. Shoot me an email through there. I’m on Twitter. I’m on Facebook. I can’t remember the names for those things. I think it’s…

Mad Fientist: That’s alright. I’ll link to them in the shownotes.

Justin: Yeah, check below the podcast here. There’ll be links for it. Yeah, stop by and say hi.

Mad Fientist: Awesome! Well, thanks again, Justin. I really appreciate. Hopefully, I’ll talk to you soon.

Justin: Alright, thanks a lot!

Mad Fientist: Alright, bye!

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18 comments for “Root of Good – A Million Dollars in 10 Years

  1. Matt Warnert
    August 1, 2016 at 11:41 am

    Great interview. For one of the future podcast can you get Mrs. RootofGood? I would love to hear about the negotiations between her and her employer. We hear so many stories about how women struggle to effectively negotiate in the work place and she seems to just be crushing it.

    • Ben Jensen
      August 1, 2016 at 1:47 pm

      I second Matt’s request. When it comes to retirement time, my wife will have the greater difficulty in letting go. Would love to hear how she handled mentally disconnecting.

    • Justin
      August 1, 2016 at 10:04 pm

      She’s very reserved and doesn’t generally want to do podcasts but I’ll see if she’s willing sometime (if MadFIentist wants a Root of Good round 2).

      The truth is it’s kind of take it or leave it. She never threatened to leave or gave an ultimatum, more like “hey I really want to take the summer off to spend time with family” and “hey, I quit. Oh you want to give me 3-4 day work weeks and work from home for full time pay? Ok!”. Being an AAA or AA rated employee always helped her out too (working smarter, not longer hours did the trick).

      • Matt Warnert
        August 2, 2016 at 2:29 am

        Thanks for the follow up Justin, it sounds like she works for a rather smart business as well. Losing quality people hurts like nothing else. Did she just fall into this business or was there something in particular she sought out?

        I feel like being on the same page as your spouse is so important to future happiness that it really needs more air time.

        • Justin
          August 2, 2016 at 11:32 am

          It was the job she started right after grad school. I found the job for her from a random internet search I think. Major investment bank (position in Raleigh, not Wall St).

          She used to be in a position that demanded many more hours with a less flexible schedule, but switched departments when they changed the overtime policy and the job became too much. She probably missed out on a promotion in the next 7-8 years but it worked out well in terms of quality of life.

  2. Jonathan
    August 1, 2016 at 12:00 pm

    Sweet, I’ll be sure to listen to this one soon. I had a consultation with Justin a few months ago and it was very helpful with my FIRE planning (and a good sanity check too).

  3. Ben
    August 1, 2016 at 12:22 pm

    I would like to know what their budget is for health insurance and if they are on a national plan. Health insurance is the biggest and most frustrating variable for me when factoring my early retirement budget. I’m currently estimating I’ll have to take a national plan and am budgeting $400-500 per month for a silver level plan with a $5k deductible. Do you have any posts about health insurance options for people who plan on retiring and remaining in the US?

    • Mr. Tako @ Mr. Tako Escapes
      August 1, 2016 at 1:16 pm

      I don’t recall all the exact numbers, but it’s all up there on his website.

    • Justin
      August 1, 2016 at 10:11 pm

      Hey Ben,

      I’ve got a few ACA posts up on my site. We signed up for a “gold plated” silver plan with large cost sharing subsidies. The total cost is $125 for us after a $909 monthly subsidy tax credit and that’s for a $0 deductible, $500 max out of pocket plan. Copays are $20 for a doc visit. So far we kept the same doctors and haven’t had any problems with coverage. They even cover the kids’ dentist visits (at the same dentist we’ve used for a decade!) at 80%. From my point of view it’s working well for us but the total cost (including the taxpayer’s share) is mind-blowing.

      Here’s a few posts for further reading: <– Our experience signing up for coverage <– how the subsidies work with your Adjusted Gross Income <– Case studies of what you'll pay for a few different hypothetical households.

      • Ben
        August 2, 2016 at 7:15 am

        Thanks so much for the links and the info! I’ve been trying to figure out what qualifies as income for having access to the subsidies. I’ll take a look at the posts you’ve referenced and see if you covered that subject.

  4. Mr. Tako @ Mr. Tako Escapes
    August 1, 2016 at 12:37 pm

    It’s always good to hear from Justin at RootOfGood. He was one of my main inspirations for ER!

    There’s this myth that kids are expensive (, but they really don’t have to be. You can reach financial independence and retire early with kids. It takes a bit more effort, but parents are used to extra effort!

  5. The Green Swan
    August 1, 2016 at 2:46 pm

    Thanks for the interview! I admit that I’m a bit nervous still about the cost of children. We have a two year old and so far so good, but still bracing for the more expensive teenage years and college. We’ll have to do our best teaching them financial literacy to help them make better financial decisions themselves. I think there are a number of good strategies that we can put in place, we’ll just have to see what works best as we begin to enter those years.

    Thanks again for the interview!

  6. Yo
    August 2, 2016 at 3:03 pm

    Tarheel versus Wolfpack…..didn’t even come up?

    • Justin
      August 11, 2016 at 11:05 am

      I attended both uni’s so it’s hard to pick. My heart remains with the Wolfpack though. :) My hatred of the Tarholes died when I started attending UNC. :)

  7. Sadie
    August 3, 2016 at 6:44 am

    Great interview! It takes a lot of effort to go through! I need a quiet time to listen again!

  8. ER-Bound
    August 3, 2016 at 6:04 pm

    Thanks for the interview! My wife recently quit her job to take care of our newborn son and I was worried that early retirement would no longer be a realistic goal. After hearing that you were able to achieve FI on five-figure incomes though, I now know it is still very much a possibility, although it will just take a little longer (on my current career path, I should probably be making six figures in 4 or 5 years).

  9. Piggybanknomics
    October 3, 2016 at 10:53 am

    The conversation that “kids are expensive” comes up all the time in my life (mid 20s-early 30s). However, I greatly appreciate you pointing out that your lifestyle changes once you have kids. There is no more partying every weekend, no more large bar tabs, no more happy hours, no more expensive dinners “just because.” Life can become simpler, and simpler living can be cheaper. There are cost to everything, and a person just needs to weigh the costs and benefits of every situation!

  10. Lori Waite
    November 27, 2020 at 6:34 pm

    I’m looking for a good bank to bank with. We’ve been with USAA for decades and now want to make a change for banking and home, auto insurance. Any suggestions?

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