Choosing sufficiency even when the money is flowing out

My spouse was venting to me today about fighting losing battles over thousands of dollars with various adversaries – a rental car company that refuses to let us out a reservation we didn’t know we made, an incompetent insurance agent that locked us into a premium plan we didn’t want, and a landlord that won’t refund us any money for our shower being out of order for a month.

Well, I said to her, if it makes you feel any better, that money is peanuts compared to what we’ve lost in our investment portfolio over the past few weeks.

Only a few months ago, we had reached a major milestone – our second FI target, a figure that would have been able to sustain our family of four at a comfortable standard of  living provided we did some modest belt-tightening.

We were still reaching even higher for our third FI target, a figure that would have enabled us to continue living the way we are now with plenty of travel and occasional spending splurges. But in the past few weeks, the number at the top of my Personal Capital page has tumbled down to well below that second milestone. And God only knows where it will end…

Of course this is terribly painful to watch. But it hasn’t devastated me as much as it would have in an earlier life.

Partly, this is because I’ve known that the market was going to blow up at some point. History says that even a diversified stock/bond portfolio can experience a -40% drawdown in any given year. We’re nowhere near that yet, but it could very well happen.

Partly, this is because I’d like to think I’ve gotten older and wiser and I recognize that my Personal Capital number is of no value when compared to the real treasures of my life: my kids, my spouse, our health, our family and friends. I’m also aware of the fact that by sheer luck, I’ve been born into the right circumstances to put me in the top 0.14% (according to the Global Rich List) wealthiest people in the world. Even if I lost half of my wealth, I’d still be the top 0.26%. So I hardly deserve to even think “woe is me.”

And partly, this is because I’ve been actively trying to choose an attitude of sufficiency. Sufficiency is indeed a choice. Lynn Twist writes in her book “The Soul of Money”:

By sufficiency, I don’t mean a quantity of anything. Sufficiency isn’t two steps up from poverty or one step short of abundance. It isn’t a measure of barely enough or more than enough. Sufficiency isn’t an amount at all. It is an experience, a context we generate, a declaration, a knowing that there is enough, and that we are enough.

Sufficiency resides inside of each of us, and we can call it forward. It is a consciousness, an attention, an intentional choosing of the way we think about our circumstances.

Sufficiency is not a message about simplicity or about cutting back and lowering expectations. Sufficiency doesn’t mean we shouldn’t strive or aspire. Sufficiency is an act of generating, distinguishing, making known to ourselves the power and presence of our existing resources, and our inner resources. Sufficiency is a context we bring forth from within that reminds us that if we look around us and within ourselves, we will find what we need. There is always enough.

I suggest there is enough in nature, in human nature, and in the relationships we share with one another to have a prosperous, fulfilling life, no matter who you are or where you are in the spectrum of resources. I suggest that if you are willing to let go, let go of the chase to acquire or accumulate always more and let go of that way of perceiving the world, then you can take all that energy and attention and invest it in what you have. When you do that you will find unimagined treasures, and wealth of surprising and even stunning depth and diversity.

What a concept! And what a relief! Watching hundreds of thousands of dollars drain out of our nest egg is still painful, but I’m beginning to understand what Twist is talking about when she compares money to water. Money is meant to flow in and out of our lives. Even if we tried our damnedest, we can’t hold it in should the market forces go against us.  We also shouldn’t let it stagnate by trying so hard to protect it that we don’t spend any away. Our responsibility is to steward this force as best we can and use it to support our deepest values.

I’m also realizing that financial wealth is only one measure of success. Of course, I’ve always known that in my mind. Yet living in a society where money is the ultimate scorecard, it’s hard to know that in my heart. Watching my mom struggle to figure out her livelihood in her sixties has been an eyeopener. Financially, she’s set. But her livelihood, defined as a means to support a life of purpose, has never been more in question as she faces a potential divorce. Financial security is only a means, never an end.

On my bathroom mirror, I’ve taped a postcard that says “I have enough, I do enough, I am enough.” I know I won’t always feel that way, but I will declare sufficiency.

How writing an Investor Manifesto can help you stick with your plan

Any index-loving buy and hold Boglehead investor like myself knows that the more you mess around with your portfolio, the more likely you are to screw it up. Yet, I couldn’t help myself. Despite taking the time to establish a portfolio allocation several years ago, I still found myself making changes all the time. I would read an article or book touting a particular asset class, and I’d go in and add a couple more percentages here or there. The market would drop, and I would decide that cash was better and reduce my contributions out of fear.

The truth is, I can’t trust myself. Despite how grounded I thought I was as an investor, fear and greed are powerful forces. I did many of the things that I thought only stupid investors do.

