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What Was Your Financial Epiphany?


What was your financial epiphany?Last week, Tawcan shared his 7 phases of retirement with us. His first phase, the financial epiphany, struck a chord with me. It is so easy to get caught up in the rhythm of everyday’s life. We get up, go to work, come home, enjoy the weekend, and start it all over again. Most people repeat this cycle until they reach retirement age. If they have good financial habits, then they’ll probably be fine. However, if they spend more than they make or ignore retirement saving, then they will be in trouble when they’re suddenly 65. We all like the regularity of a rhythm and it takes a jolt to get out of our routine. If you’re reading Retire by 40, you probably had a financial epiphany at some point. Something must have made you realize that you want to retire early because Retire by 40 is not a mainstream concept. What was your financial epiphany?

Epiphany:  A moment when you suddenly feel that you understand, or suddenly become conscious of, something that is very important to you

My Financial Epiphany

First a little bit of background. My family immigrated to the U.S. from Thailand when I was 12. My dad was an entrepreneur and my mom was a college professor. When we moved here, the only employment options for my parents were minimum wage jobs. They made enough to pay the rent and feed the family, but they couldn’t save much because the minimum wage jobs were not stable. Eventually, they purchased a small Thai restaurant and were able to generate more income. We lived frugally for many years, but it wasn’t a big deal because we were happy for the most part. From that experience, I learned that you don’t need a lot of money or material things to be happy. I’m still thankful that my parents were educated and knew working for minimum wage won’t get them anywhere.

After college, I started working full time and my income increased from a few thousand dollars a year to quite a bit more. By that time, frugal living was already an ingrained habit and I never spent more than I made. I also started investing in the stock market early. My dad convinced me to save in my 401k when I started working. After a few years, I maxed out my 401k contribution and my retirement account has been growing ever since.

Mrs. RB40 and I got married in 1999 after she came back from her stint in the Peace Corps. She was frugal, too, so I lucked out there. Her family struggled financially when she was young and she was used to living modestly. We kept our expenses moderate and never had any consumer debt except for the occasional auto loan. We splurged every so often, but we never spent more than we made. Here are some splurges we made in our 20s.

  • Annual international trips. Traveling is so much fun when you’re young. I encourage everyone to travel while you can.
  • A used BMW Z3. I loved driving around in a convertible, but I hated the luxury car repair and maintenance bills.
  • My ukuleles. I had a dozen ukuleles at one point. I sold off most of them and recouped a good portion of the cost so I say musical instruments are okay to splurge on, too.
  • A few pieces of artwork.
  • We went out to nice restaurants occasionally. The most expensive meal we ever had was at Thomas Keller’s French Laundry in Napa Valley. I think we spent around $500 for dinner, wine, and tips in 2003. It was a great experience, but I’d balk at spending that much for a meal now. The prix fixe menu currently costs about $320 per person after tax and tip. I’d double that budget if you like wine. I guess we were lucky to go then because I’m not sure I could stomach paying $1,200+ for a meal now.

We were doing well financially and steadily building our net worth in our 20s and early 30s. Mrs. RB40 went back to school, got her Master’s degree, and started a career in HR. On the other hand, my work situation was slowly deteriorating. The job was getting more stressful and I liked it less and less. Also, Intel was having massive layoffs every few years. I was still getting good reviews so I escaped round after round of layoffs. Then in 2009, my direct manager got the axe right before Christmas. He was a good guy and I liked working with him. He didn’t perform any worse than other managers. He was laid off because his manager didn’t like him for some reason and the group needed to meet the attrition goal. This showed me that anyone could get laid off. Even if you do good work, you need to kiss ass or else you’d get on the layoff list sooner or later. It’s probably better in smaller companies.

That was the beginning of my financial epiphany. The economy was still struggling so I was biding my time at Intel. I sent out few resumes, but nothing really panned out. We tightened our budget and saved as much as we could. It was around this time that I really got into personal finance. I didn’t like my job so I read a lot of personal finance blogs and other financial sites when I was on the computer. Soon after, I found out about financial independence and it called to me. It was in the fall of 2010, when I told Mrs. RB40 about my idea to start a blog about early retirement. She was pregnant at the time so she did not like it one bit. She came around, though.

