I went partial FI at 26. I didn’t mean to, nor knew what FI was.
By: Christopher Pascale
Following 5 years in the Marine Corps, I was 60% disabled. My severance in 2008 with a wife and 2 kids was $1,200 every month forever, with adjustments that have gone up since. When I was 30 in 2012, my wife was forced into retirement from the US Army for medical reasons.
Today, at 34 and 36, our pensions combine to about $44,000 per year.
This was obviously not planned, but the income has allowed us to make expensive lifestyle choices, such as having 4 kids, keeping a full-time parent at home, and living on Long Island. My wife has been able to explore multiple graduate programs (with the GI Bill) over the past 6 years while considering “what do I want to be when I grow up” instead of panicking that she needs to get a job fast because we’re in so much damn debt. I’ve been able to take risks in my career that would have devastated other people. But, for me, when they didn’t work out, I took a couple months off to re-group.
In this article, I’ll discuss:
- How having these pensions has given us freedom
- Our FI-Saving Strategies for home-buying & car-buying
- Career Approaches
- Current and future sources of FI income
- Our life of luxury (seriously, we have an amazing life)
With a family of 6 living on Long Island, we haven’t “gone FI” with $44,000, but we’ve “gone flex” in that we have flexibility we wouldn’t otherwise.
When I left the Marine Corps in 2008 I became a stay-at-home-dad and tried to write full-time. For 3 years I essentially paid to work, funding an unsuccessful [self-published] book tour that spanned 3 states, and working as a Feature Writer and Section Editor for a now-defunct site.
With moral and emotional support from my wife, I was able to stay home with our growing number of children because I had a pension, which also afforded me the time to study at a rate of 30 credits a year, earning me a bachelor’s degree when we needed it most, as my wife was forced into retirement.
Following a year at an entry-level job with the IRS, I went to an accounting firm. It was a miserable experience that equated to drinking lots of coffee and Red Bull while staring into the blue monitor-glare of hell while tap-tap-tapping away into Excel spreadsheets. The pay was only $39,000 (about 1.5x my annual rent), but because I was partial FI, I had the luxury of learning this new career instead of going to Iraq for much more with companies like General Dynamics or Lockheed Martin.
The final straw for me came on a busy day when the office manager was taking lunch orders. Normally, I’d walk to the farmer’s market, but since we were busy I put in for a sandwich and an apple juice.
“Only food,” I was corrected. “No drinks.”
“What?” I asked.
“Yeah,” he added more kindly, “we have drinks in the fridge.”
“Just soda,” I was sure.
“It’s a free lunch!” he scolded me.
“No it’s not. It’s a trade of the only hour I enjoy here for an $8.00 sandwich.”
That was a real exchange. Because I had freedom, I gave 90 days’ notice, not worried if they let me go right then. Upon leaving after tax season, they asked if I’d stay on part-time. I declined and worked weekends on a farm. During the week I spent more time with my kids, went to the gym, and we cut back by not going on vacation. I supplemented our income with some ghostwriting, and began volunteering at a new charity as its CFO, which was a very enriching experience.
Don’t misunderstand. These were lean months. The income from the part-time farm work was necessary for our bills, not extra from my fun FI-job.
A few months later I was hired to work at another business. Some good things happened there, like me doing my first travel hack – a family trip to California for points I’d accumulated thanks to the company. However, after a couple years I gave notice and took 6 weeks off, heading back to the IRS. The owner asked me to stay on part-time. I offered to be a contractor, hoping to lock in a good side hustle since I was initially taking a pay cut, but it didn’t go that way. I sent him my first bill and he wanted to negotiate it down after I’d already done a second month’s work.
“Pay it or don’t,” was my reply.
Why? Because I was free; take it or leave it.
During the 6 weeks off between that job and the next, I took the kids to Stockbridge, MA for a week, and began writing a new book that is nearly done.
Later that year, the IRS asked if anyone wanted to volunteer for a 2-month furlough with unemployment benefits. I jumped at the chance, and was thrilled to be home. We re-did 2 bedrooms and I tore out a chain-link fence in my backyard.
