3743: Retiring at 37 is Hard AND Where Should My Money Go? By Chris Reining on Financial Independence

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[00:00:53] This is Optimal Finance Daily. Retiring at 37 is hard. And Where Should My Money Go? Both by Chris Reining of chrisreining.com. And I'm your narrator, Justin Malek, reading you articles every single day of the year, sometimes two articles in one episode. And that's the case today. So with that, let's get right to the first one as we optimize your life.

[00:01:25] Retiring at 37 is hard. By Chris Reining of chrisreining.com. I think I'm dying. I'm having chest pains, shortness of breath and body chills. So I'm driving myself to urgent care. And when I get there, I describe my symptoms to the check-in lady. She tells me to go to the front of the triage line. After triage, I see the doctor and tell him what's going on. And then a nurse comes in and does an EKG.

[00:01:54] She leaves. And now I'm sitting there waiting to find out how long I have to live. The doctor comes back. How's your job? What? You're fine. Are you under a lot of stress at work? I like him because he tells me to read The Power of Now by Eckhart Tolle and to take a meditation class. He asks me if I want pharmaceuticals. And I say no. He writes me a prescription anyways. I realize I'm trying to do too much.

[00:02:24] A full-time job, running a website that's turning into a full-time job, and finding time for a life. Something has to give. And I already knew that because I tried to quit my job two months earlier. My boss had invited me into his office. And when I sat down, he slid an offer letter across the table. It was for a promotion. I've been thinking about quitting. Why would you do that? Because I've been doing this for 15 years, and I want a break.

[00:02:53] Well, I'll support whatever decision you make. Take the weekend to think it over. So how do you make big life decisions like this? My intuition is telling me it's time to quit, but I don't trust it. I don't know why not. So I sit down at my dining room table and come up with a way to make a logical decision. I write down what's important to me, the ways I want to live my life.

[00:03:20] And I weigh the importance of each one, and then score them against taking the promotion or quitting. I feel like I'm crazy for doing this, but I have my answer. Monday morning, I show up in my boss's office. I decided, I'm going to quit. Are you playing a card here? No. Is it more money, more responsibility? No. What is it then? It's me doing what I want with my life.

[00:03:50] Well, if you stay, you have a really bright future. And I start thinking about the money I'm giving up, the career I spent 15 years building, my identity. I get scared and second-guess my decision. I take the job. That was a mistake. It's always a mistake when you don't follow your intuition, or when you listen to everyone around you telling you what to do.

[00:04:15] What's hard is convincing yourself everyone else is delusional and you're the sane one. So, I work a few more months before I meet with my boss and tell him it's finally time. People tell me, I'm lucky to retire at 37. For a while, I believed this until I remembered I've been working towards this goal for at least six years. Because that's when I decided my time was more important than money because time makes you happier.

[00:04:45] The first thing I started doing was tracking where my money was going. I had no idea I was spending most of it. 89% to be exact. And then I found the biggest expenses to cut. Like the $1,000 a month I spent flying airplanes. Then I worked on making cuts in other areas. But you can't frugal your way to financial freedom. So, I took my career and learned how to become more valuable.

[00:05:13] Because top performers earn more money. Reducing what I spent and earning more money caused my savings to skyrocket. The first year I was able to save 15%. Then 30%. And then 45%. It topped out around 55%. If you want to become wealthy, it doesn't make any sense to keep money in a savings account. You have to invest. So, I put it in the stock market.

[00:05:41] I lost a lot during the financial crisis. But over the long term, the market always goes up. And at 35, I became a millionaire. Honestly, it was kind of a letdown. But I had enough money where I felt like I didn't have to work if I didn't want to. In fact, I reached what's called the crossover point. Meaning, I had enough money that I could generate $40,000 in passive income for the rest of my life.