Christmas 2009 to July 2012 was the toughest period in my life. I totally lost interest in my job and my mental and physical health deteriorated. I knew I had to find a new employer or try early retirement. By July 2012, I’d been blogging about early retirement for almost 2 years and I figured a partial retirement would probably work out. That’s when I handed in my two week notice. We saved and invested from the beginning of our career so we had a good foundation to work with. The last few years were spent paring down our expenses and saving as much as we could. In essence, the bulk of the hard work was done from 1996 to 2010. The last two years was just putting together the finishing touches.

What was your financial epiphany?

So that was my financial epiphany. The catalyst for my early retirement came from my manager’s lay off. It made me realize that any corporation won’t have my best interest at heart. They only care about the bottom line and the easiest way to boost the stock price is laying people off. I had to look out for myself and my family. Luckily, our finance had a good foundation and it only took a few years to get our ducks in a row.

What was your financial epiphany?

Image by Viktor Hanacek

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 61 comments… add one }
  • Matt December 23, 2017, 1:04 am

    My parents had drilled frugality into me from a young age, but my financial epiphany came when I was age 21 on benefits sharing a 2-bed flat with three other people (all on benefits) – one in each bedroom, and a couple sharing the living room. I remember vividly watching the fleas on the carpet – Yuk! I was good with numbers and curious, so I worked out that we all paid £50/week via housing benefit. 4x£50×52= £10,400 per year. At the time the flat was worth about £24,000. It took me about half a second to realise that my future lay in property investment.

    I looked at the local paper and saw the highest paying job was accountant, so started a degree in Accounting and Finance asap, then started training as a Chartered Accountant. One of the first new skills I used was make a cash flow forecast… As soon as I was earning I bought my first house with a like-minded friend. My take-home pay was £525/month and my half of the mortgage was £495. We did all the repair and conversion work ourselves and got students in paying a term up front, and saved like crazy. By the start of the next academic term we were ahead, and the students paid in advance again, and so on. I was made redundant and I joined the Fire Brigade like my friend, so I was working 2 days and 2 nights on an 8-day cycle. This gave us lots of time to concentrate on property. Two years later we had saved enough for a deposit on a second house and repeated the process. 18 months after that came the third, and 12 months later came the fourth. We stopped buying when we had about 20 properties, striking a balance between money and free time.

    30 years after watching those fleas, the properties are worth about £6M, with less than £2M mortgages. My own mortgage was paid off before my 40th birthday, and my wife and I have £700k in ISA’s and SIPP’s, plus my final salary pension scheme. I still enjoy the Brigade, but I’m right at the point where I’m seriously considering pressing the ‘EJECT’ button.

    • retirebyforty December 24, 2017, 8:44 am

      That’s a great story. Thanks for sharing! Real estate is a great way to become wealthy. It seems more difficult now, though. The price is so high everywhere. Great job!

  • Mysticaltyger June 2, 2016, 11:33 pm

    I came from a middle to upper middle class family that lived conservatively. Paid cash for new (but not fancy) new cars and drove them until they weren’t worth fixing. Lived in the nice enough neighborhood, instead of the one we were “supposed to” live in based on our income. Parents saved money and stressed the importance of avoiding debt, other than a modest mortgage.

    ^^I thought everyone shared the above financial values. I found out how wrong I was when I got into a relationship with someone who didn’t. That was an epiphany that lasted 6 years from my late teens to early 20s. After I got out of that relationship, which included several brushes with near homelessness (amongst other things), I made up my mind that I would never, ever let that ever happen to me again. That was over 20 years ago and I’ve kept that promise to myself.

    The rest–corporations not caring about employees, etc. was just obvious to me. I mean, even if they did care, no one can care about your life and your money as much as you do. It just seemed obvious to me. I always like the idea of having money, even when I was a kid. I understood the more money I had, the less I needed to work. I really didn’t enjoy work, so avoiding unnecessary spending and saving the difference always came naturally.

  • CentSai May 27, 2016, 8:53 am

    Wow, really cool post. Thanks for sharing your financial epiphany. These realizations are very important as they help you and your finances. CentSai.com wants to help people realize their financial epiphanies through personal stories about finance so check it out.

  • Sarah Li Cain May 25, 2016, 8:26 pm

    My financial epiphany was actually three years ago, when I was unemployed for almost a year. I realized I had no reason to be stressed out because we had some investments and had enough of a stash that my husband and I could cover our expenses and more for about 18 months. I realized that I didn’t want to rely on an employer for a job, and now that I’m in a pretty toxic work environment and have a young son, I want to be more than ever be present for when he’s young and growing so fast. I don’t want to worry about toxic work situations, working for a paycheck, and to be able to just live a modest and abundant life.

