Today we continue our Chasing Fire interview series (click the link to see all interviews in this series). I have always enjoyed reading and listening to interviews to learn how people got to where they are, so as to learn from the successes and failures of others. Each individual’s story and path is unique, and we can certainly gain insights from those generous enough to share their stories.
My job as the host is to find interesting people that will inspire and motivate you, as well as myself. I plan to share one high-quality interview per month (maybe even less frequently) and the questions may change over time. I anticipate this to be an iterative process and I would love your feedback in the comments (or via email: dom@genyfinanceguy.com).
If you’d like to be considered for an interview, drop me a note (see email address above) and we can chat about specifics.
Today’s guest is the multi-millionaire and fellow blogger, Max from Max Your Freedom. Max caught my attention with his post “Can you predict your Future Net Worth?” back in late 2017. In particular, it was his chart work that impressed me, which I borrowed from his site and share below for your viewing pleasure. I have already admitted many times that I’m addicted to chart porn and admitting you have a problem is the first step to recovery. I can’t seem to get past step one. I was doing so well; it had been three months since my last relapse, and then Max posted this beauty in all its glory. Back to step one, and no plans to recover!
Okay, let’s move beyond my weird fetish and get on with the show. I now figuratively pass the mic to Max – take it away!
OVERVIEW – Who are you?
Hello everyone! For the sake of anonymity, you can call me Max.
I started my journey to Freedom back in 2001, which I guess makes me a Gen-X guy. I turned 40 about a year ago, and have been married to Mrs. Max for 16 years. We have a wonderful 8-year-old daughter and we live in Dallas, Texas.
Ever since my first part-time job mopping up grease off the floor of the local KFC, I knew I wanted to be free. I just didn’t know what that really meant back then. Having watched my parents struggle with debt, and their finances in general, I knew there had to be a better way. Unfortunately, in those days there really wasn’t a model to follow. I just had to wing it.
In fairness to my parents, they had uprooted their entire lives and moved to a whole new country with young kids. They did so at about the age I am now, so I can only imagine how difficult and stressful that must have been. I was 11 years old when I moved to the states from the Mediterranean region, and spoke no English. I had to adapt quickly, and by the time I graduated from high school, few people could have guessed that I was technically an immigrant.
The first financial lesson I learned from watching my parents was that income mattered. So instead of pursuing an Architecture degree, which seemed appealing at the time, I decided to go for an Engineering degree. Although it was a harder road, and took me an extra year to complete, the better employment prospects more than made up for it.
Ironically, I only spent a couple of years in a typical engineering role. All the roles I had since have been managerial, and eventually business and leadership based. This was largely due to my desire to improve my income over time.
I had no concept of FIRE in those early days; I just knew that I wanted to live life on my own terms. It wasn’t until about 10 years ago that I got very serious about aggressively pursuing financial independence.
That goal fit well with my two favorite mantras:
“Learn from the mistakes of others, you can’t live long enough to make them all yourself,” and “Hope is not a strategy”
That last one is what prompted me to outline a detailed plan to pursue my version of Freedom.
FINANCIAL – It’s all about the Benjamins!
I decided to follow an old strategy of sticking with the same company for an extended period of time, rather than the now fashionable strategy of job-hopping. Mrs. Max followed the latter strategy, which has worked out well for her.
Although it’s likely I left some money on the table by camping at one company, I feel what I gained in return was more valuable (I’ll touch on that point in the next section).
We both started our careers with a household income less than $100K per year, where we stayed for about five years. Over the next five years, we were able to almost double that amount. And over the past most recent years, we’ve managed to double it again.
Our income is primarily from our jobs, with side hustles accounting for less than 5% of what we generate each year. Most of that is from Mrs. Max’s side business. Although I also technically have a side hustle (surprise! Blogging), I haven’t really spent any time monetizing it. I’ve been largely focused on growing my income through my career, and have managed to average about a 12% increase each year for the past 17.
In addition to aggressively focusing on income growth, we also eliminated all debt from our lives (we had all the varieties). This was the second financial lesson I learned from my parents: debt can be toxic and debilitating, especially if it strikes at the wrong time (they had to file for bankruptcy at one point). I was perfectly comfortable de-risking my finances, even if it meant giving up some potential gains, and a bigger net worth.
As a result of the above, our lifestyle expenses are now quite low. We can manage to live very comfortably on $2.5K per month. Our target spend however is about twice that amount, with the remaining funds used for travel and fun. At those levels, we’ve been able to maintain an average Net Savings (After-Tax) rate of >75%.
All of these habits have translated into a healthy net worth, which I detail completely on my blog. We crossed the $2M mark this year, and are planning to add another $1M over the next 5 years to solidify our financial independence status. This was accomplished primarily via saving money, with a modest amount coming from investments. My portfolio is extremely conservative right now, since I’m still formulating my long-term investment strategy. Balancing risk and returns is not as simple as it sounds!