So, I decided to do what I’ve done in other arenas in my life to help me articulate and adhere to a plan – write a manifesto on what I’m trying to accomplish, why it’s important, and how I intend to go about it. Financial writer Meb Faber provides a great step-by-step on how to write an investor manifesto here, which I adopted as the following:

  • Articulate your investment goals and core principles.
  • Starting from scratch, come up with your ideal target asset allocation for your portfolio. Don’t forget to establish the amount of cash you wish to hold as well, or you could be tempted to hold less/more depending on market whims.
  • Come up with clear step-by-step plan on how you plan to move from your current asset allocation to your ideal one. For me, this included reducing a few big stock holdings and using existing cash in the portfolio to buy more equity index funds through automated purchases.
  • Decide how you will manage your portfolio going forward. I realised I had been spending way too much time recording and analysing my portfolio, probably several hours a month. Not only was this a waste of time, it was contributing to my mucking around problem.

So here’s what my investor manifesto looks like:

Our portfolio goals and principles
  • The MsModelMinority portfolio goal is to achieve 4% real returns in the long-term (10yrs+), while keeping volatility at a moderate level for our own sanity.
  • Purpose of this portfolio is to 1) support FI (75% of expenses), with expectation that we will still generate some income during our working life, 2) pay for major expenses (e.g. house renovation, kids’ education), and 3) fund nest egg in older age when we are no longer able to work.
  • We do not need to generate income (in form of cash dividends) in the foreseeable future. If cash is needed, we will sell winners and rebalance to target asset allocation.
  • We understand that a max draw-down could be in range of -40%. However, we believe that markets do recover and and in long-term a 4% real return should be achievable as long as we “stick with the plan”.
  • We do not believe in market timing. We will mitigate risk by diversifying across asset classes, across time, and across individual stocks.
  • We know that we are our own worst enemy when it comes to achieving success, because we may often feel as if we can market time and will be tempted to react out of fear or greed. Case in point here. So, we will implement rules/processes and hold each other accountable to ensure that we “stick with the plan.”
  • We will use a low-cost, passive investing strategy. We understand taxes can also be a huge drag on returns and will continue learning ways to reduce. We will strive for simplicity as much as possible.
  • We know that our risk tolerance is moderate/low and losing money will hurt more than missing an attractive opportunity. We will follow the #1 principle of all top investors: Do not lose money! We will only invest in things we fully understand and in which we can see multiple paths to upside.
Our target asset allocation
  • We know that for a buy/hold strategy, the exact percentages of the asset allocations don’t matter since they will all fall within returns of 200bp of each other (over 40yrs, per here). The key is to not muck around with the allocation and “stick with the plan!.”
  • In terms of cash, we will keep 6 month of expenses in emergency fund (e.g. checking/savings) and any expected major expenditures in next 3-5 years in liquid assets (e.g. CDs). Beyond this, we know that excess cash is better off invested as lump-sum rather than over time per here, and that even if we choose to dollar-cost average it should be done within one year.
Within Total Portfolio
65% of my non-cash portfolio into Equity
Within Class
Of the Equity Allocation, 60% goes to Domestic
Of the Domestic allocation, 50% to Large-Cap
Of the Domestic allocation, 25% to Small-Cap
   Value (Large)
Of the Domestic allocation, 25% to Value
Of the Equity Allocation, 40% goes to Foreign
   Emerging Markets
Of the Foreign allocation, 25% to Emerging Market
   Developed World Int’l
Of the Foreign allocation, 50% to Developed
   Int’l Small Cap and/or Value
Of the Foreign allocation, 25% to Small Cap/Value
10% of my non-cash portfolio into Alternatives
Within Class
Of the Alt allocation, 50% goes to REIT
Of the Alt allocation, 50% goes to commodities (recommended to hold 3-8% overall portfolio)
25% of my non-cash portfolio into Bonds
Within Class
   Total market bond fund
Of the Bond allocation, 50% to Int. investment grade
   Corporate bond fund
Of the Bond allocation, 25% to Corp investment grade
Of the Bond allocation, 25% to TIPS
How will we move from legacy portfolio to our target allocations?
  • Our biggest gap is being over-invested in my company stock (11%), and under-invested in foreign equity (20% vs 26% target). We intend to get my company stock down to 7% by end of 2018, shifting the funds into foreign equity.
  • We also still have 4% in AMZN. We intend to get this down to 2% by end of 2018, shifting the funds into US large-cap (likely the US low-volatility fund).
  • We do not plan to shift any more cash into our portfolio. Any excess cash will go into liquid accounts given uncertainty of future.  Inflow to portfolio will come only from the eBay vesting.
  • We will keep buying into equities, through automation of $30K/yr (60% in SWSTX – US total stock market, 40% in SWISX – int’l developed).
How will we manage our portfolio going forward?
  • 1x/quarter, we will conduct maintenance to keep our portfolio aligned with target allocations, while accounting for tax impact. We will also look for opportunities to tax loss harvest, review performance, and update our spreadsheet and Morningstar tracker. Once inflows stop (e.g. I stop working) and our portfolio is fully aligned with target allocations, rebalances should only be done 1x/year.
  • 1x/year, we will do a rebalance and a thorough review of our portfolio, including:
    • Tax: Are our assets in the right buckets (taxable vs tax deferred)? Can we find new vehicles (e.g. HSA) to shield? Are dividends too much of a drag with taxes and can we reduce? Munis?
    • Expenses: Are we choosing the lowest cost funds?
    • Cash: Do we have right amount? What are major expected expenditures in next 3-5 years?
  • There is a VERY HIGH BAR for making any changes to target allocations. This should only be done with sign-off by both of us, and we need to articulate a very strong case as to why this is necessary.
  • There is no reason to spend a lot of time managing our portfolio. In fact, the more time we spend, the more likely we’re going to screw it up.
So that’s my plan, evolved over many years of trial and error in my own financial life. Writing it all down only took an afternoon, and I believe it was well worth the effort. Already, I feel a huge relief by having clear rules on what I am allowed to do.

