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July 7, 2022
Episode 66 of the NewRetirement podcast is an interview with Andre Nader — Product Growth Manager at Meta and writer at FAANG FIRE on substack. Steve and Andre discuss “What is Enough” and also touch on a cool tool he built to help people explore relocation and remote work.
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Steve: Welcome to NewRetirement podcast today. We’re going to be talking with Andre Nader, a 30-something product growth manager at Meta and writer at FAANG FIRE on Substack. He’s pursuing FIRE, which is financial independence, retirement early, as a tech worker in the San Francisco bay area. So we’re going to discuss the question of what is enough and also look at and discuss kind of an interesting tool he’d built and his own work about relocation. So, how do you factor in different variables when you’re considering remote work or changing location to lower your costs? And then, after that, we’ll take some listener questions. So with that, Andre, welcome to our show. It’s great to have you join us.
Andre: Thank you so much for having me. I’m looking forward to chatting about this, my favorite topic.
Steve: So Andre came to us from our community. That’s how we met. It was interesting. I think, getting started for this, you talked about how you’re kind of on FIRE in easy mode. And so, I wanted to kind of get you to elaborate a little bit more on what you meant by that.
Andre: No, absolutely. I think it comes back to being in the bay area and then working at a company like Meta, especially for the last eight years, the perspective that I’m bringing within that lens, it just feels very different than the traditional financial independence lens that comes across. Oftentimes, the financial independence community, it’s very focused on frugality and cutting expenses. But, when you’re in this situation where you’re in one of the highest cost of living areas, having that scarcity mindset is definitely valuable, but it’s not the thing that really accelerates your path to financial dependence.
Andre: The savings piece is one part of it, but the income piece quickly dwarfs anything that you can really do to kind of change your trajectory on that path to financial independence. Finding those situations and those solutions of like, how can I increase my income over my career will very quickly just eclipse the, how do I do a side hustle? How do I do these things? That side hustle piece is really valuable when the amount of money that you have coming in from your normal day job isn’t enough to kind of really snowball you into having enough savings. But, when you’re in a situation like I found myself in where I’m working at Facebook and now Meta and having my wife too, working at Uber, so two tech companies in the bay area with healthy salaries, it didn’t make sense to think of, how can I come up with new a hundred dollars ways on the side? Or how do I cut down my grocery bill?
Andre: What really ended up moving the needle is, how do I make the best use of the income that I currently have coming in? And then, how do I find ways to minimize the number of big mistakes? Because, what ends up happening is all these micro optimizations end up not being as important as just minimizing the number of really big foundational challenges that you can run into. So those are going to be the big recurring costs of buying brand new Teslas and letting your lifestyle quickly inflate.
Andre: That’s one of the things that I’ve really seen a lot with peers is, as you’re getting into the tech industry or you’re advancing in your career, it’s very easy to want to keep up with the Joneses, like the new Model S Plaid looks awesome. And, once you get to the point in your career that you can afford that, and you’re seeing your peers in the parking lot of Meta, oftentimes looking like a Tesla dealership, there’s that natural tendency of wanting to do that same thing for yourself.
Andre: And, what I found is, minimizing those bigger expenses, not needing that new Tesla and even going without a car for seven of the last eight years. Only recently picked up a car because San Francisco has decent public transportation and then a lot of the tech communities have their own private shuttles taking us up and down the peninsula. So the need for a car wasn’t there.
Andre: So, that’s kind of been my high level view of easy mode. Everything is stacked in favor of being able to do financial dependence if you want to, within reason. It’s just around minimizing big errors, like self-errors, unforced errors, if you’re wanting to use the baseball terms. When I was chatting with you before, I was like, it’s starting on third base and you only have one out, so you can make it easy. You can just have a-
Steve: Not screw it up.
Andre: Don’t screw it up kind of thing. In that situation, it’s just like a, don’t screw it up mentality as opposed to needing to really fight tooth and nail. Because, I think it’s much harder for FIRE specifically, when you’re making that median salary in the US where the expenses piece is important, like finding ways to cut down and finding ways to really just optimize every little piece, both on the, how do I get more income, how do I come up with side hustles side of it as well as how do I get my expenses down to kind of maximize?
Andre: I give people a tremendous amount of credit that are able to do that. But, I view my side and coming in from the tech side, it’s not as hard. We just have to admit that it’s easier, for better or worse. I think that it’s just understanding that privilege and then making sure that we’re taking advantage of it and not letting it go to waste.
Steve: For sure. Yeah. I think that tech workers have this single point of leverage around their human capital that definitely, you can make a lot more money if you choose the right company or the right places to work and the right areas to work and the right kind of careers. So you mentioned big mistakes. So one of the… not buying super expensive cars and keeping up with the Joneses. Any other things that you’re watching out for as a person with a young family and thinking about your long term horizon. What are you watching out for?
Andre: Yeah, no, definitely. I moved to the bay area with my wife and understanding, what is the path of moving from… move from Austin, Texas? So everyone is going in the opposite direction, moving from San Francisco to Austin now. We were going in the Austin to San Francisco route. So it was one, maximizing the like career value that I have over not just thinking about it in the short term, but what sets me up to be in the best position five years from now? That kind of being one of the big ones. And, not optimizing for the short-term.
Andre: Because if I was optimizing for the short term, I think in many cases I would’ve made different career decisions, but if I was always asking myself, what in five years puts me in the best position to reach my goals, financial and otherwise? I was fortunate where both of those laddered up into each other really well.
Andre: And so that was kind of one of them. The other one was honestly, I’m only half of my household. So, marrying someone that has very similar financial views or at least not polar opposite views has been one of the biggest things for me that has really accelerated my family’s own path to FIRE. Having a partner who is on board with this view and this mindset and willing to save and invest in the long term goes a long way. Moving to San Francisco, being able to have a one bedroom apartment, living that dink lifestyle. So dual income, no kids for the vast amount of time that we’ve been in San Francisco, the economies of scale of two tech workers in one bedroom makes you just quickly be able to save very quick as opposed to, I don’t know, any other situation starting off?
Steve: Yeah, 100%. This is actually one of the questions from our community was, did you have that kind of understanding about shared values around financial independence at the beginning of your relationship? Or is that something that emerged?
