Today we review JL Collin’s influential book The Simple Path to Wealth. This is a must read for anybody looking to take the low-maintenance road to financial independence. Let’s see why this book deserves a spot in your reading queue.
If you are thinking of taking this FIRE (Financial Independence Retire Early) route, then this is the book for you. If you are on the fence about it, this is still the book for you.
JL Collins gives us the road map to financial independence with his book The Simple Path to Wealth
Simply put, The Simple Path to Wealth is the roadmap for anyone looking to go down the path of FIRE.
If you’re like me, you’ll want to make it way more complicated then it needs to be. You’ll listen to thousands of hours of podcasts and read innumerable blogposts on the matter.
But in the end, it all distills down to what JL Collins has written in his book.
Collins brings logic, humor, leadership and years of experience to the world of financial independence. This carries directly over to the pages of his book.
He gives heaping portions of wisdom and sage advice throughout his writings. Whether you choose to follow the path he lays out is up to you. Either way, you will not regret having read it.
Let’s start by taking a closer look at one of FIRE’s most iconic figures.
About JL Collins
I’ve never met JL Collins in person. Some day I hope to. He’s one state up from me in NH(I live in MA), so maybe it will happen. More likely it would be through an event that he runs called Chautauqua (more on that later).
The point is, everything I know about him is through listening to podcasts and through reading his various works.
From what I have gathered, JL Collins tells it to you straight. He does not sugar coat or mask his feelings in any way shape or form. If he believes in something, he gets behind it 100% and tells you why. If he thinks someone/something is full of sh#!, he’ll tell you that too.
In my mind, he’s got that natural gift of leadership. Lucky for anyone that reads his book, he’s leading you to greener pastures (in my humble opinion). You can’t say that about every leader.
If you choose to master it, money becomes a wonderful servant. If you don’t, it will surely master you.”
JL Collins (The Simple Path to Wealth)
Better still, he’s calling on years of experience in the financial world, and showing you all the pitfalls that so many of us fall into.
He has a genuine disdain for the financial experts that lead us astray. This disdain mixed with his brutal honesty makes for good reading that is both entertaining and incredibly informative.
All told, reading his book, The Simple Path to Wealth, is definitely a worthwhile venture if you are interested in exploring the road to financial independence.
The Idea Behind The Simple Path to Wealth
If you listen to enough of his guest podcasts, you eventually start to hear Collins apologize for his book/blog’s “genesis story”. Nevertheless, it’s an important element to understand and it lends itself well to a teacher’s busy lifestyle.
Collin’s blog, then book, started out with the idea of it being a series of letters to his daughter.
Essentially, he explains that his blog (where all his writing began) is a series of letters to his daughter. Collins wanted his daughter to understand the world of personal finance so that she could avoid the myriad pitfalls that so many of us fall into. Much to his chagrin, she was completely disinterested in the topic, even though she knew of it’s great import.
Basically, despite it’s importance, she didn’t want to sink her whole life into understanding it. Finance felt too high maintenance looking and complex to her. So, she simply passed.
That’s when the light went off for Collins. Just because he found it fascinating, doesn’t mean that others did. He enjoyed getting into the weeds. But he, as he well knew, was anything but “normal” in this regard.
Collins understood. If he wanted his daughter to be financially savvy, it had to be low maintenance. It had to be “simple”. And so the blog letters that would eventually lead to The Simple Path to Wealth were born.
This, as I referenced earlier, is why I think this book is such a great fit for teachers. With so little time to spare, this road gives you the peace of mind that your financial future is being secured without the time commitment that can feel so daunting.
But, in order to follow his lead and invest your hard-earned money, you probably want to have a little bit of trust as well…
Trust
Sometimes, as teachers, we know that our students just have to make the mistakes and learn for themselves.
In the case of Collins, he didn’t want to have his daughter to learn the hard way. It could be too costly.
And there are a lot of sharks in the financial waters. He had learned this through years of experience and hard-earned wisdom.
Collins writes the following in his introduction. “Unfortunately this benign neglect of things financial leaves you open to the charlatans of the financial world. The people who make investing endlessly complex, because if it can be made complex it becomes more profitable for them, more expensive for us, and we are forced into their waiting arms.”
That excerpt gives a feel for Collins’s honesty mixed with his disdain for the “financial experts” that lead us adrift.
His candor and logic lead me to trust him. Then, throw in the fact that he has very little to gain from you following his advice, and the trust only deepens.
In the end, apart from buying his book(s) (which he’ll happily tell you to take out of the library), or visiting his blog, he has very little to gain from these ventures. He recommends Vanguard and VTSAX + VBTLX as your two funds. He does NOT get any income if you choose them.
If he wanted to, he could probably ask you for a fee and invest your money for you. He doesn’t do it. Then, maybe he’d feel just like the people he warns against.
All told, I trust in his leadership and believe his motives are pure. I believe you will too once you read The Simple Path to Wealth.
JL Collins Resources
The Simple Path to Wealth, he explains, is simply a streamlined edition of his blog, jlcollinsnh.com. Give it a look to get a feel for what he’s about. His “stock series” is probably a good place to start.
My library copy of The Simple Path to Wealth
It took me a while to get his book out of the library. It’s still in high demand I suppose… If you want to own it yourself here is an affiliate link that doesn’t cost you anything more, but supports what I’m doing.
You can also search for used versions by clicking my affiliate link at Better World Books. I like their mission of saving books from landfills and using the profits to help promote literacy world-wide.
Finally, JL Collins helps spearhead an event bringing people in FIRE together for a week. It looks fun but it books up fast (fingers crossed for me for anything in the coming years). The event, Chautauqua, can be seen by clicking that link.
The Simple Path to Wealth – In Summary
The book, the path Collins lay out, and my parting words will all have something in common. They are simple.
I said it before and I’ll say it again, The Simple Path to Wealth is the road map you should consider following if you are interested in saving your money and having the potential to retire early. In this blog, I am directing these messages towards teachers because I believe in them. But all my information comes from leaders like JL Collins.
He keeps the path low-maintenance and easy to follow. That way, you can focus on other matters with the knowledge that your financial future is being taken care of.
So, if you want the simple investing ideas from all these blogs, podcasts, and movies boiled down into one place, go get yourself The Simple Path to Wealth, by JL Collins. You won’t regret it.
Thanks for reading everyone. I started my site in February of 2022 after becoming a casualty of the teaching profession. I found myself burnt out with no idea what direction I would go in my career. Then, I found FIRE and wanted to share these ideas with fellow teachers in case they found themselves in a similar situation. Now, I feel much more secure in my future and have a plan I believe in. If you want to come along for the ride I encourage you to subscribe and get posts hand-delivered to your inbox. In the meantime, be well!
The answer to some of education’s woes lies in “less”.
Today’s post is a call to action of sorts. In recent posts I’ve been exploring the idea of stress and teacher burnout and what it means for our collective future. This represents one slice of that “burnt pie,” but an important piece nonetheless. As always, I’ll appreciate your thoughts at the end. Let’s begin…
If you’ve been teaching long enough, you’ve encountered a student whose work just keeps piling up. You can remind, call home, incentivize, or whatever other strategy you use, and still the work accumulates.
At a certain point, their to-do list can become so long that even you are daunted by it. So, probably, you modify it a bit. And eventually, if they are particularly steadfast, you may just settle for them doing anything at all…
Sometimes the pile of work is too daunting!
Whether they are playing us like a violin or there’s something else going on is taken case by case, and it’s not my concern for this post…
The feeling I want to capture is that moment when even you as their teacher look at their workload and say “it’s too much. It’s just not realistic.”
Maybe even somewhere in there is the sentimentality that “there’s no value in them even trying to tackle the entire mountain of work.” You know they couldn’t possibly do it with fidelity. Instead you’d prefer that they focus their energies on doing a few things really well.
This is my hope for how we approach schooling as well. We need to thin and cull. Whether it’s the curriculum, the workload on students and teachers, the demands on the front office, or anywhere else under the massive umbrella of education, we need to start taking away instead of adding.
To capture this sentiment, I have created a new mantra.
“Less is more or stress is more.”
I believe we would all do well to implement it and live by it. Then we can realistically expect to make education what it was actually intended to be…
You Can’t Do it All!
Like the student with a mound of work and little time to complete it, you just can’t reasonably expect a classroom to cover everything that is in today’s curriculum as currently constituted.
It happened slowly over time. Little by little, more and more has been added on to the responsibilities of the schools to give a complete, well-rounded education.
And to be clear, I understand why. If the data shows that a disproportionate amount of students are being bullied, for example, then it makes sense that an anti-bullying curriculum would be introduced. The same can be said for anti-racism, mental health, special education, nutrition, mindfulness, 21st century skills and the list goes on and on.
It’s all very important and I absolutely appreciate that.
The problem arises when you try to add it all into the already existing curriculum without taking anything away.
Cursive writing is nice, but we can’t teach it all!
The problem is further compounded when some of the existing curriculum runs counter to the newer curriculum that gets added on. As I write this (5/22) I still have to give a grade on our report cards for the student’s “cursive writing”.
The end result is that students and teachers are spread too thin trying to do everything that is expected of them. And either you do many things superficially, or you make massive cuts in the curriculum so that you can do some things well.
Either way it’s stressful for the teacher. Uncertainty is woven into the fabric of the entire year. “Am I supposed to teach cursive and typing skills?” “How do get to all of this? Which should I slash?”
This is partly why we need to cull. Right now we are continually adding on without taking away. As a result, everyone is running around like a headless chicken. Stress levels appear to be at an all-time high. Schools need to take a collective deep breath.
“Less is more, or stress is more.”
That’s just the beginning for Teachers
We really can’t teach it all. We want to, but it’s just not realistic. Something has to give. And I know many a dedicated teacher that tries valiantly. Some may even succeed.
But it comes at a price. It takes an inordinate amount of time and energy to even consider tackling all the expectations put on teachers.
I’m talking about having the janitor kick you out of the building at 11 pm kind of energy. Every single night!
Teachers are too busy and balance is hard to come by!
I don’t think it should have to be that way. Teachers shouldn’t have to choose between a personal life and their jobs. There should be a more sustainable path and I think a large part of the answer lies in “less” rather than “more”.
Unfortunately, similar to adding onto the curriculum, the workload for the teacher has been piled onto as well. I’m sure it’s all in the spirit of doing well by our students, but it’s just added to the stress. This ultimately detracts from the student experience.
We need to take massive amounts off of the teacher’s plate, before it’s too late.
Less is more or stress is more.
The Teacher’s Workload
I’ve discussed this at length in my post entitled “The #1 Reason I Burnt Out Teaching“. And truthfully, I’m certain I didn’t get it all. Give it a read and let me know what I missed so I can update it!
Ultimately, what it comes down to is that a teacher is spread way too thin. In my mind, I think of a person juggling balls in the air.
Teaching can feel like a juggling act of futility!
What happens if you finally learn to juggle 6 balls (which is impressive) and someone lobs in a seventh? Then an eighth, ninth, tenth, etc?
They all come crashing down, that’s what!
And maybe it’s not as visually dramatic as that, but the end result is that the teacher is told they need to be able to juggle 17 balls, and the impressive number of 6 is not nearly enough.
The end result (or at least what happened to me) is that the teacher gets completely overwhelmed, and feels bad about everything (even what they are doing well) the entire time.
Not only are we being asked to teach everything under the sun (which we’ve already decided cannot be done well), we’re also being asked to enter data on it, fill out reports on it, show proof that we’re doing it, communicate it to families, attend meetings on it, get trained in new methods, take surveys and fill out forms, and so, so much more.
The fact of the matter is that teachers are reaching their limits. They’re heading for the exits, and they’re not looking back. It’s a shame too, because many of them are doing so well at their juggling. (As a fun aside here’s an interesting post on the theoretical maximum number of balls that can be juggled at one time.)
But how can you feel good about the 6 balls you are juggling when you are asked to do 17? Unless, you are incredibly self-assured, feeling good about the process is usually not in the cards. When the teacher hits their limit, they start looking elsewhere.
Eventually, there’s a price to pay for losing so many good teachers. But there’s also a solution. The solution is less…
What Are You Taking Away?
How many of you teachers have heard the words “self care” mentioned in the last few years? Do you know why? It’s because we’re leaving. The powers that be in education are seeing teachers leaving at alarming rates. They’re also seeing far less people filling that void.
So, as is natural in education, they decided to come up with a “solution”. They know we’re stressed out so they thought that more “self care” would do the trick. As a result, teachers across the land have been hearing “self care” for a few years…
It’s a nice idea, but to me it rings hollow. Do you know why?
Because, quite simply, I don’t have time for self care. If I’m to accomplish all of this busy work you are piling on top of my already demanding job of educating 24 students in a small room about everything under the sun, then where does the self care come in? At midnight? No thanks, I’d rather just sleep.
“Self care” sounds nice in theory. There’s only one problem. We don’t have time for it!
Those are the thoughts in my head after hearing a few mentions of “self care” at various staff meetings. I wonder, how do you receive those particular buzz words? Let me know in the comments.
My solution used to be that whenever someone proposed something new, the response should be “What are you taking away?”
Now, I don’t even think that is sufficient. It’s piled too high. Better solutions need to be found…
Real Solutions
I’m not going to sit here and pretend that I have all the specific solutions to this problem. You know where my answer lies. It lies in “less”.
How you successfully pare down an expanding curriculum in an exponentially expanding age of information is no small task.
Getting it all to coalesce with some of the more “classic” educational standards brings an added degree of difficulty as well. It can be done, but it’ll take a lot of work
All I really know is that, as currently constituted, the job is completely unsustainable. Real solutions need to be found, and they need to be found before it’s too late.
We can’t just say “self care” and hope it all works out. Drastic measures need to be made to make the noble profession of teaching sustainable once more…
Rather than adding something new at the start of the new school year, every district across the land should be taking a hard look at what they have in place, and make hard decisions on what needs to be discarded.
The same can be said for what is being asked of the teacher. Questions like “Do we really need the teacher to still do this?” need to be asked. And when the answer is “no”, then take it out, and let the teachers know that you did.
“Less is more, or stress is more.”
What I Want
I want to start hearing that phrase uttered in orientations at the start of a future school year. I want to hear it in staff meetings too.