  • PatientWealthBuilder May 25, 2016, 7:40 pm

    First of all – great post and great question to get a good conversation started. I’m really intrigued and learning from reading all these responses.

    I think I had an epiphany when the blacksmith on the farm I was working on when I was 13 explained stock option trading to me. I went and bought a bunch of books and read all about options and in two more years opened my own brokerage account (with my dad).

    I then had another one when I was working on an asphalt construction crew and had a series of injuries. I realized that I was making almost minimum wage, putting myself into danger, and had no future. I realized I needed to work hard and go to school so I could have a different future. The main reason was that I realized I couldn’t succeed in that line of work as I didn’t have the drive and passion that some of the others did. Glad I found finance!

  • Pia @ Mama Hustle May 25, 2016, 12:23 pm

    My financial epiphany was pretty recent, but like other commenters, it sort of happened in stages.

    My first real job out of college, I didn’t negotiate my salary at all. However, I learned so much at that job and figured out what I wanted to do, and came up with a plan to negotiate a salary in line with that position, even though it was a 50% bump from what I was making. Then, I went after the job, and landed it, complete with the raise. (Financial epiphany 1: Negotiate for the market value of your position.)

    Then I realized things would continue to be tight until after our kids were in public school (since I had already planned to keep working, and therefore have full-time daycare expenses). We had initially planned to invest in a college education for my husband, but instead decided to invest in my MBA. Around the same time, my dad (my previous financial role model) revealed some more about his financial state to me, and I began to realize that a lot of the ideals I held around money were based on accumulating stuff rather than true wealth. (Financial epiphany 2: Fancy cars don’t pay your mortgage.)

    Ultimately, I continued to invest in my education not just at school, but also on the job. Once our company was acquired, I realized I was in the perfect position to go elsewhere and aim for another 50% bump – and got it. (Financial epiphany 3: Aiming way outside of your comfort zone pays… Literally.)

    Then, at the beginning of this year, I finally felt like I was in a place where expenses were going to go down (our son starts kindergarten in the fall), but I realized that I’d never learned anything about hanging on to money… And our credit card debt proved it. So, since the beginning of the year, I’ve been educating myself about how to truly build wealth, save more money, and pay off debt. (Financial epiphany 4: It’s not only how much you make, it’s also how much you hang on to.)

    Since I’m only 25, I can only imagine what kind of financial epiphanies lie ahead! I’m glad that I made the mistakes I’ve made with smaller amounts of money and relatively early on – I should be able to get us on track to a successful financial future!

  • Michael @ Financially Alert May 24, 2016, 10:07 pm

    Joe, nice to hear your story and your thought process along the way. It’s impressive that you defined what you wanted and executed quickly (that must be your engineering mind, right?).

    I think for me there were at least a few epiphanies over a couple decades. The earliest came when I was just a young boy (~7 years old). I saw an Uncle do very well as an entrepreneur and forge his own path. He built his first business from the ground up with minimal capital and eventually built a mini-empire that was doing over a billion in revenues. Realizing the possibilities for entrepreneurs early on, I always wanted to forge my own path even at that age.

    My most recent epiphany was realizing that I was able to take an early retirement and extract the essence of life by spending more time with my family on a daily basis. I had always envisioned building a larger NW before exiting, but I realized that spending time with my children when they are little is a much more important investment than accelerating my next million… that can come along the way, and I’m in no immediate rush.

    • retirebyforty May 25, 2016, 7:03 am

      You had a great role model. My dad was an entrepreneur, but he wasn’t very successful. It was a big struggle for him.
      I agree with you about taking time off to spend with children. They grow up so fast. There will be other opportunities in the future.

    • PatientWealthBuilder May 25, 2016, 7:31 pm

      Michael that is a really interesting comment about wanting to spend more time with family vs. pushing for the extra million or so. I think there is a balance there that I’m working on finding as I am earlier in my journey and pushing hard to get up the saving curve.

      • Michael @ Financially Alert May 25, 2016, 10:21 pm

        PWB, balance is the key to living a fulfilling life IMHO. In your younger years (which it sounds like you’re in), there’s no issue going for it ALL! Work as hard and intelligently as you can at this age and save enough along the way to have options later on. Financial freedom is as sweet as it sounds… you’ll see!

