June 7, 2022

67 : Retiring Early to Focus on Philanthropy with FIREy Philanthropist - Part 1


Welcome to the Mindful FIRE Podcast, where we explore living mindfully on the path to financial independence and beyond.

On today's episode, we're doing something a little different. We're having our first anonymous guest, FIREy Philanthropist.

This guest wanted to remain anonymous because they practice stealth wealth, which means they don't tell their neighbors, friends, and really anyone outside of a close group of friends that they're rich and have retired early.

FIREy had a lot of great wisdom to share from his experience retiring early and we chatted for almost 2 hours. I have edited our conversations into two 45 minute episodes.

The first part, this episode, focuses on his journey to retiring early from a 21 year career in tech in his early 40s, how he made it happen, what was the experience like and what’s he up to afterwards.

I really enjoyed this conversation with FIREy Philanthropists and I learned so much about the ins and outs of financial independence, how to know when you're at the point where it's okay to retire early and to feel confident in that decision.

In today's conversation we discuss:

  • What things really helped FIREy Philanthropist to reach fire in his early forties
  • Acknowledging unearned privilege, its impact and achieving fire
  • FIREy’s thoughts on avoiding lifestyle inflation
  • How he knew when he had enough to retire early
  • How he knew when to pull the trigger and retire early.
  • What are you spending your time doing and what makes you happy in this post-fire life
  • Which causes FIREy Philanthropist dedicates his time, energy and money to
  • Volunteering as a tax preparer

Connect with FIREy Philanthropist

More from The Mindful FIRE Podcast

Books I recommend

Links and Resources FIREy Philanthropist shared with the Mindful FIRE community

  • How much of your company stock is too much?
    • "II general, keeping 10% to 15% of your wealth in your employer’s stock is where the danger zone begins. Other financial planners have even stricter rules."
    • "“If you’re dependent upon the company for a paycheck, health insurance and other benefits, you lose those because the company has a reversal,” Cody says. “And if you have most of your savings in that company you’re going to lose those savings, too.”"
  • How To Use the 0% Tax Rate on Capital Gains
    • "The 0% long-term capital gains tax rate has been around since 2008, and it lets you take a few steps to realize tax-free earnings on your investments.
    • Harvesting capital gains is the process of intentionally selling an investment in a year when any gain won't be taxed. This occurs in years when you're in the 0% capital gains tax bracket."
  • Mechanics Of The 0% Long-Term Capital Gains Tax Rate And Harvesting Capital Gains For A Free Step-Up In Basis!
    • Mechanics Of The 0% Long-Term Capital Gains Tax Rate And Harvesting Capital Gains For A Free Step-Up In Basis!
    • "For “lower income” individuals (like people that retire early) ... the Internal Revenue Code applies a 0% long-term capital gains rate "
    • "the potential for 0% long-term capital gains rates means that for those who are eligible, the best thing they can do every year is not harvest capital losses – the “typical” capital gains strategy – but instead to harvest gains! By selling investments that are up, and buying them back again immediately (without any wash sale rules to navigate!), the taxpayer can effectively get a step-up in basis on current investments without any (Federal) tax liability!"
  • Manage Vested RSUs Like A Cash Bonus & Consider Selling
    • Manage Vested RSUs Like A Cash Bonus & Consider Selling
    • "If your company gave you a year-end bonus of $100,000, would you use all of it to buy your company’s stock? Hell, no.”
    • “Yet, scores of our clients who own restricted stock units and work for Facebook or Google effectively have. You see, restricted stock units (RSUs) are taxed differently than stock options, and many employees who receive RSUs don’t understand the implications.""In the case of the RSUs, the reason for the (cognitive) dissonance might be regret aversion" "You fear the regret you’ll feel if the stock shoots up after you sell it. That fear may be outweighing your rational view that you should diversify your holdings. Regret aversion causes people to keep what is theirs."
  • Understanding The Mega Backdoor Roth IRA
    • "The Mega Backdoor Roth IRA allows you to contribute an additional $38,500 into an Roth IRA by leveraging the fact that some employer 401k plans allow after-tax contributions up to the current limit of $58,000.”
  • Mega Backdoor Roths: How They Work
    • "A backdoor Roth is a strategy for people whose income is too high to be eligible for regular Roth IRA contributions. You simply roll money from a traditional IRA to a Roth. There are no income or contribution limits — that is, anyone can convert any amount of money from a traditional to a Roth IRA”
  • Tax-Wise Charitable Giving: Donating Appreciated Assets
    • "Benefits from Donating Appreciated Assets What are the benefits of using this strategy? The qualified charitable organization of your choice can receive the full benefit of the appreciated asset’s current market value, while you may be able to save capital gains taxes of up to 15% or 20% on the appreciation.”
  • Benefits of Donating Appreciated Non-Cash Assets to Charity
    • "While appreciated non-cash assets often are the most tax-smart charitable gifts, not all charities have the capabilities to accept these gifts. Donor-advised funds, which are 501(c)(3) public charities, typically have the resources and expertise for evaluating, receiving, processing, and liquidating the assets. At Schwab Charitable (DAF), our donors are able to take advantage of the tax benefits associated with donations of appreciated non-cash assets. In fiscal year 2020, nearly two thirds of contributions were in the form of non-cash assets."
  • The Tax Advantages of Donor-Advised Funds
    • "By donating appreciated stock held for more than one year directly to a DAF—rather than liquidating it and then donating the proceeds—philanthropists can reduce their tax liability by eliminating capital gains tax, as well as reducing their marginal income tax.”

