Hello! We're Glenn and Bryn, and we are Vagabondians. (Yes, I made that word up) Several years ago we looked forward to the second half of our lives and we decided that we didn't want to go the traditional route. So we took the next exit and began exploring the back roads. We began leaving things behind (literally) at every stop. First we jettisoned our debt, then most of our belongings, then our house, then our jobs! Here's the how and why.
Bryn and I used to be stuck in this strange limbo in-between traditional and true early retirement concepts. We were in traditional career paths, but we were always on the lookout for ideas to generate 'extra' income and ended up wasting many days and dollars on MLM's and other various schemes designed to separate us from our hard-earned money. We were looking for a way to become independent, but our focus was in the wrong place. All we could see was 'easy' money and less work. Unfortunately that only works if you win the lottery. To be fair, we did put in our share of hard work, but usually in a misdirected way. We were too quick to give up our responsibility (and money) to others. We never had our own business plan, always relying on someone else's. And on occasion we managed to generate large amounts of profit, but it never lasted.
Looking back there were many failures but also many lessons. The trick is to learn from them! By 2004 we had all but given up on any entreprenurial plans and resigned to working our 8-5 jobs until we vested in and were able to collect from our employer's retirement plan. We moved from our 1100 square foot home with a very small mortgage to a brand new home much closer to work. It was 2000 square feet and had a mortgage to match. We moved in over the Fourth of July weekend in 2005. As far as we were concerned, it was our last house, the place where we would eventually live out our retirement days.
Little did we know, but within one year we would change our minds about all of that.
I don't remember what prompted it, but I ran across Tim Ferris' book "4-Hour Work Week" and bought it and read it. I did some of the business creation exercises but never really put them into practice. However, a couple of things that he wrote really caught our attention. The first thing was the entire concept of passive income. We had desired this before but had never taken proper steps to actually plan or achieve it. Tim made it sound achievable. The other item that excited us was his example budgets from when he lived in Buenos Aires and Berlin. Both seemed realistic and were under $2000/month! Suddenly our concept of retirement affordability and geography widened.
So Why Retire Early?
In case you are wondering why anyone would want to retire early, there are several compelling reasons to do so:
- you can live and/or travel anywhere while you are still (relatively) young and healthy
- your income is under your own control
- you can end the otherwise endless drudgery of working 40+ hours/week for someone else
- you can maximize your investment of time and money into worthy causes
However, only when you are truly frustrated and disillusioned with the typical modern idea of career and retirement will you even desire to seek out information about living outside of those boundaries. Only a few do so.
Traditional retirement planning, even for those who might want to retire 'early,' involves numbers that the vast majority of people will never attain. The first assumption is that you shouldn't include Social Security. And there is a long and healthy debate about this, but only if you withdraw somewhere between 3-4% of your portfolio every year can you be assured that you will outlast your money. Just to show how unattainable this is for most people, let's use a crazy $2000/month budget. That's $24,000 a year, and it would require a portfolio of somewhere between $600,000 and $1,200,000! As difficult as this is for most people, it is nearly impossible for those who reach the age of 50 and have minimal assets to show for it. Mid-life is a time of assessment, and when we did so we found it very sobering. No 401(k) money left, no savings, a decent amount of debt and years of mind-numbing 40-hour work weeks to look forward to. By the time we reached about 60 years of age we could retire in relative comfort on less than $50,000 of income but would still be tied down by $24,000 of annual basic living expenses (house payment + utilities), not counting other debt, food, etc. Not a lot of room left in there for seeing the world. And yet most people would love to be in our shoes!
When the student is ready, the teacher will appear (Buddhist proverb)
The one thing we did do right was a renewed commitment to getting out of debt. We utilized the 'debt snowball' tactic and some of Dave Ramsey's strategies and quickly made headway. I sold my Honda CR-V just as soon as it was paid off. We used the proceeds to buy an older used car and pay off one smaller loan and our motorcycle loan. Later, after all these things were paid off, my wife couldn't take seeing this ugly used car around (affectionately referred to as the 'ghettomobile') and we bought a new Kia Rio5 for basic commuting. We paid extra on it each month and saved a lot of interest this way. I sometimes missed the other car, with it's limo-tinted windows, the 10-inch subwoofer in the trunk, and the occasional aroma of cat urine, but at least Bryn would ride in the Kia! The income side of things was a lot tougher. I did try one more strategy and that was to get back into the stock market.
Previously I had done a more traditional stock investment strategy which went very well until the Dot Com bust. This time I tried options. We weren't getting any younger and we were feeling a bit desperate to juice up our returns in an attempt to give ourselves some sort of nest egg. The first year had great gains offset by massive losses. I started over again at the beginning of 2009 with a strategy of option spreads, seemingly much safer, with much lower risk and a nice moderate goal of 2-3% gains on each trade. Our savings were rather large now that we were mostly out of debt so our balance climbed nicely. There was a setback in August, but I attempted to adjust the strategy and the balance eventually recovered. And then came April and May of 2010. Without going into great detail, I had several positions which lost a medium amount of money and then ended up in a position where we lost nearly 1/3 of our nest egg in a split second.
It was a mind-numbing, tear-producing punch in the gut.
Clearly this was an unacceptable loss and a game-ender for this strategy. I did a lot of analyzing and soul-searching and came to the simple (inevitable?) conclusion that all forms of stock market investing truly were no better odds than gambling. We were out of the market, permanently! [or so we thought] Most investors insist this is not the case, that even the small investor can safely extract regular gains from the market, but my continuing research into this question says otherwise. But as it turns out, there's a bit of a silver lining to this cloud. When this loss occurred we were in the middle of downsizing and thus had lots of extra money every month to continue to put into savings. Our 'dream home'? We moved out. We lived in a very nice apartment within a mile of both of our work places for a year, downsizing from 2000 to 700 square feet. We sold everything that couldn't fit into the apartment. Nothing went into storage. We put an extra $1000 into savings each month and walked a lot. So our savings plan was kicked up a notch.
So, to recap -- by this time we had gotten out of almost all our debt, reduced our expenses by an additional $1000 per month, stopped investing, cranked up the savings, and -- well, now what?
We still needed extra income in order to retire early, but we did so anyway in late March of 2011. Our only other alternative to the stock market for generating income was to come up with a business plan. We initially attempted to use this blog as a way to build up followers, otherwise known as readers. The plan was to eventually, somehow, make money by marketing things. We still plan on writing some books, but beyond that our plans weren't too clear.
Our Crazy Plan
Here's a rough outline of our plan, with updates:
- We left our jobs in the spring of 2011. Bryn can begin withdrawing from her pension in the fall of 2017. That left six years to fund, and by 2014 we were making enough income to hopefully avoid depleting what little 'nest egg' we had and to avoid complete dependence on the pension. This is mainly due to Glenn's web development work [UPDATE: In the end, it wasn't enough. Glenn went back to work in Texas for two years. The good news is that he is now fully vested in his pension plan!]
- We hit the road and saw much of the western U.S. in an SUV pulling a pop-up camper. We camped most of the time and stayed with friends when we could.
- In early 2012 we began traveling overseas, beginning with Mexico and Central America. As of 2015 we are mostly in Mexico for a couple of years, renting on Lake Chapala. [UPDATE: As of 2017 we returned to Lake Chapala!]
- All of this will be done with minimalism and frugality at the forefront, utilizing housesitting opportunities as much as possible.
So Here We Go!
We intend to live out our plans here, online. We hope to attract a community of like-minded individuals with whom we can share this journey and provide some value. Hope you enjoy the ride with us!