      • PatientWealthBuilder May 27, 2016, 4:15 pm

        Thanks for the advice – looking forward to it! I don’t mind working hard, and I am trying to make sure I’m working smart.

  • Josh May 24, 2016, 7:18 pm

    Why did your folks move to U.S when your folks already had good careers in Thailand only to work at minimum wage jobs? Most people move for better opportunities, but it sounds like your family had a better life in your native country. Also, you shortchanged yourself by resigning after long years of service. Most companies will allow long term employee to workout a voluntary leave with some sort of a severance as long as the separation isn’t due to some misconduct.

    • retirebyforty May 25, 2016, 7:00 am

      My dad’s business was bankrupted so he thought he’d start over in the US. I tried to get a severance, but it wasn’t an option at the time. I’d had to wait until the voluntary separation plan comes up. I couldn’t wait any longer. It worked out so I’m not complaining too much.

  • cato May 24, 2016, 1:28 pm

    In 1981 I was eighteen years old, three months out of high school, no direction, parents long divorced, dad kicked me out of the house and moved to Mexico. I was homeless. I had a 1977 Toyota Celica, $200 cash, and some clothes. That was it. I floundered for about six months living on the streets. Then a friend let me sleep on his living room floor for a couple of months. I got a job digging ditches on a landscape crew. The homes we were working on were gorgeous. I wanted to live that way. My epiphany came one day while on a lunch break a few years later. I was reading a discarded WSJ. The S&P 500 was on a nice upturn in 1983-84 period and there was an article highlighting Peter Lynch who was head of the Magellan fund at the time. His communication style is so opposite most Wall Street clowns. He uses language and concepts that talk to regular investors not down at them. I was inspired and I was sick of living like a poor slug. I dedicated myself to stabilizing my life, generating steady income, getting back into school and getting an MBA, teach myself about personal finance and financial markets, and start getting involved with my own future. Fast forward 30 years later and here we are.

    • retirebyforty May 24, 2016, 2:58 pm

      Thanks for sharing. Great job taking charge and turning your life around. A lot of people in that position would have gotten stuck.

  • Our Frugal Escapades May 24, 2016, 11:57 am

    Like you, our financial epiphany came the day we suddenly realized that we didn’t want to be working our 9-5 jobs. As we stated on our about page, we grew tired of the rat race and being stuck in a cubicle. We continue to work hard so we can achieve FIRE and leave all this behind us for good!

  • Tyler @ I Am The Future Me May 24, 2016, 10:33 am

    A few years ago I was in essence fired from my current job (HR technically did fire me, but someone above me fought and made it so I kept my job). This was a job I had for years and was very good at. One that I had made my company a lot of money, brought in more contracts than most others and fixed more problems then most could. And they were so willing to let me go over something that was so small it was ridiculous. It was then for me that I decided I needed to have more options, I needed to have something that would enable me to continue to make money even if I didn’t have the job I had then and still have to this day.

    Even though I didn’t lose my job, it was enough for me to know I need to have things in place for the day I do lose it, even if the day never comes.

    • retirebyforty May 25, 2016, 6:55 am

      That’s crazy. Companies make terrible decisions a lot of time.

  • Fred May 24, 2016, 7:49 am

    My epiphany was not such a big deal, but doing a budget and seeing $300 a month go for miscellaneous was an eye opener. Then I got a PC and to be able to do projections and draw graphs helped me to really “see” what needed to be done. Now my finicial advice is to “do the math.”

  • David @ Thinking Thrifty May 24, 2016, 6:55 am

    When the second landlord in as many years sold the flat I was living in from under me. It was at that point that I thought to myself, i need to get a grip of my finances and save for a mortgage deposit. 3 months into the £5,000 saving challenge I had set myself I realised just how much money I had been blowing. I sat down again to make a new plan, this time to retire in 15 years time!

  • Linda May 24, 2016, 1:51 am

    My epiphany came about in 2007 when I realized I was in debt about $50k and only worked at a job that paid $35k. I was shocked when I added up all the debt that was in my name. I had made a lot of stupid decisions and was dating a guy that only helped contribute to the growing amount of debt. It took a while, but I slowly turned my life around and got it on the right track again. Now I’m only 10-15 years away from early retirement.

    • retirebyforty May 25, 2016, 6:56 am

      Great job turning things around. Your debt was getting out of control. Good luck on your journey.