[00:06:10] You know, setting a goal to become financially free was easy. Getting there was pretty hard. But quitting? Getting there was a lot of money that I could have. Walking away from one life to start another? That was the hardest. Because the funny thing about money is you always feel like you need more. I was scared to walk away from it. But I was more scared of finding myself at the end of my life having never done what I really wanted to do.

[00:06:38] And that's not how you live life. Where should my money go? Today's question comes from Gabrielle. She asks,

[00:07:09] In my early 20s, my big goal was to buy a house. Of course, I like the fancy condos downtown that went for $200,000. To come up with $40,000 for a down payment seemed delusional because I barely made more than that. Instead of saying, I'll buy a place someday, I told myself I had three years. Here's the math I did.

[00:07:34] $40,000 is roughly $1,100 a month for 36 months. So I set up an automatic transfer that took $1,000 from my checking account every month and sent it to a high interest savings account. With this, plus rent and everything else, I didn't have much money left over. And I remember feeling jealous when my friends were buying new stuff I knew I couldn't afford. Do you see the underlying psychology here?

[00:08:01] And here's the exact framework I used to figure out where my money should go. Number one, don't leave free money on the table. Contribute enough to get the full company match for your 401k or similar retirement account. Your future self will thank you. Number two, have a minimum of $1,000 saved. Most people can't handle a $500 emergency. Don't be like them.

[00:08:29] And stuffing your savings account with three to six months of cash is even better. Number three, create one goal. Take a vacation to Paris. Increase my savings. Save a down payment for a house. Or pay off my student loans. Number four, make the goal specific, timebox it, and break it down. Example, increase my savings becomes save $10,000 by next February.

[00:08:58] Here's the math for that. $10,000 is roughly $800 a month for 12 months. Are you with me? Okay, good. Number five, map your money. I'll walk you through how to do this. Let's say your take-home pay is $4,000 a month. Rent is $1,600. Student loans are $1,000. Savings are $800.

[00:09:24] And everything else, like bills, clothes, eating out, groceries, and so on, is $600. Do you see that you really only have $600 to live on? So the key here is to prioritize how this is spent. Hint, brutally cut out everything you don't care about so you can spend on the things you value. And number six, build habits through the power of automation.

[00:09:52] You can't rely on pure discipline to reach your goals because it eventually runs out. Instead, when you set up automatic transfers to pay your rent and your student loans and to build your savings, what you're really doing is creating habits, which is discipline. You just listened to the post titled, Retiring at 37 is Hard. And Where Should My Money Go?

[00:10:22] Both by Chris Reining of chrisreining.com. And I'll be right back with my commentary. Many leaders think they know where time goes. But as teams grow and tools multiply, reality can look surprisingly different. So decisions about what to automate and where AI fits can be a gut call. That's the problem today's sponsor, Scribe, is helping solve. Scribe is a specialized intelligence platform trusted by 94% of the Fortune 500.

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[00:11:49] It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. Thank you to Chris. I think that conversation with his boss shows how two people can look at the same decision and be answering different questions.

[00:12:18] His boss is talking about a future at the company. Chris is trying to decide whether he wants that future at all. And I'd keep that in mind when asking someone for advice about a big change. Someone might see a promotion as an obvious opportunity because it fits what they want. That doesn't make their advice useless, but it helps to understand what they're assuming. For example, if you're thinking about taking a less demanding job,

[00:12:47] a friend might be concerned about what it would do to your career. That's a reasonable thing to consider. But if you're deliberately trying to make work a smaller part of your life, slower career growth might be a trade-off you're willing to make. So rather than trying to convince that person to want the same thing, I try explaining what I'm willing to give up and why. Then they can help me think through the decision I'm actually making. And they still might not choose it for themselves.

[00:13:16] I'd want to be open to a concern I hadn't considered without needing everyone to agree that they would do exactly what I would do. So thank you to Chris for both of these. And thank you for being here. I'm really happy that you're here. Have a great rest of your day and I'll see you tomorrow where your optimal life awaits. Let's get started. Let's get started. Let's get started. Thank you.