APL shares the tips that helped her FIRE at 30.
Philipp: Welcome to another episode of In Your Best Interest, your personal finance podcast. I'm your host, Philipp Muedder, and on the show today is A Purple Life, a personal finance blogger, who we’ll call APL for short. APL was working in marketing in New York Then, in January of 2015, she started a blog and hatched a plan to retire in just 10 years at the age of 35. By reducing her expenses, increasing her income, and moving cities, APL reached her goal in half the time and retired in 2020 at the age of 30.. APL, thank you so much for coming on the show.
APL: Thanks so much for having me.
Philipp: Yeah, it's really good to have you. Just giving a little premise to our listeners who may have not heard about you or your blog before. But the reason why I'm calling you APL is because you actually give away a lot of detailed information. So you’re kind of like hiding your name, which I totally appreciate. I think your readers are very familiar with this, but maybe not our listeners. We probably get into a lot of the numbers, right? And they're very detailed, which is awesome for people reading and wanting to learn. But of course, it's your privacy, so I really appreciate it. So for everyone listening, I will be calling our guest APL and yeah, just to set the stage for you. [02:00] So APL, what's your background and how did you get started on this FIRE journey? Like what was really like the start of this?
APL: Well, my background is in marketing, if you mean career wise and my partner actually introduced me to the idea of financial independence and retiring early in 2013, and then I'm embarrassed to say I basically ignored him and the idea for 2 years. So that's unfortunate. But I decided to finally go for it in 2015, like you mentioned, and now we're here.
Philipp: Oh, that's awesome. But that's a good story because. And thank you for mentioning that you have a partner. So it always has to come from somewhere, right? I studied finance, so obviously I have a knack for finance and I like finance. And then I went to wealth management as my first job. So for me, it was always very... I read a lot of articles, I read a lot of blogs, right?
I always thought about FIRE, but for me and a lot of people actually, it's very difficult to get the partner on board, right? And if you're in a relationship, I feel it's very difficult if one person is not on board with this, right? So if one person says, “Hey, I'm going to do FIRE”, but maybe the other person doesn't want to. So how did you guys - you said already that there was like a time, a 2 year gap from maybe when your partner started this to when you started this what was kind of that journey like.
APL: So it's actually funny you mention that because we didn't have that concern because while we are partners in life, we are not legally married and will not be in the future. And we have completely separate finances. So he actually was just like, I found this cool idea. I'm going to go for it. Are you interested? And I was like, nah. [04:00] And then he was like, OK, whatever, I'm going to go, do it then because it didn't really affect him.
Well, almost ironically, I think because he gave me space and he didn't actually care if I was going to do this idea. That's one of the reasons I came around because he wasn't nagging me about it, and I just had those 2 years to like, think about it, think about all of the objections I came up with. It was just all the usual stuff. What would I even do if I was retired? Is that even possible? How does the math work, etc? And then I worked all of it out, and then I was like, actually, this sounds plausible. Do you mind sending me those links again? And he's like, OK. And that's the end of that.
Philipp: Oh, that's awesome. Yeah, but that's good to hear for people, right? Because I think a lot of people, when they are in a relationship, maybe they're facing that fear of like, oh, what if my partner doesn't want to do it, right? Or have lots of different objections, like you said, that could come up. And then because I guess if your partner, for you guys, it was never a worry for you because you're managing your finances separately, which we can get to here in a second, actually. But was his plan always, because I know now from you, we talked before the show a few days ago, and so I know the background, maybe the listeners don't, but you told me you're currently travelling right or you're kind of location independent at this point, traveling around the States at the moment? Did he always have a goal other than reaching financial independence - like travel? And then that I could see as a difficulty - if one person wants to travel and the other person is bound to a job, right? Because they didn't FIRE?
APL: Yeah, actually, we didn't really come up with the idea for trying out nomad-ism until pretty close to when I was retiring, so I retired in 2020. I think we came up with it maybe in 2018 or 2019, but we came up with it together. So that was lucky. One of us wasn't really pushing for it. [06:00] However, even though he originally gave me the idea, I did end up retiring before him. He's still currently working, so he was just lucky that he has a remote job. So we've been travelling around together and he's been able to work during it, which is awesome.
Philipp: Oh, that's awesome. That's really cool to hear because I think that's probably where it's more and more going to, right? So with the remote work like, for example, myself, right, I'm a little bit everywhere at this point right now, too. And more and more people will be able to do this going forward. But you were saying that your partner still works right? And when you manage and you said you're managing your finances separately, how did you guys make this decision or was it from the beginning that you always said, hey, we're going to maintain our finances separately? Or was there any point in time where you said, Hey, maybe combining makes more sense?