Andre: Yeah, no really good question. I’ve always been a frugal person. Early on, people would describe me as cheap. I wouldn’t say cheap anymore. But, always that understanding every dollar and wanting to think through and optimized, what am I getting for this amount of spend? I’m an optimizer at heart. My day job at Meta is helping us understand user data to determine how we can be growing faster. I love that rule because it’s exactly how I approach everything in my own life. It’s like, this is the income that I have coming in. How do I optimize this to get as much value overall?
Andre: Then, taking it back to relationships. I don’t view it in purely transactional sense of the word, but I do think this natural frugality was one where I set the expectations in the beginning, just through my own spending habits. And, early on with my wife, I’ve been thinking about, what are the stages in a relationship for getting on a path for financial independence? It had been very interesting, in the beginning, there’s that natural courtship period. I definitely paid for the first few meals, but I think just had that natural… mostly because I asked and I felt it was more of the person asking the other person out is the one on the hook for dinner.
Andre: But then, over time we kind of quickly established this rhythm of… We’re both college students. We met in college at the University of Texas. And so, we both didn’t really have jobs, maybe summer internships. So we’re both in very similar situations to start with. So I think that was also helping and grounding. So we were alternating who would pick up the tab, just kind of this like back and forth. I get this dinner, you get the next dinner. That kind of established the regular cadence of equality on all fronts, including kind of the financial side.
Andre: It’s not one versus the other. It’s like, we’re both coming at this equally or both have skin in the game, both financially as well as in reality. And then, that’s that first stage. The second stage is when we moved in together, then all of a sudden it becomes much more real and it’s much more… in my case, I ended up making it a little bit more formal. I had a Google form where all shared expenses would be submitted in mostly just from a sense of wanting to be fair and wanting that being a core tenant in how I approach finances.
Andre: She put up with filling out forms and things like that. There should be no surprises going in, dealing with spreadsheets and things like that. And then, over time, it just kind of evolved from there. It was just the naturally always setting expectations and talking about it. We’re fortunate to be in, I don’t know, in similar situations our entire careers like graduating around similar times and both working in tech and both kind of advancing in our careers in equal amounts. And, that’s been one of the key things that I think that’s how that evolved.
Steve: Got it. So you have the shared values, you’ve always been frugal, you’ve always been an optimizer. I totally relate to that by the way. I was trying to optimize things but lots of people in our company are thinking that way, too. But, how’d you discover FIRE? When did you get into it and did that really change things? Did it snap it into focus or you were, I’m already doing this stuff?
Andre: Like many people, the Mr. Money Mustache was my gateway into FIRE. So for people that don’t know, mroneymustache.com, he’s just one of the big voices in the financial independence community and really just laid a lot of foundational content out there. Before, there was little pockets of communities within different segments, but never one as crisp, at least in my mind as he had done. I think I found him… whether it was end of college or early on in my career. So I had the benefit of, from the beginning, which I think is also one of the things I had… all of my working life, I had been thinking about FIRE and having that as one of the things.
Andre: I had always been someone who tracks my finances. I’ve always been one who has been understanding my spend. I had a mint.com account from the very beginning, prior to being purchased by… into it very early on. And, I think what FIRE really helped me have was setting more objective goals and having a target. Before, it was always, I’m tracking my finances because that’s interesting, but I didn’t have really a goal or an objective in mind. I think FIRE helped add some frameworks and just end stage goals that I could then work towards. I found that kind of really helpful, I’m very much a goal oriented person and being able to compute and figure out numbers and, okay, if I get to this amount, then I can never have to work again. Or if I get to this amount, then I don’t have to save anymore and I’ll be set for retirement at this amount.
Andre: So I think that’s when I discovered FIRE and how that evolved kind of my thinking from just tracking my expenses and understanding and being frugal, if you will, to having an objective where this frugality will ladder up into this longer term goal. Because, retirement, when you’re 20 and graduating from college, it feels like this thing that’s like an eternity away and that it’s not something that you need to think about until later on. And, this kind of helped ladder it up, like, no, you don’t need to wait until later on. You’re understanding the compounding interests and how important that is to everything. And, everything that you could do early on, very quickly laddering that up and just having those frameworks in place, I don’t know, I saw the light, if you will and just exposed how quickly and how achievable these things can be if you start right and don’t make big mistakes.
Andre: I think the one piece that I didn’t hit on as much when I was talking about the mistake piece and this is the optimization side, but low fee index funds, at the same time I discovered FIRE, I also discovered the Bogleheads group, which is all the Vanguard loyalists, where they were some of the first people that were very big into low cost index funds. And, just starting out that foundation early on, combining with the FIRE, which I think now they’re bleeding into each other really effectively, but early on, they were separate communities and kind of found each other over time. And, I think that kind of helped establish my thinking and framing.
Steve: I’m going to go to the Bogleheads conference for the first time live this year. it’s hard to get into, you got to kind of jump on it, like getting a ticket. So we’ll see about that. The demographics are totally different. I’ve always thought Bogleheads was amazing, because there’s so much incredible content and knowledge in there, but it’s kind of buried in there. And, you have to kind of know how to access it and I think the big unlock for them is getting that content out into the hands, especially of younger people. That’s what Mr. Money Mustache did a lot of.
Steve: Yeah, no, it’s like when you’re describing wait this, I was like, it’s winning lottery. So I think in that the knowledge is like winning lottery. So what we see in our community is a lot of folks kind of come to it and they’re like, oh, okay… this is traditional retirement people. Like, I have to figure this out. Then they get serious about it. And then, they’re, I need to save a lot of money and I need to invest better and I need to really understand this. But, they’re kind of doing it without the fact the biggest lever, which is time. And so they’re optimizing, starting at 50 or something versus if you figure this out when you’re 20 and you’re, I’m going to take and save money for 15 years and invest it efficiently.
Steve: At the end of the 15 years, you could be financially independent or you could be very close to it. And then, you might have to work, which is kind of incredible, right? Think about who doesn’t have to work. Basically people that win the lottery or they cash out of some IPO or whatever, they inherit a ton of money, but for most people they figure it out late and they get to it. But, they’ve kind of missed out on that 20, 30 year working horizon, if they’re 50, they’ve missed out in that 20 years of making really good choices. If you’ve been saving and investing, that’s good. Because a lot of people don’t even do that, unfortunately.