Part of why I could do this was because my home is not a prison of debt.
Home Buying Strategies
Let’s agree I’m not the most desirable employee. However, I’m pretty good at buying homes.
North Carolina, 2007: What we lacked in market-timing, we made up for in thriftiness. The banks were approving us for $200,000. We borrowed $110,000 on a 30-year VA loan, then re-fi’d to 15. It is now a rental property and will be paid off in 8 years.
Louisiana, 2009: We bought another home for well under what the bank approved. 3 years later we sold it for a profit, not feeling comfortable to take on another rental.
New York, 2014: There was a beautiful home I liked on a nice street. It had an apartment for guests, and a pool. But at $525,000, I told my wife, “if we buy this house, we’ll only leave it to go to work. It will be our prison.” A mile from that lovely home we found an ugly one that had the stench of a cat brothel (not to be confused with a cathouse, which is another name for a regular brothel). We pulled into the dirt driveway at the very edge of the school district in a different zip code. It has only 1 bathroom. After seeing it, I told my wife 2 things: (1) I hate this house, and (2) put in an offer. We bought it with a 30-year VA loan, then re-fi’d to 15.
In my worst-case scenario, the house (and, therefore, all our debts) will be paid off when I’m 49.
Car Buying Strategies
A car is just a garbage can you drive around. For that reason, I want my ‘97 Explorer to just keep running. The radio is crap, but I usually listen to stuff on my phone or iPod. The gas mileage is low, but I don’t drive it very far. When it goes, I’ll replace it with something about 10-years-old for a few grand.
Our other vehicle is a Honda Odyssey. We bought it 2-years-old with a loan, and don’t regret the purchase. I’d get another one.
Our Career Strategies
Career Hold: With small children we were adamant to be there. My wife was home the first 4 years, working as a military reservist. I was home the next 3, and she’s been home since. This year, as our youngest enters 2nd grade, she’ll start a new career.
Commuting is a waste of time and money, and it’s dangerous, so I won’t work far from home. I discuss this further in a piece about how teleworking 2 days a week let me have 12 ½ nights more sleep a year (coming soon).
My goal was always to find the most lucrative opportunity, which I’m actually finding in government. I left the IRS for an accounting job because my father was a CPA and took good care of us when he was alive. I then passed up a job as a VA budget analyst to work at a factory because it seemed like there might be an opportunity to buy the business, or at least make a high income. Neither happened. While working there I was the volunteer CFO of a charity that grew quite quickly. This helped me gain valuable skills and experience for my résumé, and has been a repeated source of impressive references when needed.
Returning to the IRS for the same job I had 5 years earlier, I rejected an offer from a large accounting firm. Two years later I’m making more than I ever have while getting out at 3:00PM.
My wife has explored many jobs and graduate school programs since leaving the military. She started at a prestigious MSW program, but didn’t like it. She then went to art school and then re-applied to law school (she had been previously invited to interview but pursued the MSW) where she was again invited for an interview, and passed it up again, deciding to take some time off.
She got a part-time job at a veterans hospital. A year into getting yelled at by old and young vets alike, our dentist said that she was clenching her jaw in her sleep. So she resigned and started an MBA program, which she will finish next month. A local school hired her to be an aide in a kindergarten classroom. After getting accidentally head-butted, she asked if they could put her in an admin or hall monitor job until she recovered. They said no; she resigned.
All in all, we have been searching for “the next thing,” meaning our next thing – our career. My wife thought she’d like being a public school social worker, but after a year, she realized it wasn’t what she wanted. She went to art school thinking she could do work that would feed her soul and her family, but found out it’s likely just one or the other. The veterans hospital afforded some good opportunities, but the water wasn’t safe to drink, and the people weren’t so great either, possibly from drinking the water! With each job she’s tried, and each college major, we’ve been excited. Being partial FI, we have choices. The school, for example, seemed great. It offered a 403(b) and summers off, but they aren’t worth a head injury and indifferent leadership.