  • The Personal Economist May 23, 2016, 5:41 pm

    Thanks for sharing. Geez $320 for dinner – eek. I lucky my husband is not materialistic so doesn’t mind being frugal. Plus he is an excellent cook.
    Not sure it was really an epiphany of such for us. I enjoy my job and although I’ve been laid off (during the GFC) now I have enough money not to stress about it if it happens again.
    For us, I think it was more having shared goals like buying a house, having passive income streams and structuring our lives to maximise time with the kids.

  • Tawcan May 23, 2016, 1:56 pm

    I’ve wrote a little bit about my epiphany on my blog but maybe one of these days I should expand it a bit more. It’s funny you mentioned Intel because they’re having round and round of layoffs again.

    It’s great having an epiphany, because without it you’d just be doing the same thing still. Life is always good with a change. You may feel nervous about this change at the beginning but eventually you’ll get used to it and strive.

  • Eric Bowlin May 23, 2016, 1:51 pm

    I was in grad school studying for my PhD. Someone knocked on my door around 8 or 9 o’clock at night. What the…?

    It was one of my tenants paying me rent from my newly acquired rental property. I sat down to finish watching a movie. I realized at that moment I would never pursue a career and would instead be focused on real estate. It wasn’t long after that I left the program, gave up the pursuit of life as a professor, and got into real estate 100%.

  • Anna May 23, 2016, 12:14 pm

    For me it was a few things. I grew up with very hard working parents. We lived a very frugal, responsible life style.
    My husband and I went through some unexpected bumps financially and job wise, right before we got married. In some ways it was great timing. It forced us to be more reflective of our priorities. Due to some negative work experiences, we learned quickly that the work place and job market can be an unkind place — you have to be prepared for anything and look out for yourself.
    We cut it close several times while living pay check to pay check. It was a terrible feeling. We decided we didn’t want to continue down such a path. Since then we’ve tried to become more financially educated. We still have a while to go to get some of the basic stuff in order, but I’m really glad our eyes opened early on.

  • desidividend May 23, 2016, 11:57 am

    My dad made sure we get good education back in india.Luckly we always knew value of money ,so we were not into spending too much. But what really got me into this financial path is see if we can do the early retirement. Reading all these blogs convinced the idea of money working for us.I knew in us that there no longer the concept of job security.every year our company had layoffs and knew that I should have some second source of income.

  • Investing Pursuits May 23, 2016, 11:09 am

    My financial epiphany didn’t come until 2010. I was working temporary labor jobs and getting no where. I had a main job M-F, another job for Sunday’s and on call M-F for any job that would come up. I have no investments. So I woke up one morning and said to my self, “I do not want to live like this anymore”. So I took action and started to become an investor.
    My father made more money in 1999 as a coal miner than I ever did, with inflation taking into effect.
    There is no such thing as job security these days. In Alberta, tonnes of people are losing their homes as they were laid off in the oil patch. The EI that they will receive will not cover a monthly mortgage payment in a lot of cases.

  • Jason in Vancouver May 23, 2016, 11:06 am

    As I commented in Tawcan’s post, I think my epiphany occurred just by tracking our finances and understanding our financial situation better.
    However, I do relate to an environment of cold corporate business decisions as my company has gone through various rounds of layoffs over the years. It’s provided me with more motivation and desire to “hit my numbers” if just from a financial security perspective.

    • retirebyforty May 23, 2016, 10:04 pm

      Tracking your finance is really the first step to financial independence. Great job.

  • Fiscally Free May 23, 2016, 10:36 am

    I think my epiphany came in two parts. The first was when I learned my job was moving from southern California to Michigan and the company didn’t really care about me. The second was when I was reading Mr. Money Mustache and realized I could probably retire like him if I made just a couple changes.

    • retirebyforty May 23, 2016, 10:03 pm

      Nice. MMM is a great example. His cost of living was very low and they still live comfortably.

  • Jeff V May 23, 2016, 9:59 am

    Good question… I am not sure what would be a specific financial epiphany, rather than just a gradual process.

    My wife and I graduated college in 2001 with engineering degrees and a combined ~$90k in student loans. In retrospect, our biggest financial mistake was buying a house, rather than committing to killing off the loans.

    We bought the house, and carried on, not able to save much. We got master’s degrees, which were paid part out-of-pocket and part by our employers. Soon after, our first daughter was born.

    We couldn’t afford for one of us to stay home, especially since both of our employers were unstable (restructuring, bankruptcy, layoffs, etc). Daycare then added a “3rd mortgage payment” (Student loans, daycare, and the actual mortgage).