Babies, birthdays, and contemplating a purposeful life

In the past few weeks, I had my second baby and I turned 37 years old. When I started my journey to design and live my ideal life, my big questions were: “Will we, as a lesbian couple, be able to realize our dream of starting a family? How do we achieve financial independence so that we don’t have to be tied to our jobs? Can we really be happy living with less than our peers?”

If I had the vantage point five years ago to see what my life looks like now, I think I’d be pretty satisfied. We’ve been blessed with two healthy children. We’ve already exceeded the initial FI goal I had set then, and we should hit our revised goal before the end of my maternity leave. We’ve learned to live more minimally, ecologically, and healthfully while still splurging on the expenses that bring us maximum return on happiness – expenses like vacations, babysitters, premium foods, the cleaning lady, and the occasional uber ride when public transport is just too much of a pain. We’ve also played the geographic arbitrage game by moving with my company to Switzerland where I got a 30% cost of living wage increase while we’ve kept expenses relatively flat (since we come from one of the most expensive cities in the US anyways).

Now with some headspace to spare (its true that you’re so much more relaxed as a second-time parent!), I’ve been perseverating on a whole new set of questions: “When should I pull the plug on the J-O-B? What the heck am I going to do with myself once I stop working? What is it that I really find purposeful and enjoyable? Can I stay at home all day with my kids without going bonkers? As an FI-mom, how do I find likeminded people who can help me on this new journey?”

I’m probably sitting at one of the most open-ended junctures of my life, which is both exhilarating and terrifying. When you remove the need to make a living, what then do you structure your life around?

These are first-class problems for sure, and I’m immensely grateful to have the privilege to even be contemplating them. A fellow FI-er was recently interviewed on the Mad Fientist show about her journey on striving for happiness after early retirement. She spoke about traveling like crazy for the first several years and needing that time to get the career stuff out of her system before settling down. She admitted feelings of guilt for leaving the workforce and about the need to justify her choice to others (and to herself). She talked about dealing with the loss of external validation and the pressure to do something big that you can brag about to others. My heart raced as I listened to her interview, because all of this resonated with me.

Where Marla is at now is this:

I have in my room a Buddhist saying. I look at it every day…It says “to bring peace to the earth, strive to make your own life peaceful.” What’s beautiful about that is it still has the word strive in there. So, there’s an effort required to be happy. And by us being happy, can we make the world happier? Probably. Can we be an example? Can we share our story and change the world little by little? We leave the workforce, that leaves a job for someone else. We show that you can live simply and without spending a lot of money and be content, surely, that’s a positive lesson for the world…Having purpose, having meaning, you don’t want to give up on those ideas. It’s just that the direction doesn’t necessarily have to be something big or something that you can brag about or something that sounds good to others. It can boil down to something a lot more simple.


Why my last year of work before FI is turning out to be the hardest…and how I’m surviving it.

After a decade of working the career ladder, spending conscientiously, running the numbers, and daydreaming about the day I get to call it quits, I’m now one year away from reaching my financial independence goals.

It feels really good. But, it also makes for a serious case of Senioritis. I’ve spent the last six months in a state of extreme negativity towards my job. My job was always a means towards an end, but in the past I found satisfaction and even enjoyment in parts of it. Now, the work week is a source of dread. And instead of my stress-levels dissipating as I near the end, they’ve skyrocketed. Every incoming email or additional responsibility becomes yet another thing I have to get through before I get to move onto my “real” life.