Then, I want to be told, at the beginning of the year, all of the responsibilities I no longer have to do. I also want to be told that this is just the beginning.
Eventually, I want to show up to school knowing that I can actually sit and eat my lunch at lunch time without having a million things hanging over my head. Imagine that!
I would like to talk to a coworker without backpedaling down the hallway to let them know, in a not-so-subtle fashion, that I don’t have time for them right now.
I’d like to be able to go to sleep at a reasonable hour. I would like it even better if I didn’t have an “urgent to-do list’ that I need to accomplish, just to survive that day, waiting for me when I walk into class.
I’d like to be able to give my students the time to dig deep into a topic that they feel passionately about. Not having to skip superficially between subjects or make major slashes to the curriculum would be nice too.
I could go on and on, but you get the point.
But does any of that sound unreasonable? I don’t think so. If you agree, then let’s do something shall we?
A Call to Action
I’m not going to get too carried away here. It’s not in my nature. But if this idea of less rings true with you, then pass it on.
Give education that catch phrase it so covets. But this time, instead of having it add to your overloaded plate, let’s make the catch phrase actually lighten your load.
If, like me, you think part of the solution lies in less, then let others know about it!
“Less is more, or stress is more”
As we discussed earlier, over time, more and more has been added to our respective plates. Eventually it reached a tipping point. Now, as a result of slowly accumulating tasks and extra work (among other things as well), stress levels are at an-all-time high. We see it in the teacher attrition rates, as well as the levels of anxiety in our students.
If, like me, you believe part of the solution lies in less, then let it be known. Let this mantra be the one you hear at the start of your school year. Let it echo down the hallways and into town halls.
Less is more, or stress is more.
Use this post if you want, or spread it some other way. Just get the message out. Let’s not make “being overextended and stressed out” the “21st century skill” that we’re teaching our kids.
Let’s make a school a place where we can calmly grow and challenge our students, secure in the knowledge that we’re doing what’s best for them…
Until That Day Comes…
Until that day comes, where the powers that be are actively trying to take work off of our plates, we need to do our own form of “self care”. And sure, yoga and meditation can be part of it.
But another part of it might have to be that we cut back on the work load. This can be incredibly difficult to do, and it’s certainly not for everyone. Nevertheless, hard decisions need to be made.
My favorite book I’ve read so far in my year of leave has been Deep Work. You can read my review of it here and I recommend that you do. Essentially, it outlines how we’re all happier in a state of deep work. But to get there, you have to eliminate superficial work that prevents you from achieving the deeper depths where the good stuff is.
In the end, this can only mean that we have to jettison all the burdensome cargo so that our students and we as teachers can benefit. I’m not sure how, but I’m going to try this when I get back. Stay tuned and I’ll let you know how it goes!
In the end, what I’ll attempt to do is find a solution to make this job sustainable in the long term. Maybe then, I can reach more students as I am able to do the job for longer… This is what I want for you as well.
Less is more or stress is more.
While You’re at it…
While you’re at it, you may want to take a look at your financial future as well. Personally, I don’t want to be another casualty of education, burnt out and looking for a new job in some other field just to stay afloat.
So, my general plan is to save my money, invest it wisely, and create my own safety net. This has given me great peace of mind moving forward. There are no guarantees in this world, but I feel confident that I have a good plan moving forward.
My new plan is to be able to forego a full pension and get paid in time instead!
Rather than trying to endure 18 more years to get my full pension, I’m planning on trying to retire in 5 years.
If you’re interested in this idea, you can start by reading my general plan for early retirement and start looking at other posts on my personal finance page. Everything I’ve learned over the past few years will be stored there. Best of all, it’s low maintenance and anyone can do it.
Have a look if you are interested in having that as a backup plan…
“Less is More or Stress is More!” – A Summary
In my very humble opinion, teachers are overworked and underappreciated. For that matter, I believe everyone working at the school, teacher or not, is overworked as well. Even the students have too much on their plates.
The result is a stress-filled environment whereby everybody is trying to cram massive amounts of work into small windows of time. But quite literally, there isn’t enough time in the day.
To remedy this, we need to take work off everybody’s plate. Otherwise, teachers are going to keep leaving and anxiety levels for students will continue to rise.
A conscious effort needs to be made to jettison that which we don’t need. We then to be extremely selective about that which we keep.
In essence, you can distill it down to a mantra that should be disseminated to schools and districts across the land.
Less is more or stress is more.
Pass it on.
Thank you for reading everyone! As always, I welcome your thoughts and comments below. I’m new to this online writing game (since 2/2/22)but I encourage you to come along for the ride and subscribe (same page as the contact section). Together perhaps we can learn from one another and find solutions to the problems facing our profession.
It’s not uncommon to see happy, engaged students in the class of a master teacher.
This post is a tribute to the master teacher. It is also a recognition of the concerning numbers with regards to teacher attrition these days. In the post we will look for a way to preserve our masterful teachers and keep teachers in the field long enough to achieve that status…
As I write this, it is Friday of Teacher Appreciation Week. Before I go any further, I personally want to thank teachers throughout the world. You have my utmost respect. In my humble opinion, as trusted guides of our future adults, you do some of the most important work that there is to be done. Thank you for ALL that you do! Truly…
If you’ve read any of my stuff before, you know that the teaching profession got the best of me (hopefully only temporarily). Unfortunately, I know I am not the only one. I’m merely one casualty in a sea of fallen teachers. We may have different reasoning that we cite for leaving, but the fact of the matter is, we’re dropping like flies.
It used to be, because the job of ushering 20+ children from differing backgrounds, crammed into one room, and convincing them to do work is actually harder than it seems (All outsiders ever see is the vacation time), that mostly only the teachers new to the profession would be leaving. Their is a trial by fire in this job, and a lot of people decide it’s not from them. Usually, If you could get through those first 3-5 years, you would learn many of the necessary tricks of the trade, and could keep an even keel with a steady breeze at your back. Never easy, but much more feasible.
Not so anymore. This article, from Psychology Today, absolutely nails the problems with the teaching profession and it pre-dates (2016) the pandemic. In fact, if I could appoint a “Supreme Chancellor of Education” it would be her (the author of that article)…
Now, burnout is afflicting so many more teachers(I’m a 12-year “veteran” of teaching for example). People point to the pandemic (incorrectly in my opinion) as the root cause. I just think that the pandemic was a catalyst. Whatever the case, it’s starting to rear it’s ugly head throughout the teaching ranks.
Most alarmingly, we’re seeing our masterful teachers exit years earlier than they planned to. This is why I write today…
Ode to the Master Teacher
I won’t write you a poem, but it doesn’t mean I don’t appreciate you!
Oh Teacher, how do you do such masterful things?
Stop. I’m not going to embarrass myself any more than I need to. But if any of you out there are poets, I am open to submissions…
I alluded to the master teacher in my post entitled The 1-Week Substitute Teacher Challenge where I argued that everybody should have a civic obligation (like jury duty) to be a substitute teacher for a week. In this way, people could begin to understand the gravity of the situation and the implications the loss of teachers has on our future (among other things).
And just so there is no confusion, I do NOT consider myself masterful. I have my moments, but master teachers are in a rarefied air.
They have a marvelous combination of experience, enthusiasm, tirelessness, empathy, caring, and the list goes on and on…
I liken the master teacher to an expert drummer. When you first start out drumming, it takes most of your bandwidth to try and keep the bass pedal going at a steady beat. Then, eventually, you can put a drumstick in your hand and tap the snare. With each progression, you add a new element.
After years and years of practice, combined with natural talent, you have the chance to become an absolute phenom. All 4 appendages are whirling about in a frenzied, yet artful, bombardment of rhythmic genius that bring your drum kit to life.
And all the while you calmly sing into the microphone with a smile on your face. La la la la la…
This is the master teacher. They are working thousands of controls instantaneously, but you would never know it by looking at them. Everything is calmly orchestrated to perfection. And all with a smile on their face.
In this daily orchestration, the master teacher somehow makes every child feel important and that they have a voice. They ensure that every student’s needs are being met and that they’re challenged at an appropriate level. All the while they bring joy, enthusiasm, organization, experience, know-how, calmness, leadership and so much more to every minute of each day.
It is a marvel to watch. And we’re losing them.
The Concerning Statistics for Experienced Teachers
If you read current reports on the current state of teaching (after the start of the pandemic) you commonly see the statistic that 55% of teachers are planning to leave their position or retire early.
55%.
This is clearly clouded by the pandemic “catalyst” and hard to sift through. Nevertheless, that is a VERY high number.
I’m part of that statistic, but I’m going back. Still, I have a new plan to retire way earlier than previously thought and I think I can do 5 – 9 more years (vs. 18) and comfortably retire. This has given me much needed hope and I wish the same for you.
Articles that pre-date the pandemic still paint a bleak picture. They show that about 14% of teachers were leaving the profession each year.
This far outpaces the rates of teacher enrollment. And it certainly does when you consider that 40 – 50% of teachers leave the profession within the first 5 years (pre-pandemic stat).
Are our best teachers going the way of the dinosaur?
Put it all together and the picture gets bleaker. First, you have your most experienced teachers leaving much earlier than expected. Second, you have a dearth of new teachers filling that void. Finally, of the ones that do take up the career, half of them quit within 5 years.
Put it all together and you have more masterful teachers leaving and far less teachers filling those vacancies. If it continues this way, it will lead to even more taxing conditions and the downward spiral could continue.
If you believe in the power of experienced (even masterful) teachers like I do, than you know this does not bode well for our future…
What Can Be Done?
Look, I’m not going to pretend to have all the answers. I don’t. But, I have ideas, which I’ll share with you. That being said, if you have other ideas, I am certainly open to hearing them.
Basically, I think we need to address some major issues plaguing education, and specifically teachers. Here are some issues that need addressing.
Teachers are extremely overworked – Paperwork, surveys, data entry, accountability measures, communication, continuing education, ever-changing curriculum, and on and on and on it goes. I could sit here and write for hours on this. I tried mapping it all out in this post, if you’re interested, but I’m certain I missed many things as well. All this results in a lack of time to actually focus on teaching and a constant feeling that you can never catch up to the mountains of work. It’s exhausting and demoralizing and it’s sending teachers to the turnstiles in droves.
Teachers are disrespected– Whether it’s a lack of respect from students, admin, parents, politicians or society as a whole, teachers take it on the chin. This is incredibly disheartening and driving teachers away. (note: I do want to recognize there are plenty of people that do still respect what teachers do, but I believe it’s trending in the wrong direction).
Lack of Belief in the System – Many of us, myself included, feel as though education has lost it’s way. Whether it’s high-stakes testing and the resultant curriculum that teaches to it, or the myriad other problems within, there’s a loss of trust on the part of teachers. The end result is that teachers feel they are constantly swimming upstream and it takes its toll.
There are more reasons, including poor pay (“You’re going to treat me like crap and pay me like crap too? Peace I’m outta here! Good luck!” ), that paint a more complete picture as well. But, if we could create far better working conditions that would be a start. Blend in more engaging curriculum that is co-created by master teachers and easier to implement as well. Then, start treating teachers with the respect they deserve, and I do believe it would go a long way towards creating working conditions that don’t push teachers away en masse.
What if Michaelangelo were instructed to do the same with painting and micro-manage the exact amount of each paint that was mixed together and document it for a board to critique? And under no circumstance would he be allowed to paint upside down.
Michaelangelo, hanging upside down for 4 years, would have complained about our working conditions!
It’s not completely apples to apples, but teachers are leaving partly because they are being hamstrung by ridiculous time-sucking measures that inhibit them from doing their jobs the way it should be done. Worse, these teachers feel (add me in as well) that these measures are actually hindering productive learning conditions…
We need to start trusting that our teachers know what’s best for their students and put education back in their hands…
Mastery Can’t be Taught
This is just my opinion but I was always of the mind that I’d get through my teaching degrees and then actually learn how to teach on the job. Another way of saying this is that “there is no substitute for experience.”
Along the way, of course we can be guided and helped. I just fear that today’s “training methods” miss the mark by a mile. Teachers are getting bogged down in endless minutiae. That which is devised to help, only stretches them too thin.
To illustrate, I make an analogy to the famous blues guitarist BB King. BB King is famous for being unable to read music. And yet, he is widely regarded as a genius, especially in improvisation. What would have happened, however, if BB King were asked to pre-plan each note he would play at each fraction of a beat within a given song? Worse yet, in this hypothetical, he would have been told it was a prerequisite to getting on stage?
Let the musicians play and the teachers teach!
Would we even know who BB King is today? I highly doubt it.
This is akin to what we’re asking of teachers. We are bogging them down with so much extraneous work that they can’t give their craft the time it needs to breathe.
In my opinion, teaching, in large part, is an exercise in trial and error that you build upon over time. Day by day, week by week, month by month and year by year. Eventually, after many trials and tribulations you continually add to your bag of tricks. What was once difficult becomes natural. Many of the things you had to focus on early now come naturally and automatically. This allows you to focus your energies on even higher-order teaching skills. Eventually given enough time, support, hard work, encouragement, and talent, you can reach the highest levels of teaching.
You can even become a master.
This, of course, can (and should) be guided and mentored. In this current climate, however, it doesn’t feel as though the teacher is being guided in a supporting way at all.
With conditions so poor, and trainings so far off the mark, far fewer people ever reach the higher levels. Teachers are leaving early and often. There are also far fewer coming through the pipelines.
In short, the master teacher is going the way of the dinosaur. In this equation, we all lose…
Listen To Teachers (Before it’s too Late!)
Teachers are telling you, with their words and actions, that the conditions are untenable.
Listen to them, before it’s too late!
I don’t go into surgery and tell the brain surgeon how to do their job. Why? Because I don’t have a freaking clue! That’s why!
Similarly, why do we have so many people that have never taught influencing education? Seriously, does that make any sense?
Sure, it’s always good to have balance and outside perspective. But right now it feels like the scales are tipped way out of whack. I’m just going to make this stat up, because I don’t even want to try to find it and I’m making a point…
(It feels like) 95% of the teaching profession is dictated by people that have never taught before.
Hopefully Google picks that stat up and puts it at the top of every search for “teacher burnout”.
But seriously, it is too much to ask that we have experienced, amazing teachers heavily influencing the direction of the profession? Is that so outrageous of an idea?