APL: Yeah, we talked about it, and obviously we were separate people, so we came at it with separate finances and then when we decided that we didn't want to get married, just chatted about, well, what does that mean for our money? Do we want to combine it or keep it separate? And we just decided to keep it to ourselves.
One of the reasons for me personally, I can see myself becoming annoyed just because, obviously, we're different people so our values can be different. So while I'm totally fine with the $7,000 I dropped on a first class ticket to the Maldives - that's a true story - he might not see that as a good use of most of our funds at the time, so I was just like, well, great, it's my money. So I'm going to do that and you can go buy whatever you want and we'll just be happy together, it's fine. So that's how we decided. I think I wrote a post about it, like I think it's called, why we have separate finances or something like that. [08:00]
Philipp: Yeah, we should definitely drop that in the show notes below. So people can take a look at this because we get that actually quite a lot, right? Those questions about: Do I manage my finances separately? I do a lot of financial planning still. And talking to… Some people want to only talk together. Some people don't want to do financial planning together. Finances have separate pros and cons, right? So they always ask, there's always and it's also very much a personal preference, right?
But I think from your conversation that I already can hear is that you guys have a very good communication channel, it seems, because I think that's the most important. That's what I always tell people. As long as you communicate your needs and wants with the other person, especially when it comes to finance… I saw way too many people end up in divorce over their finances. It might not be the final straw, right? Why they got divorced, but it started mostly there.
APL: Yeah, we've been together for, I think, 14 years, so we have a lot of practice that does help.
Philipp: Oh, that's really cool to hear. So APL, another thing then you said your partner is still working currently. Does that mean he has not reached his retirement sum? Or is it because he still likes to work? What's the reasoning behind that?
APL: A bit of both. But yeah, he doesn't dislike his job. Nowhere near as much as I did at some points in my career. Yeah. And so he's just trucking along until he gets a nice, cushy number that he likes.
Philipp: So, to recap: APL was 25 when she decided to retire at 35. But she ended up retiring in half the time, at 30. Keep listening to find out how she did it (without scrimping on food or going out!), how she calculated her savings goal, and how she spends her time in retirement.
Philipp: That's awesome. When you decided on your number [10:00] - which we get to in a second - your initial goal to retire, right? When you know, looking at 25 to 35, that number, did you come up for it yourself? Did you guys talk about it or do you guys even have the same number or are they separate?
APL: They're separate, just like everything else, yeah. So when I was coming up with the number originally, I just took the like standard advice for a 30-year retirement, multiplying your average annual spending by 25.
So I think I was spending $35,000 a year living in Manhattan, so multiply by 25. That's like, what, $875,000? So that was my original goal, and that's why it was going to take me a decade. And then luckily - we can get into it - but basically, I moved across the country and had a better life for about half the cost. And so that cut my time in half and I also got a promotion and a higher paying job. So that helped as well. And so I needed a lot less money to maintain the life I wanted and got there faster.
Philipp: Yeah, which is pretty, pretty cool. Do you see yourself at all going back to work, you think?
APL: Not unless I absolutely have to.
Philipp: Ok. No, that's good to know, right, but because some people, you know, they might enjoy retirement for a few years and then want to do something they maybe have an itch to start something because a lot of times when I speak with clients on financial planning and they say, Oh, I want to retire at 50 years old, but then we look at longevity, right? And that's going up as well, right? So how long do you have?
Let's say, oh, we work with a 9-year time horizon for your life, then that's, you know, 35, if you retire at 50, 40 years of retirement, right? And these people then worked already from 20 to 50, right? [12:00] And maybe had good careers. So for them, it's hard to quit. But I always said, Hey, you can always have a part time job. You can always work for an NGO, right?
Or do something that you're more passionate about that can always bring in a little bit of money on top of your investments. So, you know, when talking about it because they always feel like, Oh, I don't reach my number, but you can supplement that as well in retirement. So that's always what I work a lot with clients on as well.
APL: Yeah, it's a great idea. And that's one of the reasons I was comfortable pulling the trigger at 30 because even if I have the absolute worst secrets of returns which are already, it doesn't really seem like that's the case. But if I did, oh look, I'm 31 or 32 and I just had a year or two off.
So I go back, it's fine.
Philipp: Well, exactly, exactly. And like I said, I think that plays also the role now with this nomadic lifestyle. And I think getting jobs from anywhere has gotten through the last 2 years even though how bad COVID-19 is, but that is one of the things that was brought up to the table that's a common thing now going forward, right? And potentially helps a lot of people to get out of the trot, move around and still find jobs later on.
