Welcome to Bogleheads on Investing, podcast number 14. Today, we have a special guest, Chris Mamula, author of the new book, Choose FI, Your Blueprint to Financial Independence. My name is Rick Ferry, and I'm the host of Bogleheads on Investing. This podcast, as with all podcasts, are brought to you by the John C.

Bogle Center for Financial Literacy, a 501(c)(3) corporation. Today, I'm pleased to have Chris Mamula, one of the authors of a new book called Choose FI, Your Blueprint to Financial Independence. The other co-authors of the book were Brad Barrett and Jonathan Mendoza. These young men have written a truly fantastic book for not only young people, all of us should learn from them.

I am very pleased to have with us today one of the co-authors of Choose FI, Your Blueprint to Financial Independence, Chris Mamula. Welcome, Chris. Thanks for having me. And it's an honor for me to be here with so many people who I read and follow, who I've seen have been your prior guests, and not to mention Mr.

Bogle himself. So it's quite an honor. Well, you have quite a story yourself. And I want to start out by you talking about your background and how you got to writing this book and also your blog, Can I Retire Yet? and all the great work that you've put into the FI community.

So why don't you start out telling us a little bit about yourself. Sure, so I graduated with a Master of Physical Therapy in 2001. And so I had 20 years of formal education from kindergarten through grade 12 and my bachelor's and my master's. But in that time, I never had any financial education.

So like most people, we spend all this time learning to gain the skills to earn money. But nobody really ever teaches you what to do with it. So I was pretty fortunate in that my parents instilled in me just a kind of a disdain for debt, I guess you would say.

And so from day one, I was a great saver. My wife had a similar upbringing to me in that she wasn't raised with a lot of money, but she didn't have that foundation. So she had some debt. And going into our marriage, we didn't want to get married with debt.

And that's something we talked about together. What we agreed to do was just live off of her salary and use everything I made to get us out of debt before we got married. And that was working really well. So it's something we just kind of stuck with. And so we always lived off her salary and saved mine.

And our careers kind of grew in parallel. So we basically had a 50% savings rate our whole lives. But we really didn't have a plan because we didn't know what we were doing. And so I kind of always bought into this idea that investing is complicated. So we invested with an advisor, and we really did no due diligence.

And I kind of bought into this idea that retirement is at 65, and maybe early retirement was 55 or 60 if you're really lucky and you do everything right. And so again, we had no plan for that. So we just kind of fumbled through life until around 2012, about 10 years after getting started.

We didn't think we could have kids. My wife found out she was pregnant. And so I realized I had to get serious about finance. And that's when I kind of stumbled into the early retirement, the fire blogs, the financial independence, retire early. And they really changed my life. So that's kind of what motivated me to start writing about the topic.

Chris, I want to get into the FIRE movement, F-I-R-E. What does it stand for? When did it start? What's the motivation behind financial independence, retire early? And what are the different splinter movements from that? Can you describe the whole culture of FIRE for us? Yeah, sure. So let's just start with the definition.

So FIRE is Financially Independent, Retire Early. It's kind of a catchy, cute acronym. But in a lot of ways, I think it turns people off, because people get hung up on the whole retire early, and people have perceptions of what retirement means. And so in some ways, we're trying to move away from that.

We really focus on financial independence and really don't focus too much on the retire early. I think what it's all about is just really lining up your values with your spending. So typical advice is you save 10% or 15% of your income, and that puts you on a path where you're going to retire in your 60s or 70s.

And basically, we just kind of flipped that on its head and said, if you can save far more than that, you can free yourself up and become financially independent much earlier in life. And then if you choose to retire, you certainly can. But most people that I've come across in this movement choose to go on and do just bigger and better things, and things that more line up with what they want to do versus what they have to do to earn an income.

And as far as the origin, I guess I probably have to credit Vicki Robin, whose book Your Money or Your Life was published in the early '90s. And it was very popular at the time, but kind of like most books, it kind of fell off. Even she didn't know that a lot of the early FIRE bloggers kind of picked up on her ideas and turned it into this FIRE movement.

And the early influences were kind of all looking the same, like white males, engineering, really focused on maybe spreadsheets and optimization and frugality. And so when I got into writing in 2013-- and honestly, I kind of fit a lot of these stereotypes because I'm a white guy, and I was part of a higher-earning professionals, and we had no kids.

And then, like I said, I got serious once we had one child. But I was in the health care industry, and I don't know anything about spreadsheets. I didn't know anything about finance. And so I was kind of-- at the time, I think I was diversity. But I think a lot of that initial perception is kind of what people still think, and it's like this monolithic thing.

When really, there are so many different stories now. And I think this FIRE message is really attractive for parents looking to create space in their lives to spend time with kids, maybe older adults who are way behind on retirement savings. And this lets them supercharge that. Or just people burnt out on careers who want to do something different, and it gives them some leeway and some courage to do something different with their life.

So it's definitely a much more diverse community than I think people perceive it to be. And you started a blog about this. Can I retire yet? So actually-- so I started writing back in probably 2013, and I wrote a little blog called Eat the Financial Elephant. And it's based on that riddle, how do you eat an elephant?

And you do it one bite at a time. And it's because I felt so overwhelmed by finance. And it was really-- a lot of it was to hold myself accountable. And I built a little audience, but nothing-- I wasn't having any kind of impact. So as I was leaving my career in 2017, this movement, this idea changed my life.

And I wanted to reach more people. And I wanted to maybe change some of those perceptions of what fire looks like to people. But I didn't have a platform to do it from. And my idea was to start a podcast and talk to different people who influenced me. And then-- so Brad Barrett and Jonathan Mendonca, they started the Choose FI podcast a few months ahead of that.

