WORTHEN FINANCIAL ADVISORS EP 1: FINANCIAL INDEPENDENCE RETIRE EARLY (FIRE): THINGS TO CONSIDER + TAKING THE FIRST STEP

Angela Johnson
Anthony Hernandez
Worthen Financial Advisors
Your Money or Your Life by Vicki Robin and Joe Dominguez
Life Energy Calculator
MINT
EveryDollar
That feeling of regret after buying a ridiculously expensive (bag), or insert your financial splurge here
Women & Money: Owning the Power to Control Your Destiny by Suze Orman

Looking for help creating a plan and implementing FIRE in your life? Book an appt with Worthen Financial Advisors HERE!

Full Transcript:
Angela (00:01):
Okay. So, we help people with investing and planning for retirement and planning for college and things like that, which are so important. But today we’re here to talk about FIRE.
Anthony (00:14):
FIRE.
Angela (00:15):
FIRE. FIRE lifestyle. So if you haven’t heard of FIRE, what is it? What does it stand for?
Anthony (00:25):
Financial independence retire early, which sounds pretty nice.
Angela (00:32):
Yeah.
Anthony (00:32):
Retiring early.
Angela (00:33):
Yes. And as we’re getting started, I think a lot of people who we meet with and talk to aren’t planning to actually retire, retire. They want to make work optional really, or continue to work, but doing something that they love, which we might have good news because you can do that as well early if you follow the FIRE lifestyle. But I mean…
Anthony (01:05):
Yeah, there’s so many different ways to do FIRE. It’s really just about the way you see yourself being the happiest, so.
Angela (01:15):
Happiness. That’s a new concept in the work world.
Anthony (01:21):
Yeah. Most of people don’t think that they’re going to enjoy their day to day when they think about work, so.
Angela (01:28):
Right. That’s why it’s called, I feel like work is a negative word sometimes, but I’m fortunate to love, love what I do. And I don’t want to speak for you, but I think you do too.
Anthony (01:42):
Sometimes. I’m kidding.
Angela (01:47):
Your boss is the best. We got that down. So how did you hear about FIRE? Because people who are my age who I work with want to make work optional for sure, but there wasn’t a name for it other than kind of the Dave Ramsey plan. But FIRE is a whole movement.
Anthony (02:18):
It really became prevalent in the nineties from a book, but I think what really sparked my interest was that I just didn’t want to have the normal nine to five. I wanted to find something that I enjoy doing because I’m going to be spending 40 hours plus doing this. So for it being such a big chunk of my life, I want it to be something that I enjoy, something that I feel like I’m making a difference for someone. So that’s why I specifically chose financial planning. But at the same time, I don’t want to have to do this forever. I want some security knowing that if someday I decide this isn’t what I want to keep doing, then I can just walk away and start something new.
Angela (03:04):
Yeah. So totally different than my grandfather, your great grandfather, or our grandparents or whatever, who you get a job, you go, you work there, you get a pension. You retire when you’re 65. They have a nice lunch for you. They give you a watch and you go… I was going to say sit in a chair and watch TV and wander off into the sunset. But people travel and things like that, or did. But we’re living longer. Our jobs are less physical in general, and so we’re not actually tired. Our body isn’t broken down by age 65 and people want to enjoy their time now and their time later. So how do you do this fantastic FIRE? What’s the secret sauce?
Anthony (04:13):
The secret sauce, it really just boils down to what you value. So it’s really just taking a step back and saying, “These are the things that are worth it to me to spend all this time working,” and then go spend some money on some jeans may or may not make you feel better, but looking at it.
Angela (04:37):
Yeah. So jeans. You’re not talking about Wranglers for Walmart, I guess. This might be the extreme. I don’t know if Walmart even sells Wranglers, but let’s say a $40 pair of jeans, which could be very nice, or a $200 designer pair of jeans for instance. Is your life energy, what you put into working to earn the money to get that, was it worth it? So it’s looking at every purchase in a different way.
Anthony (05:25):
So talk about a little life energy. What’s that?
Angela (05:28):
So life energy, the way I think of it is not just how many hours. So if you earn $20 an hour, then you have to work 10 hours to buy a $200 pair of jeans. That’s more than a full day. Was this pair of jeans worth one day out of 365, one point however many days? But then, and we should back up. The book that started this all is Your Money or Your Life, and I’m going to look, by Vicki Robin and Joe Dominguez. So that’s from the nineties and they kind of gave this name to this way of thinking. And we’re going to have a series going through the steps to talk about the FIRE movement and FIRE lifestyle.
Angela (06:24):
So they talk about life energy a lot. Back to the jeans, was it worth 10 hours? But then they break it down even further. To get to work, you’ve got to have a car, if you commute. You got to put gas in that car. You have to pay tolls. You have to have maintenance on your car. You do have to have appropriate work attire, whatever that is. If you can wear nice jeans and a top to work, that doesn’t necessarily mean $200 jeans. But if that is worth your life energy, great. Maybe something else you’re spending money on, you could cut back on somewhere else. Okay. And so you’ve got to get haircuts. You’ve got to maybe your coworkers go out to eat lunch every day and order coffee in every day, and you’re spending so much money on food and there’s a cost to working. So it’s looking at every expense that you have, tracking what you spend, and making sure that it was worth it to you. Is that how you would explain? How would you explain?