APL: Yeah, it definitely does. I actually had a remote job for the last 4 years before I retired. And obviously that was pre-pandemic basically, so it was awesome to see that there are so many more remote opportunities now. So I feel it would be an easier option if I did have to go back for some reason.
Philipp: Yeah, no, absolutely. And let's get to the numbers. So you said you would have needed $875,000 if you would have stayed in New York, but you were able to move right? And you were able to cut your retirement time in half. So what was that magic number for you in the end that you wanted to get to? And then, how, as a follow up question to that, how did you cut it in half? It's not just by moving to the other side of the country, right? [14:00]
APL: Actually, it was just from moving.
Philipp: Oh, really?
APL: Yeah, just the difference in rent and taxes between Manhattan and Seattle. That was it. I didn't change my lifestyle. I was still eating out, going to lake houses like whatever - that was it. Which is amazing. And then Seattle also pays Manhattan salaries while having about half the cost of living. So that was all I had to do besides getting that higher paying job to get me there a little faster as well.
But to answer your original question, yes, my revised number was $500,000 invested, and I got that from analysing my spending in Seattle and seeing that I spent about $18,000 a year. And then just to be safe, I added an 11% buffer on top of that to get about $20,000 for a goal for my first couple of years of retirement. So, you know, 20 by 25, $500,000, that's how I got that. And then just to be safe. I also wanted to have a 2 years’ cash cushion, about $40,000 saved when I quit as well since I was retiring into a pandemic and possible recession.
Philipp: So it's kind of like your emergency fund, those $40,000.
APL: Yeah. So my plan was if the market - since it did drop in March 2020, if it stayed down, then I wouldn't go into my investments immediately. I would still instead go with my cash cushion. And then since a lot of market recessions in the past have only lasted 2 years, after it's over, I'd be able to get into my investments. And then, of course, life has worked out even better than planned, and last I checked a few days ago, I actually have $750,000
Philipp: And you lived already one year off in retirement right now.
Philipp: Yeah. So that's pretty good, right? So you grew your investment, your nest egg and you already did more for you? That's pretty nice, huh? Well, that's the power of being invested. I, like too many, you know, a lot of people start saving, [16:00] but then they're not investing or they're trading right?
We will get into portfolios and a little bit and how a simple portfolio can, you know, you don't need much magic from an investment advisor in order to get there. But $20,000, have you thought about inflation knowing that that's a big topic the last 1 to 2 quarters, really the last quarter of this year, not just in the US, but everywhere, right?
Talking to my family in Europe. Gas prices for heating the houses are through the roof. Same with food, right? How have you thought about this before retiring? Or is this something that now came up and you kind of like a little bit worried about that or not really?
APL: I'm not worried at all. And of course, I put that into my models. So my calculations originally included increasing with inflation every year, my spending. So since we have like what, 5% inflation, I'm going to add that to my budget for next year.
However, I know that you mentioned like heating houses and stuff like that. The actual inflation rate - like the, what is it, the consumer price index - they based it on things that normal people have that I don't.
For example, houses, cars, kids, pets, like all these things. So I have seen a slight uptick in food costs, but nothing huge or like… I think I was reading some articles like a 30% increase.
We just have, you know, switched the types of meats we eat for now. If it's way too expensive - or the types of fruit and vegetables - it's really not that big of a deal. I think I'm still on track to spend like between $18,000 and $20,000 this year, even though we've been traveling all over. So it hasn't really affected me, but that is built into the models just in case.
Philipp: Yeah, that's good. That's good, for people to know and for modelling. [18:00] Do you use a spreadsheet these days or do you use any online tools?
APL: Yeah, my favorite online tool is cFIREsim.com. It's a FIRE calculator that allows you to change a lot of different variables, which I absolutely love. So, yeah, that's my favorite. And then I do just have standard spreadsheets for simpler stuff.
Philipp: Oh, that's great. I'll check out cFIREsim.com I don't think I came across this yet. So that's a good one to take a look at. And so yours was $500,000, right? In most people's head, and it's probably something that is, like, probably burned into us by media or by parents or other people you look up to when you look at finances is that, hey, I can only retire if I have a million dollars like a magic number, right?
As if a million dollars is the be all and end all. So why, I know some of the reasons why you're already comfortable retiring with 500K, right? But how do you talk to people, maybe your family and friends write about what the number should be and why your $500,000 you think will last till the end versus what other people say.