Steve: Okay, great. I want to ask you a couple more questions and then move on to kind of what is enough. But, I’m curious about your take on FIRE and the tech community kind of overlap. You mentioned that there were something like 8,000 people in a FIRE group inside of meta and that’s out of, I think 60,000 employees. So that’s 12, 15% of the population. That’s not insignificant. Is it like a big thing?
Andre: Yeah. I think the concept of early retirement is super appealing to everyone. I think within the tech community, there’s often this strong sense of wanting to work really hard and being able to enjoy the fruits of your labor. You see around you, a lot of us having peers and newly IPO’d companies and hitting large amounts of money relatively quickly. And then, there’s always this question of, what do I do with that? Oftentimes, the same thing happens with people working at companies like Meta where there’s a lot of new grads. A big portion of the company is new to working at a company like Meta where they’re finally earning large incomes for the first time in their lives. And then, they’re starting to, for the first time, have surplus and figure out what to do.
Andre: It kind of starts with looking at basic personal finances, but it quickly balloons into people pointing into, oh, if you want to take this… Once you’ve nailed down the basics, what do I do now? I’ve now met the match of my 401k or I’ve now maxed out my 401k. What next? I’ve more left. What do I do next? And, it has more people in that position where they can keep asking that question, what do I do now? What do I do next? I’ve been really impressed with having a lot of people really interested because I think they’re in the position for the first time in their life to seriously consider it and think through this as a potential path. As well as not wanting to waste the opportunities that they have, I think that’s kind of been the big thing.
Andre: But, I was excited to come in and see the FIRE community growing right now, leading the internal group. So within Facebook, we use an internal version of Facebook called workplace. I think it’s available now externally. We have a group, you said, like 9,000 at this point, all around FIRE, just sharing different strategies of, what are the Facebook or Meta specific things that we can do for FIRE? Tailoring those very specific… this is exactly what our 401k has. This is exactly what our after tax backdoor Roth has and have it so fine tuned and having 9,000 people with very similar situations being able to give advice to each other. Just that kind of very specific advice has been really valuable to just learn from just kind of that community just been really important.
Steve: Yeah, no, that’s one of the big things for us. It was our Facebook community and we have over 10,000 people in it now and yeah, it’s more traditional retirement folks. But, when we think about this, traditionally financial advice has been a one-to-one experience where, hey, you’ve got this wealth advisor and they’re the expert and hopefully they’re fiduciary, but not always. And, they talk to you one-on-one, and that only works for wealthy people because there’s just not enough advisors. So we think kind of one to many classes or many to many, the community. How do we learn together? How do we learn faster?
Steve: I saw this to great effect, yeah, Bogleheads, much like forums, but also like ChooseFI, which has a huge active community about this. So all kinds of people. I think there’s a ChooseFI Stanford group, right?
Andre: Yeah, the bay area ChooseFI group, I think is where I had first found about new retirement where people are finally starting to ask questions around, okay, I think I’ve reached FIRE, what do I do now? How do I think about actually implementing withdrawal strategies? And, how do I think about Roth rollovers and someone, oh, you should just check out NewRetirement, here’s their group, this solves that problem. And I was like, wait a second, let me check this out. So that was kind of my gateway, through the ChooseFI group was my gateway into the NewRetirement community on Facebook. And then, the website and app and everything kind of came from there.
Steve: Does Meta worry that they have a big chunk of their population actively think about out of retire early. I know that you individually, right, are not that far away from doing whatever you want to do. We can talk about that general problem, but his is a big thing, right, for companies? This is a big thing for society where, I know that a lot of the boomers retired suddenly. Our economy has a big problem. And then, that can get the micro scale for an individual company. Hey, if 15% of the workforce can actually be done way earlier than they thought, how does that affect their thinking? And, does it change the dynamics in there at all?
Andre: Yeah, no, I think they probably do think about it a lot. I think that’s one where they’ve had to think about it for a long time, because if you think about the… I’ve been there eight years, so this is after the IPO. But, they’ve already gone through this initial surge of early employees that were at Facebook, like beyond 10 years plus. They went through the IPO. The Facebook stock has increased significantly from the IPO moment. And then, the later stages of raising capital and IPO’ing where they had this influx of employees with a lot of disposable income all of a sudden, and the ability to be able to retire at any moment.
Andre: I think that plays into a big role into needing to think about, why are employees here in the first place and then needing to make sure that people are excited about working there? Because, the financial piece isn’t the only reason that they’re there, especially people that have been here 10 plus years, they’re not here only because of the money. They’re getting personal fulfillments from the work that they’re doing. And, they’re able to kind of take that lens and remove the financial aspect of it. There’s people that really deeply believe in the mission of the company and connecting the world and really fostering the open communities and relationships and just taking that to heart and that being more important, that mission aspect of it.
Andre: The financial piece is there. It’s definitely one of the compelling reasons why there’s a lot of people working here, but that mission being equally as important, especially the further along you are in your career.
Steve: Yeah. I can see that becoming a much bigger consideration for lots of companies as hopefully the world’s wealth increases and more people get to financial independence, but yeah, this is-
Andre: Yeah. And the benefit too is also, we can also push on our own benefits teams because we’re plugged in and like, hey, I want to retire early. I see my peers at Google have access to this after tax mega back door, why don’t we have that? Or Google and Netflix has these funds, why don’t we have that? And, being able to apply that pressure. The benefits team at Meta has been great around listening to our input and viewing this as a way of retaining employees that are interested in this and making sure that, hey, this is how more and more people at these companies are evaluating the packages across companies and wanting to make sure that we’re not missing the boat here and needing to be as competitive as possible on that front as well.
Andre: So that’s one of the ways where I think the feedback loop works in reinforcing that, hey, we care about this retirement piece. Yes, we’re young on average within these tech communities, but wanting to… we are thinking about it. We’re not willing to accept just only the salary without the 401ks, without the benefits.