And so I reached out to them probably in April of 2017. And we agreed to partner on the book. And then in August of that year, there was-- the Can I Retire Yet blog was started by a gentleman named Darrow Kirkpatrick. And he had built a nice following. And I loved that blog.

But I kind of sensed he was burning out. He was a one-man show doing it. And so I reached out to him and said, would you be open to a partner? And he was receptive. So I kind of-- before I actually, quote unquote, "retired" from my physical therapy job, I had my next two projects lined up.

And so I've been writing with Darrow at the blog since, I guess, December of-- or since January of 2018. You feature other bloggers and other podcasters all the way through the book, which is extremely well-written, by the way. You're a great writer. This is a very, very well-written book.

I read it cover to cover, very easy to understand, very easy to follow, a lot of great information in there. But one of the things you did throughout the book was you were referencing all these other blogs and all these other bloggers and all the different points that they were talking about.

And you have a whole list of bloggers and podcasts and so forth in the book, which is really a wonderful reference. But in your site, you started writing about this and you started focusing on this culture. And I really want to talk about the culture of Fi because it's very similar to a Bogleheads culture.

The Bogleheads started maybe 20 years ago, first on the Morningstar forum, and then we went out on our own and had our own bogleheads.org website. But it is a culture and it is a community. The Fi community is very similar, and the goals of both communities are very similar.

There might be a little bit of a generation gap. So could you talk about the Fi community and the culture? Yeah, sure. And first off, thanks for the kind words about the book. I really appreciate that, especially coming from you. But I was just in Detroit promoting the book, and I was staying with a guy named Joe Saucihai.

And he has a pretty popular podcast called Stacking Benjamins. And it's kind of comedy mixed with personal finance. And he and I had a really great conversation. And he kind of pointed out to me that there's 300 million people in the United States. And so even if you have 3 million people that you're reaching, which even the Bogleheads or even maybe Dave Ramsey and Sue Zorman, when you get to that level, nobody's really reaching that percent of that number of people.

And if you are, that's 1% of the population. So overall, as personal finance, I think we're failing to get out and reach people. And so there's a lot of snipping back and forth between these, like maybe the Boglehead community and the Fi community and the Dave Ramsey community. And really, we need to be building upon one another and pointing out what each other is doing well so we can reach a bigger audience.

And with Choose Fi, that's what they did is they kind of-- I think a lot of personal finance is guru-driven. And what they kind of do is they highlight people who just have compelling stories. And in each episode, they really focus on what are the actionable steps people can take.

And we tried to build on that in the book and say, how can we take the key lessons, and then we kind of just put it in a more organized fashion than you really are able to on a podcast. And kind of building up everyone and choosing the best of what everybody is doing versus kind of snipping and trying to kind of protect your little piece of the pie.

We really want to grow the pie and reach a much bigger audience. And so I think where, like you said, there's just so much overlap between the Fi community and the Bogleheads messaging. And so I think if we could kind of work together and reach a bigger audience, it's way more productive, and we're going to be able to help a lot more people.

And that's kind of where we're trying to take things right now with the culture and the community. Well, that's great. Because for us at the Bogleheads, we are always trying to figure out how we can reach more people. And our push is to try to reach out to other communities like yours and work together with you to better educate more people.

Because that's really the goal of everyone. This is so important for society and so important for our fellow citizens and make them better investors. And get them away from the hawks on Wall Street. I mean, you talk about that in your book. And I think you did a great job, by the way, talking about your story of 10 years with the financial advisor before you finally realized what was going on.

I mean, that happens everywhere. And it's a majority of the population are trapped in that. And I think that by working together, these different groups working together, will help just make the message more powerful and louder. Because we don't have a lot of money, and you don't have a lot of money.

And so we're fighting against a trillion-dollar industry that has, it seems like, unlimited wealth. Yeah, and I can't agree with that more. And like I said, if you kind of look at the things that we kind of argue about in the personal finance community compared to where people are, just as we record this, last week there was an article in The Wall Street Journal about how so many people were going to now seven-year car loans from five-year car loans.

And the average savings rate-- I mean, I know this is something we cited in the book. It's like 5% across the population. So like I said, yes, I mean, there are little things. Each of us could do better, and we can help each other improve our messages, absolutely. But I mean, overall, I think when we could be really helping people who are just missing and not getting the big picture.

We're not competing against each other. We're competing against the Kardashians, and the NFL, and the things that people like build their life around while they have no idea what an expense ratio is or anything like that. We're going to go through the book now and what you've done, how you've organized it.

I think the very first thing that struck me as I was reading one of the earlier chapters was the stages of financial independence. And I've never seen this before, what the stages are. And you list them out from one through seven. And I'd like you to quickly go through the stages, because I think they were really well done.

And I appreciate that. And again, like you said, you complimented my writing. And I wish I could take credit for these ideas. But again, what we did is we built on all these ideas. So this was a blogger who was on the podcast, and he talked about this. And I think traditional finance, it focuses so much on retirement and retirements, like the end goal.

And what we really wanted to do is reshape the conversation. And so we started with just really once you get to zero, if you're out of debt, and really, you can define it in a number of ways. But most people, they're kind of trapped because their mortgage payment, their car loan payments, maybe they still have student loans, credit card loans.

And so their next paycheck is already spent before it ever comes. So just getting to zero, however you want to define that, is so powerful, because it starts to let you start choosing going forward. And then as you start to build on that, just having a fully funded emergency fund, that's a hallmark of personal finance.

And that's really like a Dave Ramsey concept I've seen a lot, where you have six months of your expenses saved. And I think that's great advice, but if you look at traditional advice, they say you save 10% of your income, say. So if you're doing that, after a year, you're going to have basically a month of savings.