APL: So usually my first thing I say is that when you see those media headlines about a million, they're talking about a couple. So half of that is $500,000.
APL: So we're already there. Yeah. But actually, my friends and family, surprisingly, I'm still waiting for it. They've never questioned any of this. So I don't really have practice with those discussions. But if they are looking to retire themselves, I give them the baseline of like a 30-retirement, multiply your expenses by 25, like I mentioned, and then add in all the caveats that you want.
For me personally, just because I don't have all of those things that the consumer price index assumes you do, my spending is completely flexible, and that's one of the reasons I'm comfortable [20:00] with this. So for example, I don't think I have any bills month-to-month besides my $30 Google Fi plan.
So like, I don't have rent coming up necessarily. I don't have a car payment. I don't have anything. So if the market tanks and I'm about to take out my annual expenses from my investments instead of going to the UK, I'll switch it up and I'll go to Mexico and hang out on the beach for like a quarter of the cost, no big deal.
So the spending flexibility and then also, as I mentioned, the fact that I am so young, even if this doesn't look like it's going well in 15 or 20 years, I can still find a job like I'm not completely out of the realm of possibility to get back into my career. So those are the main two things. And then also, I'm always just weighing the possibility of not having all of my mental or physical faculties or something going poorly or losing people in my life. So that's like a bigger fear for me than the money portion.
Philipp: Yeah, no, those are. Those are good, good points. And yeah, that fear everyone probably has. And it's more important than money for sure. And you need to put that into perspective. So we know now how we got to the $500,000 that you initially wanted to realise before you get off into the retirement sunset. And we talked a little bit about how you got there, right? One is moving. You know, the cost of living standards are lower. You made more money in your job, but it's also about saving right and it's also about investing. So how did you first get started into investing and what are your favorite instruments in that?
APL: Sure. I first got started investing by reading the stock series on J.L Collins, in which he has since turned into a book called The Simple Path to Wealth. [22:00] And he explained how the stock market works in really down to earth terms that for the first time, I understood, which was awesome.
I recommend that book to everyone that asks me, How do I invest? Like, just read this book and get back to me, or if you prefer blogs, it's in blog form. Here you go. So, yeah, that's what I decided.
And based on that, and then also, I was ravenously reading every book that I could find at the library about investing just to make sure that I understood all of the concepts and pros and cons of different approaches.
And after all of that, and weighing my goals and my risk tolerance, I decided to actually have 100% stock index funds. So I'm just in one fund with Vanguard, the Vanguard Total Stock Market Index Fund VTSAX, and that's me, simple.
Philipp: Very simple. So, and then did you end up maxing out like all your 401Ks back in the days or did you just save in the brokerage account since the problem with these retirement accounts?
For a lot of people, maybe you're not aware because you're in the US, but in Asia there's retirement accounts and there's, for example, in Singapore, there's a very good pension scheme still, right? But you can't draw on that, of course, until you're later in your retirement, like a 401K at 59 and a half, 60 years old, right? How were you thinking about that and where were you placing your assets from that standpoint?
APL: So I did max everything in my 401k, my IRA, and then I also saved money in taxable. So by the time I retired, I had about half of my investments in tax-advantaged accounts and half of them in taxable accounts. So my plan currently is to obviously use my cash cushion and then use my taxable account, which is about two-, well, when I retired, it was $250K, and now it's what, $375,000? And draw that down, at the same time, [24:00] I'm going to be doing a Roth conversion ladder. So moving my money that was in my 401K that I then transferred to the traditional IRA and then slowly moving that into a Roth so that after the 5-year conversion period, I can pull on that as well without having to wait until I'm 59 and a half.
Philipp: Oh, good strategy. And so you already mentioned your favorite investments, so you're using just one index fund from Vanguard. What's the reasoning behind that? You know, this is already very diversified of course, it's a fund. But what was the reasoning behind just one versus maybe having, you know, maybe exposure to emerging markets or different geographies through different funds on top?
APL: So for me personally, the downsides outweighed the pros basically. So having more funds, having an addition to the US stock market fund, having an international fund, stock market fund, international bonds, US bonds, all that stuff.
Basically, the risks of currency conversions and other things that happen with emerging markets, for example, were just a little too much for me. And then I was comparing it to like, if I added that in, how would my models look historically if I'd retired in the last hundred years or whatever, and it was a few percentage points different?
And so that is not, to me, worth the time, basically to reallocate it every year and keep my eye on it and all that stuff. Also, just because, like I mentioned, my risk tolerance. So even if this is not an ideal gamble and the US stock market continues being so unpredictable, I'm fine with it because I did test it in March 2020, I'm a weirdo in that I look at my portfolio every single day.