Maybe then teachers could actually grow and do their jobs in a sustainable way… Maybe then we wouldn’t be losing so many good to great teachers, past, present and future…
Thank Your Teacher!
Teachers deserve our sincere gratitude!
If you happen to be reading this, and you’re not a teacher but you have a kid in school, then take a moment to thank that teacher.
Let them know you appreciate all they do for the students AND behind the scenes as well. Who knows, maybe that one note keeps one more teacher from dropping from the ranks.
If you feel the need/want to get that teacher a gift, then I’m sure it will be appreciated. But please, no mugs! No signs from Target that say things like “Teachers teach the future,” either. I won’t get derailed but we have too many of that those things and it just becomes stressful. Eventually, it just goes to a landfill as well…
If you feel the need, get them a gift card to a local restaurant/coffee shop. Let them know in the note how much you appreciate all the hard work they do. Tell them that you want to treat them to dinner/coffee because they deserve that and more.
Teachers don’t go in for the money. They go in to make an impact and help. Teachers want to feel like they are actually making a positive impact. Your recognition, even if it’s a note, can go a long way!
In Summary
There is a teacher shortage happening in our country. Teachers are leaving the profession earlier than expected. There are also fewer future teachers enrolling
This means that not only is there a teacher shortage, but it also means our best and brightest teachers are fading from the ranks as well.
This does not bode well for the future of our society. Students benefit from the guidance of highly trained, experienced teachers. With the dwindling numbers of these teachers, less and less students are having access to their expertise. This presents problems in the immediate future and down the road as well.
Not the same type of piper that needs payment!
At some point, the piper has to get paid…
Efforts need to be made to wrest control from outside forces and put education back in the hands of its trusted teachers.
Then, maybe we can make working conditions more sustainable and begin reversing the disturbing trend in departing educators. In that scenario, we all benefit.
I just hope we can figure it out before it’s too late.
Thanks for reading everyone. As always, I’m interested in your reaction/feedback. Also, if you have questions on this or anything else (like personal finance for example)please feel free to contact me. Also, I invite you to come along for the ride and subscribe (right margin or “contact me” page). As I write this, I’m about 3 months into the writing process and am showing no signs of slowing. Subscribe and I’ll deliver my content to your doorstep (or inbox) as soon as I submit it.
..My library copy of Your Money or Your Life on the back porch of a sunny day…
I’m no FI (Financial Independence) historian. In fact, I just found out about FI/FIRE a year ago and it changed my whole outlook on life. Vicki Robin wrote her book, Your Money or Your Life, in 1992. Many people claim it’s the spark that started the entire movement. Whatever the case, this book still has something for everyone. Whether you are just getting started or you have already reached FI, I encourage you to give this book a read…
I’m pretty sure when I picked up this book, I was doing so more from an archaeological perspective. My thinking was probably laced with a touch of condescension as well.
“Let’s see what primitive humans thought about money matters,” or some such nonsense.
Time and again I manage to remind myself that I’m an idiot.
I came away from this book reminded, yet again, that the core tenets of life are a tale as old as time.
Not surprisingly, based on my surge in interest for Financial Independence, I was immediately pulled in. Vicki Robin has a beautiful writing style. She brings an almost spiritual element to the concept of money. Read that last sentence again and tell me that that’s not impressive.
There is also a refreshing fearlessness to her writing. She is telling the reader exactly what they need to hear to turn their lives around.
No sugar coating.
By page 4 you are reading thoughts like, “We aren’t making a living. We’re making a dying.” She’s up front and always honest.
In her honest but non-judgmental way she delivers important messages. Here’s what you’re doing wrong. This is how you fix it. Here’s why you need to fix it. This is going to be difficult, but it’s worth it. You’re worth it too. Let’s get started. You can do it.
And yet, she also has the mastery to bring you full circle on this spiritual journey. A wonderful read and incredibly refreshing.
What’s more, Vicki Robin, capitalizing on the new tidal wave of FI enthusiasm, revamped and updated her book to 21st century living.
There is plenty of wisdom to be gleaned from, Your Money or Your Life. I’ll highlight some of what I appreciated, but as always, you’ll get more if you read it yourself.
Here’s a glimpse at some of what resonated with me and may do the same for you.
Honesty – Best Policy
As I referenced before, there’s no sugar-coating in this book. Vicki Robin tells you exactly what you need to hear.
Vicki Robin doesn’t sugar coat the message. She says what needs to be said!
In the opening pages she paints a pretty bleak picture of finances in our country. “We have a national disease based on how we earn money,” she writes.
She explains that, despite being the wealthiest nation in the world, our debt is growing. We have collectively doubled our debt since 2000 (to 2017) by reaching an astounding 3.7 trillion dollars in debt.
“Our savings rate has actually gone down,” she tells us. This is a big one for me. We (myself included) are virtually throwing away money that we already have in hand. I’m currently working on completely revamping my savings rate and I’ve found it to be quite a liberating process.
In the book, Vicki Robin likens our debt to manacles that keep us beholden to our jobs, as we desperately hang on just to keep the vicious cycle of consumption going.
She reminds us that “The dreams we had of finding meaning and fulfillment through our jobs have faded into the reality of professional politics, burnout, boredom and intense competition.”
Having experienced burnout myself, you can imagine how this resonated with me. However, if we’re being honest, you can probably see how that quote has something for most people…
But don’t worry, it’s not all doom and gloom! It’s just, by my eyes, an accurate portrayal of the harsh reality most people find themselves in. She needed to do this, in order to open the reader’s eyes to change.
Shortly after, she describes her “co-author”, Joe Dominguez, whom unfortunately passed away decades ago but was every bit her partner (even if she did the physical writing), making impassioned speeches to their audiences.
At the very end, a very simple, yet incredibly clarifying, idea was presented.
We are trading our life energy for money.
That line right there boils it down better than anything I could hope to pen.
We are trading our life energy for money.
What a brilliantly simple idea. We collectively spend a huge percentage of our waking hours at work trading time for money. Later, with this idea in place, the question that begs asking arises. Why then, do we consistently throw our life energy (transitive property for money) away (in the form of frivolous purchases/practices etc.)? It simply doesn’t make sense.
After this moment of awakening, the spiritual journey begins…
Your Money or Your Life: A Spiritual Journey
If there is a spiritual side to money matters, then this book finds it!
If I were on a pitch team, coming up for titles for this book, the above heading, “Your Money or Your Life: A Spiritual Journey”, would be a title I would have put forth.
A spiritual journey is essentially what this book can be for so many of us…
This book starts you at the awakening that we’re “making a dying” and “trading our life energy for money,” and takes you all the way to achieving financial independence (not wealth) and being able to trade your life energy for pursuits of the highest order.
One concept that I connected with was a different form of FI, that Vicki Robin calls Financial Interdependence.
“Along the way,” she writes, ” you realize that the independence we crave is a separation from dead-end routines, jobs, relationships and ways of thinking – not from one another.”
She goes on to illuminate how we are all interdependent on one another. Financial Independence, therefore, is not the end. In a lot of ways it’s a beginning of the more meaningful “work” that gives us a sense of purpose.
“In fact, after achieving Financial Independence, most people…” she explains, “actually want to spend their time helping to make the world a better place.”
Yet again, I had an immediate connection. Here I am, a teacher. By most metrics this is an incredibly noble profession (compliment to you readers that are teachers, not me) and I find myself wanting out? What does that say about me? It doesn’t feel too good…
Well, I do still want to give back. But perhaps my path will be different than I originally intended. And perhaps, by subtracting the incredibly stressful circumstances that led to my burnout, I will have the necessary energy it takes to actually accomplish the impactful work I know I am born to do. Whatever that work ends up being…
In the meantime, I also feel fulfilled in the impact I have already made in my 12 years of teaching to this point…
To me, this spiritual journey is already enough to make this a worthwhile read. There are also other benefits as well…
For Those Just Beginning their Journey to FI
Your Money or Your Life is a book that I wish someone had given me long ago. But regrets do us little good in this game, and I just assume move forward, thankful for what I do already have in place.
If you are reading this and you consider yourself relatively new to the world of financial independence then this might be a great book for you.
The reason I say this is because it gives a concrete outline, with practical steps that you can follow, as you grow your understanding.
And yes, there are a ton of resources at your disposal that have come along since. But, with this book at least, all of the information is in one place and written in a logical sequence.
To me, this is invaluable and incredibly convenient.
If you find yourself reading this a little farther along in your journey, there is still value to be had. The book is easily navigable and you can pick and choose parts to meet you where you’re at.
Finally, the reason it’s valuable to all of us, even those who have reached FI, is because it taps into a current of personal growth that we could all learn from…
Enough!
This was one of my favorite concepts from the book. It’s the concept of “enough”.
The book shows a curve with money spent on the X-axis and fulfillment on the Y-axis. The graph is an upside down parabola and at the very peak is the word “enough” (see below).
“The Fulfillment Curve: Enough: from Your Money or Your Life.
One take-away is that “more money spent does NOT equal more fulfillment.” We all know this to be true, but how many of us live it? I don’t think I have. Still, it’s something I aspire to do.
Another take-away is that money is a tool to 1. Fill basic needs. 2. Help you attain comforts and 3. Help you attain certain luxuries (all depicted in the graph).
But how much is too much? How much is enough?
Once you reach this perfect balance of enough, if you continue to spend your fulfillment curve starts dropping (to a very dramatic ending I might add).
When will I be satisfied with what I have? Where is that tipping point of enough? To me, this is a worthwhile mental exercise to contemplate. It may be true for you as well. Personally, I want to live at enough!
The concept of enough also ties in nicely to the next theme that is woven into the book…
Environmental Considerations
This book explores the balance between wealth accumulation and environmental preservation.
Vicki Robin and Joe Dominguez were very clearly NOT trying to make it big with a New York Times Bestseller and ride off into the sunset.
The fact that it became a bestseller is, I would guess, merely icing on the cake.
Their main motivator, as I see it, was to help people as much as they could. As you read, it becomes abundantly clear from the intermittent case studies and testimonials, that they accomplished their goal.
Another talking point woven throughout the book is the environmental consequences of our consumerism.
With sections of the book labeled “Don’t Go Shopping”, “Take Care of What You Have”, “Wear it Out”, “Do it Yourself”, etc. the author is showing us how we save our life energy (money) AND contribute far less to the mountains of trash we contribute to the landfills daily.
There are explicit environmental lessons she shares as well that are equal parts thought -provoking and refreshing to read.
Thoughts on Teachers
If, like me, you are (or have been) a teacher, then Your Money or Your Life has you in mind as well.
In the following excerpt, Vicki Robin alludes to “jobism” and the pervasive hierarchical system we assign to given jobs.
“[Why else] would we consider teachers lower class citizens than doctors even though their desk-side manner with struggling students has equal merit to doctors’ bedside manner with the ill or dying?“
She goes on to explain that “Whether we realize it or not, our daily interactions involve the unconscious sizing up of how each of us ‘makes a living.'”
It reminded me of a documentary I watched (title forgotten) about how some cultures do put teachers on the same pedestal as doctors. Not surprisingly, those cultures value education greatly and their societies thrive because of it…
Either way, Vicki Robin respects you as teachers and it comes out in her writing. Yet another reason to read this book as I see it…
Vicki Robin Today
Throughout my own personal journey in this world of Financial Independence, I have heard Vicki Robin’s name and this book has come up quite a bit.
I have listened to hundreds of podcasts and none more than the ChooseFI podcast that I highly recommend (you can just start at the beginning and enjoy the ride).
It was in episode 70 where I first had the opportunity to hear her speak. It is a great interview and worth the time if you are interested. She brings her own slant to Financial Independence and it’s well-worth hearing about if you get a chance.
She also has her own blog that she still contributes to at vickirobin.com. Recently, it was down for a few days and I was worried she had called it quits (especially after a recent post where she addressed some readers that were giving her a bit of a hard time). But it’s still there and she’s still doing what she was born to do: Writing and making her important voice heard.
Head on over and enjoy.
Book Recommendation and Summary
Not surprisingly, I definitely recommend Your Money or Your Life for all people, independent of where they are in their quest for financial independence.
This book has something for everyone, and it is nicely modernized to reach today’s reader.
To acquire a copy, I used my local library and fully encourage you to do the same.
However, if you want to own this valuable resource so that you can reference it without late fines, then I appreciate you using this affiliate link below to purchase the book.
If you have multiple books to buy use this link for Better World Books. I use them to make my classroom/personal book purchases (You can also search the book after clicking in). They prevent used books from ending up in landfills and sell them to you at a good price.
Proceeds from their sales are used to promote their mission of “bringing literacy and opportunity to people around the world.” Sounds about right for a teacher don’t you think?
By using either of that link, there is no extra charge to you, but it supports me in my mission to support teachers and make a small positive dent on our educational system as well.
However you get it, this book has something for everyone and I’m pleased to have had the opportunity to read it. I hope you get as much out of it as I did.
Thanks for reading and feel free to let me know your thoughts on this book if you’ve read it. If you haven’t yet read it, is it on your list? Why or why not? Comment below or contact me any time.
Teachers: Why can’t we all achieve financial independence? Answer: We can!
To some teachers, financial independence feels like an abstract idea, unattainable to them. Really though, all teachers can reach financial independence and reap the many rewards for taking that path. Here, we’ll look into how and why you can make this concept a reality for you.
When you were a kid, what was your dream for yourself? What did you dream of becoming?
For me, it was a baseball player and later a basketball player. The fact that I was only passable at each was irrelevant. It’s what I wanted to be.
As a youngster, my dream was to be a professional baseball player.
And Why? Simple. 3 F’s. Fun, fame and fortune.
Baseball players were famous, and baseball players were rich. They also got to play a fun game for their fame and fortune. Those simple facts trickled down to my growing, impressionable brain and took hold.
If you ask your students now, you can get a wide array of responses. Some are incredibly refreshing while others reflect my line of thinking in a modernized way.
“Youtuber” and “Social Media influencer” might be on the newer side of things and could be mixed in with some of the classics like basketball player, actor, or musician.
Kids these days and their social media aspirations!
And if you probed a little deeper, it’s probably safe to say that the words “famous” or “successful” are probably implied with those aforementioned professions.
I want to be a famous basketball player, Youtuber or actor. I want to be a successful musician or social media influencer.