 

Disclaimer: This should not be taken as financial advice.

None of what we discuss in this episode should be considered financial advice. You should always do your own research and talk to professionals that you work with.

Having said that, I found it really helpful to get the perspective of someone who's traveled the path and reach financial independence and gave me a lot of things that I'm going to explore in my own research and with the professionals that I work with and I recommend you do the same.

Each Tuesday I release a guided meditation or inspiring interview on the topics of mindfulness and financial independence. Subscribe for future meditations and episodes!

Transcript

[00:00:00] Intro

Adam Coelho: Welcome to the mindful fire podcast where we explore leaving mindfully on the path to financial independence and beyond I'm your host, Adam Coelho and I'm so glad you're here.

On today's episode, we're doing something a little different. We're having our first anonymous guest FIREy philanthropist. This guest wanted to remain anonymous because they practice stealth wealth, which means they don't tell their neighbors, friends, and really anyone outside of a close group of friends that they're rich and have retired early.

in this conversation FIREy philanthropist, and I explore their journey through life and how they ended up retiring from a 21 year career in tech, in their early forties and we get into a lot of the technical financial details of how they made that happen, what they recommend to people early on their path to financial independence. and we also explore how they knew when it was actually time.

I really enjoyed this conversation with FIREy philanthropists and I learned so much about how to know when you're at the point where it's okay to retire early and to feel confident in that decision. You can find the full show notes for today's episode mindfulfire.org / 67.

While none of what we discuss in this episode should be considered financial advice. And you should always do your own research and talk to professionals that you work with. I found it really helpful to get the perspective of someone who's traveled the path and reach financial independence and gave me a lot of things that I'm going to explore in my own research and with the professionals that I work with.

And I recommend you do the same.

Let's jump into today's episode.

[00:01:47] Intrerview [00:01:47] Introduction

Adam Coelho: FIREy Philanthropist welcome to the mindful fire podcast.

It's great to have you here.

FIREy Philanthropist: It's great to be here. Thanks for giving me this opportunity. I'm excited about fire and I love that your blog is helping people.

Adam Coelho: Thank you for that.

So FIREy philanthropist, I'd love to have you start by sharing a little bit about your backstory, your journey to reaching financial independence and retiring early in your mid forties.

FIREy Philanthropist: Yeah, so I had a lot of privilege straight whites. I had two college educated parents. In elementary school. My parents were able to help me overcome dyslexia. I was held back a year and so they paid for private tutoring. And my parents helped me get summer jobs, or I kinda learned the value of hard work and persevering through challenges.

I was able to go into the boy Scouts and learn the joy of volunteering and having leadership opportunities. I was voted high school class presidents and the president of my computer club at university. And those leadership opportunities let me shine and learn things. And my private undergraduate school had small classes.

And so I was able to get to know professors who were able to give me great letters of recommendation, which helped me get into in graduate school and in graduate school. They took all of us to the premiere academic conference, where I was able to stop by the recruiting booth of a tech company.

And that led to more and more interviews and eventually working for tech. And once I got into tech for 21 years, I learned a lot about fire and volunteering. And I was able to retire about 21 years later. And now I spend my time volunteering and I practice stealth wealth which means I just don't tell most people that aren't retired and rich.

I answer their questions about what do I do as I help nonprofits.I'm on the board of multiple different nonprofits. And I love helping people and donating money, and that's why I call myself a philanthropist.

Thank you sharing that.

[00:03:41] Acknowledging unearned privilege, it's impact and achieving fire in your forties.

Adam Coelho: And, you mentioned at the outset that unearned privilege really played big part in your journey. And I can certainly relate to that being a straight white male as well. But most people don't talk about that. And so can you talk about why it's important for you to acknowledge that and really look at the impact that had on your path in life and to being able to achieve fire in your forties?

FIREy Philanthropist: I think as a philanthropist, I've learned that everyone has challenges. Everyone is unique and I had certain opportunities that other people did not have. I could have easily had dyslexia, like many of my friends in elementary school and dropped out of high school and we would not be having this conversation.

If I dropped out of high school, I only was able to succeed in life because people helped me. People went out of their way. Teachers went out of their way to help me. And part of that is just, my parents were willing to stand up for me and go to teachers and go to other places and say he , needs special help.

And that special help has made a huge difference and retiring in your forties is a privilege. And I just want to keep myself centered Sure. I worked hard. But most people probably work harder than I am in many cases. And so it's just a realization that I need to acknowledge that not everyone had the same opportunities as me and part of my role is to try to help more people.

And that's why I really do try to help a lot of people. So my friends and some of them, just people I meet to help them get the leg up that I got.