Steve: Right. Well, and I think you’re showing up being financially literate. So previous generations, people didn’t know what… they weren’t aware of the fees on their 401ks and what that load could be. In some companies, if you look at the fund line up, you’ll be, oh, look, they’re charging 1%, 2% loads or something like that. It’s like, oh, it’s crazy, that’s insane. But if no one knows, asks the questions, then they’re just getting kind of raked over the coals. So to the community, look at your 401k and understand it and what the fees are and ask questions. And, the people have the power.
Andre: Yeah. And, the benefits, people are incentivized for that, too. Their job is to hopefully help the employees understand, get the most value out of it and pushing on them, hey, why don’t we have any of these lower cost options? At least having one index fund or one cheap retirement target date fund.
Steve: Yep. 100%. All right. So let’s move on to kind of, what is enough? So one of the things you wrote about this recently in your blog and we’ll link to your Substack blog, but I wanted to know if you could expand on that topic and also you said you’re pursuing avocado FIRE. So what that is.
Andre: Yeah, no, the concept of enough, it’s a super interesting one. So Jack Bogle, we were talking about Bogleheads, he’s the founder of Vanguard for those that aren’t familiar. And, he wrote a book on and it was titled Enough. And he also told the story between… Kurt Vonnegut was saying around… the author of Catch 22, he was talking about, they were at an extravagant party where it was just extreme wealth and luxury all over the place. And, Kurt Vonnegut asked his friend, how do you think about this person, in one single day, made more money than you have in your entire lifetime of publishing your book? How does that make you feel? And, the reply was, I have something that he’ll never have, I have enough.
Andre: And, that concept and that kind of the mental way of thinking, I don’t know, I really resonated with that. One of the things, for me, growing up was something… I grew up in a household that had extreme wealth changes. I came from a family that had a high income earner, but then also made bad financial decisions and went through bankruptcies and stuff like that. So I’ve had to experience very early on kind of those extremes there and kind of the stability aspect of it. So always wanting and pushing to have more and more and more, but then taking on more risks in order to achieve that. And then, feeling kind of the lack of stability as a result.
Andre: So for me, I was, okay, that wasn’t fun as a kid growing up, I never want to feel these massive fluctuations in wealth or have my family need to go through that. So thinking about financial stability kind of really became one of the core tenets of how I was approaching FIRE. And, one of the reasons even why FIRE was so compelling, even if you just do the financial independence piece of it and not necessarily the retirement early piece, having that stability and optionality was one of the things that really drew me in. I wasn’t sure whether I wanted to do that retire relief part, but I knew I wanted that stability. And that always kind of give me a goal post to focus on.
Andre: That kind of plays into this concept of enough, what does it mean to have financial stability? And to me, it ended up being, how much do I need to have all of my needs taken care of where I no longer need… the need being the key piece… need to have any more income in order to live the life that I want. Then, it comes to a question of, do I need more? Why do I need more? Why am I continuing to do this? Am I getting something else out of it outside of the financial piece that’s rewarding to me?
Andre: That’s thinking through, what is enough and knowing the answer to that was really kind of helpful. And, thinking through what that meant was really helpful in setting goals. It’s not just putting this arbitrary, throwing a giant number out there. It’s, okay, what do I actually need in order to live the life that I want?
Steve: Right. To put a point on that, I was reading it and you talked about, I want to get to a certain level of income. I also want to factor in no mortgage and I want to factor in paying for college. I think those were the three big things that you were trying to cover. Anything else, or any more detail on kind of how you broke that down?
Andre: Yeah. So, for me, the enough, I always come back to my trustee spreadsheets and the different tools that I use in order to do that. So, in the traditional FIRE community, it’s really popular using the 4% rule, which is basically for those that don’t know, being able to take 4% of your investible net worth and every year withdraw that amount. And then, every year adjust that for inflation. And, that’s kind of how much you can live off of. And, you can kind of reverse that. How much do you want to spend every year, multiplying that by 25 will kind of give you that number that backs up into that 4% rule.
Andre: So for me, starting point on what enough was, how much am I spending, do I want to be spending on a yearly basis? And then, what is the calculation to get to that base number? I’m much more conservative than the traditional 4% loyalists, particularly being in that early retirement side of things, with the 4% rule being tried and true and tested on 30 year timeframes and having high success rates on longer durations, but still having the 5-plus percent chances of failure and not wanting to fall in that failure case again, because that stability aspect was always kind of central into why I was wanting to do this.
Andre: So I use a more conservative 3% withdrawal rate. So that was one of the first points of, what is enough? Verus, I want to be able to spend this amount of money every year and multiplying that now times 33. That’s kind of the rough math on getting the 3% withdrawal rate. And then, it goes into, what else would make me feel that stability? And, that was kind of having a paid off house and the college funded for my now four year-old daughter. I have the income, I have the house piece of it. And then, I have the college portion covered.
Andre: Everything else I think was kind of the… That, to me, answered the question, what is enough? If I have those things covered, that at least answers the question of that’s enough for me. And, in detail into the fine toned math behind each of the different points.
Steve: Right. No, that’s great to hear. Also, about your story, I think the family generational part of this definitely resonates a lot of the folks that we talk to that do well, they definitely come from either less stability or a little bit less money. And then, they’re highly motivated to be frugal and thoughtful and safe. But, I think the reverse is true. If you come up with a lot of money and you don’t have to think about it, which a lot of families in the bay area, they raise their kids. That’s how it is. It’s just, people are printing money and taking care of their kids and everything’s taken care of da, da, da. Do you think about that for your own kids? And, how are you going to raise them and instill that sense of financial responsibility and frugality?
Andre: Yeah, no, definitely. This is one that I think is a super interesting topic because oftentimes within FIRE, especially people in the bay area, it’s, I’m going to retire. And then, I’m going to go to a super low cost of living area, or go super rural and have a cabin in the woods type situation where my expenses are super low. And to me, it was always around, wait a second, now I have this four year old. I want her to have the same opportunities that I had to put herself in the situation that I find myself in now where I have this ridiculous opportunity to be thinking about this at all. So, I don’t want to make decisions or sacrifices that would jeopardize her ability to do that in the future.