If you have the great fortune of teaching certain age levels that I won’t name, your teaching may be met with varying levels of indifference. Why? Because this fame and success, in the students’ minds, is pre-ordained.
I don’t need to learn this (fill in subject matter), because I’m going to be a famous (fill in the profession).”
What’s lost in all of this are the incredibly long odds for each of them to achieve these levels.
In the NBA, for example, there are about 400 players. I won’t get silly with the math, but with about 7 billion inhabitants on Earth, let’s just say I don’t like your chances.
And if 5 of those kids are purportedly sitting in any given class, then I DEFINITELY don’t like those chances.
But it’s not our job to shatter dreams, so I don’t. Besides, maybe I’m wrong.
However, there is one question I want to ask them and that is this: “Is it such a bad idea for you to have a back-up plan?”
“Just in case your long-shot career move doesn’t work out, it’s probably prudent to have a back-up plan. Let’s make school your back-up plan… Get back to work.”
And that, today, is a message I want to consider in this post. The idea of the back-up plan. For me, and perhaps you, that back-up plan could be this idea of being Financially Independent.
That way we can take control of our own destiny, and not be so reliant on other forces (like pensions for example) to dictate our future.
Financial Independence – A Good Back-Up Plan
Last year I burnt out teaching. I didn’t think it would happen to me. I really didn’t. But, given some of my prior money habits that were favorable, I had a de facto back-up plan baked in.
Between then and now I have done a deep dive into this concept of personal finance, and my ideas have hopefully evolved. This is partly why I write. I want to share what I have learned with the hopes that it can positively impact your life as it has for me…
A lot can change in education!
So, even if you are reading this and your job is going great and you love it, it seems to me, in my 12 years on the job, that there are no guarantees it will continue this way.
Principals move on. Students and parents change every year. Superintendents switch districts on the regular. Education, in general, is constantly morphing.
Enter the back-up plan.
Saving your money and growing it, can, in essence, be a back-up plan in case you ever find yourself burnt out (or in some other extenuating circumstance).
And, by the way, I freely admit that I had other factors at play (fixer upper house, baby, etc.). It wasn’t all the job.
But in the same breath I’ll say that the rates of teacher burnout are going up, not down, across the country. So, I know I’m not alone.
And while my favorable personal finance habits weren’t meant to be a back-up plan per se, I was so glad that I had them in place so that I could take this year and regroup.
As I write to you today, my future is still uncertain, and I’m planning to head back into the field. However, I am doing so with a new outlook.
For starters, I knocked out a HUGE chunk of that daunting house work. It will always be there in some capacity, but I feel very pleased with what I’ve accomplished.
In addition, given my research into Financial Independence, I now predict that I only have to work 5-9 more years, instead of the 18 years I assumed I needed to reach full pension.
Thanks to personal finance, this year has been good to me.
That alone, has been so reassuring to me. I don’t even know that I can do it justice with words.
This psychology, of knowing that I’m taking care of my future self, is worth more to me than anything I could purchase.
I want you to have that reassurance as well. You have, in my humble opinion, the most important jobs there are. If you feel taken care of and reassured, it could take some stress off your plate and allow you to focus those energies to the important work that you do.
This is another reason I write.
So, in the same breath that I ask myself “Why can’t I be financially independent?” I also ask you, “Why not you?”
Answers will obviously vary, based on varying starting points, but perhaps the knowledge that you are taking those steps and creating a viable safety net or back-up plan for yourself, is well worth the potential spending “sacrifices” you make today.
Believe me when I tell you, it absolutely was for me! And if your line of thinking runs parallel to mine, then what are we waiting for? The steps, as I see them, are right there for the taking.
As soon as we allow for the fact that this plan can take many years, then the psychology behind it becomes much easier to accept.
But if your original plan was a 30-year pension then it doesn’t look so bad all of the sudden.
This post, “What Does a Millionaire Actually Look Like?“, has a table in it that lays out a pretty reasonable yearly savings goal that can get you to $1,000,000 in 20 years.
Personally, I want about half of that ($500,000) so my numbers look even more favorable and I’m hoping I’ll be closer to 5 more years to reach Financial Independence.
Let’s quickly look at what Financial Independence is, then explore the steps that I’m taking to go down that path.
What is Financial Independence (FI)?
Financial Independence can be a very helpful goal to work towards.
Simply put, financial independence, as I see it, is reaching a level of savings where you no longer have to work for money.
In most cases this involves investing (and it certainly does for me).
Basically though, with your invested savings, you can live off the interest your savings provide for you, and/or your savings themselves.
In all of these calculations, I factor in an 8% rate of return from investments because that is what the market has averaged over time.
Example: Basically, if I reach my FI number of $500,000 then, in theory, I would be making, on average, 8% from the market per year. Eight percent of $500,000 is $40,000.
Then, when I’m 55, I could start collecting my meager pension. Mine might be close to $20 – 25% of my salary by then. Let’s call it $15,000.
In addition, because I have free time, I would have the option to earn some money on the side, if need be. Could I cook up a plan to make $10,000 per year on the side? Probably, though I recognize it’s harder than it looks.
Finally, as a back-up, don’t forget that you have the $500,000 itself that you could dip into if need be.
Put it all together and, in theory, you are making $65,000 per year ($40k from interest off investments, $15k from pension, and $10k from side hustle). If your financial needs are below that number, as mine are, than you have reached financial independence!
You are no longer beholden to a paycheck and free to dictate how you spend your precious “non-renewable resource” of time!
And as I write this, I come to an important realization. Perhaps my FI number is too high? Maybe I don’t need $500,000 saved… I think my break even amount for the year is about $25,000. $65,000 so far exceeds that, and is giving me pause… Over this past year of research, my FI number has gradually dropped. Perhaps it’s time for another tweak? Stay tuned on that one…
Either way, I’m not there now, so there is time to investigate it as I get closer to that point…
For now, however, if this is as invigorating for you, as it is for me, then let’s look at the plan, or steps, I’m following to get there. I believe that I am on my way and I ask again, “Why not you?”
Steps to Financial Independence
The steps to FI (financial independence) aren’t as daunting as you might suspect.
Here seems like a good spot to slap down a disclaimer. It’s the world we live in right? But very truthfully, I maintain, as I do in nearly every post, that I am NOT a financial expert. I’m only writing my plan for my own money, and what you do with yours is entirely up to you.
The only thing I’ll add to that is that I will never ask you for a dime, and that the general financial outline I follow are gathered from people that I trust in the field of finance.
For a post that references some of these people, AND a deeper look into the world of FIRE (Financial Independence Retire Early), check out this post entitled “FIRE, Hope and Early Retirement“.
Moving on, the steps I am about to lay out for FI, are pretty simple in nature. But remember that there has to be an underlying understanding that they take many years to reach.
Nevertheless, you have to start somewhere, AND, more importantly, they really don’t feel like much of a sacrifice. If anything, I feel so much happier/relieved knowing I’ve set a course that I believe in, rather than filling holes with expensive material goods (as I’ve done in the past).
Step 1 – Improve your Savings Rate: This is the foundation for which all of the other steps are built upon. If you can build your savings rate, you are spending less. If you spend less, than you need less money to live off of. If you need less money, then your FI number lowers. If your FI number lowers you can retire earlier.
So, like I said, this is a big one.
For your reading pleasure, I have created a bunch of posts on this subject matter. Here, I’ll highlight two of them:
If you are interested in even more options on saving money, click here and it will take you to the “saving money” page where all of those posts live.
Step 2 – Get out of “Vicious Debt”
By “vicious” I mostly mean “credit card debt.” Debts like these carry massive APRs that approach or exceed 20%. If I’m expecting an 8% return on my investing then losing over 20% is 2.5X of that in the wrong direction.
Clear that stuff up.
Knock out that credit card debt to accelerate your savings!
The positive spin is that you can think of it as investing. You are getting over 20% return (or whatever your APR is) on your investment. That’s crushing it!
And once you wipe that stuff out you can investigate other debts that may be high as well. Can you consolidate? Are there ways to bring that percentage into a much more manageable range?
Doing these steps can save you many thousands of dollars per year that we are giving away for nothing.
Wipe out the high-yield debt before moving on to next steps. The one exception, you could argue might be this idea of an emergency fund. (But for me, I’d still rather get rid of the debt first).
Step 3 – Set up an Emergency Fund. Like I said before, you may want to do this during or before you go after your debt. Whatever gives you piece of mind really.
Nevertheless, because your savings rate is so much higher, we can knock this step out relatively quickly.
Basically, you want to establish some money for when life throws you a curveball. That way you don’t have to go back into that crushing debt you just got back out of.
For a much more detailed look, check out this post I wrote entitled “Emergency Fund Know-How“.
One big advantage to this emergency fund is so that you don’t have to accumulate the aforementioned crushing debt. That’s why I like this as step 3.
Step 4 – Begin Investingand keep on Investing!
Investing can take years off your Financial Independence number!
There are no guarantees in this world, however, given the history of the market (and that it has always trended up over time) and given the alternative (that if I don’t invest I will definitely have to work 20 more years) this is a non-negotiable step for me.
Basically, I want to tap into that 8% annual growth. This will double my money every 9 years or so and take years off of my expected work time.
This can be a very daunting step for many, but based on my research, it really doesn’t have to be.
I also have an investing page of my site that has other related posts as well.
The bottom line is that if you want your money working for you, you probably need to invest it somehow. For me, I’m following the very simple strategy laid out by others, including Warren Buffet, and letting time do it’s work.
That last part is a great lead into the last step.
Step 5 –Allow time to do it’s thing!
Give it all time and enjoy the ride as you do!
With your savings rate elevated and your money invested, the math becomes more and more in your favor over time.
So, as I’m learning to do myself, and in the words of other FI people before me:
“Be patient and enjoy the ride.”
When, you finally reach your FI number, you can make a decision that is best for you. And if you’re anything like me, you won’t regret having had this “back-up plan” in place even if you do decide to keep teaching.
Other Benefits – Job Risk, Environment and More!
Here are some other benefits, I see them, to taking the path to financial independence (FI).
Take Healthy Risks – If we’re calling a spade a spade, then for many of us in the teaching world, the idea of “tenure” is a security blanket.
In reality, because we’re very good at what we do, we don’t actually need it per se. “They’d be fools to fire us…”
Nevertheless, it’s a reassurance once you get it. Reassurance because who knows what can happen right?
FI can reduce stress and allow you to take professional risks as well.
But that same security blanket can also be a governor or inhibitor of sorts as well. Maybe you see a more attractive position in another district but you don’t apply for it because you don’t want to give up your tenure.
Or, maybe you don’t take a healthy teaching risk because it goes against some new initiative your school/administration is rolling out.
All that goes away with Financial Independence. So, if you want to continue teaching, you can do it on your terms and take those risks that you deem necessary to improve your life or the lives of your students.
Sort of a ,”If they fire me, I’ll just ride off into the sunset,” way of thinking.
This sounds very liberating, and my guess is, that once you take those chances and receive appropriate accolades for them, you’ll wonder why you didn’t start sooner!
FI can allow you to take those risks. This ties nicely into another potential benefit.
Drastically Reduce Stress!
There is something about having a plan that I find very reassuring. Now, instead of feeling somewhat rudderless and buying things because “what else am I going to do with this extra money?”, I have a direction and a plan for it.
On top of that, I also feel reassured that I am taking care of my future self. No longer am I beholden to a “full pension” to care for me in my wearied, battered state after 30+years of teaching (that’s where I’d be, but may not apply to you!).
Now I have a FI number that I can aim for, and a plan to get there.
Knowing my direction and that I’ll be taken care of have drastically reduced my “long-term stress”.
If you’re deciding whether to take this path, ask yourself if it would have the same effect on you as well. And is it worth it to you?
For me, it absolutely is!
Environment – Reduce Waste and Energy Expenditure
Being financially independent can help preserve the environment as well!
There are all sorts of stats out there about what percentage of the stuff we buy ends up in a landfill after the first year (hint: it’s high and it’s alarming).
But really, my outlook on it is a little more long term. Basically, I think, “It’s all going to end up as trash at some point.”
Whether it’s this year or in 15 years, or even 100, the stuff we buy becomes trash. So, if you are on a path to financial independence and consequently saving much more of your money, then you are most likely buying less stuff.
Whether it’s intentional or just a helpful byproduct, you are buying less materials and creating the demand for less of it to be made. This leads to less trash.
It also leads reduces clutter! Clutter subconsciously sucks your energy and I want no part of it. But the unfortunate reality (at least for me!) is that it is much harder to get rid of something than it is to never bring it in.
Now, with this new plan I just reject it outright and am much happier for it!
Lastly, if you are saving money, you are also finding ways to reduce utilities or travel expenses. All this amounts to less energy that needs to be created. This, in turn, is also better for our environment.
More Time!
In the FI world the refrain “time is your most precious, non-renewable resource,” comes up time and again.
Both, the journey to FI, and reaching FI can free up your precious time.
I’m on board with that line of thinking and it’s why I’m heading down this path. I want the option to spend my precious, precious time the way I deem fit.
And certainly, with a noble cause such as teaching, that is time well spent.
Nevertheless, it has exacted a toll on me and I want the option dictate how I spend my time, should the need arise again.
I’m currently reading Your Money or Your Life? by Vicki Robin. She is a pioneer of the FI community and wrote the book in 1992.
I’m going to do a post on it soon and will put it here shortly.
In that book she puts forth a number of thought-provoking questions/ideas to ponder. One of the questions is the following…
If you didn’t have to work for a living, what would you do with your time?
My answer? Well, certainly I’d like to think that I would still teach in some capacity, but I also know what I would NOT do.
I would not exchange emails with parents explaining whether or not their child is/is not getting enough homework (depending on the parent).
I would not write report cards that take me very long hours, and are barely read.
I would not go to staff meetings to learn about new initiatives or take “5-minute surveys” from the district that dictate my future.
I would not… pause… Oh boy, I’m starting to get revved up here! I’ve been avoiding it, but it’s time… Stay tuned for a “Why I Burnt Out Teaching” Post.
For now, let’s just say that I don’t find all parts of my teaching career to be “fulfilling.”
Getting back to the question, maybe you can see why, for me, the answer is not as simple as “teaching is fulfilling, therefore I would teach.”