It’d be natural to accept that this last year is just something I have to grind through. But I’ve decided that’s not good enough for me. First, a year is still a long time. I spend too many hours at my job to accept that there’s no option but to suffer through it. Second, I firmly believe happiness is a choice. It’s not my job itself that makes me suffer; it’s my attitude towards it. And whose to say that even after I remove my job from the equation, I won’t face other things in life that I wish I weren’t there?

Happiness comes from embracing reality as it is in this moment. So how I am embracing my current reality, which includes showing up at an office every day to a demanding job?

What I’m doing to not only survive, but thrive, in my last year of work:

  • Find “one thing” you want to accomplish in your career before you leave, and let everything else go. My one thing is to be a kick-ass manager, which means helping my team grow professionally and personally. At this point, delivering project X or achieving business goal Y really has no meaning to me. But people always matter, and I still have an opportunity to make a meaningful impact in my remaining year as their boss. The hard part is letting the rest go, because it WILL get uncomfortable if you’re used to always being on top of everything. But embrace the chaos. It’s the way to peace.
  • Change up your work situation so you can find new challenges to be excited about. I really couldn’t bear the thought of dragging myself through the same 1hr+ commute, to the same campus, and in the same business unit as I have been working for the last decade. So I took an international transfer to Zurich, Switzerland. On top of giving my family a whole new adventure and an opportunity to live in Europe, I also got a 30% bump in salary for cost of living adjustment. Awesome!
  • If you can, reduce your hours. It’s probably better financially to stay at your job and work part-time than quit prematurely because you just can’t take it anymore. Last month, I moved to 90% time which means I work from home Friday mornings and take off Friday afternoons. While it’s only a 10% reduction in time and pay, it’s made at least a 25% increase in my everyday happiness.
  • Start living your post-FI life now. After writing my “Ten Year Plan for a Remarkable Life,” I realised that my ideal life is actually quite simple and achievable today. So instead of daydreaming about everything I’m going to do with all my post-FI free time, I try to live that life now as much as possible. These include: Daily time for exercise and meditation. Luxurious breakfasts with the family. Reading and writing (including this blog) for pleasure. World travel (yes for Switzerland!).

Life is too short and unpredictable to defer your happiness to post-FI. What are you doing to find joy in your situation today?

January 2016 Financial Report Card

How’d we do in our first month against our 2016 budget goal to reduce spend by 30%+ compared to last year?

We went over budget by 11%, or $360. This was mainly due to an intentional overspend in gifts given and dining out (Baby ModelMinority is coming soon and we’re enjoying our last nights out), and a way-too-high heating bill that I’m going to be much more careful about.

Our net worth tanked along with the market, dropping -4.9%. While it hurts, I’m feeling relatively okay about it. We’ll stick to the plan and keep our money in the market in accordance with our asset allocation. I may even put some more in later, depending on how we’re progressing against our value path (more on how to use value-path investing to mitigate risk in another post).


January 2016 budget

We went over unintentionally on utilities, due to a $198 heating bill that is 2x(!) our average bill. I worked from home most of January and it was unseasonably cold, so the heat was kept on nearly all day. Oops, time to turn off the heat and put on a sweater!

In contrast, our dining over-spend was done consciously. Baby ModelMinority is due in early March, and we’re trying to get out with friends as much as possible before life gets a lot more complicated. February will probably also go over. Compared to the $795/mo. dining spend that we averaged in 2015 though, this is still an improvement.

Groceries was slightly over. We’ve been trying out Green Chef and Blue Apron, which are meal services that deliver fresh ingredients to your door that you cook yourself according to their easy-to-follow and delicious recipes. Clearly, this is not the cheapest way to cook at home. But it is still cheaper and healthier than eating out, which is what we’re trying to wean ourselves off of. After trying both services, we’re sticking with Green Chef. It’s slightly more expensive ($80/wk vs $59/wk for Blue Apron), but it’s organic, the portions are bigger, and the food is tastier.

Gifts was another conscious over-spend. We had a couple of baby showers and my brother’s big 30th birthday.

Clothing & Personal Care spend should go down after this month, as we still owed one last payment on the massage club subscription that has since been canceled.

Net Worth

January 2016 net worth

Ouch! This represents a $60K loss in January, and that’s painful to see. My asset allocation helped to mitigate some risk relative to the stock market, but it did not help that my company stock  tanked by 10% over the month.

Se la vie. Good thing my meditation practice and gratitude journal seems to be working in keeping me grounded. After all, money can always gained back. Time, on the other hand, can never be recovered. And with Baby ModelMinority due in a month, my remaining time as a dependent-free adult is truly precious!