And it's going to take you about five years just to get that six months of savings built up. And it's no wonder people fall off, because it's so slow, and you don't see any momentum. So what we do is we say, if you can build a higher savings rate, and we just hypothetically throw out the number 50% savings rate, for one thing, that's going to lower the bar of how much it takes to save to get six months of savings by being a little bit more frugal and watching your spending.

And also, that frees up the money to save. And if you can save 50%, now you can have a six-month emergency fund in only six months, instead of five or six years. And so it's a total game changer, and it lets people to start have freedom and peace of mind.

And we just kind of build up through the phases till you get to ultimately full financial independence, and then even financial independence with cushion is our last level, where you're having greater than 30 times your annual expenses. And you can pretty safely retire at that point and even be comfortable to maybe grow your spending, depending on how the market does.

So really trying to reframe that conversation from an all or nothing to a conversation where your power is growing and building throughout the phases. In the next chapter, you get right into the whole thing isn't really about money. It's about having the right way. The money is just a facilitator of that.

So the money is just a tool. What you're really going for before you even go for the money is a philosophy. And you talk a lot about philosophy. Yeah, so kind of the framework I wrote the whole book with is that you have to learn the rules. And you mentioned briefly my bad experience with the financial industry.

But I think a lot of people, they go in and they know the rules. They know that you get a college degree so you can get a good job. And then once that starts, the first things you do is you buy a house. And you determine how big of a house or how much you spend based on your income.

And you can spend x percent. And you buy two cars. And everybody knows you buy them with loans. And this kind of goes on and on. You save 10% so you can retire at 65. And none of these things are rules. So kind of where we start is you have to unlearn the rules and just kind of get over all these things that people just blindly accept.

And really, a lot of this is just about asking better questions so you can get better answers. And then once you unlearn the rules, then we kind of get into the rules of what is the math behind saving? What are the rules you have to know to invest wisely?

What are the rules to grow your income? And all these little levers you can pull. But I really think unless you unlearn the rules first and break down those things that people quote unquote know, you're gonna really have a hard time. - As we move along in the book, you have a section called Becoming a Lifelong Learner.

And I looked at that and I said that is perfect because I happen to be writing a book right now. And I will give you the name and selfishly promote it, but it's not gonna be out for a little while. It's called A Few Good Funds, The Genius of Simple Investing.

And the last chapter is all about lifelong learning. So as I'm reading your book, it says become a lifelong learner because it is so important that once you have the concept, once you have the philosophy, once you get it, once you set yourself up, it can easily be forgotten and go by the wayside.

And the second thing is, one thing that really not only helps you, but helps a lot of other people, is not only your lifelong learning, and you get to this in the book very quickly, is once you learn it, teach other people. And teaching other people helps you stay the course.

I thought that was fascinating. And I was actually including the exact same things. I was reading your book. I just saw so many things that you just did such a great job bringing out. - Yeah, thank you. And yeah, and it's kind of funny, like when I talk about my background, that five years ago, six years ago, I had no clue.

I didn't know what an index fund was. I wasn't utilizing my 401(k) 'cause my advisor said that he had better investments for me and I totally bought hook, line, and sinker. I mean, I was completely clueless. And now I'm writing this book, which is hopefully gonna have a pretty large impact and be read by a lot of people.

And it's just that matter of, I realized, okay, I'm making a lot of mistakes and it's easy to wallow in that and feel bad for yourself or get angry. But what I did is said, okay, I need to correct course and I need to keep learning and then learning at a deeper level.

And then as I was doing this and seeing the impact it had on my life, yeah, I almost felt an obligation to share it with other people so they could do the same thing. And in some ways, I think you get imposter syndrome that who am I to be qualified to write a book about personal finance and investing?

And on the same token, I think I'm the perfect person 'cause I know exactly how all those people that really need to get this message are thinking 'cause I was stuck in that pattern for, like I said, 10 years before I finally started questioning things and figuring it out.

So, yeah, I mean, I think that's super important. - Yeah, what we find is right is in many of this stuff about personal finance and investing and taxation, all of this is routine. I mean, these are the rules and all you're doing is figuring out how to put it all together, how to link it all together, and then writing about it.

I mean, we're not creating any kind of a new way to invest in real estate, and we're not creating any new way to invest in index funds. I mean, it's all out there. We're not trying to recreate the tax code in any way. It's all out there. It's just a matter of putting it all together and showing how it all works together and explaining it to people in a way where it makes it easy to understand.

And so me, I don't take any credit for anything I've done as far as index funds and talking about ETFs and asset allocation and all that, because it's all out there. It's just a way in which you explain it and being able to explain it to people so that they understand it.

So in a way, teaching people how to do it. And I think that's really where you have a real knack and a real skill to be able to do that because your book is so good at teaching people. - And again, I appreciate that. And a lot of that is just, again, because it's not really me.

I mean, yes, I'm the one writing it and putting it together and organizing it, but we've taken a lot of people who were super generous with sharing their stories on the podcast with those guys. And then they were generous with allowing me to take that and kind of put it together.

And then we kind of repackaged it in a way that just makes it consumer friendly. And particularly to people who aren't maybe inclined to be in the Bogleheads community or to be inclined to be saving large percentage and be in the FI community and just take it to ordinary people who most need this message and really make it accessible.

And that was what we wanted to do with this book and not be judgmental and not be dogmatic, but just saying, look, here's the different options that you have. Here are people with really inspiring stories that probably somebody in there is gonna look a lot like you. And you can kind of take their story and take the things that you like from it and then take from other stories and put together your own path to achieve financial independence.

- Yeah, you wrote in here that you do not have to adopt anyone else's definition of success or failure, but to gain traction on the path to FI, you do have to determine what you value and then start spending your time and money accordingly. So as you figure out what's important to you, and then you start on that path.

- Yeah, and there's a term, and I'm not sure quite where that came from, so I'm hoping we didn't steal this from somebody, but we call it a valuist. And instead of saying like you have to be frugal or you have to be a minimalist, you don't have to be anything, but you do have to figure out what you value and then does your spending reflect that?