Anthony (07:38):
Yeah, no, definitely. I think it’s what we mean by looking at a different way, it’s not so much just looking at the money aspect of it, but the time aspect as well, looking at time as a resource. It’s a finite resource that we don’t know how long we’re going to get, but one day it’s just going to end. So looking at where that time is going. You could even go as far as to look at time it takes to decompress afterward.
Angela (08:07):
Oh. Yes.
Anthony (08:07):
So from work and you want to just not do anything. You want to turn the TV on and just sit there for 30 minutes or an hour. That’s causing you time because it’s an effect from work.
Angela (08:17):
You’re so right, especially if you don’t like your job. We all have stressful days at a job. But if you don’t like it, then this FIRE, your money or your life explains, it’s probably not worth it because you have to take not just vacation time, but you have to take vacation. You have to pay for a vacation not because you necessarily want to travel, but you have to decompress big time. You have to decompress in The Bahamas in addition to every night when your kids want to play with you, but you are too mentally exhausted, so you can’t put your life energy towards your children or your spouse or your dog or your cat or your parents, or…
Anthony (09:13):
Your passion project.
Angela (09:13):
Passion project. That’s something that I don’t even… What? My passion is work. But yeah. So what else? Life energy, decompressing. I cut you off.
Anthony (09:30):
No, I think that was pretty much it, just looking at not the money you spend, but the time it takes to get there now.
Angela (09:39):
So you would describe kind of the whole FIRE thing as enjoying your life now and in the future, not just working, working, working and sacrificing to have a good future later when you’re 65.
Anthony (10:04):
Yeah. I think another important topic is talking about keeping up with the Joneses. A lot of people want to keep up with the Joneses and they think that they need more and more, they need a new car, they need a new house. My neighbor just got a pool, so I need a pool.
Angela (10:27):
It’s Houston.
Anthony (10:28):
Yeah.
Angela (10:28):
You kind of do need a pool.
Anthony (10:32):
You kind of need a pool, but it’s finding what is enough. And I really like that word enough. It’s finding where you feel most peaceful, because I’ve talked to a lot of people and they seem like they’re kind of like in this race with no finish line. They’re just trying to go, go, go, get more assets, then as they make more money, they’re trying to find more ways to spend it and stuff. And they’re just trying to get to the end of the rainbow, wherever that may be, but that rainbow just keeps getting pushed and pushed and pushed as they-
Angela (11:06):
The finish line moves.
Anthony (11:07):
Yeah, the finish line moves. And so you’re just kind of left wondering when does it end, instead of trying to just enjoy what you have now and that being enough.
Angela (11:18):
I feel like you just define my generation. So if you’re a seventies baby, around there, maybe eighties too, Gen X, I just haven’t ever thought of… It’s not that I don’t enjoy my life. I enjoy it for sure. But it’s like, “Okay, I got to go, go, go, go, go, go, go, go.” But yeah, I’m starting to learn the word enough. But part of what we do every day is coach and counsel people on that whole concept, which is so exciting to see the light go off, the light bulb come on, I guess, because for instance, a $1,500 handbag… I have made this mistake. I will just own it. I’m sure everybody listening to this or watching this has had something, maybe it’s a set of golf clubs that you didn’t really need or what?
Anthony (12:25):
Golf clubs.
Angela (12:29):
A second set. It’s not that you can’t enjoy. If it’s worth it to you, do it. If that is your passion, this golf, like you mentioned, you want to have time for your passion projects or passions that you enjoy, do it. That’s not what it’s about, the FIRE is about. But a $15 handbag or $1,500 purchase, whatever it is to keep up with, if it’s only to keep up with the Joneses, right? Not because it’s something that…
Anthony (12:58):
Adds value to your life.
Angela (12:59):
Adds value to your life. And probably the best way to identify that is if you’ve ever purchased something that a month later or a week later or a day later, you wish you hadn’t, it did not add value to your life.
Anthony (13:14):
We’re going there.
Angela (13:16):
Yeah. You walked in a room with it and nobody cared and you were like, “Oh, this did nothing for me. This did not turn me into a movie star.”
Angela (13:26):
But so the way I like to look at big purchases like that is not just what it costs today, $1,500 today, but if I had invested that $1,500, what would it be? So in 10 years, $1,500 would, or 20 years, $1,500 invested would be about $11,000. So if I’m going to retire in 20 years, was that handbag worth $11,000? No, the answer is no. And most people who we work with, don’t just spend $11,000 on a handbag or a set of golf clubs because they have larger goals for themselves and their family.
Angela (14:16):
So I guess by the same token, you and I both started using not a budgeting app, but a spending tracking, which is eye-opening. And if you can cut out a thousand… Do you think you could cut out a thousand dollars a month of spending? Say yes because I have numbers for that.
Anthony (14:45):
Yeah.