So when it was dropping 10% a day in March, I was looking at it and I was like, I'm fine. [26:00] So I thought originally that I'd be freaking out and like, want to be more diversified, to be safer and all that stuff. But I was totally chill. So basically just ease for me. Obviously, it's not an ideal portfolio for everyone, but it works.
Philipp: No, I think it's great and I think you're not a weirdo. I see my investments every day, too. So don't worry. And a lot of our listeners probably too, because they're interested in personal finance. But yeah, no, I do agree. It's not for everyone to look every day. I have a lot of friends that call me when it's going down and I go, It's terrible. I said, don't look at it - remember 5 years ago you had the same thing, and now you have more than the last time, right? Yeah, exactly. So let's go.
APL: I get those texts. Yeah.
Philipp: Well, exactly. So before we wrap it up, right? First of all, thank you for all this insight. I think we'll definitely have a few links to some of the articles you wrote, because that's where people get even more insights into some of your thinking behind the different topics we touched on today. But what's retirement life like? I have to ask.
I'm not yet retired, and a lot of people are also afraid of leaving work, right? And then what to do? What do I do all day? Maybe it's fun for the first, you know, 6 months, 12 months. But then at some point, do I want to do something?
Obviously, you have a blog, so that will probably take some time away from your day. But yeah. Anything you want to share, any lessons, anything that people should be prepared for.
APL: Yeah. And I was totally one of those people. I literally said to my partner: “What would I do all day?” And then, now that I think about that, I want to slap my former self because and I get it, though, because when you're working, especially in a high-demand job, I forgot what I enjoyed doing.
Like, if I had a weekend, it would usually take me the whole weekend to remember. And then. And it's Monday morning, so that didn't work, so I'm loving retirement personally, [28:00] what I do all day is, obviously we travel, we move about every month, so that takes up a good chunk of my time exploring the new places that we are eating everything in sight, walking around, learning the history of the new town we're in the new state and hopefully soon country.
Also, I have my own personal goals. You mentioned my blog. I do post every week on there currently. And I like to do random challenges. So this month I'm doing NaNoWriMo - National Novel Writing Month, which the goal is to write 50,000 words in the month of November. So that's taken up a good chunk of my time.
I also have a goal in 2021 to read a non-fiction book a week, and some of them are quite long, so that's taken up some time. But it's awesome because I could barely do like 10 non-fiction books a year when I was working, so doing 52 in 52 is really exciting.
I also had the goal of getting better at sleep because I absolutely sucked at it, and I thought that was just part of my nature. But it turns out it's not. After a year of sleeping when I feel like it and waking up when I feel like it, napping, if I'm tired, I am a sleep rock star, which is awesome.
I also have just been getting into other random hobbies, kind of because of the pandemic. We were obviously not travelling around very much pre-getting-vaccinated. So I started getting into random stuff like birding. I can now identify most of the local birds, which I never would have expected, some of them by sound. I'm all into astronomy. I got up at 5:00 a.m. this morning to watch the Leonid meteor shower, which was really cool. Also, like plant and animal identification, I've just got into running. I'm doing a couch-to-5K program, and then on top of all of that, I am obviously travelling around, and part of that is seeing our loved ones. So today actually, I kind of complained. I was like, Why am I so fully booked? [30:00] What's going on? And then I realised how stupid that sounded. So yeah, that's my retirement. It's pretty sweet.
Philipp: That sounds pretty good. I can't see you, but I can hear from your voice. You're enjoying every minute of it. So that's really cool to hear. So if you would leave our audience, maybe with one advice for them if they are just getting started in FIRE or on the journey to FIRE anything you want to leave them with before we wrap it up.
APL: Yeah, I'd suggest figure out what makes you happy and then save for it.
Philipp: That's awesome, thank you so much, and I know you have a bunch of resources on your blog, so it is also your favorite books on there. Your favorite finance book, I looked at - took a look at them. I read all of them before as well, so I like them a lot. So I suggest everyone to go visit apurplelife.com, we'll put that in the show notes below as well. And APL, thank you so much for joining us today. It was a pleasure speaking with you, and I wish you all the best on your journey. And perhaps, you know, in 5 years time we'll meet again, and let's see where the journey took all of us.
APL: Sounds great. I'll be there.
Philipp: Thank you.
In this episode, APL, a personal finance blogger and former marketer living in New York, shares how she FIRED at 30.
For past guests, visit stashaway.com/podcast
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