And for a lot of people, I think, if you were being very honest and looked at it, a lot of people would say no. And if you think that you have to suffer and sacrifice, frankly, none of us, including me, are going to be able to save 50% by scrimping and saving.

You do it by cutting out the things that you don't value anyway and you spend the money where you do value. But a lot of those things that, again, people just do reflexively, like buying the biggest house they could afford or the most car they can afford. I mean, if that's truly what you value, then by all means, do it.

But I question how many people are happier because they have a bigger house or a fancier car. And if it's not, then cut it and be honest and don't be afraid to make changes. - You talk about the three big things and you just hit on them. You talk about the way to get a high savings rate is to focus on the big things that you can control that are the big budget eaters, if you will, and that is housing, transportation, and food.

And those three things together, if you can control your housing cost, if you can control your transportation cost, if you can control your food cost, then you can bring more money to the bottom line. - Yeah, and I kind of talked how my wife and I just stumbled into getting a lot of those things right.

There was no fire movement back then. And so we just kind of stumbled into it. So we were getting a lot of the big things right. And so for us, it was really pretty easy because if you don't inflate your lifestyle, and you can live pretty comfortably, and then as we had our basics with the housing and the cars, kind of, it was locked in, and we were able to inflate our lifestyle as our careers grew.

So we were traveling more and doing fancier things and eating at better restaurants and things like that. But because we had the key things just locked in and we were living so far below our means, it was easy. Unfortunately, for some people, you're gonna find this later in life, and it may feel a little bit of sacrifice, and you're gonna feel a little bit of the pinch if you have to go back to get those things right.

But really, if you don't get those things right one way or the other, either by starting well or by going back and making changes, it's really hard to develop that savings rate because those things, if you look at the average person's spending, they make up such a large percentage that if you don't get those big things right, it's gonna be very hard.

- And one of the other things, of course, that's big for everybody is paying taxes. And I've found in talking with people that on the investing side and how to set up their accounts so that the right assets are in the right accounts and just how to structure the whole thing, and even when they were doing distributions, doing Roth conversions, I mean, the whole tax code and working the tax code to the maximum that you can for your advantage from savings to distributions to knowing where all the break points are for things like Medicare charges, for retirees and so forth, to understand the tax code as an investor and to work that tax code gets you so much more money than trying to go out and pick any actively managed mutual fund that might outperform that it's not even a comparison.

You spend your time on taxes and you have a whole chapter, a whole section in here about working the tax code to your advantage, and I think it was a really good chapter. - Yeah, and I think that's where the book gets really fun. So, I mean, some people, it's gonna be pretty easy, the housing, cars, and food, and some people, it's really gonna be a struggle, but you have to get those things to get the savings rate, but once you can do that, and it's really simple things, like just using your work-sponsored 401(k) account.

For a lot of people, that's the easiest and biggest thing you can do. Doing things like learning to be a index fund investor and cutting your expenses, like it can be seen as a sacrifice, I guess, for people, if you say you have to live in a smaller house or drive a less fancy car, but I mean, I personally, I've never met anybody that said, man, my life would be better if I just paid a little more taxes or if I could just pay my financial advisor a little bit more.

So, I mean, those things, I mean, they add so much value to your life and you're actually spending, and we're talking big dollars less. Like, I know for me, we talked about some of the mistakes I was making as I became a do-it-yourself investor and bought into the index fund philosophy.

I started saving about $10,000 in taxes and $10,000 in fees every single year, year over year, and those things were adding zero value to my life. So, I mean, talk about something that's easy to do because it makes your life better and you become wealthier. It's a no-brainer. - One of the big expenses for young people, of course, is going to college and you spend an awful lot of time on talking about things like college or hacking college and how to pay for college.

And I think the whole hacking college idea, it was really unique. I had not heard it before. Again, you know, always learn something by reading other people's material and the whole hacking college idea was really new to me. Could you describe that? - Yeah, so I talk a lot about my mistakes, but if there's one thing that I did right, so my wife and I, between us, we have six college degrees and we did that with, she had about, we started with about $20,000 of debt from her undergraduate and otherwise we did it all without any debt.

And it's been such a game changer compared to most people we see coming out. Like the average physical therapist who I was mentoring when I was working as a physical therapist, they were coming out six figures in debt. So it's a complete game changer. And I really think a lot of it is just, I'm again talking about like just questioning the rules.

I think most people think that to go to college and to do it without debt, you have one of two paths. You get lucky and you get a scholarship or you have wealthy parents who are able to fund you the whole way through. And what we found is just, I think a lot of times, you know, if you have a hammer, everything starts to look like a nail.

And I think college, just debt to finance college is so easy. So if you limit that or eliminate it completely, there's so many more options out there from working through college to, you know, to looking for different scholarships, smaller scholarships that people don't bother applying for 'cause they don't think they can get to, you know, doing like when you're in high school, getting some credits that apply to your degree.

And most of the people we profiled use all of these and some other strategies. And if you are able to do that and you get a little bit here and a little bit there, you can drastically reduce the debt or eliminate the debt and come out debt-free. And that's a complete game changer.

And it's funny that I've had a lot of positive feedback about that chapter. I absolutely loved our editor. And we actually cut a couple chapters and made some big changes, but she actually recommended we cut that chapter. She said, you know, a lot of people are writing about that.

And that was the one place where I pushed back and we left the chapter 'cause I think it's so important. And one of my co-authors on the book, Jonathan, he actually came out of school $168,000 in debt and it was a big piece of his story. And when you can kind of contrast and you see like it took him basically a decade of working and saving to get out of that just to get back to zero versus some of these people in the book, myself included, who were able to get out debt-free.