Adam Coelho: Thanks for going into that. I think that's really important to recognize. I enjoy a lot of privilege in my life.

A lot of people do and they just don't recognize that. And for me, I think that I'm still recognizing all the ways in which life has been really easy for me, a lot of people work a lot harder than me for a lot less money. And it's an absolute privilege to be able to not have to worry about that and to be able to recognize how and when and where I can, help others and make it so that more people can have the benefits that I've been able to enjoy.

FIREy Philanthropist: Yeah. And I think that lot of other success I've had is because of what I've learned and a lot of people just don't have those opportunities to get one-on-one coaching or helping with basic financial topics. We'll probably discuss today some more the advanced topics like mega backdoor Roth and spending rates and things like that.

But many people just need help with other basics. Like just what does a budget and how can I do my taxes to maximize my refunds. And so all of us can learn and we're all on a different journey. And I'm happy to just with where I am and trying to just make sure that I help other people get to where I am.

[00:06:26] What are the things that really helped you to reach fire

Adam Coelho: So let's talk about how you reached fire, so the path you described, bright getting the help you needed in elementary school, which helped you overcome dyslexia to be able to thrive in school and get into a good college.

And those opportunities allowed you to eventually end up getting a job in tech. But obviously as you did that, you started to make some money. And it sounds like, there were some things you learned that allowed you to save and invest in a way that ultimately allowed you to reach the point where you had enough money to achieve fire.

So I'd love to understand, what are the things that really helped you to reach fire?

FIREy Philanthropist: So in addition to just privilege, I think there were multiple things. And one of the first things is just, I minimized my lifestyle creep or lifestyle inflation, meaning when I got raises at work, I didn't go out and spend it on things.

I really just put my head down and said, I'm not going to enjoy life that much more if I buy all these items. So haven't spent a lot of money on items, but there are a few things I have splurged on. I haven't splurged on a car. I drive a modest 12 year old.

I have splurged on my home. I wanted house that really would make me feel happy. So I custom designed my own three bedroom house. It happens to be a double-wide mobile home, that's in a mobile home park because that's one of the few ways to actually live with not huge expenses for housing in the expensive San Francisco bay area.

And so I think I'm a frugal environmentalist. I probably buy fewer things than most middle-class people. And the year that I retired, I total spending was $42,646 which is about 2% of my net worth. So I was well below the 4% safe withdrawal rate. And so I think I've had friends and family that they just keep on buying nicer and nicer houses are nicer and nicer cars and better vacations.

And that just didn't attract me.

One of the other things that really helped me meet fire was being taught to spend money on things that will really make me happy and not on just items. And so I've worked hard jobs and some of those, I didn't want to spend my money on kind of things that I knew wouldn't last very long. I have a philosophy that I'm willing to splurge and spend money on things that will last for more than 10 years or on an experience that I'll remember for decades.

And so four years before retiring, I spent over $20,000 traveling to Antarctica with my family, which is a great experience. I'll always remember that.

And also before retiring, I donated a hundred thousand dollars to nonprofits because that brought me meaning didn't help me reach financial independence, but it did help me feel good about giving back to the community.

Another thing to tell me, reach fire is just learning investment topics and learning from my mistakes. Everyone makes mistakes and I made some pretty big blunders. When I was in college, I knew about the miracle of compounding growth and the rule of 72. Essentially, if I invested in the stock index funds and about 10 years, they would double and just knowing that motivated me to maximize my 401k contributions early in my career.

Now, here are a few of the mistakes I made early on in my career. I bought individual company stocks, several went up, which was great fun, but boy, several of them plummeted well losing well over 50%. And I had to hold myself accountable to calculate was I really gained. More on all of my socks than if I just invested in like the S and P 500.

And I learned, I don't have the ability to pick stocks that out, do the index funds when you track it over multiple years. And so I sold those stocks, some for gains, some for losses. And I reached financial independence because of investing in plain old vanilla S and P 500 index funds. There's nothing fancy about my portfolio.

Another mistake I made was in real estate. A real estate agent said I could make great money. If I bought a condo in the Caribbean, I rented it out for one week vacation rentals, and it worked well at the very beginning, but the person who was booking all the reservations left and the person who I eventually hired didn't do as well.

And I lost money. And I eventually decided I don't like the stress of this having to figure out to find new renters and I was just lose money. So I sold it and I sold it for a significant loss.

Another time I've made mistakes is I bought a company that hoped to IPO in a few years, and I invested $25,000, four years later the company was bought by a larger company and I lost 83% in four years. If I instead had invested in S and P 500, I wanted to gain 12,050. Instead of losing $20,000. So that one thing was a $30,000 mistake.

And so I've tried to think I'm smart. I can do better. I eventually learned just give me the average rate of return for the stock market.

It's plenty. I'm happy with that. So those are a few of the things that I've learned from my investment mistakes.

Another thing that helped me reach fire was great paying tech jobs in the late 1990s, when I started my starting salary was $43,000. When I retired 20 years later my salary and bonus was $180,000.