And getting back to the original idea of more free time, there are a few forces at play. First, because you are consuming less, you are spending less time consuming. You are shopping less, browsing online less, taking less things to the store to be fixed, etc. As a result you have more free time in the present.
The other, more obvious one, is that because you can retire early you would obviously free up A LOT more time to use as you deem fit.
So, if the idea of more time is enticing, because it is so valuable, then this might be a path for you as well.
In Summary
Achieving Financial Independence is absolutely a path that all of us can take if we choose. It’s not reserved for a select few.
It’s also a reassuring back-up plan that has helpful byproducts of reducing stress, helping the environment, freeing up time, and allowing you to take healthy risks in your career.
By improving your savings rate, you can clear debt and build an emergency fund. Continuing on, this same improved savings rate will fuel your investments and reduce your time to Financial Independence exponentially.
For all of these reasons, I have chosen to take the path to FI, and getting there becomes a math equation.
Does this sound like something for you as well? If so, what are you waiting for?
Thank you for reading everyone! If you feel inspired to write in the comments below, I’d love to hear your thoughts? Where are you on your path to FI? Or, what is holding you up? If you have questions/thoughts, feel free to put them below or reach out and contact me independently.
How much does our mental image of a millionaire match reality?
In reality, there is no one look for a millionaire. Logically, we understand this. However, the word does conjure an image doesn’t it? Taking a deeper look into this idea of a millionaire can be an eye opening exercise, that can ultimately inform how we manage and use our own money moving forward.Let us Investigate…
Okay, let’s be quick about this. Put the image of a millionaire in your head and hold it. What pops in right away?
Typically, I have a financial system that I run for my students throughout the year, and we do this exercise at some point in the first month or so.
If you are like me or my students, a certain image popped into your head at the mention of the word “millionaire”.
For us, typically it’s something lavish, perhaps involving yachts, clear blue water, and people sunbathing on the deck with their fancy sunglasses.
But then, shortly after, I override that image and come up with a completely different one.
My new image, I believe, is much closer to reality. Let’s take a look and figure out how it came to be. Then we’ll see what take-aways, if any, we can collect from the exercise…
The Stereotypical Image of a Millionaire
When I do the aforementioned exercise of envisioning a millionaire with my class, two things become abundantly clear. First off, the reality of our image is that the person that lives such a lavish lifestyle is WAY richer than a millionaire.
A million dollars doesn’t carry the same weight these days…
Being a millionaire these days, isn’t nearly as impressive. This is partly because the value of the dollar has gone down due to inflation. Having a million today just doesn’t have the same worth.
According to this inflation calculator I quickly found, $1,000,000 is the equivalent about $10,000,000 in 1989 when I was a young impressionable 10-year-old. Wow! That’s a 10X devaluation of the dollar in 23 years!
Another reason a million dollars isn’t quite as impressive is the fact that we are living in the age of information. Nowadays, we frequently hear about billionaires (1 billion is one thousand millions!) and the massive business transactions they make. This further demystifies the concept of a millionaire.
Still, despite all of this, the term millionaire still has weight to it. Which is why I’m using it in this post.
Getting back to our example, there is a good chance that a person living a lavish lifestyle spends like a millionaire, but isn’t actually a millionaire.
We see this a lot. People are constantly trying to “keep up with the Joneses”. Other people in their lives have all the latest and greatest, be it technology, cars, fashion, housing, etc. They want a piece of it too.
And while they can technically afford all of these things, it comes at a price. Most likely, by spending exorbitantly, they are foregoing their future savings. They are probably also adding many years to the time they need to go to work.
Personally, I would much rather have the precious commodities of “time” and “choice”. With the financial decisions I make today, I can get to a point where I have the choice to step away from work and use my time in a way I deem best.
Let me choose how I spend my time…
And truthfully, I do NOT think I am sacrificing any happiness in the process. That’s the part that makes this fit so well for me. In fact, the knowledge that I am securing my future gives me peace of mind, reduces stress, and probably makes me happier.
If you are interested, I wrote a post on the danger of YOLO (You Only Live Once) purchases and why we do them. It digs a little deeper into what we are talking about here and gives practical ideas on how to alter this way of thinking.
I’ll never forget a conversation I had with my parents after driving away from a house of one of their friends. I was probably 10 or 11 and I was definitely beginning to notice symbols of status around me. Noticing the luxury automobiles that others were driving was a favorite past time of mine.
At any rate, this house that we had just finished visiting checked all the boxes for me. First off, it was massive. Secondly, it was incredibly elaborate and everything was new. Third, it had a game room filled with all sorts of arcade games and pinball machines. Finally, and perhaps most importantly, it had two luxury automobiles, a Jaguar and a Mercedes, in the driveway.
Okay, maybe their house wasn’t this nice, but it was still impressive!
I was impressed!
“Wow!” I probably proclaimed to my parents as we were driving away. “They are so rich! They must be millionaires!”
I remember my mother looking back from the passenger seat at me and calmly stating something along the lines of “Actually, no. They are not rich. They are currently having a lot of trouble right now with money… They may have to move soon.”
This just about broke my brain. These people had everything and here my mother was telling me that they were in financial straits? It didn’t compute and it probably showed by the look of confusion I was wearing.
Each chiming in, both my parents continued. They explained that one of the two had recently lost their job. More importantly, they explained that the family was living well above their means and spent every nickel they got.
That meant, when life threw them a curveball, as it is wont to do, they didn’t have the resources in place to absorb that impact. Now, they were left scrambling to get out of their credit card debt, pay their bills, and hang on, by a thread, to whatever belongings they could.
This had a huge impact on me and I wonder if my parents even remember it…
And just to be clear, my parents did not typically talk about the finances of others. Like a good teacher, they saw that teachable moment before them and chose to break that one code for the benefit of their child.
Learning they were in financial straits was eye opening for me!
I’m sure they missed some moments along the way as we all do, but that one they absolutely nailed.
And getting back to the point, these folks were spending like millionaires, but it came with a very heavy cost.
Now we’ve discussed this image of a millionaire that pops into our heads. We’ve also compared it to someone who simply spends like a millionaire. Moving on, let’s investigate what I believe a millionaire actually looks like!
What Does a Millionaire Actually Look Like?
0nce I override my initial image, a completely different one takes its place.
The new image is that person wearing a care-worn jacket they first purchased in the 70’s, driving around in an old Corolla that has well over 200,000 miles and is happily making their coffee from grounds that come in a bucket.
This is closer to the car my millionaire drives!
Why do I come up with this image you ask?
It’s because that’s what I believe is closer to the truth for most millionaires. In order to accumulate wealth, most people have to be careful with their money. They string together thoughtful financial decisions, one after the other.
Over time, these seemingly trivial decisions can add up to huge amounts.
Then, by the time they actually do have this accumulated wealth, their habits are so deeply engrained, that they opt not to partake in the lavish lifestyles we sometimes envision.
For an insight on how to establish positive habits in your own life, read this review I did on the book Atomic Habits.
This is why they still wear their coat from the 70’s. “It still works fine. Why change it?” they reason.
This is why, they drive the old Corolla with 200,000+ miles on it. “It still gets from A to B, with no trouble. Why mess with success?”
In the meantime, the average person has gone through 10 jackets, and is on their 4th car in the same amount of time.
The differences in spending can accumulate quickly.
People are naturally skeptical that these concepts can result in becoming a millionaire, but the math doesn’t lie. If you spend thoughtfully, invest wisely, and give it time to do it’s work, you can be a millionaire many times over.
I’ll say this many times in these posts, and I’ll say it here as well. I am NOT a financial expert in any way shape or form. I’m just a teacher from a family of simple investors and have a newly reinvigorated appreciation for the profound impact these ideas can have on our financial outlooks.
On this site, I tell you my plan for my own money, but you should only do what you think is right for your money.
Now that that disclaimer is out of the way, let’s take a quick peak at the math of it all.
The Math of Becoming a Millionaire
You know how the conditions for creating diamonds is something like, heat, extreme pressure and lots of time?
I think the millionaire formula is similar. Saving, investing and time are the three key ingredients as I see them.
Thankfully, accumulating wealth is a little less time-consuming than creating diamonds.
In other words, if you save well, invest wisely, and give it time to do its magic, you can become a millionaire in less time than you might suspect.
Personally, I have no designs or aspirations to become a millionaire. I just want to reach Financial Independence. When I get to a certain total of savings (TBD, but probably somewhere in the $500,000 range) I plan to live off the interest it provides from investing AND whatever meager pension I receive. I can also dip into the savings I’ve accumulated if need be.
But “millionaire” has more cache! So let’s take a look at what it would take to become a millionaire. Below I am going to create a table showing how much you would need to save/invest each year in order to become a millionaire in a fixed amount of time. I’ll start at 5 years (which should be completely unrealistic) and keep adding increments of 5 years until it looks entirely realistic.
To do this, I’ll assume the 8% market return that the market has returned since it’s conception. Then, I’ll just plug the numbers into this compound interest calculator that I like from Nerdwallet. That way I can show you much was actually was actually invested (principal) vs. how much was earned via interest.
Spoiler alert: The impact of the interest will be more pronounced over time.
Here’s the table. It calculates how much money needs to be invested per year in order to become a millionaire in a fixed amount of time ( in increments of 5 years).
Take a look and then we’ll process it together. What jumps out at you?
Years to become millionaire
Total invested per year
Total principal
Total Interest
5
$157,850
$789,350
$210,924
10
$63,950
$639,600
$361,145
15
$34,100
$511,600
$488,676
20
$20,250
$405,100
$596,181
25
$12,100
$302,600
$699,294
30
$7,750
$232,600
$773,419
35
$5,050
$176,850
$832,685
40
$3,300
$132,100
$872,723
Calculation of how much money needs to be invested per year to become a millionaire in a fixed time.
Processing the Millionaire Table
At first blush, the first two rows feel completely unrealistic on a teacher’s salary.
This makes sense, because you are trying to achieve this high figure in a short amount of time. That means you have to add a lot each year, and it doesn’t give the ever-magical compounding interest time to take effect.
Around Row 3, however, things start to get interesting really quickly…
Making that million might be a little less difficult than we think.
Now, all of the sudden, 15 years from now, you are telling me I can be a millionaire if I put away $34,000 per year?
Sure, that’s still a tall order, but it’s not altogether impossible. I’ve read examples of people saving 70 – 80% of their income. 70% of my own income, where I stand now, gets me above that number if I play everything right. Especially if I max out my pretax accounts (403b, 457, and HSAs are examples of this).
Mind you, I do not want to live that lifestyle. That is too much of a strain. If you’ve read my post called “Improve Your Savings Rate Drastically“, you know that I’m aiming for a much more comfortable savings rate of 40%. While we’re on it, give that post a look if you are interested in seeing the massive, life-changing difference between even a 40% savings rate vs. a typical savings rate that is conventionally recommended.
40% is my target savings rate.
One more benefit uncovered in that post is the idea that if you are increasing your savings rate, you are spending less. And if you are spending less, you need less to get by. And if you need less to get by, you can retire earlier! See how that works for you many ways?
Getting back to the table, there is good news for me. I don’t even feel the need to become a millionaire. My Financial Independence number is about half of a million (the way I see it now). My plan is to live off of the interest of my investments, plus my pension and the actual savings if need be.
So, given that fact, I only need to save half of that amount (about $17,000) over 15 years I’m quite content. Now, we’re really talking!
And as we continue down that table we see the yearly total invested go down. This is for the obvious reason that it’s spread out over more years so you would have to invest less per year.
But the potentially less obvious reason is that the amount of interest we are accumulating is going up. That is because, through the magic of compounding interest, our investment, given time to work, is building on itself.
The longer you give it to work, the more interest you accumulate (always assuming the market continues to go up).
By the time you get to 40 years, you have only actually put in approximately $132,100. The rest is interest!
And if you are looking at the table feeling daunted by the amount of time, remember that the conventional wisdom for teaching is that you stay in for 30 years to collect your full pension.
After burning out last year, I took that off the table for myself. I’m 12 years in at the time of writing this and I estimate that 5-9 more years to retire (vs 18 more years to get to 30) is well within reach. That is far less daunting to me!
If you are interested in learning about this “magical” concept of compounding interest and how to put it to work for you, I wrote a post entitled “Teacher’s Pet – Compounding Interest” for your consideration…
Now, let’s put a bow on this one and bring it all together.
In Summary
To review, we’ve seen that, due to inflation, being a millionaire these days doesn’t have the same gravitas because the value of the dollar has gone down considerably.
We’ve also explored the difference between actual millionaires and people that spend like millionaires. In the case of the latter, and the friends of my family, spending like a millionaire can not only put you in a tight spot in the present, but it can also add many years to your mandatory work sentence.
Next, we looked at what my new image of a millionaire is. This is a person that has built the habit of spending sparingly and saving consistently. Over time, especially if buoyed by investing, these small daily wins can add up to huge totals in the long run.
Lastly, we looked at the math of becoming a millionaire, and it appeared far less daunting than most folks might imagine.
In the end, we all make decisions that are best for us. My general premise is that I hope to learn to forego some of the creature comforts now, invest wisely, and take care of my future self down the road.
Having the option to access time and have agency (to use an educational buzz word) in the process, are of great value to me and well worth any short-term “sacrifices” I make today.
I know I’ve given you a lot of links today (no pressure!) but I would be remiss if I didn’t add one on investing. This post, “Investing Basics Made Very Simple“, gives insight in how I plan to invest in an easily accessible manner. Give it a look if you are intrigued by this concept and are looking for an inroad.
As always, thank you all for reading. Do any of you have a vision of a millionaire that you want to put in the comments below? Any other thoughts? All ideas are welcome (within reason!). Also, please feel free to reach out and contact me any time!
Fear of dangers lurking can prevent us from accessing potential long-term investing gains.
If you are a beginner, there can be a lot of fear and uncertainty around investing. Fears of “market crashes” and “losing it all” run rampant. Usually, after investing for a while and seeing that you didn’t in fact “lose it all” (you probably actually gained) the fear subsides and you gain trust in the process. The strategy I propose today allows you to dip your toes in the water, gain the trust in the process, and decide whether investing is for you. And all this without putting anything overly consequential on the line…
Have any of you ever seen the movie Jaws? It’s an absolute classic and I enjoy it thoroughly. From ages 8 through 25, as a tradition, I watched it every summer when we would meet in New Hampshire for my mother’s anesthesia class reunion. It was a very small class and we would all stay together in the home of one of her classmates.