And again, it's just a, it's a total game changer. So yeah, hopefully we can add to the conversation and instead of making it a black and white, college is good or college is bad. I think for a lot of people, it's very valuable, but you have to approach it in the right way.

- You talked in here a little bit about making college pay. In other words, well, you know, you wanna maximize the benefit from your degree and minimize the cost. And by maximizing benefit, I'm glad to see that you wrote a lot about, go out and get a degree that you can actually use to earn money.

I mean, to spend $200,000 on a degree that you're gonna make 60,000 or $50,000 a year on just doesn't make any sense. I mean, you talk about college as an investment where you expect to get a rate of return on that investment. And I have not seen a lot of that and I'm glad that you brought that up.

- Yeah, and it kind of ties together. I mean, I think any of these things in a silo, they maybe don't make as much sense. But when you look at the whole grand picture, again, we embrace being a lifelong learner. And you look at like the things that I've done with learning to manage my investments and how much that's paid off and learning to write just by sitting down at a keyboard every morning and picking up some books at the library.

You can learn everything, but I didn't need to go get a journalism degree and I didn't need to go get a finance degree to be able to do these things. So there's a lot of things you can learn for free. I mean, we live in an amazing world where many of these things, you don't have to have a degree and you can be pretty successful.

I mean, some things like if you wanna be a doctor or you wanna be a lawyer, obviously you have to have the paper that says you're qualified to do that. But then even at that, you really have to approach that decision more wisely and like you said as an investment versus this is good at any cost because there's plenty of examples where that's just not the case.

- You also provided advice for what to do at work. I don't mean saving in a 401k, I mean, how to manage your career. And it was even a little chapter in there about how to manage your boss. And I started reading that saying, manage your boss, what's that about?

Maybe you could enlighten us. - I think a lot of people just think, you can go and work hard and you're going to be rewarded and maybe you will, maybe you're gonna be lucky, but a lot of times that's not the case. If you can learn to add value to whatever situation you're in and learn what your employers value and then deliver and even over deliver on those things.

And then sometimes this can kind of almost seem self promotional or taking too much credit, but you're your own brand. If you're doing above and beyond work, then you need to point that out to your employer and you need to maybe set up regular reviews and just things so that they're aware of what you're doing and how you're adding value.

And that way it doesn't guarantee you're going to be compensated for those efforts, but at least you're aware. And then if you're not at that employer, then you have something objective to go to a new employer and say, look, this is what I've been able to do. And again, that is not my idea.

That was from the blogger, it's called ESI Money is his blog. He was the president of a hundred million dollar company. And this was his framework that he laid out and we thought it was brilliant. And again, I agree it's something I had not seen anywhere. And a lot of the things my wife and I did in our own career, in our own house, but I've not seen it really put into writing in one place.

So by being able to take all these people's best ideas and to organize them into one book, yeah, I agree that added a tremendous amount of value. - Brian Tracy talked about invest 3% of your income in yourself to guarantee your future. As I read that, I said, that makes a lot of sense.

Can you dig into what Brian said a little more? - I think one of the things that the FIRE community is criticized for is being hyper frugal, almost to a fault where we don't want to spend money on anything. And honestly, there probably is some truth by some people in this community.

And so what we really want to do is kind of push back a little bit and say, it's not just about cutting your spending, but how can you spend and how can you invest on yourself? And so just some little things, and we use an example in the book I know of a guy named Scott Trench, who's now I believe is the president at BiggerPockets, which is a real estate investing platform.

But when he was really young, he had the good fortune of being invited to a mastermind group of real estate investors. And he started, he just kind of in his head said, I'm gonna buy each of these guys lunch and try to just pick their brain if they would let him.

And they did, and it kind of led to some pretty great opportunities for him from being more comfortable to start investing in real estate competently, to eventually kind of leading to the connection that got him his current job. So just little things of thinking differently and investing back into yourself versus trying to save every penny, it can really add up and change your life over the long haul.

- The book gets into actual investing, putting the money to work. And of course, you're an advocate for low cost index fund investing and not trying to go out and pick funds or stocks that are gonna outperform the market. One of the things about this chapter, though, as I was reading it, invest in index funds and understand the 4% rule, which we'll get to in a minute, was as I was reading this, there was so much in there that I had just, was like reading my own life in many ways, and all the things that I went through with figuring out what the philosophy of investing should be, and how indexing works and why it's better, and then going to develop a strategy, and then finally finding the discipline.

I mean, you have it all in here. It's all here, and you did a great job. The 4% rule, though, is one thing that I wanted to get to right now, which is this idea that you could, at least initially, the Trinity study from a few years ago, which said, "Gee, if you withdraw 4% of your money "out of your account, then you can do that "for the rest of your life and not run out of money, "so get to some level where you can withdraw 4%," but that has changed recently.

I mean, the numbers have changed, but you still talk about it in the book. - In the FIRE community, I think we're maybe criticized for oversimplifying things, and so a lot of times, we'll define financial independence as when you have 25 times your annual expenses, meaning that you could spend 4%.

I agree that that's not a valid rule, that if you're gonna retire in the traditional sense and start drawing down, and particularly for early retirees who have a 50 or 60-year potential timeframe versus a 30-year timeframe that the Trinity study was based on, but I do think it's a great rule to get people started.

I think it's a great way to shift your mindset from people think to retire, you have to have X percentage of what you earned in your peak earning or your later earning years, and this kind of flips that whole thing on its head, and it makes us start focusing on what are you spending, and what is the multiple of your spending, and I think that's a much healthier and better place to start from, and then we have people in the FI community.