And neither of those include the stock options and awards that I received. The social security administration actually keeps track of how much money we make every single year. And I was interested in learning how much do I really earn? And so I looked it up and in my 29 years of having money, earning money I made a little over $2.8 million in earnings.

And about half of that was just because of stock options and awards. And when I left tech to retired at about 2 million in net worth. Large amounts of income significantly helped my path to financial independence.

Another thing that helped me with financial independence is imposters. I felt I didn't have the skills to succeed in some of the jobs I had. I have dyslexia and I do pore with grammar. I have below average emotional intelligence and memory to overcome my imposter syndrome. I worked longer hours and I put in the extra effort to be more prepared than many of my coworkers.

In some cases, this got me promotions and bonuses. And in some cases it meant that I was really prepared for job interviews and I'd already showed the interviewer that I'm willing to put in the extra efforts. And so they hired me. Eventually. I learned that many of us have imposter syndrome.

And one of the last things that helped me reach financial independence is I don't have children.

And I went through a divorce and didn't lose my nest egg. And so I'm grateful for that.

[00:13:10] Firey's thoughts on avoiding lifestyle inflation

Adam Coelho: I totally agree that lifestyle inflation is one of the major things that can cause people to slow their path to five, because as they increase their income, which could go to expenses, they just instead invest that in inflating their lifestyle costs, with nicer cars, nicer meals, nicer vacations, and it really doesn't bring them longterm happiness.

So I'd love to hear a little bit more about your thoughts on avoiding lifestyle inflation.

FIREy Philanthropist: I think all of us struggle with lifestyle creep. We always like for someone else to clean our house or to clean our car or to have something that will impress our neighbors. And I've learned that just thinking about none of those things are really going to make me happier.

If my neighbors see have a nicer car, it's few moments of thinking, Hey, I'm really great, but long-term, that's not gonna increase my happiness. And so for me, it's really just deciding what's really gonna free up my time and allow me to spend my energy on things that I like. And shopping is not something I particularly like doing.

But I have learned that in some cases I was just too frugal. I would buy cheaper stuff and feel good about it, but then have to replace it a few years later. And so I've learned that. Be careful about what I try to be too cheap on. And if it's something that's going to last, like 10 years, like a car or a sofa by quality cause you're going to amortize it over multiple years.

And also my mom died recently and I looked back and said, I wish I had done some more things with her. And so that's why I think experiences, I am willing to splurge on I've gone around the world and I'm happy I've spent the money on that because I had those experiences with people. I think back at them, I looked back at the pictures and that's worth it.

But having nicer clothes or fancier shoes or other things, it's not something I look back at.

Adam Coelho: I think it really is all about figuring out what's important to you and what you value and spending on those things and cutting expenses on things you really don't care about, like fancy cars or eating at super fancy restaurants and things like that.

[00:15:15] How did you know when it was enough and when it was the time to retire early

Adam Coelho: So it sounds like you made the decision that you wanted to work a few more years to be more comfortable with the percentage of money you would need to live off of. How did you know when it was enough and when it was the time that you were ready to switch make the leap to leave the workforce and retire early.

FIREy Philanthropist: So it was a big decision and I lost sleep over it. I thought about it for a long time, over a year. And a lot of my mental worry left on a certified financial planner told me I'd already reached five. And it was great just to get that second opinion. Someone who knows this stuff I told him where all my investments were, my asset allocation, how much I expected as expenses once I retired and he plugged it into his own software.

And comes out with these beautiful looking graphs. And most of the graphs kept on growing. And it's like, if you retire now, 20 years from 30 years from now, you'll probably have even more money than you do now. And here's the likelihood you will actually run out of money and the likelihood I'd run out of money.

It was very sad. And so having that professional opinion really helps. And he did a few things when he did that, is

he covered multiple topics. Like what does a self or a safe withdrawal rates and asset allocation once I retired and I realized sitting next to him, I already knew these topics. I had done enough research on my own that I knew what was a safe withdrawal rate. I knew that I had to still be invested in stock index funds once I retire.

And so it boosted my confidence that I really knew what I was doing. And I wasn't taking as big a risk of like, oh, I'm pretty sure I can retire on the amount of money I have. And so once again the financial advisor really helped with that.

He also did help me think about sequential risk, which is once you retire the first few years you're not earning an income.

If the stock market goes down tremendously, it's very hard to recover from that. And so sequential meaning to time-based risk. And so for the first few years I was retired. I actually became more conservative in my investments. I went to about 20% in bonds. But after my investments grew for multiple years, I went back to the early a hundred percent stock index funds.

So once again, the financial advisor really did help with that. But even after he told me I was financially independent, I still worked for over a year later which I was happy to do. I think part of the reason I felt comfortable is understanding safe withdrawal rates. I had read an article about the 4% and I knew that if I was going to do that without a safety net of having a spouse that worked or having other safety nets, I needed to know what that really is.

And so I read dozens of articles on the safe withdrawal rate, and I eventually said 4%. Isn't good enough for me, I'm shooting for less than 3% safe withdrawal rate. And eventually once I did retire my first year, I was about 2%. And now my withdrawal rate is even lower than 2%. And I really would need to understand safe withdrawal rates.