My 2016 goals and why early retirement isn’t the point

“You don’t need more free time.” This was the thought-provoking conclusion of a NYT article on a study of the daily emotions of 500K+ people.

The study’s first finding was unoriginal: People have the lowest levels of well-being from Monday through Thursday which rise on Friday and peak on the weekend. The obvious conclusion is that the workweek brings stress, and the key to greater happiness is to get rid of having to work. This belief is the basis for most people’s dreams of early retirement, including my own.

But, the poll also uncovered a second much more surprising result: The weekly cycle of well-being levels held true for all people, whether they were employed or not!

The researcher’s conclusion is that free time is most valuable when your friends and family are also free and you can spend time with them. If you don’t have a job, you end up spending your workweek doing errands and tasks by yourself. Like employed people, your “fun” time ends up becoming limited to weekends when other people are also off.

Of course, this study doesn’t distinguish between people who are unemployed because they can’t find a job versus people who are unemployed by choice. My assumption is that results could be quite different if we looked specifically at early retirees.

However, it was enough to give me pause and reiterate a truth that I know in my heart of hearts but still need to be reminded of: The most important work of my life is not to achieve financial independence. Rather, it is to figure out what to do with my life when it is fully my own. 

Every new years, my wife and I set aside a few days to reflect on the past year and set goals for the upcoming one. This year, in between decluttering our house Konmari-style to make room for a nursery and our impending new lives as parents, we took some time out to get our mental and emotional ‘house’ in order as well.

My simple guide for a spiritual retreat:

1. Reflect on the past: 

  • Grade yourself: Looking at goals set from previous year, what went well? What didn’t go well?
  • Examine your beliefs: What beliefs/attitudes did you hold that enabled you to succeed? What beliefs/attitudes did you hold that were not helpful?

I can’t stress enough how important this second step is of looking at your beliefs. I went through Tony Robbins’ Personal Power program last year, and one of my biggest takeaways was this: My beliefs are what lead to my success or failure. If I think that willpower alone is going to get me to my goals, I’m a fool. When I shifted my belief from “If I have a lot of nice stuff, I will be happy” to “If I have a lot of free time and energy to spend with the people I love doing the things I love , I will be happy,” I naturally wanted to stop shopping. This made sticking to my budget goal so much easier. An area that I am still struggling through is how to get in control of my mornings, which always seem to get away from me and cause me unnecessary anxiety and self-loathing. I realized that this is because I carry a lifelong negative belief that “I am not a morning person.” To combat this, I’m working on instilling a new morning routine and changing my belief to “I have the power to change my attitude in the morning, and therefore the outcome of my day, in spite of how I may feel.”

2. Envision your best life: This year, we decided to create vision boards after watching this inspiring (albeit cheesy) video on the power of visioning your dreams. Another great tool that I’ve used in the past is the Passion Test, which provides a super simple method for helping you identify your core passions.

*Minimalist Tip: We don’t have magazines or poster boards lying around the house, so we made virtual vision boards instead. This free vision board app was super easy to use, and you can save your board as a screensaver or print it out.
3. Turn your vision into actionable goals: Take your top ~5 visions/passions and identify actionable goals for each of them in the next year. For me, this looked like (in priority):

1. I am self aware and mindful of the present.

  • Take time every day to journal and reflect on affirmations and vision board
  • Set time 2x year for a quiet spiritual retreat
2. I am a joyful, kind, and loving spouse and mom.
  • Weekly date nights: explore new events, ideas, activities
  • Go on a family trip during maternity leave
3. I live in close community with family and friends.
  • Intentionally reach out and invest the time and work in my relationships
  • Set up a Personal CRM system to trigger myself to maintain relationships (more on this another time)
4. I have enough wealth to have freedom
  • Keep to the $60k budget and check in on progress monthly
  • Build on my investment skills (e.g. books, webinars)
  • Explore lifestyle business ideas
5. I am learning and engaging in hobbies that bring me joy.
  • Learn to cook a few dishes very well that I would be proud to serve, and get proficient enough to feed my family otherwise
  • Learn to play a dozen songs that I would feel comfortable performing
  • Blog regularly (1x/week) about ideas that I am interested in
6. I am fit, strong and beautiful.
  • Go outside daily and use my body in some way (e.g. walk, hike)
  • Reduce sugar intake and be conscious of how my body feels
  • Take care of my dress so that I feel good about how I present myself

4. Schedule those actions into your daily planner: Make it real! For me, I’m a believer in the GTD system as I wrote about here. So each goal becomes a Project, and each bulleted action goes into my Tasks and gets scheduled on my calendar.

I feel really good about my 2016 goals. Firstly, my topline goals have hardly changed from previous years, which means I’ve really honed into what matters most to me. Secondly, while financial independence is one of my goals, its fourth down in priority after growing self-awareness and building strong relationships.