One that we feature in the book, and he's probably the most prominent is Karsten Jeske, and he writes the blog Early Retirement Now, and he's done a whole series on safe withdrawal rates, and it's just great work, but I think it really does make you change that whole framework to get started, and it also, we talked about like investing fees, and if you assume you can withdraw 4% a year, it makes that one or 2% that you're paying annually in investing fees, it kind of puts some, I guess, context to that.

When you say, you know, if you can withdraw 4% a year, but you're paying 2% between your fees to your advisor and then fees to the funds, that really only leaves you 2% for yourself, and that makes that 4%, it puts everything into perspective. - You talk a lot in the book about investing in index funds and keeping costs low, keeping taxes low, and so forth, and I wanna read something you put in here because it's so true, talking about how Wall Street tries to make everything complex, and I've been saying for a long time that if you're an investment advisor or you're a broker and you make things complex for your clients, you have job security, you think you're building job security because they don't understand really what you're doing, so they kind of throw up their hands at one point and say, "Hey, look, you're the expert, I'm trusting you," and that's exactly what you wanna hear as a financial advisor, but not exactly what you should be saying as an investor.

And you put in here, "There's a tremendous incentive for the financial industry "to promote feelings of inadequacy, fear, "and confusion in investors," and that is so true. - And that was just from firsthand experience. I lived it for, again, a decade, and I felt so overwhelmed, and then eventually, after I took control of my own finances, I talked to my parents, and they kind of were in that same boat, so I kind of had to help them figure things out and get through, but I mean, you see that over and over with everyone who I talk to that you feel like you have to go to the advisor because they are the quote-unquote expert, and they just foster that feeling of dependency, and it's great for them, but it's not great for you as an individual investor, so it kind of goes back to you just have to learn the rules.

- A lot of young people now are turning towards quote-unquote robo-advisors to invest their money, and I'm talking about Betterment and Wealthfront, and now just Vanguard. We heard through an article in Investor News is going to be launching a true online-only robo service, and their fee is going to be undercut everybody, of course, because that's what Vanguard does.

How do you feel about these robo services? Are they a good thing for people, or do they make things too simple where you end up relying on them? - Yeah, so I mean, I'm not a huge fan, just because I don't have a problem with using an advisor of any sort if they add value, but for me personally, I don't see the value add of a robo-advisor.

I think what they maybe do is they give a false sense of security because they're using these algorithms that if you follow this, then you're going to do better, and frankly, nobody knows what's going to do better in the long term, and what we do know, though, is that they're adding a cost, and they'll point out that their cost is maybe a quarter or a half a percent compared to traditional advisors, maybe charge 1%, and so any fee savings are good, but you can just do it yourself, and if you go in with that humble attitude that I don't know what's going to be the optimal portfolio, I know why I'm choosing the portfolio I am, and I'm going to stick with it for the long haul, I don't know that they're going to add any value with the portfolios they're going to put you in, but I do know for certain that it will cost you that extra quarter or a half percent, and again, again, that kind of sounds like a small number, but if you look at it, again, with that concept of maybe the 4% rule, or like we said, maybe that's not valid, maybe it's a 3% rule, and so if you're paying a quarter or a half percent, that's a substantial amount of the income you could potentially live off of, and again, if it's adding value, then great, but I don't see necessarily a great value add that they're providing.

- There are some advisors who point to a study or an opinion piece by Vanguard who says that advisors can add up to 3% alpha in a portfolio, they call it advisor alpha, and they sort of backdoor into this idea that because advisors can change your behavior, because they can lower your fees somehow, I guess by using index funds, and because they're better at doing investing than you are, that they can add up to 3% alpha to your portfolio.

How do you feel about that? - So when I started writing, we talked a little bit about my background, and so I was very dogmatic that everybody should be a do-it-yourself investor, and then as I started dealing with real-world scenarios, my parents being a great example, readers that call right into the blog and ask me these questions, and I realized there's a lot of complexity in people's situations, and so I do think if you have a complex situation, maybe you had bad advice before and you need to get out of products that aren't in your best interest, if maybe you have a unique circumstance, maybe you have a special needs child or something like that, there are scenarios where I'm certain that an advisor could add value, and then for other people, they're not going to do the simple things that it takes, simple rebalancing and things like that, so maybe they add some value there, but 3% seems like a lot, and especially across a general population, I have a hard time buying into that.

- It's possible that advisors might add 3% to a small, minuscule number of people, but in general, at least in my practice, and I'm just doing an hourly advisor model now, the people I'm seeing are much, much more ahead than that. A good advisor might add a quarter of a percent, maybe, but not three.

- Yeah, especially on an annualized basis. I mean, that's a lot of change. - And so one of the battles that I'm fighting is this 1% AUM fee, where if advisors are charging a 1% fee to a million dollar client, and .9 on a two million, and .8 on a three million, and it ends up being 10,000, 18,000, $24,000 to pretty much just manage a simple index fund portfolio, and then maybe doing some financial planning as well.

How do you fall on that debate? - So kind of getting away from the book, but kind of on our blog, again, we have a lot of people that write in, and that's generally the advice that we give, is that you find somebody that's fee-only, and that's gonna provide advice on an hourly basis, on an as-needed basis.

I think that gives you the best chance to have the least conflicts of interest, and then we recommend that you find somebody that is a fiduciary, although I do understand that doesn't guarantee anything, but I think that gives you a better chance also. And so that's the general advice that we give, but I think in general, finding good financial advice is very challenging, and I think anybody that thinks that they can hand over to anybody under any model and not be a part of this, I think they're in for a rude awakening.

I think there's just so many conflicts, and it's just really challenging, so you have to be invested in the process. - I think that's great advice. I wanna get into active management, and here's where I just thought you did a fantastic job in the book, 'cause it just opened my eyes up to, wow, what a whole new way of looking at active management, because when you start talking about active management in the book, you're not talking about investing in index funds versus investing in actively managed funds.