They graduated in 1975 which is the same year that Jaws was released, hence the tradition.
Good times.
One lingering byproduct of watching Jaws from age 8 thru 25 is that I am irrationally terrified of swimming in the ocean. Normally, I love to swim and always have. But I can think of many times when I opted not to, for fear that a 25-foot Great White Shark would gobble me whole.
As a result, I mostly stick to ponds and pools.
However, there are a few beaches where I can bypass this irrational fear, and a few reasons for it. The first reason is that the water is very clear. It takes out that element of sharks lurking in hidden shadows. The other reason is that I have successfully (“successful” as in not being eaten by a shark) swum there many times before.
This is essentially the same premise I propose for anyone who is a beginner with investing. Make it low risk and dip your toes in. Then, once you see the waters are relatively clear, you can enjoy the swim and all the benefits that accompany it.
What is the “Dip Your Toes” Investing Strategy?
Essentially, for the “dip your toes investing strategy, you take money that you “were going to spend anyways” and invest it instead. That way, if you were to lose it all (highly unlikely) and the market crashes, you can rationalize that you weren’t supposed to have it in the first place…
A sort of easy come, easy go way of thinking.
When deciding whether or not to invest, taking it easy might be the best way to get started.
But, if the market behaves as it has since it’s conception, by trending up, then you might decide that investing isn’t so scary after all. The fear of lurking danger that is unlikely to materialize subsides, and your confidence rises.
I talked about this in my About page. For me, if I do not invest then I’m staring at 25 years of mandatory work. If I do invest, I calculate that my mandatory work time is reduced to somewhere between 5 – 9 years. This, along with knowing the history of the market, and having experience investing for a while, is enough to keep me invested long term.
But for others, that might not be enough. They might lack the experience, or because only bad news makes the news, the stories of the market crash of 1929 might have left an indelible print on their minds.
This is similar to how the movie Jaws affected my ability to swim in the ocean. Rationally, I know I am more likely to get in trouble driving to the beach, but rationale and fear don’t always mix so well.
So, if this is the case for you, and the idea of investing in the market seems daunting, I don’t blame you at all.
Maybe though, if you invested a little money that you were going to spend anyways, you wouldn’t be so concerned about it. You could watch it for a while and see if it takes some of the fear and mystery out of investing.
This is the premise that would work for me and that’s why I propose it. Now let’s look at where we can get these “expendable” funds with which to make the first investment…
Funding Your First Investment
We’ve already talked about “money you were going to spend anyways” above. So what is that? Nobody wants to frivolously throw money away or burn it up so what are we talking about here?
Well, first of all, I definitely don’t think of investing as “burning money” or “throwing it away”. Personally, I believe it’s a great tool to make your money grow.
But what I’m really talking about is money that you were going to spend on something you don’t actually need.
To start, take a month’s worth of the non-essential spending (that we all do), and direct it towards investing instead.
Cutting out some luxuries for a month could fund your first investment.
Instead eating out or getting a coffee out, set that money aside for investing. Instead of treating yourself to ice cream or purchasing a gadget for yourself on Amazon, put that money aside for investing instead.
That way, if your worst fears materialize, you’ll know that you only had to make your own coffee and some home-cooked meals instead of eating out for a month or so. In other words, it’ll be no big loss because you were going to spend that money anyways.
Another way of looking at it is that you are increasing your savings rate (if only temporarily). If this speaks to you and you want other ideas on how to save, check out this post I wrote on Drastically Improving Your Savings Rate.
Does that make sense? It’s just a way to rationalize taking that big step into the scary unknown.
Then, once you have accumulated this surplus of expendable cash (whatever the amount ends up being), you can think about investing it…
Making Your First Investment
Let’s face it, doing something that you find intimidating, is very difficult. As an aside, it’s also a worthwhile practice for teachers to do anyways. As adults we can more easily avoid the practices that we don’t feel successful at and that intimidate us. For students, many don’t have a choice what they do on a given day at school and it’s worthwhile to be able to empathize with this sensation.
So, if it helps, you can make this the thing you do that scares you (from Eleanor Roosevelt’s famous quote) and tell your class about it!
But, my suspicion is that once you try it, you’ll wonder what you were so afraid of.
Sometimes starting is more than half of the battle!
You can go online or just call up the brokerage company you want to start investing with. Personally, I have accounts with Vanguard and with Fidelity. I like both.
Next, you open an account and you transfer money into that account. This whole process probably takes 15 – 30 minutes.
Then, after a few business days, once the money has transferred, you can choose the fund that you would like to purchase.
Finally, just sit back and enjoy the show.
And just to be clear, I do NOT get any kickback from Fidelity or Vanguard. Also, as anyone reading this site regularly already knows, I am not a financial expert in any way shape or form. You should only do what you think is right for your money.
If you are interested, and not sure where to start, I follow a very basic investing strategy that I wrote about. It outlines some of the simple strategies I employ and the reasons I got there (as well as the people that influenced me). It’s called Investing Basics Made Very Simple.
In it, I talk about total market index funds as the main vehicle I use to invest. If you’re interested, I did a horse race between 3 of these funds to see which one came out ahead. The results are pretty interesting and you can find them in the post entitled Total Market Index Fund Horse Race.
Based on that article, and based on how much money you decide to “dip your toes” in with, you may want to choose FZROX (Fidelity Zero Total Market Index Fund) as your first fund. The reasoning is simple. Unlike other funds it does NOT have a minimum investment requirement. You can invest just one dollar if you want to! Most funds require a minimum investment somewhere around $2,500 so FZROX, might be a good one to try out if you only want to try a little at first… But that is entirely up to you.
Side note: In that horse race post I linked to above, there is another fund I reference as well that does NOT require a minimum investment either. It could be more to your liking so give it a look!
So far, the steps seem pretty simple don’t they?
Save some money you were going to spend frivolously anyways.
Open an account with a brokerage company like Fidelity or Vanguard.
Wait for the money you are investing to transfer into your account.
Buy into a fund.
Sit back and observe.
That’s where we are so far. And really, depending on how that goes for you, there may only be a few more steps in the process!
There are No Guarantees in this World
There is a scene from Jaws that loosely connects to what I’m about to say here. Really though, it’s just a classic scene that I’m shoehorning in! It’s a great opportunity to meet Quint, the cagey, seasoned captain hired to catch Jaws. It’s also a way to see a very young Richard Dreyfus!
The part that captures it starts around the 30 second mark. Go ahead and take a break to view it. You deserve it!
Classic scene from Jaws, that I use to illustrate how there are no guarantees in this world.
In the scene, Dreyfus’s character is packing an “anti-shark” cage, the likes of which old Quint has never seen. He has questions.
You go inside the cage? Cage goes in the water… You go in the water… Shark’s in the water… Our shark?
Singing: Farewell and adieu to you fair Spanish lady…
A total classic! But also totally ruined me for swimming in the ocean! Oh, the inner conflict!
Really though, all this is my way of saying that there are no guarantees in this world. If I go swimming in the ocean, I could be bitten by a shark. The odds are exceedingly low. But technically, it could happen.
The same, is true in investing. You could, in theory, lose it all.
Here’s what helps me think through this though:
The odds for this are exceedingly low (according to the experts that I trust).
Over time and throughout history, the reality has been that the market has gone up. I don’t want fear to interfere with my opportunity to capitalize on those money-earning opportunities. If fear dictated my actions I probably wouldn’t get out of the bed in the morning.
I heard JL Collins (a major player in the Financial Independence movement)speak about this and he said something along the lines of this: if the market crashes and burns and there is nothing left of it, we will all have far greater problems on our hands than the loss of our money.
That last one is kind of grim. Nevertheless, it, along with the other 2 reasons, are more than enough to keep me fearlessly swimming! No, there are no guarantees, but for me, the pros far outweigh this slim possibility of cons.
Deciding Whether or Not to Invest Long-Term?
After employing the “dip your toes” strategy, people may differ in how long it takes them to decide if investing is for them. This can be based on your personality, how well the fund does in that time, or any number of other factors.
Ultimately, which investment path you decide to take is up to you.
But, if you do decide you want to make the plunge, there really isn’t much more you have to do.
You’ve already got the account open and, in theory, you have probably decided that investing might be the thing for you.
The probable next steps, as I see them, are as follows:
Continue to increase your savings rate so you have more to invest.
Set up a monthly deposit amount into your investing account. (You can automate this from your bank account or your paycheck (usually). You can also have it automated so the money automatically invests in whatever fund(s) you decide upon.)
Optional. Consider setting a pre-tax investment account through your district. This can be a 403b, 457 or a HSA (Health Savings Account) depending on what your district offers. In most cases, these are very favorable because they get deducted from your check before taxes. Once you are certain that you won’t be needing the money any time soon (perhaps after establishing your Emergency Fund ), you may find it beneficial to start thinking long term and getting more bang for your buck with those pre-tax savings.
That’s it! As you can see, taking the time to set up the “dip your toes” account, was more than half of the battle. After that, once you have everything automated, you really don’t have to do a thing!
Beginning Investment Strategy – In Summary
I think it’s very natural to be intimidated by the idea of investing especially if you are a beginner. All the imagery that we absorb from the ether paints a certain image. This image suggests that investing is very complicated, time-consuming, stressful, difficult, and only for a select few people.
The reality, however, can be so far from that perception. There are paths that are recommended by very successful people, and are very easy to follow. These paths take advantage of the idea that has held true since the market’s conception.
Over time, the market always goes up.
The “dip your toes” investing strategy for beginners is a way for people to shed all of those preconceptions and view investing through a much clearer lens. Then, through this clarified view, they can make a decision that works for them.
It’s a simple, set -it-and-forget-it, approach to investing that reassures you about your future. It also allows you to focus on whatever important work you are doing in the present! Having such a low-risk, high reward proposition, is exactly what it would take to get someone like me to take the plunge.
I hope you find it helpful in your own lives as well.
Thanks for reading everyone. If you have any thoughts on what tipped the scales for you towards investing, I’d love to hear them. I’d also be interested in hearing about what, if anything, is still holding you back. Feel free to comment below or reach out and contact me any time!
Picking the right horse for your investment portfolio can be tough. I chose many horses and raced them.
As an investing strategy, I have chosen to go the route of using low-cost, broad based, index funds. This essentially equates to using “total market index funds”. You set them and forget them. But, there is a lot of conflicting information out there on which one is the best. Instead of going one way and feeling uncertain, I decided to get lots of total market index funds and compare them. Then, I just watched the results play out in real time. With real money.Here’s what I found…
I remember reading Seabiscuit back in 2005 or so when I was living in Spain. If I’m not mistaken, the lead trainer was able to look Seabiscuit (then just an unknown and unwanted racing horse that would go on to be one of the best ever) in the eye, see the fire that was there, and know that the horse would be great…
Then, there’s this idea of “looking a gift horse in the mouth,” which is apparently bad practice and rude. Keep that in mind the next time someone gifts you a horse… The idea was that you could look at the horse’s teeth/gums and know how old it was and therefore know how much value it could provide you.
Personally, I’ve never had much luck with premonitions and gut feelings. I think life has bestowed this wisdom upon me after some serious trial and error. We all want to think our gut is right every time, but I just haven’t found it to be true for me…
So, when it came to choosing a total-market index fund, I decided to get many of them and compare them to one another. It’s a horse race of sorts and I have early results I’d like to share. Mind you, the race isn’t over yet, but for me, there is a clear horse (or two?) that are out in front. I have some interesting results that have definitely swayed my thinking. Seeing my results might help sway your decision as well.
First though, I want to explain why I chose to compare total market index funds in the first place…
Why Compare Total Market Index Funds at all?
When I first plunged down the rabbit hole of Financial Independence (FI) and FIRE (Financial Independence Retire Early), I became convinced that investing in low-cost, broad based, index funds was the way to go. This essentially amounts to acquiring “total market index funds.” As a result, I came up with a very simple investing strategy that I outline here.
But, there was another message that I kept hearing throughout my research: “Nobody else can be trusted but Vanguard.”
When investing your hard-earned money, trust is not to be overlooked.
That was a bummer because I already had Fidelity. At the time, Fidelity had a total market index fund of their own. But, based on what I was hearing, other brokerage companies (other than Vanguard) could not be trusted. Their principle goal, it was said, was to make money for themselves, rather than save money for their investors.
So, naturally I opened a Vanguard account. But just as I did, I cut off my source of income by taking a leave of absence (I burnt out teaching).
In the meantime, Fidelity had come out with a brand new total market index fund with an expense ratio of 0.0%! I was intrigued…
Ultimately, before completely bailing on Fidelity, I decided to do a test. I now had 3 total market index funds at my disposal. Two were in Fidelity and one in Vanguard. Essentially I had 3 horses, and I wanted to see how they would fare against one another.
If Fidelity couldn’t be trusted, then I would see it in the diminishing results compared to Vanguard. Then, I reasoned, if that was the case, I could bail on Fidelity and feel secure in my decision.
I find the results to be informative. First, however, let’s get to know the horses a bit better.
Total Market Index Fund Horses
Of the three horses, which horse will come out ahead?
Like I said before, there were 3 “total market index fund” horses to compare at my disposal. Really though, if I wanted to open accounts at different brokerage companies (like Charles Schwab for example) I could have access to even more of these funds.
But that’s high maintenance, and who needs that? Besides, I figured I’d get the general idea without all of the added difficulty. Looking back, I believe I was correct in this assumption…
Without further ado, here are the horses!
Horse 1 – VTSAX – This is that thoroughbred, tried and true work-horse. It needs no rest. You could race it every day, and you’ll probably place as well! VTSAX is the esteemed Vanguard’s total market index fund. It has an expense ratio of .04% which is higher than the others. But, because it’s Vanguard and we trust it, the slightly higher expense ratio is merely an afterthought.