    Around this time (2006) I started looking for alternatives. I had become interested in personal finance along the way, reading a lot and connecting with folks online. Eventually, I decided to do something completely different, and pursue a PhD in finance. I liked the idea of teaching finance, and felt a teaching position would be more stable than what I had experienced in engineering.

    Unfortunately, the program I joined wasn’t what I expected, and I had to leave it after the first year. Fortunately, my wife and I were able to return to our old jobs. SO, we went back to our old life, also with a second child.

    After recovering, we decided (in 2009) to crack down and pay off all the student loans still outstanding. Also, we had two car leases ending, so we needed two new-to-us used cars. Over the next two years, we bought the cars and paid down ~$60 k of loans. (We had been paying as little as possible on the loans, plus we had stopped paying when we went for our master’s and my PhD. So they had hung around a long time!)

    So, in 2011, we were debt free, other than the mortgage, and saving as much as we can ($40 – $50 k) each year to 401k, Roth IRA, and 529s.

    Now, I have been restless for a while that I want to do something different, but I don’t know what. I was laid off from my job in 2014, and started a new one a few months later as contract. It has been almost two years, and I am hoping the contract becomes permanent. I am conflicted as well, since some days I am bored.

    If I were to do something completely different, I would become a financial planner. The main reasons I haven’t pursued that yet are:
    a) Giving up my current income. Even on days I am bored, engineering pays well.
    b) the time and cost of CFP education
    c) Not wanting to start over
    d) Fear that I will be bored of this within 5 – 10 years.
    In summary, there wasn’t one epiphany, just a steady progress. And now, figuring out what I want to do next.

    – Jeff

    • retirebyforty May 23, 2016, 10:02 pm

      Good luck. I would cut back and save even more. That will give you some choices when there is another cut back at your work. It seems like layoff is inevitable when it comes to engineering jobs. I briefly considered CFP as well. I didn’t think it was that expensive to get certified. I looked at it a while back, though.

      • Jeff V May 24, 2016, 11:17 am

        Yeah, we try to save more. Medical costs are a big hitter this year. Premiums and deductibles are high this year, and we will hit the deductible, since my daughter has had weird stomach issues. I’m glad we can afford it, but I would like to save more.

        I compared my expenses vs “Future Early Retiree” expenses from a Mr Money Mustache article here:

        The biggest differences were in child care and medical (His example has an unrealistic $0 of medical expenses!). Our mortgage payment is much less, but our property taxes much more in western NY. I could go into more detail, if you are interested in a reader’s budget analysis.

        – Jeff

  • Fred L May 23, 2016, 8:51 am

    My first financial epiphany came about a year after starting work at your former employer. My wife and I were both engineers, making a combined mid 6-figure salary. But we had two nice cars (nice meaning new Fords, not Audis), a $1200/month apartment, shedloads of student loans, and we were living a premium lifestyle. As soon as I started tracking our net worth I realized that despite our two-engineer salary we were still in the red and not making financial headway very quickly. We quickly reversed course, moved into a smaller $600/month apartment, and started plowing our income into debt repayment and savings.

    Fast forward 20 years; we’re still a couple mid-level engineers but have built our net worth to a mid 7-figure sum on the back of living well below our means.

    I’m at the beginning of my second financial epiphany. Over the years as our salaries increased, so did our standard of living. We still live well below our means, but our means increased substantially. Now single again, I’m just starting down the path of tightening the belt a notch, and adjusting to income dropping by 2/3 and less job security at The Corp.

    I’m putting into place the plans for this, but they involve basing my expenses on roughly 3% of liquid net worth, and saving everything else. That low withdrawal rate and high savings rate should give me enough to live on in perpetuity even if I find myself suddenly unemployed, and the the size of the nut should increase rapidly which equates to a fairly predictable “raise” every year.

    • retirebyforty May 23, 2016, 9:56 pm

      It’s great that you figured it out early and were able to build your net worth.
      It must be tough being single again. I can’t imagine what I would do. Good luck with your plan. It sounds like you’re well on your way.

  • freebird May 23, 2016, 8:42 am

    For me it wasn’t one big thing but rather a combination of several factors that first led me down this path. I had inklings back in grad school that I’d rather be a professional student and didn’t want to join the work-a-day world. After hiring into a megacorp, the nature of my early job didn’t fit very well because I had stupidly asked for a management training track ill-suited to my personality. Then the big push came with the layoff waves a few quarters later. With all these issues I knew I needed a high savings rate, so I maxed it during my early years.