And I really needed to know how much I was going to spend once I retired. Now, when you're working for a company, you don't pay a lot of your healthcare costs. The company pays us. Once you retire, you have to pay your own health insurance. And so I was like, I don't know how much that is going to be.

And so I had to go though Obama Care marketplace and type in all my age and all these other things and figure out what would be my insurance costs. And as a side note, once I retired, my insurance costs are about 10% of my total expenses. It's a significant part of my expenses. knowing my spending, the other part as we've discussed is I need to have more confidence that my housing costs were not going to explode.

They weren't going to grow tremendously. And so that's why I really paid attention to putting myself into a situation where I wasn't gonna have a mortgage that I knew what taxes and rents I would pay. And really feeling confident with that. And for multiple years, I have tracked every single expense I have.

I can go back into my spreadsheet and tell you exactly how much I spent last year the year before that. And it's a great exercise. I highly recommend people do that. It's not very hard at the beginning of every year to go to your credit card companies and download all your transactions and go to your bank and download all the transactions, put them in a spreadsheet and look

how much are you spending on housing? How much are you spending on food? How much are you spending on travel? Is it aligning with your goals?

Other things that made me feel comfortable about retiring is just realizing my net worth was going to go up and down. Significantly because the stock market goes up and down. I can remember maybe the first time I ever saw a log in my portfolio, it's I lost over $10,000 today. I was like, wow, that's a huge number of paychecks.

That will happen. You will expect probably a 50% crash in your portfolio, in your lifetime. I've experienced multiple of them. And so you just have to realize once I retire, it's okay. If my money goes down I know that it will recover. And I have proved to myself that I'm not going to panic sell when the stock market goes down by 20% or 30% or 50%.

FIREy Philanthropist: And to have that confidence in myself that I know I'm not going to panic.

The other thing that really helped me is I can always go back to work. I wouldn't necessarily want to, but I can always go back to work if I retired and things didn't work out well.

And one of the kind of unspoken secrets in the fire communities. Many people actually do go back to work, they go back to work. Not because they have to, because they want to, they want that social interaction that their coworkers give them. They want something to do. They want 40 hours of their life filled up per week. There have been times where I've been a little bored in retirement or a little lonely, and I had to find things that were making me excited again.

So not a failure to go back to work after you reach financial independence, especially if it's something you really enjoy.

I know on your podcast, you've had guests that have had a second career and maybe in that second career, they picked a job or they weren't gonna be paid as well.

And that's okay. I knew I could always go back to work.

So to summarize why was I comfortable pulling the trigger? I had done the research. I had spent the hours listening to blogs, listening to podcasts and just knowing my stuffKnowledge is power. The more you understand, the more, it seems less risky and I was happy to do it.

And once again, if you ever are really worried about something, I highly recommend trying to get a financial advisor.

Most likely you can get a free financial checkup with whichever company has most of your money. If that's a 401k many of the providers essentially offer a one hour once a year free checkup.

And they'll just look at your portfolio and talk to you about asset allocation and take advantage of that. I have before and after fire had probably at least four financial advisors from four separate companies look at my portfolio because they offered it for free, right? I'm a frugal guy. I have a hard time turning down free.

And so take those opportunities to learn from others about your portfolio. And you won't necessarily agree with everything they say, but you'll gain confidence that you are thinking of the right things. And you're aware of the risks you're taking.

Adam Coelho: And importantly, do your own research as well. It's easy to get bad advice if you don't have a good financial understanding yourself. And so have that foundation and take advantage of these opportunities to learn from others as well.

FIREy Philanthropist: Yeah. With the bad financial advice, I will point out that my company stock was which a company and they offer free financial advice.

So I say, sure, I'll show up. So I go, there 15 story office tower, and I sit in their beautiful lobby. And they want me to sell a lot of my stuff and buy their companies index funds and their bond funds. And I was like your bond fund as a heck of a lot higher fee than the one I'm currently in.

Why would I do that? And and so we had a good discussion about that, but just realize that if it's free financial advice, they are wanting to eventually make money on you. And that's okay. But you're aware of that. And you just have to think about are they really pushing their own products?

To make money.

For one example one financial advisor did get me to do direct indexing, which is a very advanced topic. Don't necessarily recommend it for everyone, but that's instead of buying like the S and P 500 index fund mutual fund or ETF, you buy in your own accounts, like 200 of the 500 directly, that's why it called direct indexing.

And there are some tax advantages to do direct indexing because you can do tax loss harvesting. So when one of those 200 goes down, you can sell it for a loss and therefore what do you sell something for a gain, a loss, and the gain can even themselves out of balance themselves out. And and I knew the tax loss harvesting was important.

It does make a difference in direct index would allow me to do that. And I did that for a small part of my portfolio for a few years, and it did work. I was happy to do it, but now that I'm retired there's no reason for me to do direct indexing. So I'm not doing that anymore.