Horse 2 – FSKAX– This is the horse that is always in the hunt. It always has the 2nd or 3rd best odds to win, but never seems to actually win. However, on paper, it’s metrics make it more favorable than even VTSAX. But metrics don’t win races which is why people might dabble with this horse and throw a few bucks on it, but never bet their life savings on it. Maybe that will all change after this race? It has a lower expense ratio of .015 (less than half of VTSAX). It’s also a total market index fund. But it’s Fidelity and so, according to some, we don’t know if we can trust it to come through for us in the end…
Horse 3 – FZROX – This is the new exciting horse on the block. Everybody has been talking about it for years as it raced in the younger circuits. It has finally come of age and people want to see what it can do. On paper it has the best metrics and in person it is by far the most attractive. Its coat shines and its reassuring eyes sparkle. It effortlessly glides around the track as if the laws of physics do not apply to it. It is, in a word, beautiful. FZROX is Fidelity’s Zero Total Market Index Fund. It has an expense ratio of 0.0%! That means, in theory, Fidelity makes no money off of this fund. In fact, because every fund must cost something to run, Fidelity probably loses money off of FZROX. Such is the price of beauty…
But really, FZROX is known as a loss leader, which I’ll get into next. For now, these are the 3 horses I’ve been racing for the past 10 months. Which one would you choose based on the descriptions/metrics above? Choose now and see how you did later…
Next, we’ll briefly discuss loss leaders before we set the conditions for this high-stakes race.
What’s a Loss Leader?
When I was teaching in Italy, I felt almost obligated to travel. Here I was, living in Europe, where a new culture, with it’s rich history, was merely a stone throw’s away.
The problem was, I didn’t have a lot of disposable income. My job didn’t pay all that well and I was still paying off grad school. I couldn’t exactly afford Europe’s finest hotels and cuisines. Or the air fare…
Luckily, there was a little company called Ryanair. If you’ve been to Europe you’ve probably heard of it. Essentially it was (and probably still is) an incredibly cheap way to fly around Europe. You could routinely fly round trip for under 50 euros. No problem at all.
Ryanair advertises loss leaders to attract customers to its site.
How Ryanair could afford this, I know not. But business was thriving and I wasn’t going to question very cheap flights.
In addition, they had these promotions whereby you could fly from Italy to Norway (for example) for free. You would have to pay for taxes and that ended up being around 5 Euros. But, there were no hidden fees ,and essentially, if I was able to get one of these promotions, I would pay 10 Euros or so to fly to Norway and back! 10 Euros is probably 12 or 13 dollars. When you think about what you can get for 12 or 13 bucks, I’m sure a round trip to Norway doesn’t come to mind!
But, this was a great example of a loss leader. By having these outrageous promotions, they surely lost money on the people who took advantage of them. BUT, they also increased their traffic by many times, which more than paid for the loss they took for the free flights.
The promotion brought people to their site. Once they were there, however, maybe they decided that they wanted to go somewhere else. “It’s only 50 Euros for that trip to Budapeste? I’ve always wanted to go there,” the hypothetical vacationer probably reasoned. Click, click, booked.
The loss leader brought in tons of extra business!
The same can probably said for Fidelity’s zero fee index funds. Fidelity has four of these funds. They cost nothing to the investor and Fidelity probably loses money on them. However, the loss leaders get the people to open an account. Then, once they are there, Fidelity can begin influencing these people towards some other investments that will make them money.
That’s the logic, the best I can figure. For our purposes however, it gives us a nice shiny new horse to race and I’m eager to tell you how it fared as we compare total market index funds…
One last thing quickly… One more cool thing about Fidelity’s Zero Index Funds (no this is not an affiliate program. It’s just helpful!) is that you don’t need a minimum amount to invest. For some other funds you usually need at least $2,500 or so to get started. Here, you could start with $1 if you wanted. It wouldn’t do you much good but it’s a start that you could do!
Back to the race. Before we fire the starter’s gun, let’s make sure the race is fair, so we can feel secure in the results later…
Race Conditions
For the results to be validated, the track and conditions have to be the same.
If you are going to have a race, and you want the results to stand, the conditions have to be the same. You can’t have one horse race one day on a dry track with perfect conditions and then have a different horse race on a different day where the winds are gusting and the same track is thick with mud. Technically, it would be the same track, but nobody would legitimize those results…
In the same vein, if I wanted to compare total market index funds legitimately, I knew I had to make the conditions the same.
So, for starters, I bought the SAME AMOUNT of each of the 3 funds AND I bought them on the exact SAME DAY.
And, each time I add to them, I follow the same guidelines. I buy them on the same day with the same amount of money.
And Just FYI, Mutual funds are purchased at the end of each day, after the market has closed. Thankfully I didn’t have to think about clicking “buy” at the exact same millisecond to make sure the market was identical.
Then, I just sat back and watched the race knowing the conditions were equal!
Now, the moment you’ve been waiting for! Here are the results of the race!
Race Results!
Knowing that the conditions were equal and that I bought the same amount of each fund on the exact same day, you might expect that the results SHOULD be based on the expense ratios.
After all, they are all total market index funds.
Have you chosen your winner yet? Which one crosses first?
But, even though they are all the same in name, they might vary in how much of each company they purchase.
For example, one fund may be comprised of .25% Microsoft and the other might be .5% Microsoft. Then, if Microsoft has a huge day of swing, those funds could vary slightly in results.
But none of that really matters to me. I just want to compare these total market index funds to see which one performs the best.
So, let’s get to it. Below is a table of the results from my little experiment. I plan to come back and update this table from time to time. That way, if the results ever change, you can be in the know.
Date
VTSAX
FSKAX
FZROX
3/29/22
3rd place
2nd place (+$1.06)
1st place (+$71.74)
Comparison of 3 total market index funds bought at the same date with the same amount of money.
As you can see, FZROX is in the lead by a length! FSKAX and VTSAX are virtually identical.
And just FYI, I won’t give the exact amount of money I invested for a few reasons, but also because I hope to keep purchasing more, and it will always be changing. But $10,000 of each is in the right neighborhood.
Let’s quickly analyze the results and make sure we are on the same page.
What do the Results Mean?
Basically, my conclusion is that all of these are pretty much the same. Right now it looks like I won’t go wrong with any of these.
But, in fairness, if we are all attracted to winning on the margins with fractions of a percentage point, then there is a compelling case to be made for FZROX.
Mostly however, I was curious whether brokerage companies like Fidelity did have secret, covert tactics to skim money without having to report it in the prospectus report.
For now, at least, the results don’t support this finding. So, if you, like me, already have a Fidelity account, you might not need to scramble to open a Vanguard account, (though I’m still glad I have one).
And remember, I’m NOT a financial expert. I’m just a teacher. This is all just information I am using for my own investing. What you do with your money is completely up to you.
I also want to note that I do NOT get paid a dime by Fidelity, Vanguard or Charles Schwab. They barely know I exist (tears).
Normally, I would put a bow on this one, but looking back on the race track I see a new tornado of dust surging up the line! Hold on folks, this race is not over!
Late Surge from a Fourth Horse!
Unbeknownst to me, a fourth horse has entered the mix! It is absolutely screaming down the track and doesn’t look to be slowing at all. It just passed VTSAX and FSKAX and it’s got FZROX in its sights! This one is going to be a photo finish…
Actually it’s not even close. This 4th Horse just won by a landslide. Let me explain…
The fourth “horse” out ahead gets disqualified for obvious reasons…
It just so happens that on the very day I purchased VTSAX, FSKAX and FZROX I purchased the exact same amount of a 4th fund.
It’s another of Fidelity’s zero expense ratio loss leaders. This one, however, instead of being a total market index fund is a “large cap blend”. Basically, instead of having all publicly traded companies, it only has the biggest companies (Your Apples, Amazons, Microsofts, Facebooks, etc.).
So really it’s very different, and comparing them isn’t fair. It’s also a bit apples to oranges. If the larger companies have trended better than the medium or smaller ones in the past year, then this will do better.
But since I have the data right here, I might as well share it right?
The fund is FNILX. It’s Fidelity’s Zero Large Cap Index Fund. The Expense Ratio is 0.0%.
At the time I am writing this (3/29/22), it is over 2% better than FZROX. This is probably more in line with Warren Buffett’s plan for his money. If you remember from last post, investing basics made very simple, I told you that Warren Buffett planned to invest some of what he left behind (the rest he plans to donate) in S&P 500 index funds when he was gone. Those are the 500 largest companies and are all considered “large cap”.
So, FNILX, which is a “large cap blend” is probably more in line with his plan. And, as I said before, if Warren Buffett gives me investing advice, I take it.
So, for what it’s worth, FNILX is ahead by a few lengths on the other 3 horses. This could change over time and I’ll keep you up to date along the way with this one as well.
Here’s a new table so we can compare the total market index funds alongside FNILX.
Date
VTSAX
FSKAX
FZROX
FNILX
3/29/22
3rd place
2nd place (+$1.06)
1st place (+$71.74)
Disqualified but (+$220)
New comparison of 3 total market index funds (plus FNILX) bought with similar conditions.
Summary of Total Market Index Funds
If, like me, you buy into the idea of investing in low-cost, broad based index funds, like many of the people I follow endorse, then you are probably going to have some total market index funds in your portfolio.
Some people, like JL Collins, only have VTSAX as their investment vehicle.
As I was researching and planning for my quest towards financial independence, the concept that Vanguard was the only trustworthy brokerage company, surfaced from time to time.
I’m not going to refute that. Vanguard has a sterling reputation that is built on a foundation of trust and doing what’s right for its investors.
Nevertheless, based on my results so far, I see no reason to transfer my money from Fidelity to Vanguard. Fidelity’s total market index funds are ever-so-slightly ahead of Vanguard’s (and in the case of FZROX, not insignificantly).
For now, this tells me that no hidden fees (of consequence) are being extracted and I can feel good with Fidelity’s options as well. If this changes, however, I will be sure to let you know!
For now, I feel secure in my decision but I am very open to your feedback as well! Did these results surprise you at all? Is there anything else you think I should consider? Leave a comment below or reach out and contact me any time. Thanks for reading and be well!
Not the type of “fire” I’ll be discussing, but a fire on the beach is a lovely scene nonetheless…
This post is intended as an introduction to the FIRE (Financial Independence Retire Early) movement for teachers. May it give you hope, like it did for me.
Have you ever experienced the phenomenon whereby you learn about something at exactly the right moment in time?
Maybe it was right there all along and you just needed to be ready for it? Or maybe it was pure serendipity?
Whatever the case, the FIRE (Financial Independence Retire Early) movement came along at a perfect time for me. I had seen information on it before, so this is definitely a case where I had to be ready for it. Nevertheless, I latched on hard and haven’t looked back.
Before I discuss its profound impact on me (and potentially you) I think it’s worthwhile to give you a little background on the FIRE movement.
A Brief History of FIRE
It all started with a bolt of lightning… No, different fire… And before I go further I just want to say that this is only intended for background understanding. This movement has steamrolled to massive heights and there is no way I could capture it all.
Some think it started with a book. Others think it all started with a single blogpost. In January 2012, a guy by the pseudonym of “Mr. Money Mustache” (who also wrote the foreword to the updated version of the aforementioned book, Your Money or Your Life) wrote a blogpost entitled “The Shockingly Simple Math Behind Early Retirement”. It’s still a good read and you can find it here.
From there, like-minded people running parallel financial experiments in their own lives were drawn in. Others, who hadn’t even thought such thoughts, were drawn in as well.
Eventually, many of them started working out their own paths and found new ways to get a financial edge.
They all began reaching out to one another and sharing.
Ideas were swirling and colliding. The pull grew ever stronger. They were all being sucked into a singular gravitational field.
Finally, a star was born.
Nowadays, you simply need to type “FIRE movement” into google and you will get endless amounts of resources and information on the topic. It is that prolific.
I have gone through much of this information, and like I told you in my introductory post, I have curated it for you through my teacher filter. Now, you don’t have to sift through it all, looking for the little nuggets of gold. I will give it all to you here on this site!
My Relationship with FIRE
You know that kid in the class that only reads one book series? They just can’t get enough of it and it’s all they talk about. It can even interfere with their relationships.
That was me with FIRE (temporarily).
Whatever I did, I had an earbud in my ear listening to this podcast or that. I was just mining for the little nuggets of information that would bring me one step closer, no matter how small.
My colleagues at work for those final months, couldn’t talk to me about anything else. I was obsessed.
Now I have charted my course and I have my plan. My relationship with FI is much healthier and I plan to share it all with you. I just need to time to get it all out there!
Also, to be clear, I’ve always had an unofficial background in saving and investing. This didn’t just come out of nowhere. My parents openly discussed investments with me and hammered home the importance of a retirement plan.
Before I switched to teaching I was doing all the right things. Then, for some reason, I just figured the pension would take care of me and I stopped.
If you think about it, when you first get hired, it’s all a blur. You have to meet these coworkers and take these courses. You have to set up your email, prepare your class and on and on it goes.
It makes sense that something like opting into a 403b would fall by the wayside. Or why you wouldn’t have the bandwidth to figure out to look into it and figure out what to invest in.
This is probably why I went astray.
Either way, I feel like I’ve been able to use my background and combine it with my new outlook to come up with a good plan.
I fully encourage you to go down a rabbit hole as well! I’ll share some of my resources at the end of this post. Just don’t forget about me as you are way down in the weeds!
FIRE for Teachers
Admittedly, I struggle with this concept.
Teachers are a truly amazing bunch. In my opinion, they are one of the last lines of defense between a healthy society and an ignorant one. You all are such a positive force on society. I truly mean that.
How then, can I sit here and tell teachers they should retire early?
Well first off, I’m not telling you should do anything. I’m just showing you your options.
Secondly, I know that teacher burnout rates are on the rise. Some sources indicate that 50% of teachers think they will quit within the next 2 years. While that number probably won’t hold true, it is still pretty drastic don’t you think?
I burnt out completely and took a leave of absence. As I write this, I’m dreading going back. I felt completely overextended and that I could never get my feet under me.
I knew I was doing good work but at too great a cost. It was one of the most difficult decisions I’ve ever made.
But it’s also one of the best decisions I’ve ever made.
And by the way, I’m not proud to be writing that. I’m just trying to be honest and share what has worked for me. Perhaps what gave me hope will do the same for you? The prospect of 5 more years instead of 18 more, gives me hope. The concept of Financial Independence (FI) is the vehicle leading me to that hope.
Finally, on a much more delusional note, I want to play a small part in changing the teaching profession for the better. Maybe if enough of us either quit or demand better working conditions, the education powers that be will start to take notice?