Andre: So it’s like, that kind of factors into moving to a low cost of living country, even, which is a popular retirement strategy, or even FIRE strategy, let me go to somewhere like Thailand, where the cost of living is lower. And, me having only $50,000 a year, I can live a really good lifestyle in a lot of these different countries. But then, now thinking into the generational aspect of it, will my daughter have the same opportunities that I had and needing to just layer that in much more intentionally, that’s kind of how I’ve been approaching it?
Andre: But it’s also one too where if I actually pulled the trigger and retire early, how do I communicate to… what is the reality of, what will she think, what is dad doing all day? Or, what are her parents doing all day? And, I think that’s a fascinating piece, because you want to instill that same sense of… I don’t know, I had the extreme wealth changes that kind of put this fire underneath me. How do I instill that same fire without needing that volatility at the same time?
Andre: So, I think it’s that balancing act of being able to, I don’t know, just help them see the purpose and find meaning in what they’re working on and have that financial piece as a part of it, but not need it to be the only piece that they’re focused on.
Steve: What’s crazy is most people that achieve FIRE, well, one, I think many of them keep working and they kind of keep piling up more money and they tend to maintain these habits. Not like I’m gearing up to crank it up and then at 70, I’m now going to take my consumption to the moon and burn it all to the ground and then leave my daughter with nothing. Maybe you give it all to charity, who knows? But, if you are sustainable and then you pass that legacy onto your family, theoretically, they could be independent from the get go or very early. And so, that would create a different dynamic.
Steve: I have talked to some friends that have this situation. They’re more traditional folks, but they’re like, yeah, I don’t tell my children what is potentially in their future because I think it will screw them up to know that they might not have to work at 30. Yeah.
Andre: It’s a really interesting thing. I naturally come from that frugality view and I’m always been kind of a very much optimizing from that lens. Sometimes that can be taken to that extreme where you’re getting too cheap and too frugal and having all these aspects. One of the books that kind of helped pivot my mindset here is one called Die with Zero. So this is kind of the opposite aspect where the goal here is to die with $0 and make sure that you’re spending the money that you have while you’re living. And, he had this concept of really optimizing for life experiences and instead of having a bucket list in the traditional sense, thinking through, how do I maximize my enjoyment of different activities relative to my life?
Andre: So, I love skiing. I’m not going to be able to ski as much in my fifties and sixties. So I’m not going to be able to get enjoyment. If I limited time at 50 to ski, it’s not going to be as enjoyable as if I had that in my thirties. And it kind of brought this shift in mindset of, when do I want to have experiences in my life and when do I want to do it? And, in terms of the generational aspect, one of the things that I found really interesting is, on average, people that do receive inheritances from their parents, oftentimes they’re in their sixties or seventies already. They’re already on the footsteps of their own retirement, it doesn’t incrementally change their situation that much.
Andre: And, one of the things that they’re pushing on with is if the plan is to give money to that next generation, asking yourself, when can this money be the most high leverage to change the situation that they’re in? It was pushing more towards, hey, when they’re in that late twenties to 35 range, that will materially change. Like, can they now buy a house when they couldn’t? Can they now make different career decisions with that flexibility? Can they have their student loans paid off and be able to, I don’t know, enjoy the different things.
Andre: So that kind of was really helpful just thinking about, okay, not just saving it up, building this big thing, and then when I’m gone, then it shifts over. But, okay, how can I be more intentional throughout the life to maximize both my own personal enjoyment, but also the next generation’s enjoyment. I thought that was a good counterbalance to the natural, let me move frugal and let me accumulate, let me get this number within my account to be as large as possible.
Steve: Right. Yeah, exactly. I think there’s a lot to be said for that, that, you only live once, nothing is promised. You can work really hard, get financially independent and then kick off or get sick or whatever.
Andre: And, get cancer next year. You can only control what you can and there’s so much outside of it.
Steve: Well, I think that maybe you should think about Bezos’s regret minimization framework, right? He projects everything in the future. He’s, all right, if this plays out and I end up having 5 million bucks at 38, but I died at 39, would I be happy? Or, maybe, I don’t know.
Andre: Yeah, it’s a great way to think about it.
Steve: I wanted to kind of go to the relocation part of this thing. This also ties into another question I had for you, which is, you built this cool tool to help you kind of think about where could I move and have a good life and also solve against, I guess, high quality of life, various different variables, but low cost of living and all that other stuff. I think this also ties into, once you are FI, how do you see your life changing? What would you do and how would you spend your time and what would be your purpose and stuff like that?
Andre: Talking about the relocation piece, I wanted to originally be that person who went to the bay area for three years, came back to Austin and then complained about how cheap everything was, like that. I was, okay, that’s my plan. And I had a house back in Austin originally that I was just going to kind of go back to, but what ended up happening when I was in the bay area is, I kept saying, I think I have three more years here. I think I have three more years. But, it was never, I’m going to be here forever. It definitely evolved from, I don’t want to necessarily go back to Austin, but there was still kind of this piece of the bay area, it’s so expensive and there’s so many different challenges that it has where thinking long term is always one of the more challenging aspects.
Andre: So in my head, one, I never thought I’d be here now coming on eight years. But still, I always say, okay, I have one to three more years left in the bay area. But, I didn’t have an answer of, where do I go to next? Originally, it was going back to Austin, but I loved being in the bay area so much, it kind of had me questioning, what are the chances that the best place for me long term is the place that I just happened to be in because I grew up in Texas and that was the college town I went to and that was where my first job was. What tells me that’s where the most optimal place for me long term.
Andre: It started opening my eyes around, okay, where else can I live? If not San Francisco, where would I spend my time? It started from that FIRE lens, where after I reach my enough number within San Francisco, where will I go? Because, having an enough number in San Francisco is very different than having an enough number everywhere else. The number would need to be much higher just because your base expenses and housing costs are way higher. So, that was kind of one of the pieces of it. I’m able to achieve FIRE much sooner if it’s not in San Francisco. Or, do I like San Francisco enough that I want to work 5 more years or 10 more years depending on things. That was kind of the lens that I always had.
Andre: So I started doing what I always do and coming up with different spreadsheets around comparing different places. And it starts with kind of the basic, here’s the median housing costs in these states. Here’s the average public school systems in the state. Thinking more in the future for my daughter and then going at the city level and then layering in, what is the natural disaster risk? Is this going to flood? Are there tornadoes? Are there hurricanes? What is the political climate? All these different factors that I thought would be important to be able to have a cost benefit for.
