Ask Me Why I “FI”
Side Note: What has been going on in our life?
I have been a little out of pocket on the blog for the last few weeks. We had to take some time off in order to help rebalance life. Work is still crazy, family is getting restless (too much COVID enclosure), spent a lot of our free time hiking and climbing because the weather has been unusually nice for this time of year, and I am working on setting up our first passive income stream (more to come in a future post).
One thing that has occurred to me over the last few months, is that because I am writing anonymously, it is hard to really connect with people. Don’t get me wrong, I enjoy the conversations and email but would prefer to meet up with the people in the community to start building strong relationships. Because of all this, we are looking at doing some traveling this year to at least one conference. Next year, after paying off the house, I think we will be trying to attend more and more events. Being anonymous has quickly become less important to me.
Ask Me Why I “FI”
I got asked last week “why are you trying to pay off your house this year instead of waiting and paying it off right before retirement?” If we put that money in the market, it could grow until we finally pulled it out to pay off the house. This is something that I have struggled with for a while. The answer basically comes down to the same reason we have become so passionate about pursuing FI…
I have a fairly stable job; and by that I mean that I do not anticipate getting laid off or fired anytime soon. Despite knowing this, I also have a wife and four kids. We are currently a single income family and my wife stays home with the kids in order to homeschool. Don’t get me wrong, we are in a very good spot financially and could make it an extended time without making any money and still be ok. Even with that being said, we strongly desire the security of knowing that our house is paid off.
Understanding Early Life in the Choose Beta Household
My wife and I started dating in high school and got married in college (actually we got married while I was on a Co-op and thought I was rich lol). I was going to school for my engineering degree and she had dropped out after getting sick with Mono.
We had some money saved up from my job as a co-op, but it was not enough to pay our bills. She picked up a job at a day care while I went to school for senior year. We had a plan, and our path to graduation was clear, all I had to do was find a job. I was scheduled to graduate college in December of 2011 and it was 2010 with the job market looking much better than it did just a couple years prior.
Life Changing Events
In the Fall of 2010 we got another surprise, we found out that my wife was pregnant! Suddenly our plans had to change. We had not accounted for any baby expenses and I still did not have a job lined up. Life was getting real. Luckily, we still had health insurance from the co-op because they covered us through graduation. This was a critical part of keeping us from medical bankruptcy.
During Spring 2011, we decided to take a trip out of town to visit my parents before the baby was born. She was 26 weeks pregnant and the Doctor said she could still travel. When the week was over, we started getting ready to head back to school but she started having what we thought were Braxton Hicks contractions. After a trip to the hospital, we found out that was not the case; it was preterm labor. She was now at 27 weeks pregnant and in an ambulance going to another hospital that had a NICU.
Luckily they were able to slow the contractions long enough to buy us a couple of days to get the steroid shots that would allow our daughter’s lungs to develop faster and hopefully support her after birth.
We ended up having a 2lb 12oz baby girl. She was so small that I could hold her in the cup of my two hands. She was put on a ventilator, a feeding tube, and lived in an incubator. The ventilator only lasted a week, but she kept the feeding tube and the incubator for most of the summer.
New Parents
At this point I did have a job lined up. I had actually received a couple offers and accepted one in February of 2011. Even with that security, there was no way we could make it to December with all of the expenses we were racking up. On top of that, my wife had to stay in Richmond VA with the baby while I had to go back to school in another state to figure out how to accelerate graduation.
In the midst of the chaos, I called the company that had offered me the job to see if I could start early if I found a way to graduate in the summer. Fortunately, I had knocked out most of the core classes in the first few years of school so all I had left were electives. The company agreed to hire me in August if I could find a way to graduate that summer.
I immediately loaded up on hours and got special permission to make a few substitutions in the curriculum and knocked out my bachelors in time to graduate! We ended up having to max out student loans that year to buy food and keep up rent because we had spent a lot of our savings on the medical bills. My parents had helped out covering tuition (we had borrowed money from them early on). They also allowed my wife to live with them for the summer so she could be close to the hospital. We could not have done it without them.
Life was starting to line up again and we had a path laid out. Despite the craziness, we had figured out how to make it work; or so we thought. After couple weeks back at school, I remember getting a call from an unknown number during a class one day and thought it was a job calling me back. Turns out it was a collection agency calling about a $100k bill for the NICU.
Talk about stressed out.
Thankfully, it had not been filed against our insurance correctly and we were able to get it resolved. This would have been detrimental to our financial future.
Post-Graduation
My daughter had been released from the hospital in time for graduation and they were finally able to come home. We made the trip across the country to our new rental house in order to reset our lives and start a new job. By the time we had everything done, we had less than a hundred dollars left in the bank. It did not matter to us because we had a relocation check that was supposed to hit the next day. It was part of our plan.
When we got to the house, the moving truck had been delayed (this is not a complaint, the company had paid for movers which was a huge relief). But with them not showing up, we used the last of our money to buy a blowup mattress and a couple snacks to hold over the night. The next morning, the relocation check had still not been deposited! It was the weekend and I didn’t start until Monday. We had no contacts to see if anything was wrong with the relocation money so we had to wait.
Road Blocked
At this point we were not sure what to do, so we packaged the blowup mattress up and returned it to the store just to have money to buy some food. We made a pot of chili and bought some crackers. This fed us through the weekend. We settled into our new place and I got up bright and early for work on Monday. When I showed up, I found out that they had not changed my start date in the system and therefore had not done a background check or employment verification….. and by the way this process can take up to 2 weeks! They would not let me start or deposit our relocation money until I had been cleared… Back to the store for more canned beans for chili…
This process ended up lasting 10 days. We did not have internet so we spent our time at the library filling out all of the paperwork that had been missed. In the end we eventually made it work and were able to bridge the gap to starting the new job.
There were a lot of lessons learned through these experiences and it definitely made us stronger as a family. Most of all though, it ingrained in me that I never wanted to be that close to the edge ever again. We were definitely not perfect and we still had a lot to learn (still do today) but those experiences made us ultra-sensitive to risk.
Enough Rambling; So Why Do We “FI”?
We are very fortunate and have no regrets for how our journey has gone. Afterall, we are the sum of all of our life experiences. I also realize that there are many people who live like that every day. We are very fortunate. We have a healthy daughter who made a complete recovery as well as three other healthy kids.
Going through those experiences and realizing that we have other little people relying on us has made my wife and I very conscious of the responsibility we have to our family. This has made us extremely risk averse. We now try to have backup plans for our backup plans.
Our logic for paying off our house is trying to get the liability that we carry down to $0 ASAP.
We invest regularly and more than most people. We are happy with our current status but in order to take it to the next level, we want the mortgage gone. This reduction of cost of living, and the security of knowing our housing is completely paid off, is more important to us than having a little more savings. In December when the mortgage is gone, our savings rate should pass 70% and our outlook to retirement is going to be only a few more years down the road.
While this is not the mathematically optimized path, it is our psychologically optimized path. We “FI” in order to never live close to the edge again. We “FI” for Freedom and Peace of Mind.
Here is the more important question:
Why Do You “FI”?
Until Next time, continue to Choose Beta
– Chris