[00:24:30] How did you know when to pull the trigger

Adam Coelho: Definitely great advice how did you know. When to pull the trigger. For me, the idea of retiring early obviously is very attractive. I've made a podcast about it.

But at the same time, I'm also getting paid well, have a fairly comfortable situation. So the idea of, even if I get to the point where yeah, I clearly have enough, could do it. The thought of me actually saying, okay, I want to stop getting this paycheck and take the leap.

That's tricky, I think for me. And so I'd love to understand your thought process of like, yup. I got these fears taken care of. Now I'm going to do it next April, for instance, how did you come to that date?

FIREy Philanthropist: I agree with you. It is hard to walk away especially with the golden handcuffs spinning. Once I left all my unvested shares were going to disappear. I wouldn't get them. And for me, that was hundreds of thousands of dollars. I was walking away from the day I retire. And so once again, part of the reason I wanted to leave is I knew I'd enjoy volunteering more, but also part of why I wanted to leave is I wasn't enjoying work as much.

So it's there's the stress of work that is pushing me. And the whole of, I know I can enjoy life more if I'm able to spend more of my time volunteering. And I did reach a magical number, $2 million of net worth. And it sounds silly when I say it. But it was something I'd been looking at in my portfolio for multiple years.

It's like, am I going to get to that round number? And I eventually got to that round number. I also timed it. I purposely retired right in the beginning of the new year, because I knew once the new year start in January, I was able to push a huge amount of money into my 401k and get it matched. I was able to make a large amount of donations and get the matched my company at that point was giving me like a thousand dollars if I signed up for a health savings account.

And so I retired in January rather than December just because I could essentially be getting my company to do a lot more things in that one month.

And so I agree. It's a hard choice. Truthfully, I probably wish I had done it earlier. Now that I know that things have gone well, the market didn't crash right after I left.

But it's a tough choice. And sympathize with people who are going through that. But once again, for me, it was part of a push part of a a pull and at one point it just wasn't worth it anymore. I just didn't want to have to go to work and do the same stuff I've been doing for 20 years.

But I do miss the people.

Adam Coelho: Yeah, Definitely get it.

And as you said, you sympathize with the people going through it, going through a very privileged thing. back to what we were talking about before it is an absolute privilege to even have the ability to think about this problem that we just discussed.

And so it's worth noting that, but it's good to hear your thoughts on how you thought about it. Cause the pushing from the job and the pulling to something else, at some point those forces will be strong enough to warrant a change.

FIREy Philanthropist: And I would say even with not just leaving a company to retire permanently, it's just, what do you want to leave and go to a different company? I eventually did after 16 years, I was like, maybe I'll get more excited if I go to a different company, maybe they'll have better bosses. Maybe the grass would be greener there.

And even that I timed out to think about, are there certain vesting that I'm going to have, it's better to stay around for another three more months to get that last big vest before I hand in my leaving notice. And I have friends, one friend works for a large tech company and if he can keep there for another eight months, he gets a large amount of vesting in that eight months. Does he necessarily want to do that for the next eight months? No, but

when he actually looks at the dollar amount for that one vest thing, he's like, I can struggle through because there's a big payoff.

But it's just knowing what is your vesting schedule knowing what is your X thing? And I also had the advantage of when I left after 16 years, I already been hired by the second tech company. So I didn't take the risk of just leaving and trying to find a job. I found a job when I was currently in a job and then switched.

But as a side note, I really disliked that my company I was hired at didn't allow me to take more than a two week break between jobs. So I was like, I'd really love a sabbatical. Maybe I could reenergize myself and no company has ever allowed me to do a sabbatical or take off a large amount of time between jobs.

So that'd be another piece of advice I'd have, if you're switching between companies try to schedule enough time that you can really decompress and have time to, mentally shift to the new company.

Adam Coelho: Yup. I was just talking about that earlier today, actually definitely feel you on the sabbatical thing.

Cause I've been doing what I'm doing for 11 years now. Different jobs, but same company and I was talking with a friend about another friend who leaving, getting two weeks, and I was saying that I can't believe that some people will leave one job on Friday and start another job on Monday.

It's like, you gotta give yourself some time, like you're doing this is a marathon, take a water break.

[00:29:39] What are you spending your time doing and what makes you happy in this post-fire life

So FIREy philanthropist, you leave your job in tech, you retire early. What are you spending your time doing and what makes you happy in this post-fire life?

FIREy Philanthropist: For a lot of my life, I really didn't critically think about what made me happy. I was just waking up every day and some days I was happy and some days I wasn't and I was like, oh, I'll plan a vacation. I'll enjoy that. So eventually I did sit down a little while and think what makes me happy.

And it took me a few revisions of the list to really think about it. Because at first I was like, oh, food makes me happy. I was like, well that's very, short-term it's like, yeah, I'm happy when I eat that one thing. But 10 minutes later, I'm still hungry. I still want more. And so I eventually did write down a list, the fourth topics that make me happy.

One of them is helping people and friends and other one is socializing with friends and family. Another is learning and another is engrossing entertainments.

so I've really tried to spend my precious time on things that make me happy, not just, Hey, I'm sitting in my room, I can turn on the television for the next X number of hours.