Andre: This was all originally from the lens of when I retire, where will I live? But then COVID happened. And I think it completely changed the math on this, especially for many tech workers and even outside of tech where people can now work remotely for the first time. So originally, it was, where do I go to FIRE? But now it is, oh, I can work remotely from anywhere in the US. Why do I need to wait till I’m FIRE to live in that area and kind of get myself established?
Andre: Then, all of a sudden I had a lot more calls and it was, okay, what is the change in salary based on being in a different location? What is the tax obligation for being in this state versus another one? What are the property taxes? Because, that’s one of them. It’s very easy on paper to be, okay, Texas, Florida, Washington all have no state income taxes, but they have very different approaches to how they do get money from you. And, among the no state income tax states, Texas is very popular, but when you’re actually doing the numbers, especially how housing is appreciated, they get you on the property taxes.
Andre: So just like having all of those different weights in place was really the forcing function behind this. I originally made this for me personally, but then people started asking me more questions as I was talking about it and thinking through different things. And, I ended up changing it and making it more applicable, more broadly to more people and ended up creating this tool. One of the pieces that I forgot to mention as being the central factor of what was one of the important elements was the weather. That was one of the things I loved about San Francisco so much was kind of the lack of seasons and me trying to find what is the equivalent city that doesn’t have extreme seasons. Where’s that Goldilock city that has San Francisco weather without the high cost of living?
Andre: I found some articles on average number set on how you define… this is how many net Pacific coast. And, there’s a huge monopoly on nice days in California, especially as you’re going into Southern California. They just, whatever methodology that it used, that is the ideal, that San Diego weather, which lack of extremes, I think is kind of the thing that played really well into there.
Andre: And for me, I wanted kind of the balance of, I was always indexing away from the cold. So I wasn’t thinking at all about people that are going to New York or Chicago or all these very cold places, but being able to know, okay, how many days of freezing weather would I be able to put up with? If it’s a handful then, okay, all of a sudden Nashville is now in the picture. If it’s even less, than all of a sudden it’s going further and further south or to the different coasts.
Andre: That was kind of the impetus of putting together the tool, then having more and more people be interested in it. And then, all of a sudden the COVID piece, everyone, all of a sudden being able to relocate, I don’t know, more people were asking me about it. So I decided to more formally put it together in a more plugin play way to have more people get value out of it.
Steve: We allow people to kind of run the numbers on move relocating and stuff like that, but we’re not kind of doing all this more qualitative stuff around like nice days and factoring all that stuff in and letting people do that. That’s interesting. Are you, yourself, thinking about working remotely now?
Andre: Yeah, actually today, I just got the email that I’m fully approved to work remotely at Meta. My current plan is still staying in San Francisco, at least for the next year. I’s always, living one year at a time. And right now, I think the current plan, again, my lease in San Francisco is up at the end of May and being year to year, it’s always within that, once I sign that lease, I know what I’m going to do at least for the next year. So the plan still is in San Francisco, but then that also lines up really well with next year, my daughter will need to be starting elementary school.
Andre: And then, it’s where things, I think, start getting a little bit more real, whereas a common hard line when people with young kids in San Francisco, that’s the deciding line of, where, what happens next? Do I go to the burbs or do I go somewhere else? Or do I play the lottery system that they have in San Francisco to determine which public school you go to, which is always a fun game of optimization in a different way?
Steve: Yeah. I’ve lived that journey. We were in San Francisco with kids and then opted to move to Mill Valley where we live now. And, we got lucky in terms of buying a house here. But, I think that the whole calculus of living in California is really largely based on whether you own a house and can you afford doing that? Did you get it at the right time? But, there is a wealth creation engine through real estate in California that doesn’t exist in other places, whether that will continue is to be determined. But historically, that’s been pretty true.
Andre: Yeah. Absolutely. And for me, housing is always one of the largest expenses that you could possibly have. And I think in most cases, if you are certain you’re going to be in an area for seven plus years, the math for owning, even without the housing appreciation that we’ve seen over the past decade, becomes just more favorable, just like building that equity is important and being able to get the full value of the equity from just the amount of the small percent that you need to put down. Makes sense. I could never, with a lot of confidence, say, I’m going to be here seven years, five years out. I still am always saying, two to three years, three years.
Steve: Yeah. One thing that’s interesting about you in your story, is that when I think about what makes people successful, so one is a high savings rate, right? In terms of, how do you get to be financially… so you got to have a high savings rate. That’s from the guy Doug Norman, actually. I asked him this question on the podcast and he’s like kind of military FIRE person. And I was, what’s the single biggest thing? He is like high savings rate. Because it implies lots of things, right? Expense control and everything else, behavioral management and all that stuff.
Steve: But then, investing dollar cost averaging with low index funds. I think the third thing is the time, having a long time horizon. So yeah, with everything else, you have a long time horizon, right? And all the investment stuff, but on the housing side, because you’re not sure about what you want to do, it can change your thinking to a shorter amount of time, which might be ultimately… who knows if it’s going to be good or bad.
Andre: Yeah. And, honestly, having a child, I think, changes it, too. So it’s like the value in having the stability piece of being able to go to school with the same peer group. Obviously, the people with lots of different backgrounds, especially military families. I grew up in San Antonio, so I had a lot of friends with families in the military and they had that natural built in, moving every couple years going from different bases or different cities. And I saw them thrive too in different ways. But, having that core set of peers to grow up with, I think there’s a lot of value in that. And, trying to get to a point where I can do that, that’s kind of like what’s that long term view.
Andre: And I think for many people too, it comes back to, where do I have my family? Where did I grow up? And for me, my family immigrated from Brazil. I was born in Brazil, my family’s all from Brazil. I don’t have a tremendous amount of extended family in the US. So there’s not this central home base that I think a lot of people have is like, oh, all of my family lives in X. And, I think that’s a natural anchor for a lot of people when they’re thinking of, where do I want to end up? My mom is now in St. Pete’s, Florida, which I just got back from visiting for my daughter’s spring break. That’s a big pull of where your family is. That’s another element within, everyone’s kind of calculus of where do I want to live long term? Where is my current family living?