    If there was a revelation moment, I guess it was reading that 1991 Money mag article about the Ter Horsts. It never dawned on me that my target could be that close, mainly because maxing savings also means living tiny– and having a proportionally closer finish line. So even though things were lightening up at work, and I was starting to enjoy parts of my job, I kept up my high savings rate to cross the finish line pretty much at the same age as they did.

    At that point our paths diverged– they quit to travel the world and I stayed on at my regular job, which perhaps because of my ability to stop anytime, became far less stressful. I felt freedom to do just the interesting bits and to blow off the parts I didn’t enjoy– and doing this actually improved my performance as our new mangement regime encouraged us to specialize and become co-dependent on team members. This mutual trust atmosphere replacing the dog eat dog arena that I originally hired into totally changed my view about work. In retrospect ER prep probably saved my career.

    But as they say “enjoy it while it lasts because it never does”. Some day, maybe soon, the old ugly environment will return, and I’m ready to leave Dodge when it happens.

    • retirebyforty May 23, 2016, 9:53 pm

      The Ter Horsts have a great story. They have been traveling and enjoying life for a long time. It’s nice to see a real world example. Great job creating your own little pocket of reality. I think that’s the ideal way to work.

  • Mike H. May 23, 2016, 7:05 am

    That’s easy. When I started working in the retirement industry years ago, I very quickly saw how much could go wrong, and more importantly, how easily a retirement financial plan could fail even if you did everything right!

    That, and a family medical incident, made me determined not to have to rely on The System in my old age.

  • Dividend Growth Investor May 23, 2016, 7:02 am

    The epiphany I had was when one of my parents was laid off, despite dedicating a decade of working nights, weekends, holidays for their employer. As a person I am very loyal, but unfortunately I expect reciprocation, which is a dumb thing in today’s world. This happened when I was a teenager, so unfortunately it left a big impact on me. No matter how hard you work for an employer, if your manager decides to throw you under the bus, they will. If there is a quota to assign layoffs or bad reviews, noone is safe.

    So I have learned to take good care of myself, and keep building diversified streams of income. This has provided with the strength in knowing that if I were laid off, I would still have dividend, interest, other income to put food on the table.

    • retirebyforty May 23, 2016, 8:07 am

      Did the layoff created hardship for your family? Corporations are heartless.
      Great job building in a safety net for your family. You can’t depend on others to do it for you.

      • Dividend Growth Investor May 23, 2016, 1:52 pm

        My dad kept his job, but my mom found another job that paid much less unfortunately. So no real hardship, just sucks hearing that a loved one is thrown under the bus.

        The main downside was that I had to pay for my own college tuition by working after school and during summer and winter breaks. Which is probably a good thing in hindsight, since I realized how valuable each dollar is. Though I am more stubborn, and usually ignore people who tell me I am doing things wrong ( which could be good and bad)

  • Justin May 23, 2016, 6:37 am

    There have been a few epiphanies along the way. The biggest one was realizing I have all this money left over after paying the bills and that the extra money can be put to work to eventually fund an early retirement.

    It was a paradigm shift from focusing on making enough to pay bills to focusing on keeping the surplus large enough to turbocharge the savings for early retirement.

    • retirebyforty May 23, 2016, 8:05 am

      Nice. Your cost of living is so low. It is envious.

  • Mr. Tako @ Mr. Tako Escapes May 23, 2016, 6:17 am

    Great story Joe. Thanks for sharing it.
    My financial epiphany came after a job loss. It was actually my first job out of school. The crash of 2001 cause the small startup I was working at to collapse. Everyone that worked there lost their jobs. I didn’t have much saved because I was just out of school. I still had a bunch of student loans and a car loan at the time. Lots of debt and no way to pay it.
    This was enough to get me to start studying personal finance seriously. I learned to live on very little.
    Despite the hardships over the years, I consider myself quite lucky. If that incident hadn’t happened, I doubt I would have been able to retire early at age 38.

    • retirebyforty May 23, 2016, 8:04 am

      We had a massive layoff then too. It seems like Intel was laying people off every year. Doesn’t seem like a good way to do business. Sometime it takes an incident to wake us up. Great job being able to retire early in just 15 years!

  • Buckeye Nut May 23, 2016, 5:09 am

    At a young age my Dad told me that it was not enough to earn money, I needed to make it work for me. I ended up working in automotive and as soon as my wages allowed it I maxed out my 401K. Early retirement was not an objective; I had a penion plan.