FIREy Philanthropist: Cause I realized that's probably not going to really make me happy. What will make me happy. And for example, helping people and friends voluntary volunteering is one of the few things that science research has proven will make you happier and boost your health. So junior is about to take my opinion on it, but helping other people helps you.

And so I am a board member of three different nonprofits. I volunteer about 500 hours in the last few years just doing board service.

Legally, every U S non-profit has to have a board of directors. That board essentially decides on where they're going to spend their money, how to have more impact and hiring and firing any of their their executive director or CEO.

And so I joke I have a high tolerance for committee meetings. Volunteering makes me feel like I'm making a difference. And I realized that I can influence a budget and say, Hey, we should spend 20% more on this program to help these number of kids or this other thing more than if I was just a volunteer, actually, maybe helping those kids.

So I think I get more impact by being on the board rather than just a volunteer doing their basic program.

[00:32:02] What are the causes that are important to you

Adam Coelho: So you spend a lot of time on the boards of these nonprofits and working directly in some of them and creating more impact through the board work.

What are the causes that are important to you? I'd love to understand what areas are important to you and that you are pulled to give your time and energy to,

FIREy Philanthropist: I did take a long time to really think about what types of nonprofits make me happy. I'm a frugal environmentalist, but I'm not on the board of any environmental non-profit. One of my nonprofits helps pay for scholarships for middle school and high schoolers in developing countries like Kenya and Tanzania, because I realized bang for the buck.

If I send a hundred dollars to a 12 year old girl in an African country, that can be life-changing because she might not be married. She will have another year of schooling, which will allow her to maybe get a better job. And so that hundred dollars can have a bigger impact internationally.

So one of my non-profits I've volunteered as international education the exact opposite of that is I'm on the board of a community foundation. community foundation is a place-based nonprofit, that fundraises for just that city or that area. it's where I live. It's my city. And so I like it because it's allowing me to learn about the local nonprofit space in my own city. As a community foundation, you usually give grants to other nonprofits. And so I read the grants applications of the nonprofits that are doing things related to homelessness and trying to get the homeless people off the streets and the nonprofits that are going into our schools and trying to do tutoring to help the kids who are struggling with learning English.

And so the community foundation allows me to see what's being impactful in my own community.

And then the last nonprofit on, on the board of currently is a nonprofit that helps people become more efficient philanthropists. It teaches philanthropy and there are things to learn how to most effectively give money and volunteer.

So it's a group of us who are going through the process of learning about how do you decide, which are the most effective nonprofits. You can read the tax returns of any U S non-profit and you can see how much they're paying their executive director. You can see how much they are spending on different programs and how much they fundraise.

And being a an optimizer in my life. I really try to get the most out of everything I do. And so I was like, philanthropy is important to me. How do I optimize where I'm giving my money and where I'm deciding to do it.

I've also been on the board of a US-based nonprofits that was helping high-schoolers stay in school. We would pay for things like alarm clocks and glasses and jackets. And so those are the areas that I did.

But I think just as importantly, I had to realize what types of volunteering activities do I like to do?

Board service is not for everyone. If you don't have a high tolerance for sitting and listening to other people talk about budgets and strategic planning, then it's not for you. I spent multiple years trying to always say yes to volunteer activities. So when someone say, oh, there's an opportunity to do invasive plant removal.

I said, sure, I'll give it a shot once. And someone else said, Hey, there's a chance to judge high school debate tournaments. I'll try it once. There's a chance to do construction for low-income housing. I'll do it once. And I found some of those things. I was like, I'm not very good at this.

My skill set is not hammering two by fours to make a house. I could do it, but the time and effort I was putting into it, It wasn't going to have as much impact compared to if I was using my skills that I had gone to graduate school or my companies that it put me through hours of leadership training and critical thinking.

FIREy Philanthropist: I feel comfortable in spreadsheets. I feel comfortable making PowerPoint presentations, and those are the skills I eventually used. And so that's how I pick which nonprofits I serve with and which activities I do for them.

Adam Coelho: that's a great approach.

You sound very thoughtful about how you even approach the giving back piece, which I guess makes sense because now you're dedicating a lot of your time and effort and money to it. So that's very cool.

[00:36:25] Volunteering in tax preparation

FIREy Philanthropist: What other volunteer activity I do which does not have any background. I don't have any background in this is tax preparation.

My degrees are not in anything or accounting or legal or anything like that, but I realized that one of the most effective ways the federal government has for keeping people out of poverty is what was called the earned income tax credit. If you, which is an incentive for people to have jobs. So if you're a low income and you have a job the federal government will.

Money, essentially in a refund once you reach a certain income level, you don't get there in income tax credits. So most people on your podcast probably are not getting the earned income tax credit, but it does keep tens of millions of people, especially children out of poverty. And so I volunteer as a tax preparer.

I fill out the taxes for low to moderate income people, and I'll spend a couple hours with another volunteer and we'll prepare a tax return and the person might get a couple of thousand dollars in a refund. And that can be a life-changing event for them. That can mean they can put their child in childcare and actually get a job or that will mean they're not going to be evicted from their apartments.