Andre: And then, recently my brother moved up to Marin, actually. So just on the other side of the Golden Gate bridge. That kind of changes the math, all of a sudden, you have more family nearby. It changes the weights and distances of where people are.
Steve: 100%. So you now can work remotely, but you’re still, okay, one more year and then we’ll figure it out.
Andre: That’s the plan, one more year in figuring it out. I think one of the big factors is, how much longer I want to work versus when I want to retire? It’s one of the things I built into the relocation tool is, how many years are you planning on earning an income in this state versus how many years are you planning on being retired in the state? Because, that drastically changes the math, because if there’s a state with a high income tax rate, while you’re working, that will be at a detriment to you. But, when you’re retired, that no longer becomes an issue. And then, the high property taxes in Texas, all of a sudden, it just hits you a lot harder.
Andre: So okay, if I want to work three years and then want to then stay there for 15 years and needing to do that. It’s really interesting, once you do that, Colorado, all of a sudden, becomes a really favorable location because it hits that middle ground of taxes and property taxes and housing values, where if you’re earning… maybe there’s higher taxes upfront, but then over time, it kind of smooths down. But if you’re planning on working for a longer period of time, it’s tough to beat those, no state income tax states, like the Tennessee’s and stuff like that.
Andre: In my head, I really like a lot of the aspects of, in North Carolina, the Raleigh, Durham area on paper or the Chapel Hill area on paper hits a lot of the boxes that I’m really interested in. But then, if you’re adding in a working a longer period of time, all of a sudden, ah, what happens? I just go get to the other side of the border in Tennessee. And then, all of a sudden you’re thinking of, do I care? You can actually be, am I willing to spend $40,000 more per year to live in a Raleigh versus a Nashville? Do I care?
Andre: You can get down to that level of detail and asking those trade off questions. And obviously, that math, it’s not perfect. And, there’s like so many intangibles for different cities and how do you actually weigh them against each other? But, the financial pieces of when you can calculate, you can think about that piece.
Steve: I’m sure a lot of our traditional retirement audience people are rolling their eyes. They’re like, okay, so this person’s in his early thirties and they talk about retiring. Should I retire in the next few years when I’m 35 years old or whatever age around there? Most people are, I’m 55 or 60, and can I retire at 65? Is that even doable? It’s just such a different mindset, but it’s interesting. To your point about what’s going to happen next, I would say the data is that people who quote, unquote, retire that are white collar workers, they find themselves doing something, volunteer, consulting, startup, back at the job within two and a half years on average. So I would estimate you’ll end up doing something that probably involves making money.
Andre: Yeah. That’s the thing I think is super important of, what are you retiring to? I think that’s one of the things that within the subreddit, the financial independent subreddit, one of their kind of key mantras is making sure that you’re retiring to something and not away from something. Not running away from, I’m retiring because I hate my job or I hate working. And then, you retire and, now what? Now, what are you going to spend your time doing?
Andre: I think that’s an important element of it. And for me too, I don’t have a firm crisp answer of exactly what I’ll be retiring to. What I’ve found is, when I’ve had periods of not needing to work, I’m still doing things. Now, even on my days off, often writing content on financial independence, just because that’s what interests me, I think I would have a very hard time just sitting around and playing video games all day and doing nothing. I would love some aspect of being able to do nothing for periods of time because I think that’s novel, but I think it comes down to that existential question of, what is the purpose of life? Why are we here? It just kind of removes that hard monetary aspect of like, I need to earn a living to have my basic necessities taken care of.
Andre: Once that’s gone, now what? Now, what are you living for? I think that’s an important piece. I think they’ve even shown the people that live into their like nineties and their brain health, it’s like, they’re constantly learning, they’re constantly working, they’re constantly volunteering and doing different things and finding what those passions are and being able to spend more time on those, I think it’s important. I think it’s like not doing nothing. I think that the ability to do nothing is one aspect of it, but I think it’s going to be spending time doing things.
Andre: Like you said, maybe it’s consulting, maybe it’s like angel investing, maybe it’s being a fishing guide on a river in North Carolina. Who knows? I do find it hard to think that I would never earn another dollar spending time doing anything. People that put themselves in the position to retire early, it’s hard to turn that off all of a sudden, working hard and being in a competitive corporate world, competitive tech world. I don’t think you can just stop. I think those kind of that natural built in people that index towards that, there’s something inside of us that I don’t think many people can just fully turn it off.
Steve: And, another question from Sherry, which is what is the single biggest factor that you attribute to your success in pursuing FIRE?
Andre: Yeah, I think, one, starting early and then two, marrying someone that has similar point of view in terms of finances. I was lucky to also have this similar earning power. Again, having two people working towards one goal is just a game changer, especially when you’re able to… just the economies of sharing that one bedroom in San Francisco, just completely shifts things of just, I don’t know, you’re able to save so much more, so much sooner.
Steve: Yeah. Awesome. And actually, you mentioned your family a little bit. Do other people in your family, like your brother and your parents, are they pursuing… you told me a little bit about your parents’ story, so maybe not, but does your brother think similar ways you do?
Andre: Yeah. I think I’m the only one in the family that is fully thought in that sense. I’ve tried rubbing off on them and giving them things. They give me the same questions that other people will give. Like, so what are you going to do? I don’t believe that you’re actually going to retire, you’re just going to keep working. You’re going to keep saying it and keep talking about it, but not actually pulled the trigger. Then, I think it’s interesting too, that view. We all had the very similar upbringings, but we ended up in different situations, all with lots of flexibility and in good paying jobs, but being able to have what we’re working towards and whether those outcomes are different.
Andre: I think they also have, I have one child and then he has three and then my sister has two. Children just change everything. I think all of the planning pieces of it ends up being like such a big factor. Early on, I hadn’t fully appreciated that because I was dual income without any kids for so long, that hadn’t been a big element. And I think having a child changed a lot of it and added those, okay, I want 18 years of stability when… or, at some period of time, some being able to have that school or having that college cost taken care of it. It reframed things a lot more than when I originally started.
Steve: Do you think personally, since you’re a high income earner, so you reach FIRE and you don’t need to work. But, if every year it costs you hundreds of thousands of dollars or something like that, right, that opportunity cost of making that money, does that affect your thinking at all?