Like I said, probably delusional. I could launch into a rant right now that would go for 50 pages, but I’ll save it all and sprinkle it in throughout…
Whether this resonates with you or not, can we all agree that it’s never idea to have a backup plan?
Having a Backup Plan
Part of me hopes that I will want to continue teaching by the time I reach FI. If not, I will retire and use my energies to give back in other ways. That is how I justify this whole endeavor to myself.
Ultimately what I think is this: It never hurts to have a good backup plan. I think FIRE is a good plan to fall back on in case you find yourself burnt out like I did.
Being Financially Independent gives you power over your personal situation. It gives you the freedom to decide when you would like to call it a career, rather than relying on an algorithm.
That sounds like a good backup plan to me.
But maybe you have other plans as your backup? If you do, I want to hear about them!
To me, the statistics working against teachers are daunting. This is especially true for teachers just starting out today. Teaching for 30+ years and getting a full pension feels more and more fantastic(as in fantasy) with each passing year. It’s more like hitting a half court shot to win the game then the veritable layup it may have once been.
By the way, that is no knock on veteran or retired teachers! I am your biggest fan and I have relied on you heavily throughout my career. You are an asset in every sense of the word. But when I talk to you, so many of you tell me that the profession has changed for the worse. For so many of us, it has become unsustainably taxing. This is probably why we are dropping like flies. It’s a big reason why I did.
So, If you don’t already, make sure you have a backup plan. If things don’t go your way in this career, you can be ready for your next move instead of feeling stuck.
I think mine is a pretty good backup plan to have. Here’s the general outline if you haven’t read it already.
You’ll at least have to agree that it’s at least better than my ultimate backup of moving back into my parents basement and playing video games (original Nintendo of course) until my mother calls me for dinner for the third time (I always waited for the third call).
My FIRE Resources
When I went deep into the FIRE rabbit hole, I relied heavily on 3 resources. As I said before, there are thousands of different resources out there. If you have one that you love, then I want to hear about it in the comments.
Here are the 3 FIRE resources I used.
Mad Fientist Podcast – This guy is one of the original FI figures and was my introduction to FI. In the beginning, he is on a quest to reach his FI number. Then (spoiler alert), he retires and tries to figure out what to do with his life once he doesn’t have to earn money.
For me, the first part when he was saving and trying to reach FI, were most valuable to me. It helps to hear how other people go about it. He gives lots of practical advice. He’s also incredibly humble and forthright. He is not afraid to share his missteps along the way. There’s something endearing about that.
Here’s his website where you can also find his podcast.
Frugalwoods – My wife turned me onto the Frugalwoods blog. It’s the story of a family realizing their dream of reaching FI and buying a dream home in Vermont. Mrs. Frugalwoods (the host) is an excellent writer. She also does a number of case studies and works out a strategy, in great detail, for people to get their lives on financial track. There is a lot to be gleaned from reading each one.
Mrs. Frugalwoods is very down to earth and espouses many of the lifestyle changes that I think are positive byproduct of financial independence (buying used, living simple, etc.) She’s also a great interview on many podcasts, including the one I’m about to mention.
Here’s her website. I recommend you click around and see what strikes your fancy!
ChooseFI – I have consumed so much of their content it’s almost embarrassing. They have over 500 podcasts and I’ve listened to 75% of them. These guys caught lightning in a bottle and it shows.
The show consists of two hosts, Brad and Jonathan. One, Brad, is down to earth and has a knack for asking the perfect questions at the perfect time. Jonathan, on the other hand, is a ball of energy with an infectious enthusiasm for FI. Their chemistry is undeniable.
In addition, they have so many hosts with so much insight, that I couldn’t not (double negative) listen to almost all of the episodes.
Here’s their website where you can also access their podcast.
I recommend just starting at episode 1 and not worrying about listening to all of them. That’s what I’m here for!
Summary
The FIRE movement started with a single spark and has spread like wildfire (pun intended but I’m not proud of it).
I believe in what the movement stands for and I believe in the strategies they promote.
I also believe that it can be a guiding light for how we choose to spend our hard-earned money. Sometimes you just need a strategy to latch onto to direct your funds in purposeful ways.
If nothing else, I think it serves as a wonderful backup plan to have. Life throws us many twists and turns. It’s never a bad idea to have a backup plan in case you go off the beaten path for a little bit.
Personally, throughout all the twists and turns of the past year, I went off the beaten path and found a new one. This new path has lead me from one four-letter word (FIRE) to another (HOPE).
I hope, if you are looking for a new path, it can do the same for you.
Thank you for reading about FIRE for teachers. As always, please feel free to share your comments below or reach out to contact me.Whether you have a backup plan you want to share, or a FIRE resource you enjoy, I want to hear about it. All questions are very welcome as well!
Retirement looks different for everybody, but sooner rather than later, I hope to achieve mine.
The following post outlines how I plan to retire early from teaching. After experiencing burnout, I began to desperately search for alternatives to teaching. Instead, I came up with this plan built on the ideas of others.Here’s what I came up with...
If creative writing falls under your purview in teaching, you know that, when left to their own devices, most students (read: all students) will opt to forego the planning stages and just wing it.
Before long, the bully is being attacked by benevolent aliens who have teamed up with (fill in a powerful foreign country)’s military.
But wait! The aliens are not benevolent after all! It was all a ruse! Also, the foreign country’s military planted spies all over!
Now the main character (usually the kid writing) has to assemble a team of special forces (four kids that also happen to be in our class), to neutralize the aliens, root out the foreign spies, and repel the bully.
How does this team of 5 do all that you ask? On the backs of dragons of course…
You get the idea. Ultimately, the point is that i it helps to make an outline. So here I am practicing what I preach.
Here is my general outline for how I plan to retire early from teaching:
How I Plan to Retire Early From Teaching – An Outline
When I was in the throes of burnout and just trying to survive until the end of the year, my initial thought was this: “I HAVE TO keep my pension at all costs!”
Really, I just want to have the option to retire. This idea alone, and knowing it will come much sooner than I originally anticipated, gives me hope.
Now, I still want to keep my pension going (I’m only 12 years in) but I don’t feel the need to get to year 30. If I’m thoughtful, and a few things go my way, I think I can cut it down to 5-9 more years.
Between then and now, I have gone down many proverbial rabbit holes and devised a plan. It’s not set in stone however, so feel free to offer ideas!
Nevertheless, here are the steps I plan to take so I can retire early if I feel the need to. I think you’ll find that, even if you are not planning on retiring early, following these steps and having a backup plan, is never a bad idea.
Step 1 – Improve Savings Rate
Improving you savings rate will put you on the fast track to early retirement!
If the end goal is to have enough money to retire early from teaching, then I need to make sure I’m not frivolously spending the money that will buy me that time.
Increasing my savings rate is a double-edged sword and cuts two ways.
The first benefit is the obvious one. If I spend less money, then I will keep more of it!
The second benefit is only one layer away, but it’s one that I hadn’t thought of on my own. If I spend less money, then I need less money to get by! If I need less money to get by, then I need less money for retirement.
Here’s an extreme example of that second benefit. If I buy a Porsche, hire a full-time chef with living quarters in my mansion, spend my free time buying extravagant stuff online, and go to Las Vegas every weekend, I am going to need A LOT more money to maintain that lifestyle after I retire.
However, if I am perfectly content to live without those “luxuries”, it is going to take MUCH LESS money to maintain my lifestyle. That means I will need far less total money saved to retire.
If time is the most precious commodity for you, like it is for me, then suddenly that impulse buy becomes far less enticing.
This is why, it’s clear to me that I need to improve my savings rate.
Step 2 – Maximize My Retirement Contributions
In the previous post on compounding interest, I briefly discussed how it’s impossible to look at your financials without regrets. Not maximizing my retirement contributions is one of my biggest regrets.
Before last year, I just assumed that I would retire after 30 years of teaching and have steady income for the rest of my days. “I don’t need to contribute even more to retirement,” I thought. I wish I could get that one back.
Then, after burning out, 30 years began looking impossible and I had to reassess.
One of the concepts I rediscovered was this concept of “tax-deferred retirement plans.” For most of us this is a 403b plan (which is essentially a 401k for people performing a public service such as teaching).
Basically, you don’t get taxed on the money until you withdraw it from your retirement account. But by the time you retire, you are in a much lower tax bracket (because you are earning less) and so you get taxed at a much lower rate.
In addition (this has lots of benefits) that money was hopefully invested and has grown.
Also (yup there is more) the money you allocate for your 403b doesn’t get reported as income. This means you pay far less in taxes each year you do it. That’s even more savings!
There are a lot of great resources out there that explain it better than I can. I will do a post on it and connect to those resources as well.
Essentially my plan is to extract $19,500 tax free from my income and contribute it to my 403b retirement plan. This will save me over $4,000 per year in taxes and provide other benefits as well.
A 403b is like a 401k for teachers. Its benefits can be huge!
And remember, I’m already increasing my savings rate so I don’t need as much now. I’m buying time and my extra savings allows me to max this out. Even if you can’t max yours out, I think all of us should be taking advantage of these tax-deferred retirement plans. That way we don’t leave free hard-earned money on the table.
If you’re convinced, like I am, that this is a good idea, reach out to your HR department and inquire about opening up a 403b plan.
Step 3 – Invest Wisely
We’ve already seen, in previous posts, that if we invest wisely then we can harness the power of compounding interest and double our savings at a much higher clip.
On average, since its conception, the market has returned 8% per year. At that rate my money will double every 9 years and that suits me just fine.
Investing wisely can help your net worth grow exponentially and put you on the fast track to retire early.
I don’t need any get-rich-quick schemes. Just give me slow and steady. Of course, there are no guarantees in life and there is always the possibility that the market goes down.
But if I don’t invest, my money is just sitting there and losing value to inflation. I won’t go too deep into that now, but Grandpa telling me how gas cost a nickel when he was a kid is a good example. Essentially, just like that nickel, our money buys less with time due to inflation. If I don’t invest, the buying power goes down.
So what will I invest in? Essentially, after all my research I’m on board with what the leaders in the FIRE (Financial Independence Retire Early) movement promote.
My answer is perfect for a teacher. It’s low maintenance. I just set it and forget it. I’m not monitoring the market and trying to buy all these stocks that I know nothing about.
This will be another post as well, but essentially my plan is to put my money into low-fee, total market index funds.
These funds cover all publicly traded stocks at once. That way I don’t have to pick individual stocks (which just feels like gambling to me) I just get them all at once.
It also has very low fees which don’t cut into my savings.
I’ll direct you to posts that explain this better, but for now, here’s a quote from Warren Buffett as proof of concept.
“By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals…”
If the person who is widely recognized as the greatest investor of all time says that, then it’s good enough for me…
Find A Side-Hustle for Extra Income
This is a key ingredient for my plan. Can I find a side hustle to get me $10,000 per year in extra income?
While I’m teaching, I really doubt it. But if I can come up with a reliable source of income to bolster my retirement income, it can act as a buffer so I don’t spend down my savings too quickly.
So what will I do for this side-hustle? TBD! So far I have built a few outdoor tables and sold them on Craigslist for $250 apiece. I averaged about 1 sold every 6 weeks.
Here’s an outdoor table I sold.
I doubt people want these in the winter. So maybe I could sell 6 per year? That’s $1,500 of the $10,000, but those don’t take up too much time either. And that’s just one example but it’s already 15% of my goal.
Ultimately, I don’t think it will be too difficult. Whether it’s teaching English online, tutoring, freelance writing, woodworking, or something else that comes up between then and now, I am confident that I will find a reliable source of extra income by the time I retire.
If I average $20 per hour for 10 hours per week, I can get to $10,000. That’s very doable!
And don’t forget, I plan to be earning interest from investments!
The Numbers Behind My Plan to Retire Early
I haven’t chosen my FI (Financial Independence) number yet. Your FI (often pronounce like “hi” with an “f”) number is the amount of money you need saved so you can quit working and live off your savings.
The letters FI are also the first too letters in the acronym of FIRE (Financial Independence Retire Early).
FIRE is the movement for people who have decided they don’t want to follow convention and spend most of their lives at work. So, as part of my backup plan, I’m borrowing from their ideas to come up with my own strategy.
For the sake of argument let’s say my FI number is $400,000 which is probably low. That number does not leave too much room for error.
We’ve already decided my side hustle will make me $10,000 per year.
But I will also make interest off of my investments. Let’s say I make 5% interest per year (hopefully low). 5% of 400,000 is $20,000 per year.
$20,000 + $10,000 = $30,000 per year. And I haven’t even gotten my pension yet!
Teacher Retirement Pension Plans
Teacher Pensions, vary greatly from state to state. If you have a moment, check out this NY Times article on the grade your state’s teacher pension plan received.
If, like me, you are from Massachusetts, then its kind of bleak. Massachusetts gets an “F”. This essentially means, I will never effectively recoup the money I actually put in.
The New York Times article on teacher pensions does NOT paint a rosy picture.
So, if I retire in 5 years, for example, I will get a measly 25% of my income starting at age 55 for the rest of my life.
And you know what? That suits me just fine!
By then my salary will be about 80,000 per year. 25% of that is $20,000 per year for the rest of my life.
I actually think that I only need about $25,000 per year on average to get by.
We’ve already established I’ll get about $30,000 per year from interest and my side hustle until I’m 55. Then I get an additional $20,000 per year for my pension. That puts me well over my target of $25,000 per year.
And that, in essence, is my plan to be able to retire early from teaching. To accomplish it, I’ll need to make some lifestyle changes and even better financial decisions. I’ll keep you in the know all along the way.
But to me, the freedom to choose my next direction and spend more time with my family (and higher quality because I won’t be so rundown) is absolutely worth it.
In Summary
It never hurts to have a backup plan.
You may find yourself 30 years into teaching and yearning for more! To that I say, congratulations!
For me, after experiencing teacher burnout, I felt as though I needed to come up with a better plan for myself.
If you are reading this and unsure which path your future will lead you, I still think the first line holds true. It never hurts to have a backup plan.
Any way you slice it, saving more, increasing retirement contributions, investing wisely and finding a side hustle, isn’t a bad strategy to have.
That’s my plan for now and I’d love to hear your thoughts on it as well. Post a comment or reach out and contact me.