You describe active management as something quite different than that. - Yeah, so I mean, I think a lot of times when you go to a financial advisor, they think in terms of stocks and bonds, because that's how they're paid, and I think it's extremely difficult to beat the market by investing in the market.

So I think if you're going to be a stock and bond investor, you should probably be an index fund investor for the vast, vast majority of people. But I don't think it's impossible to beat the market by investing outside of the market. So maybe investing in your own personal business, or investing in real estate where you have much more control over getting into a small market where you have a competitive advantage, and you can put in some sweat equity, and you can utilize leverage in a relatively safe way.

And I think for a lot of people, if you can't develop a high savings rate like we talked about earlier in the interview, but you still want to become financially independent more quickly, again, it kind of goes back to learning the rules and understanding the basic math. Investing in index funds may not get you there on the timetable that you want to, so you need to find a different path.

And so that's where I think investing in your own business and/or investing in real estate, either on their own or in combination with index funds, that's going to give you a realistic chance to get to where you want to go. - And just to clarify, your version of active management is invest in yourself, invest in businesses that you start, invest in real estate directly.

These are the active management things that you could be doing, which would really build wealth, as opposed to going out there trying to find active managers in the mutual fund space who you think might outperform the market. And I just thought that was a great insight and I completely agree with you on that.

- Yeah, and I think that kind of goes back to the way we framed it. I think we probably will get some pushback because it kind of goes back to that definition of retirement. And so we kind of, we just don't really care about that definition of retirement, but we kind of look at these as investments.

And some people will say, well, you're not really retired 'cause now you're an entrepreneur. You're not really retired because you're a real estate investor and you're out managing properties. And certainly there's truth to that. But the bottom line is, are you building the lifestyle that you want to live in alignment with your values?

And so if you can work a couple of hours a week on a real estate, as a real estate investor, or as on your own business that you set up as a business and not a job where you can step away from it without the business shutting down, I would view that as an investment.

And people are certainly can feel free to, we can agree to disagree on the terminology around that. But I think that that's the way that you can have outsized returns on your money versus trying to roll the dice by taking more risk than you can tolerate or getting into some hedge fund or somebody that wants to take huge fees and promise outsized returns.

And I just don't think that that's reliable for really anybody and particularly for the vast majority of investors, I would certainly stand behind saying that. And I want to get back to something you just mentioned because it's a great line in the book. Scrap the idea of retirement completely and focus on building lives we don't want to retire from.

I think it was just a great line. That's exactly it, isn't it? That's really what this FI fire movement really is about. It's about this whole archaic idea of slaving away until you have enough money to retire. If your employer lets you later on down the road, get away from that idea and focus on building a life, not just a job or not just a career, but a life that you don't want to retire from.

- Yeah, and I normally write at the website, can I retire yet? And I found that blog 'cause I was literally asking that question. To me, it was all about retirement and it was all about escaping this career I was not satisfied with. So my partner at the site, Derek Kirkpatrick, I mean, he's just a really smart and detailed planner.

And as I really kind of got into what does a traditional retirement entail, I mean, what I realized is, yes, it's going to free me from these things I don't like, having my time dominated by a job is the primary one. But now it's going to introduce a whole nother set of stresses where, what is my day-to-day purpose?

Where as a physical therapist, I was going in every day and helping people. And so how am I going to replicate that in my everyday life? And we talked about, we were savers because we enjoyed that feeling of abundance. And if you're drawing down your investments, it's going to be a whole different feeling of scarcity.

And every day you're stressed about money where money was never a concern. So I think a lot of people just oversimplify it and think retirement's going to fix their problems. And really you're trading one devil for another. And so how I approach it now is, how can I get the things that I really wanted from retirement?

And so for me, that was time with my young daughter, time to get out and seek adventure with my wife while we're both young and healthy, to having some freedom to just step back and just have some space in my life. How can I create that without all the downsides of that scarcity that come with a traditional retirement?

And that's really what it's all about. - When I was getting into the last chapter now, up to page 300 or so, I ended up drawing this little diagram. There's something you might see on a road, a sign that shows you could either go straight or you can take the sharp left-hand turn.

And there's two arrows, one arrow goes straight and the other one makes the sharp 90 degree left-hand turn. And I drew that in the book and I put standard path was the straight line, right? That was the work till 65, get the gold watch. That's what we all, at least my generation, was kind of taught.

And on the left hook, the pivot, if you will, that went 90 degrees the other way, I put choose FI, because to me, that's what it's really all about. It's changing the whole dynamics of the equation. - It's really funny that you say that because we kind of went back and forth on how we were gonna title the book.

And it was between like your blueprint of financial independence versus a roadmap to financial independence. And my original vision of the cover was exactly that, like a road sign that has like an arrow that splits in different directions. So that's just, it's really, that's a astute and kind of amusing observation that you wrote that, 'cause that's exactly where we were, one of the two ways we were gonna go with this.

- Well, it was easy to draw that figure because it's exactly what you're talking about in the book. I can see it. And quite frankly, when I look back at my own life, this is what I did. I didn't quite know what I was doing, but that's what I did.

I took the left-hand turn. I started my own business when I was 40 years old because I didn't wanna continue to work in the brokerage world where they controlled everything and controlled my destiny. I wanted to do it on my own. I knew it was a big risk. My son came up to me in the second year of the business.

He was a junior in high school and he comes up to me and he's crying. And I remember him crying and I'm like, "What's the matter? What's the matter?" He goes, "I can't believe you left this great paying job "to start this business in your living room." Literally, I was sitting in my living room at a desk in our living room where I set up shop.

I said, "You have to trust me. "This is gonna work. "You have to believe me. "I know what I'm doing. "This is gonna work. "Everything's gonna be just fine." And it was. But it is a scary thing. It is a scary thing to get off that treadmill, if you will, the hamster treadmill and actually get off of it and take that left-hand turn and choose to do something different and choose to financial independence in a different way.