My goal is to amass a $2M investable asset portfolio (different from net worth) which will generate a modest 5% return to subsidize our lifestyle.
Once I accomplish this goal, which I intend to hit by the age of 45, I can join my version of the financially free club. This doesn’t necessarily mean I’ll retire at that time. It simply means I’ll have the option to decide what the best course of action is for my family.
And that’s what Financial Freedom really means to me: the option to choose your own path.
RECREATION – What do you do for fun?
Mrs. Max and I have always loved to travel. It’s the thing we have most in common. We’ve taken some kind of vacation together every year that we’ve been together, including before we got married.
This means we’ve been traveling together for over 20 years. One of the main goals we set out to accomplish a couple of years ago was taking our travel adventures to the next level.
We’ve always talked about moving overseas and experiencing different cultures and lifestyles, but our practical side always squashed those dreams. Our family was all state side, and we had an only child that we wanted to give a stable environment.
We decided about five years ago that we could come up with an attractive compromise. We spent the following five years putting a plan in place, so we could make our new dream a reality. That compromise was to “slow travel.” We’ve used the summer months over the past couple of years to travel more extensively. We spent our first year in Barcelona for eight weeks, and this year in Southeast Asia.
This doesn’t mean we were on vacation the entire time; it means we were able to enjoy those cities more like locals would, which was a more enriching experience to us.
You might be wondering how we could pull this off with two professional careers. Which brings me back to an earlier point I made. Staying with one company does have some advantages, as long as you plan your career accordingly. The experiences we had over the past two summers (in extended time off made possible by my seniority at my current job) were more valuable to us than the extra income we could have made by job-hopping up and up the salary ladder (with less leeway at “new” jobs to take off extended time).
Aside from travel, Mrs. Max enjoys riding horses, and I’ll admit to having a weakness for video games. There are more leisure options available to people today than in all of humanity’s history. Plenty to do with free time!
MORE – Tell us your secrets!
Unless you inherited money, received a large windfall, or have the kind of job that earns you millions of dollars, you’re not going to stumble into financial independence.
It takes planning, discipline, sacrifices, and perseverance. Living life by design, as Dom would put it. There are sadly few shortcuts (trust me, I know). But the formula is pretty straightforward, and accessible to just about anyone.
I happen to enjoy planning and thinking ahead, perhaps even too much. I guess you can call it my “Super Power.” I’ve always made sure to have some type of 5-year plan at every stage of my life. Doesn’t mean things always go according to plan, but at least I have a general direction to aim for.
I will say that as I’ve gotten older, it’s become much harder to come up with those plans. The most obvious ones are easily identifiable earlier in life.
But planning is useless without execution. You have to follow through, despite setbacks.
I made some stupid financial mistakes early on. My lowest point was investing (a lot of money) in a penny stock, hoping for a shortcut overnight. I had forgotten my mantra that hope is not a strategy. I hate making stupid mistakes, and it took me a while to get over that one.
It was a good lesson though, and has helped me become more disciplined about investing.
So the secret is….there is no secret! Becoming permanently financially independent is generally boring, incremental, and uneventful. You just wake up one day, and the next thing you know you’ve become a millionaire.
If you’ve managed your lifestyle appropriately, that revelation won’t have a huge impact on your financial life. It will however force you to reexamine your priorities, and will allow you the privilege to set them yourself.
PARTING ADVICE & WHERE WE CAN FIND YOU
If you’re in your early 20s & 30s, congratulations! You live in the kind of world where learning from other people’s mistakes has never been easier. There are so many roadmaps to financial independence out there through blogs such as GYFG, that claiming ignorance is no longer an excuse.
You have enough time ahead of you to reach financial independence with enough planning.
If you’re interested in how to improve your career (and income), check out one of my posts on how to get promoted. It includes some useful book recommendations.
If you happen to be older, and have a desire to be financially independent, that goal is still possible. It just takes more grit to get there, and usually some drastic lifestyle realignments.
I recommend tracking your finances; in the end you’re only as good as what you measure. I use Personal Capital like many other people. I also read quite a bit, usually blogs when it comes to finances. I’ve found Rockstar Finance to be a good source of information. There’s a flavor of blogger for everyone.
Finally, I’d like to thank Dom for the opportunity to participate in this series. I don’t do many of these, but it’s hard to turn down the Gen Y Finance Guy!
If you’d like to learn more about me and my journey, you can find me over at Max Your Freedom. My posting frequency has dropped a bit (because life), but there’s still some good stuff in there if you dig around a bit. Like Dom, I’m one of the few bloggers out there with an open kimono (financially speaking). You can indulge in some money voyeurism if that’s your thing.
Good Luck with Your Journey to Freedom!
Max
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