    I had a long commute and the work was demanding and stressful. We had a cyclical indsutry and RIFs seemed perpetual. Once we had young children I was unhappy with how much time and life energy my job was sucking out of me. A few times I tried to participate in a RIF, but was swayed otherwise. Finally, the stars aligned and I was able to obtain my walking papers.

    When I left work, my husband and I assumed I would have to go back to a corporate job. After obtaining freedom I was very depressed about going back to work (especially with young children). I started reading all of the financial blogs. With the help of MMM readers, we had an epiphany – we were financially independent (just barely). A part-time job did fall in my lap – it gives us just enough to not touch our savings and splurge on the travel we love to do.

    • retirebyforty May 23, 2016, 8:01 am

      Great job saving up early in your career. I didn’t plan for early retirement when I was young, but it just worked out.
      Congratulation on making it work. Working part time is a great lifestyle. I wish more people would realize that.

  • The Green Swan May 23, 2016, 4:53 am

    My first financial epiphany came when I was just a few years out of college and the financial recession hit in 2008. Many were laid off and I was fortunate to keep my job. That is what spurred me to go back to school and get an MBA to make sure I continued to be valuable for my employer and also to advance my career.

    I’d say my second epiphany came just a few years ago when realizing that I had the ability to retire early if I kept up with my high savings rate and that I didn’t want to work ~40 years before hitting normal retirement age. I’m still on the path to retire early, just chugging along hoping to reach Financial Independence in a ~5 more years.

    • retirebyforty May 23, 2016, 7:57 am

      That recession was rough. Many of my friends got laid off and it contributed to my anti-corporate sentiment.
      Great job with saving a high percentage of your income. Keep at it!

  • Apathy Ends May 23, 2016, 4:51 am

    When I realized that I was paying over 5k in student loan interest every year and would continue paying on my loans for 10-15 more years if I didn’t get it figured out.

    • retirebyforty May 23, 2016, 7:56 am

      At least you realized it quickly. 🙂 How long would it take to pay off you loans?

  • John C @ Action Economics May 23, 2016, 4:25 am

    About 8 years ago I took a temp job working on a scaffold building crew. Several of the guys I was working with were in their 50s and 60s and had numerous health problems from working a physical job all their lives. Most of them had constant aches, usually in their knees or in their backs. Several of these guys also mentioned in passing conversation that they needed to work at least X more years, often 10 – 15 years.

    This job showed me that even though I like the type of work I do, the odds of being physically able to do it without it taking a massive toll on me for my entire life are not good. I needed to plan better to ensure I wouldn’t be working a job that causes me great physical pain because I had to options in my 50s and 60s. There’s also no gaurantee that even with 30 years of experience employers are going to want to hire guys in that age range to do “a young man’s job”

    • retirebyforty May 23, 2016, 7:55 am

      Sounds like it is tough for older manual laborers. Hopefully, most of them can get good social security benefit.
      Even office jobs are physically demanding now. I had plethora of ache and pain when I was sitting in a chair all day long. It seems employers are getting worse at ageism. Or maybe it’s more noticeable because I’m a bit older now.

  • Financial Samurai May 23, 2016, 4:18 am

    My financial epiphany was when I was about 12 to 13 years old living in Malaysia. I saw very wealthy people alongside very poor people and I decided that I needed to study hard so I could get good grades get into a good college and not end up poor.

    I was a very bad kid growing up. My next financial epiphany was the first three months out of college. I realized I couldn’t last for 20 to 30 years working in finance so I had to save as much as I could to have options to leave early!


    • retirebyforty May 23, 2016, 7:52 am

      I never really notice the stark differences between rich and poor when I was young. Even poorer people seems to do fine when I was young in Thailand. You’re very smart to realize you couldn’t last 20-30 years. I didn’t know that until I was in my 30s. I’m a slow learner…

    • PatientWealthBuilder May 25, 2016, 7:28 pm

      that is really interesting Sam thanks for sharing. How did you end up coming over to America? I’m still wondering / hoping I can last for 20 – 30 years. We’ll see!

      • retirebyforty May 25, 2016, 7:35 pm

        I think his dad worked for the State Department and worked oversea a lot when Sam was young.

      • PatientWealthBuilder May 27, 2016, 2:18 pm

        That’s really cool. Lots of great responses here!

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