Angela (14:45):
Okay. So I know that when I looked at where my money was going, I could cut out a thousand dollars in eating out because why? Because I’m always busy at work running between appointments, and so then I spend money to be busy and don’t meal prep or something on the weekend, which would take no time. So let me just give you the numbers for a thousand dollars a month because most people could find that. So in 10 years, if you had invest a thousand dollars a month, $207,000 in 20 years, it’s $767,000, which is more than a lot of people retire with. And then in 30 years, it’s 2.2 million. So do you need that extra car payment if you already have fine cars? What else? What are some categories maybe that you could trim down monthly? So you don’t have to cut out a thousand dollars on food maybe.
Anthony (16:01):
Just eating out or maybe…
Angela (16:04):
Clothing.
Anthony (16:05):
Shopping. Yeah. Shopping’s a big one.
Angela (16:11):
I’m sorry, I asked you a question and then cut you off.
Anthony (16:13):
Oh no, I was just going to say this kind of ties back to finding what’s enough. And then when you finally find what truly adds value to your life, then you feel so much more confident about the things you spend money on. You don’t feel bad about spending a little extra money here because you know that there’s a reason that you’re spending extra money here, but you’re saving money somewhere else, so.
Angela (16:36):
Right. So you actually spend it on…
Anthony (16:41):
Yeah, something that makes you feel better.
Angela (16:43):
I read a book by Suze Orman a long time ago, and one of the things that she said is so many people’s net worth, a large chunk of their net is in closets. I felt convicted. I read it when I was just out of college, and so it’s been a while and I’ve never forgotten that. I don’t buy more toothpaste if I have two tubes. I don’t want a bunch of hand lotion or I don’t want candles for every season in my closet. I want my money in my account for me. So in your closets, under your bed, in storage, in the closet with price tags still on them. I guess what I’m saying is it’s pretty easy to cut down something to be able to get so much more in return.
Anthony (17:57):
Yeah, absolutely. And there’s people that find, going back to your example of having more net worth in your closet than anything else, people go back and kind of look at their closet and be like, “I don’t wear half of these clothes. Haven’t touched them in six months. Why don’t I just sell them?”
Angela (18:17):
Yeah.
Anthony (18:18):
And so it’s really a compounding effect of just finding ways and finding things that make you feel better and make you feel less cluttered in life and less anxious about things.
Angela (18:31):
Yeah. Also, I also think it’s kind of common that when people feel stressed about money, they spend more money on small little things. I feel stressed about money. So I’m going to go through Jack in the Box and get two tacos and a Coke, and what’s $4? Or whatever it is. Or if you feel stressed about money, you go and buy… I’m just thinking of specific examples that of people who I’ve worked with. Candles. I know I already said that, but it blows me away, or hand soap. I change my hand soap with every season. Well, that’s awesome, but that’s a lot of money in your storage closet.
Anthony (19:20):
Yeah. How much hand soap are you not using?
Angela (19:28):
Hand soap, candles, everything switches out with the season. That’s a lot of money.
Anthony (19:33):
Where does all that extra go? You pretty much just pay full price for half of a product.
Angela (19:37):
Yeah. Well for next year, I guess. And maybe that could be their life, it’s worth their life energy, but I bet there’s something else. Or if you do the math on what it actually costs and what you could do with that money instead, are you just working to have fresh hand soap with the season?
Anthony (20:01):
Or if you put it, I don’t know, if you put it a vacation with your kids-
Angela (20:03):
Yeah.
Anthony (20:03):
-over buying hand soap.
Angela (20:08):
So what we enjoy doing is helping people maximize their income, and by finding ways to use your money better, being better stewards of your money, not only to make you more happy, but what I find is when people start taking steps to be better stewards of their money, they get more. It’s just how the laws of nature work, that when you’re using money appropriately in a more responsible fashion, everything starts to change and you start to get more, and then things really pick up steam and it’s really fun to watch.
Anthony (20:59):
Yeah, absolutely. I think just specifically FIRE movement is kind of what drew me in was that it’s just put it in a different picture and made you think about it completely different. And I know that FIRE’s definitely not for everyone, but there’s definitely a lot of good lessons to take away and ways to think about money that can help you feel better about your day to day. And so I guess really what’s, if people are interested, maybe in FIRE, maybe not, but just getting a better hold of their financial independence, what’s the best way to start?
Angela (21:41):
Best way to start, I think would be using either a budgeting app or a spending app. So most popular with the people we work with would be EveryDollar for budgeting or Mint, M-I-N-T, for spending. They come at that from two different directions and some people resonate with one or the other. So I would say one of those and just be aware, first of all, of what you’re spending and then what we do a lot with and spend time helping people, and we love doing this, is helping you then go through it and say, “Okay, let’s really get deep into this and talk about it.” And what might not sound fun, people feel so relieved when they’re done. They have found free money and the wheels are starting to turn and they’re starting to think of things differently. So I would say that, and if you need help or have questions, we would love to help you. So our phone number…
Anthony (23:00):
(832) 895-1188.
Angela (23:01):
And our website is worthenadvisors.com