Is it gonna work? Yeah, it will work. You know why? You're gonna make it work. That's why it's gonna work. - I had that exact experience, actually. So my dad started, he was an entrepreneur. He was a newspaper photographer and by all means, he was pretty successful, but he just hated it.

And so he quit and started his own business. And I witnessed the struggles of an entrepreneur. And one of the things, again, we talked about investing in your own business and kind of how these concepts all tie together. I think a lot of people don't do what you did or what my dad did because they're afraid.

And it's a healthy fear if, again, if you need that next paycheck or you're going to lose your car or lose your house. But by embracing these concepts that we talked about earlier in the book with cutting your core expenses and by building up some cushion so you're not paycheck to paycheck, even if you're not financially independent where you can retire, but if you have a year or five years or now 10 years of runway, where's the risk in that?

I mean, you have a lot of time to figure things out and to get on the right path. And so I think it's going to embolden a lot of people to live into that life that they want to live versus being just stuck in fear. And that was really much more of the take-home message than anything about retirement.

- And there's an entire community out there to support you. I mean, it's called the FI community, which is what this book is all about. It's talking about this community of people who are there to help you. And they are, I went to FinCon conferences, which are financial blogging podcast conferences.

I went to the first one when it first came out and I've been to several. And it's just a great community of a lot of young people and some older folks like me, over 60 that try to make an appearance, but it's a great community, a support community for people who are looking to do something different, looking to take control of their lives.

And change their lives for their better, for the better for the children and the better for the grandchildren as well. So this community, the Choose FI community, the FIRE community, it's all good. What you've done with this book is really great. And if you could just take a few minutes to talk about some of the kind of the special people who have helped you write the book and have helped you come to the messages that you've come to the book.

I know you talked about Brad and Jonathan, and could you just go over your list? - Yeah, so I mean, I think when I originally started writing the book, a lot of those early thought leaders in the FIRE community. So going back to like Vicki Robin, but then I think the person that really picked it up and started this whole thing was a guy named Jacob Lundfisker.

And he wrote, it was called "Early Retirement Extreme" and it lives up to its name, it's pretty extreme. And he talks about like an extreme frugality and getting to retirement as quickly as you can. But I think people started building off of his ideas and Pete who's known as Mr.

Money Mustache and his blog is, it's been phenomenally successful. And he's kind of taken Jacob's ideas and taken it more to the mainstream. And there was kind of that whole core group of kind of that engineer type. So Mad Scientist, Go Curry Cracker, Root of Good, I think were the original bloggers there that kind of grew this community.

And then as far as like investing and linking to the bogleheads, there's a blogger called J.L. Collins. And his blog is just called JLCollinsNH.com. And he's written a book called "The Simple Path to Wealth." And he was really who introduced me to the idea of index investing. And he considers John Bogle one of his heroes.

And I started reading his stuff and I started reading Mr. Bogle's work and getting into the bogleheads community. And so that was super valuable to me. And then there's just a couple bloggers that were kind of out there in front of me. Todd Tressiter, who writes at the blog Financial Mentor.

And my partner now at the blog Can I Retire Yet is Daryl Kirkpatrick. And I think a lot of people don't even maybe consider those two as part of the FIRE community 'cause they're a little bit older and a little bit further out ahead. But Todd really was the first person I heard talking about, you know, it's not about retirement.

And, you know, he called it the pro-leisure circuit where maybe you're gonna go out and whatever it is for you, hiking, skiing, traveling. And, you know, it's gonna be great for six months. And then you're gonna get bored and what are you gonna do next? And for Daryl, my partner now, he just kind of was more even keeled and not extreme and not all about optimization and frugality, but instead like about what really matters to you and how do you design that.

So all of those people and many, many more who've now come behind them and contributed their own stories have all really contributed to the book. And when I started writing, I thought that was the story. I thought that was the book. So all of those people were tremendously influential on my journey and putting that message together in the book.

- Your two authors, Brad and Jonathan, have a podcast called Choose Fi, which has been extremely successful. And a lot of the information in the book comes from those podcasts. - They've done a great job at bringing in a lot of voices. And I originally thought that the book really was kind of collecting these original thought leaders and their ideas.

But what Brad and Jonathan have done a great job of doing is bringing in a lot of different voices and a lot of different perspectives and learning from many different people. And then the other thing, even bigger than building the podcast, they've really built a community. So like when I was starting, we talked about like I was saving 50%.

And I knew I wanted something different, but I didn't know how to find other people on a similar journey. And what they've done is they've created first a Facebook community, and now it's turned into these Choose Fi local communities. So like I'm in the Salt Lake City area and every month we get together.

And it's just a community of people, of like-minded people who you can support one another and learn from one another. And that's just so valuable when you're trying to do something that's so different from what you're seeing every day. And I think that's just tremendously life-changing to have that support group and people can find them wherever they're at in the country and kind of build it into whatever you want it to be.

And having a place where people can go and meet up on a local level and support one another, it's phenomenal. - The book is called Choose Fi, Your Blueprint to Financial Independence. Chris, Brad and Jonathan did a fantastic job with this book, highly recommend it for everyone. I learned a tremendous amount and I've been around for a while and I've read a lot of books.

And sometimes when you pick up a book, you think you're gonna read the same old things over and over again. I'll tell you, I learned an awful lot from your book, Chris, and I really appreciate you being on the show. - I really appreciate you having me, and that means a lot coming from you.

So I'm quite honored to hear that. - This concludes the 14th episode of Bogleheads on investing. I'm your host, Rick Ferry. Join us each month to hear a new special guest. In the meantime, visit bogleheads.org and the Bogleheads Wiki. Participate in the forum and help others find the forum.

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