I recently read an incredibly insightful post about How NOT to pursue Financial Independence from a FI blogger that I follow and respect, the Mad Fientist.  He talks about how his single-minded pursuit of FI lead him down a path of isolation and depression, and when he finally achieved his FI number he didn’t even feel happy!

The truth is that FI is only an enabler – it offers you the opportunity to use your time and energy to pursue what really matters to you in life. But it is useless as a goal by itself.

In the middle of my vision board, I have a beautiful quote from Pablo Picasso:

“The meaning of life is to find your gift. 

The purpose of life is to give it away.”

That’s my true 2016 goal and the end goal for my entire life.

5-min journal and my morning routine for the New Year

“Win the morning, Win the day.”

I’ll start by stating that I am not a morning person. It takes me a good half hour to warm up to the day, until which I am barely coherent, mostly mute, and altogether miserable. Small children who have made the mistake of jumping into my bed to wake me have been scared off for life.

Nor am I inclined towards daily routines. Force me to follow the same exercise routine or eat the same breakfast every day, and I’ll quit within a week out of sheer boredom.

So why do I nonetheless believe in developing a morning routine? Because I have experienced the consequence of too many crappy mornings leading to crappy afternoons and evenings.

Good habits are the cornerstone of a good life, and their powers are magnified if you can do them in the morning. Why? 1) You are more likely to keep habits if you do them first thing before anything/anyone can get in the way. 2)  You have the most willpower in the morning. 3) You start off the day feeling successful and good about yourself (this one is most compelling to me).

To make my morning routine sustainable, I had to allow myself room for variety. More importantly, it had to be a routine that I would actually enjoy (or I might never get out of bed)! And it couldn’t take more than 30 minutes, since anything more than that would be self-delusion on my part.

So here’s my morning routine:

  1. Clean up: Make the bed, wash up, and change into clothes for the day. This sounds like a given, but when you work from home I can’t tell you how easy it is to stay in your pjs all day and not bother brushing your teeth until you realize your spouse is about to return home from work in an hour. As for making the bed – I would generally do this at some point in the day, but there’s something about doing it as the Very First Thing that is critical to start the day right. A four-star Admiral and Hindu priest agree.
  2. Hydrate: Drink a glass of water, preferably cold. It wakes me up, and I immediately get to knock off one glass from my daily goal of 8.
  3. Energize: Do something that will stimulate my body. If I’m short on time, I do a few sun salutations. If I have the leisure, I go out for a walk or undertake a more ambitious workout routine.
  4. Breakfast well: Eat a hearty, fat/protein heavy breakfast. It makes me feel full and keeps me from eating junk food later. Bacon and eggs are a common choice, as is my green protein smoothie. Anything with a load of peanut butter on top also makes me happy.
  5. 5-minute Journal: Express gratitude and set your intentions for the day. I suck at journaling. In a recent purge of my house, I found boxes of old journals that have been started and never finished. While there are all kinds of proven benefits to journaling (including strengthening immune cells), I have never managed to keep it up as a habit. Enter new approach: The 5-minute Journal. In the morning, I fill out what “I am grateful for…”, “What would  make today great?”, and a daily affirmation. Before bed, I write “3 amazing things that happened today” and “how could I have made today better”? It takes so little time to do, and I honestly believe this has made a real difference in my everyday happiness.

*A frugal tip: The official journal costs $28.95, but save yourself the money and just follow the same outline in any old notebook.

5min journal

Source: 5-minute Journal

6. Get Things Done: Review my goals, set tasks for the day, and tackle the most important task first. I have been a faithful adherent to the GTD method of time management since it first changed my life a few years ago. Seriously – please check out these 5 simple steps that will apply order to your chaos. For the longest time, my efforts to convince my wife to GTD her own life were rebuffed. But then after months of complaining of overwhelm, she let me set up a simple GTD system using her existing Google calendar and the $5.99 app GTasks Pro, and she’s now a convert as well.

So every morning, I review my Project List (e.g. actionable goals from my 90-Day focus plan), set my tasks for the day, and tackle the task that will make the most meaningful impact on my life first.

Easy, right?! No actually, I’m sure it won’t be when I wake up tired and cranky, which is certain to happen shortly (especially with new baby due in just 9 weeks, eek!). Hence, the most important thing that has to happen to make this morning routine work is to change my attitude about who I am in the morning.

The old me thinks: “I am not a morning person. I cannot overcome my  feeling of fatigue and physical discomfort in the morning.”

The new me says: “I have the power to change my attitude in the morning, and therefore the outcome of my day, in spite of how I may feel.”