Going into government service as a career, we are now set on getting defined benefit pensions that can be gained with just 20 years of service. I wish I could say that my FI plan involves some stock-trading tricks, or owning a 100-unit apartment complex, but we’re not that savvy.
After all, if we were so smart, we wouldn’t have accidentally fallen halfway into this plan, not even realizing it until hearing a few O.L.D. podcasts 10 years later. But now we have a plan.
Current & Future FI Income
As mentioned, I fell into FI by qualifying for a VA pension. I’m currently rated as 70% disabled (a re-eval in 2013 raised me up from 60%), which I wrote about in more detail in a guide on a site for marines. My wife is medically retired.
Current veterans pensions at 36: $44,000 per year
We own a rental property in North Carolina. It will be paid off in 8 years. Using conservative numbers, I’ll assume that only 8 months’ rent will be profit. The rest will go to expenses or it will be vacant.
Rental income at 44: $7,200
We own some dividend-paying stock, but not enough to make a difference. Over the next 20 years, I’d like to own at least $500,000 worth of shares in companies like General Electric that pay about 3%.
Dividend income at 55: $15,000
I’m going to complete at least a 20-year career in the federal government, which will bring a traditional defined benefit pension. My wife will likely do the same after graduating next month. If she does, great. But if she stays home and continues to be a terrific mom, that’s awesome, too. This early federal retirement webpage does a fine job of explaining how it works. Keeping it simple, 20 years of service will equate to 20% of my top pay, which I qualify for at 48, and can receive when I’m 60.
DB Pension at 60: $24,000
As you can frequently hear on Optimal Finance Daily, retiring in a radical fashion does not discount traditional retirement planning. For this, I have a Roth IRA, as well as a Thrift Savings Plan. Staying conservative, let’s say they total to $500,000 when I’m 60, and I draw at a rate of 4%.
4% draw on accounts: $20,000
Total FI incomes (not including salaries, or my wife having a 2nd career) will be as follows:
|Age||FI Income Amount||Sources of FI Income|
|44||$51,200||Pensions, Rental Income|
|55||$66,200||Pensions, Rent, Dividends|
|60||$90,200||Pensions, Rent, Divs, DB Plan**|
|60||$110,200||Pensions, Rent, Divs, DB, 4% Draw***|
*These pensions will decrease as the children reach 18, but increase with inflation.
**This is only 1 DB pension. My wife will likely have another career.
***This is only a draw on my accounts, but if my wife has a TSP of $500,000 it will double this income source. In total, our retirement income could reasonably be $150,000 at 60.
Our Amazing Life
I am honestly among the richest people I know. Along with two homes and the income that has come in every month (even during government shutdowns), my children and I have great relationships and enjoy talking about a wide variety of subjects. Our dining room has a chess table that has seen hundreds of games (played poorly). All of my kids take private lessons of some kind, and all have learned to play an instrument. My oldest daughter has been living in Australia as an exchange student since July. My next oldest is going to science camp for a week this summer. As I proofread this before submitting, it’s Friday night and there are 10 kids in my living room watching the Flash Gordon movie and eating pizza while my wife mistakenly tells them that the star of the movie (she thinks it’s Dolph Lundgren) has a degree in particle physics (it’s chemical engineering), and they are all blown away.
My wife, having now been out of the Army for 6 years, will have an MBA and will likely start her 2nd career on her terms. I’ll reach 20 years of federal service at the age of 48, and could continue beyond that, but all of my daughters will be adults – possibly with children. Given an opportunity to be a care provider for my grandchildren, I might just take it.
Lastly, my wife and I are talking about doing a stint in the Peace Corps when we are 50. Given that we’ll be completely out of debt, and FI, we’ll be able to do whatever we want.
Christopher Pascale is an author, accountant and adjunct professor from Long Island. He is the former CFO of Portfolios with Purpose. His finance writing has been featured on the AIPCA’s “Tax Matters” page, WealthyJoe.com, and others. He is also the author of a book of poetry, and is working on a novel due to be released in 2019.