Andre: It’s definitely a trap that I see a lot of people fall into and people call it the one more year syndrome where it’s always, oh, I just do it one more year. Because what happens when you’re working in these jobs, every year you get a refresher of equity and oftentimes that equity vests over four years. So every year you get another pool of that equity that vests over four years. So it’s always like, okay, next year at my vest date, that’s when I’m going to do it. Oh, but now I’ve this new pool. Or maybe you get a promotion and it’s okay, now the numbers are even higher and the opportunity cost of leaving is there.
Andre: That’s why I thought it was important for me to write down that enough number for myself to be able to know, okay, this is what I need in order to be enough. Anything beyond that isn’t going to satisfy this piece, but it has to be satisfying some other element that gives my life meaning and purpose. And, what I’m deriving out of this needs to be not only on the financial side. But, it’s also one I think about too, what does that equation, in terms of every year you’re saving X amount of money. There has to be some kind of way and calculation of like, at what point is it… if it’s only adding 10% more to your spend every year, or reducing that… I think the diminishing returns of every additional year, I think there’s a way to calculate that.
Andre: That’s definitely something that I’ve been interested in working out to be, when is the optimal time to actually FIRE given your enough number and it becoming, okay, no longer worth it? But, I think tech salaries are to the point where it’s hard to do that sometimes. And, I think it drastically changes. And even now, one year to the next, I think everyone, especially talking FIRE, we’ve had the benefit of coming through a 10-year bull market, especially within tech, seeing incredible wealth accumulation. And, even within this year 2022, when we’re seeing a lot of shifts down, a lot of people have drastic shifts in their take home pay.
Andre: And I think being able to factor that in, I think ends up being important. I think it’s like a good gut check too around, where is my spending relative to the amount of income that I can control or my savings? Like my risk tolerance. I don’t know, the there’s a lot of people that have never seen any recessions or bear markets. And I think that’s one of the criticisms that many people get of, FIRE is very popular when markets move up and to the right. When there’s a lot of stability or volatility ends up… that’s why I graduated in the great recession and felt that early on, but it’s all been big bull markets since then. So I think starting from that volatility there too kind of influences the timing kind of going forward of how to think about it.
Steve: 100%. Well, one of the things you said was interesting. So everyone thinks about wealth in terms of what they have, their number. If they thought about it more in terms of income, then all the math around the visualization changes. So yeah, as you’re older, it might be a big number that you make, but the impact your income could be much lower than a smaller number, like 10 or 15 years earlier when you’re earlier in career, because it has more time to compound and turn into income later. So it’s an interesting way that you described it, maybe that we can frame it up better in charge for folks.
Steve: I want to give you a chance to kind of give any shout outs for any resources you like, right? We’ll link to your substack and stuff like that, but any podcasts or books or whatever that you found useful. And, I’m not trying to get you to talk about us, but anything else.
Andre: No, definitely. I’m a big fan of adding logging into your own personal lives, to be able to understand what your enough number could be. That always starts off with like knowing how much you’re spending today and knowing what your discretionary pieces are. So tracking my finances is a big element of my personal finance toolkit. And, I use a number of tools. I’ve been on Mint since they’ve started in the beginning, but I’ve found that they haven’t evolved like many other tools have over time.
Andre: I use You Need a Budget, so YNAB for short, for very explicit budgeting purposes and just being very intentional with knowing where your spending is going. I think this is really important. I definitely encourage people if they’re trying to come up with how much they’re spending today, to at least do like a year of using You Need a Budget because it’s intentionally manual at times, but it helps you really understand, what is my discretionary spending versus what are my fixed costs to kind of really give you a sense of how much I need to save long term to have it?
Andre: And, their approach of every single dollar that you have in your account needs to have a job. Whether that job is simply the emergency fund or it’s now going towards covering your rent or your mortgage, I find that framework really valuable at least to start having that conversation of how much you need.
Andre: And then, in terms of like other tools, I’m a big fan of tools that help with visualizations on long-term projections, cFIREcalc was really good for being able to run Simulations on withdrawal rates. Personal capital for investment tracking, huge fan of their free toolkit. If you can put up with them calling and upselling you on managing your funds, it’s definitely well worth the occasional phone call. The toolkit is really popular, really powerful. Being able to say, okay, I want to retire at this point, I want to pay for college at this point, all these things.
Andre: And, that kind of plays into all of these tools are really effective in the accumulation phases. What I found NewRetirement really valuable for is, what happens next? Or what is the process after I hit that number? What do I do next? I’ve really liked NewRetirement for that. Being able to think through, okay, if I’m going to stop earning an income here, at what point does it start making sense to make those Roth conversions? Getting money out of my traditional and into my Roth as I have no income or low income. Just having those calculations end up being really important and valuable and timing of it. As well as kind of just thinking through long term, eventually we’re going to get into social security and there’s going to be required distributions that I’ll run into.
Andre: I’m in my thirties now, but eventually, I don’t want to, all of a sudden, have to pay huge taxes in my seventies because I wasn’t thinking about it. So thinking about it early on and being able to plan there. And, that’s where I think the NewRetirement Facebook group has been really helpful in addition to the tool, because I’ve been able to be exposed by people going through that more traditional retirement path. And, I found the same problems that they’re going through are going to be the same problems that everyone on the FIRE side will have to go through as well. There’s more things in common that I think are different and being able to learn how people that are actually retiring are processing these things and going through these different challenges and being able to bring that lens into how I do my own planning.
Andre: My main toolkit is those sets of tools in addition to kind of just spinning up my own spreadsheets every now and then to get what I can’t find from the tools.
Steve: Thanks, Andre, for being on our show and thanks Davorin Robison and Brian Blaesing for being our sound engineers. And, for everyone listening, hopefully you found this useful. If you’ve made it this far, I encourage you to definitely check out Andre’s site at andrenaderdotsubstack.com and we’ll link to that. And then also, feel free to check out our site and planning tool at newretirement.com and the Facebook group that we talked about. And then finally, we’re trying to build the audience for this podcast so any reviews are welcome and any sharing is also highly appreciated. So with that, thank you and have a great day.
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