Retiring by 2018: Our Journey to Financial Independence (with breaks in between)

Ever since a grueling stint in my early 20s as a junior banking analyst in which I watched my colleagues trade in their lifeblood for wealth and career progression, I’ve been determined to escape the same fate. My initial plan was to look for a job with a much more manageable work/life balance, avoid financial commitments that would keep me obligated to work (e.g. taking on a big mortgage or getting a MBA), and take periodic sabbaticals like my year-off in my mid-20’s to volunteer in Asia and again with my wife-to-be in our round-the-world trip from 2011-2012.

I’ve managed to stick to this plan for the last decade, and I was feeling pretty good about my gradually growing net worth thanks to a reasonable budget (at least compared to the standards of high-wage earners in the Silicon Valley). I figured that things would go like this for more-or-less the next two decades, until I could fully retire at the still-respectable age of 50: Put in my hours at a well-compensating 9-5, take a long sabbatical every 5 years, and live within a reasonable budget.

But then two years ago, my mind was blown when I read Extreme Early Retirement: A Philosophical and Practical Guide to Financial Independence.  While my plan is already quite radical to many in my circle who could never imagine departing from their careers to take a year off or retiring short of 65, it was not nearly radical enough once I got exposed to the ideas in the EER community.

The problem with my plan was that it still required me to keep holding a job in my current field in order to keep bringing in high wages. Now, my job isn’t bad by any standard – work/life balance is great, colleagues are lovely, there’s plenty of intellectual challenge, and it pays well – but it’s still a job. It means that’s 50 hours per week that I can’t spend with the people I love or undertake a hobby or explore a new career path that could be more fulfilling (but less compensating). It also means physically tying my family to a location, which is difficult for a wanderlust like me.

Hence, I’ve embarked on a path to full Financial Independence by the end of 2018, or age 37 for me and age 39 for my wife. Our net worth has gotten a huge boost in recent few years, thanks to a meaningful stock grant from my employer that then doubled in value. And since 2013 and my enlightenment in EER, we’ve also worked on reducing expenses by ~15% every year and increasing our savings rate. But our expenses are still way, way too high to sustain post-retirement, and our focus going forward will be to cut these even more radically.

ModelMinority’s Path to Financial Freedom

Financial independence plan

The red line are my actual expenses excluding tax, which will be dramatically lower after retirement given loss of income. While I’ll still have some kind of tax bill post-FI, it should be minimal if I play my cards right so I’m just taking taxes out of this equation for simplicity. The green line is my projected passive income, based on 3% withdrawal rate from net worth. This is more conservative than the typically accepted 4% safe withdrawal rate, but that’s what I feel comfortable with given how early we’re trying to retire. The blue line (which is graphed on a different axis) is our net worth.

The point of freedom is when the red and green line intersect, and my goal is to have them intersect at the black line which marks my goal expense budget and my goal passive income. This means I need to continue socking money away to build up my net worth, while decreasing my expenses further.


ModelMinority’s Annual Expenses

I’m embarrassed by these numbers, but I’m putting this out there to show our ongoing rehab from the high-spending life. 

Annual expenses

ModelMinority’s Budget Breakdown

Again, rather embarrassing. Highlighted line items are especially atrocious (how are we spending that much money to feed a family of two women?).


What we have to do between now and our 2018 FI goal: 

  • Reduce our annual spend to $60K. This means a 30%+ reduction in costs, compared to our spend for 2015. There are some big expenses that will naturally fall off, but we still have a long way to go when comparing our budget to that of other FIers. Also by 2018, we hope to be a family of four so we need to take into account added cost of the kiddos. Our plan for meeting the new aggressive budget:

Dining: This is honestly the most difficult bucket. We truly enjoy good food and even moreso when it’s enjoyed with good friends. Given that the end goal of this entire exercise isn’t to accumulate money, but rather to enjoy life more fully – we refuse to let money prohibit us from dining out with friends or on special occasions. However, what we can cut is all the mindless dining out we do because we failed to bring lunch to work or because we were too lazy to cook (which accounted for at least $1K in 2015). We’re also receiving a fancy espresso machine from a relative who is moving, so no more excuse to casually spend at Starbucks either! Our bottom line philosophy on this one: We will still dine out, but we’re committed to dining out mindfully.

Home/General: We’ve been fostering a dog for a friend this past year, and when the dog goes in January that will naturally reduce $1800 in costs. Also no dog means a cleaner house, so we’ll reduce housecleaning from 2x/mo. to 1x/mo., another $500 savings.

Clothing/Personal Care: We’re cutting our subscription to a massage club where we both have been getting monthly massages, which saves us $1157. I’m also on the hook to cut my personal care expenses in half ($250 savings), and we’ll cut our clothing budget from $350/mo. to $100/mo. Still very beefy compared to the truly frugal budgets I’ve seen from other bloggers, but a dramatic reduction from where we’ve been.