And so for me it was really a high impact and it really keeps me centered. I do taxes for a wide set of people, including homeless people living in section eight, housing, people are behind into rents, people getting an unemployment compensation disability I've helped a 93 year old I've helped a 17 year old in the foster care system.

I've helped the DACA students. I've helped undocumented families. I've helped people who are behind in child support payments, and it really just helps me realize I have a huge abundance. I don't worry about trying to save a hundred dollars here or there, because it's not gonna make any difference in my life, but for those people it does.

I'm helping people that are struggling for the basics, like food and rent.

FIREy Philanthropist: I will say volunteering as a taxpayer also helped me. Reaching fire, it helps to understand the tax system. And I now have a a much better understanding of how to minimize capital gains taxes, which you get when you sell things like index funds or ETFs.

And I have a better understanding of tax credits. You get on purchasing health insurance, through Obamacare marketplace. And so it definitely has helped me. And so I encourage everyone listening to the podcast to consider being a volunteer tax preparer. You can go to the IRS website and search for Vita V I T a it's a national program.

There are tens of thousands of volunteers like me. We always work in partnership meaning I'll prepare a tax return, but another volunteer will double check my work. There's always other people I can ask questions to if I'm not familiar with the tax code. And so it really helps you help other people in a meaningful way.

And once again, you will learn about things that you didn't think you would really understand about fire, but they do help a fire.

In the last three years have helped about 300 tax returns for about a thousand hours. So that's how I've helped with tax preparation.

Adam Coelho: That's very cool. it absolutely can mean an incredible difference by getting somebody that couple thousand dollars back.

And I think, with the latest thing that the Biden administration passed, the re relief act, I think that's going to be even more impacted.

FIREy Philanthropist: Yes. The child tax credit is potentially a game changing, but to get it, you have to fill out your taxes. And many of you in the fire community either don't do your own taxes or you're not really confident you're doing them correctly.

I've had multimillionaires tell me, it's like, oh, I did my taxes, but I really don't understand them. I just plugged in the numbers and I'm like okay, you can go through life like that. But the bigger amount of money you have, the more likely the IRS has to audit you. And so you might be comfortable now when your net worth is maybe smaller, but once you become a multimillionaire you might want to learn a little bit more about your taxes and feel confident that you're actually doing them correctly.

There are a couple of other things that I do to help people. And one of them is I've volunteered as a financial coach, not a financial advisor. What a coach I don't tell people what to do. I essentially try to educate them so they can make their own decisions. And I do that with friends.

There's about a half dozen that I do that with. And I help them learn about finances, like tracking their net worth. What does a backdoor Roth what are the advantages of immediately selling your vested options? Why it's a risky to have more than 10% of your net worth in the company stock.

And I help these friends become accountable to themselves. And many of us kind of delay learning about certain things related to finances. And if you don't have a partner that likes learning about five, try to teach someone else, you will learn in the process. I did not know about the extra $6,000 you can put into an IRA until someone told me about it.

And so it give back to people.

And the last thing I do to help people is relating to sit in on my butt just like I do in board meetings, but this is sitting on my butt while I donate blood. I donate blood platelets, which is the clotting factor of blood, which you can donate 24 times a year.

So I joke I have a high tolerance for having a needle stuck in me and they're pumping my blood out of me. And then that about 300 times in the last 25 years.

For people reaching financial independence, I think donating blood is a great activity. It doesn't cost you anything. It only takes a little bit of your time.

Plus you get free food and drinks after donating. So it's a win-win you also maybe even lose a little weight cause you're giving some of your blood away. Think about if blood donation is something for you.

Adam Coelho: All right FIREy philanthropist. I think that's a great place to stop for the first part of our conversation.

Thanks so much for sharing your experience with me in the audience.

For the audience. I hope you enjoyed this first part of my conversation with FIREy philanthropists, exploring his journey to financial independence, the practices and mindsets that helped him get there and what he's been up to in retirement so far.

On the next part of our conversation, which I'll release in two weeks, we'll dive into the nitty gritty finance topics that he employed to grow his net worth and retire early.

I hope you'll hit subscribe and join us for that next episode.

[00:42:34] Outro

Adam Coelho: Thank you so much for joining me on this episode of the mindful fire podcast. I hope you enjoy the episode with FIREy philanthropist. and if you got value from this episode, make sure to hit subscribe wherever you're listening to this, this just lets the platforms know you're getting value from the episodes and you want to be here when we produce additional content.

If you'd like to spread the word about the podcast, we'd really appreciate if you could leave us a five star written review on apple podcasts, this just helps more people find out about the message of fire and mindfulness.

As a reminder, you can find the full show notes for today's episode, including any books, links, or resources we discussed in the episode mindfulfire.org 67 And after we recorded this episode, FIREy philanthropists sent me nine grade articles, which I've included at the show notes, which again, you can find out. Mindful fire.org/ 67.

Thanks again, we'll catch you next time on the mindful fire podcast.