Gifts Given: In 2015 we went nuts with a lavish gift for my mom’s 60th birthday (a helicopter volcano tour in Hawaii) and numerous other gestures of financial generosity to our friends and family. This is another tricky one – we feel incredibly fortunate to be in the financial position that we’re in, and we don’t want to become Scrooge McDuck just to accumulate more wealth for ourselves. We’ll see how this one goes but we are committed to making more homemade gifts and gifting experiences rather than things, which will make the gifts we give more meaningful and less expensive.

  • Get our net worth to >$2M. Based on a 3% withdrawal, that’s how much we need to sustain $60K/year spend. Even with my wife planning to leave the workforce next year to care for our first kiddo (we’re expecting in March ’16), I feel like it’s possible to achieve this by our 2018 deadline assuming the market does not crash.
  • Live life to the fullest in the meantime! I could consider these next 3 years as a deferral of pleasure for the sake of future rewards. But life is too short, and the future is never certain (e.g. the market could crash, our health could be compromised). We need to enjoy the moment, because we’ll never have them again. To this end, I’m turning my maternity leave next spring into a 6-month mini-sabbatical which will include a RV roadtrip across North America and a trip to Mexico. In reality, we could get to FI much sooner by having my wife stay in the workforce and cutting my leave short – but we want to enjoy parenthood, and these first years will fly by only too quickly.


Learning to fight for my joy

Let me be real. I’ve been doing terribly in my attempt to rest. In large part, I can blame this on too many good things happening to me at once. In the past 30 days, I got a big promotion at my day job, the wife and I successfully went through phase one of our IVF fertility treatment, we signed our first distribution deal on our film (more on this passion project another time), and…drum roll…we just got invited to speak at a TED event next month. 

As I’m writing this all out, it’s no surprise that I’m thrilled and totally overwhelmed at the same time. I’ve been working towards this promotion for the past year and half, but now that I finally have it, I’m worried about whether or not I can actually live up to my new position as a Director. The success of the first phase of our fertility procedure is a HUGE relief, but I still can’t allow myself to hope for more. And the TED invitation is the biggest thing to have happened to this passion project, yet of course I’m panicking at the thought of the speech itself. What’s clear to me is that if you don’t intentionally take time to celebrate your successes, it’s all too easy to allow the pressure of achievement overshadow your joy. 

As a way to put some rigor and discipline around resting (yes I know it’s ironic, but that’s who I am), I adopted a few goals based on the 90-day action plan espoused by performance coach Todd Herman:

  •  Process goals: My goals here were to meditate 1x/day, go on a meditation retreat, and do something restful everyday. Meditation fell off the table for much of March and April, but I’ve been bringing it back here and there in the form walking meditation (typically post-dinner walks with the dog). I was hoping to go on an official meditation retreat, but the best I managed to schedule is a weekend getaway with some Buddhist friends which will include some scheduled meditation time. As for doing something restful everyday, I’ve been more mindful about this than ever, though execution is still haphazard. My most restful day was one that I had no choice over – after my fertility procedure, I was pretty drugged out and couldn’t do much other than play video games and eat ice cream for the rest of the day. And all guilt free – oh the bliss!
  • Performance goals: My goal here was to feel less guilty about taking a break. Emotional hang-ups don’t get cured overnight, and neither will my unhealthy preoccupation with staying productive. But, I have been reminding myself of all the reasons why rest is necessary for creativity and well-being. I’m doing a decent job of putting time limits around work so that I make sure to step away from my desk and do something rejuvenating every few hours.
  • Outcome goals: My goal here was to get restored and give myself space for insight and self-reflection. Hmmm…no, I can’t say I’m anywhere near feeling restored. In fact, it feels like my life is this roller coaster ride that looks like a lot of fun to everyone else, but really it’s all I can do to just hang on for dear life. For now, my main relief comes from cuddle time with my wife, quiet walks with the dog, and Trader Joe’s mini mint ice cream sandwiches.

Sometimes I also find relief by staring at the net worth number posted on my Personal Capital account to remind myself that the promised land of Financial Independence and infinite free time is only a few years away. But as much as the idea of the future brings me anticipatory joy, I also know that life is lived in these moments right now, no matter how harried and crazy they may feel. After all no one knows what the future may hold, and these may be my only moments.

So this weekend, I promised myself to take time out from the errands and obligatory social events to do something that I truly enjoy. I looked up a new hiking route just 20 minutes from my house, and I was delighted to discover a beautiful 8-mile mountain trail with postcard views of the rugged California coastline. So often, just making the small intention to enjoy the present moment can yield such surprising rewards.