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Imagine retiring at the age of 33, after just 10 years in the workforce. A fantasy you think? Hardly. I interviewed Justin, founder and owner of the blog RootOfGood.com, where he discusses the financial aspects of early retirement, as well as the psychology behind it.

This was an enlightening interview on a number of fronts. For one thing, Justin has retired at an extraordinarily early age in life. When most people think “early retirement”, they’re talking about 50 or 55. He’ll have been retired for about 20 years by the time he reaches that age.

But perhaps what was most interesting to me was the fact that Justin’s story has the potential to benefit a lot of people who are over 50, and don’t feel that they are adequately prepared to retire at all. By taking some of Justin’s advice, you may be able retire in a decade or less, even if it doesn’t seem possible right now.

Book Review: Retire Before Mom and Dad

Justin’s Story

At least part of what I found particularly fascinating about Justin’s story is that he came from fairly humble beginnings. There is no inherited money, no giant real estate play, and no high tech start up that he was able to sell for a seven-figure profit. It was all about keeping expenses low, saving a very high percentage of his income, and investing it faithfully.

Justin came from a middle-class family, went to college, and eventually to law school. He never did work as a lawyer, but went into engineering instead. Still, he and his wife finished law school with $110,000 in student loan debts. They also married young, and now have three young children.

Since they started working, they began maxing out their 401(k) plans, as well as IRAs. They bought a house at a deep discount in a city auction, and are driving the same subcompact cars for the past 15 years.

Clearly there have been sacrifices.

While others around them traded up to bigger houses and more expensive cars, they plowed their money into savings and investments. They were saving over $20,000 when they were making $50,000. They increased that savings level to $80-90,000 out of an income of $140,000 in the last year Justin worked.

They started investing back in 2004, using $50,000 that they took in a cash out refinance on their home, and kept adding to it through savings. Eleven years later their investments are now at $1.4 million.

What are Justin’s investing secrets? And how did they survive the 2008-2009 stock market plunge? Listen to the full podcast for all the answers.

Transcript: DR166: Root of Good – Interview With Justin

Rob: Justin, welcome to the show.

Justin: Thanks Rob. I’m glad to be here.

Rob: I’m thrilled you could join us. As I mentioned in my email to you, I found your blog, rootofgood.com. Where in the world does that name come from?

Justin: Well, it’s sort of taking that old classic saying, money is the root of all evil, and putting it on its head to say, money is the root of all good. I know the actual quote is, the love of money is the root of all evil. But, it’s been popularized to the point where people say that money is evil. Money is bad. It causes all these hardships when the reality is, I think it actually frees you up and lets you do what you want to do. It lets you help other people like you want to. It takes away a lot of the constraints that you have in life. When you get down to it, everyone is pursuing money, and it is really just a means of exchange for buying other things, like food, for yourself and your family. It is just bizarre to call that evil. That’s where the name came from.

Rob: I like that. We’re going to talk about early retirement. You retired at age 33. Before we dive into the nuts and bolts of how you did that and how that’s going for you, why don’t you tell folks as much or as little about whom you are as you’d like?

Justin: Sure. As you mentioned, I retired at 33. I’ve been retired for about 18 months, now. I’m 34, now. I live in Raleigh, North Carolina, which is in the triangle area that is sometimes called Raleigh-Durham. It is a somewhat modest cost of living area, not the most in the nation, but nowhere near some of the more costly areas. That’s played into our ability to retire early—a lower fixed cost structure for pretty much everything housing related. I worked as an engineer in the private and the public sector for almost 10 years before pulling the plug. I have an engineering degree and actually went to law school. I went to law school and figured out I did not want to practice law, during some of my summer internships.

Rob: You’re smarter than I am. It took me 25 years to figure that out.

Justin: Yeah, I had a good backup plan. I practiced engineering and it boiled down to that I liked engineering better. The mathematical and analytical part of my brain works better than the legal side, where there’s a lot more grey areas that were arguable one way or the other. I just felt more comfortable doing engineering, and it was easier to find a 40 hour a week job in engineering than it was in law. The money wasn’t quite as good, but good enough. It worked out well for me. I went into it knowing that I wasn’t going to be working, forever. I thought I’d probably have to work about 20 years from the time I left college, but it worked out that I didn’t have to work quite that long.

Rob: Did you complete your law degree?

Justin: Yeah, I finished it up. During the Great Recession of ’09, I was in the engineering field that was very closely tied to real estate, so I had a backup plan, at that point, in ’09, I went back and took the Bar Exam and got my law license to practice, just in case everything went crazy. I could always do traffic tickets and write wills for people. It would pay the bills. Back in ’09 the world was in a certain place. My backup plan was to practice law, on the side.

Rob: You’re married?

Justin: Yes.

Rob: How long have you been married? You’re supposed to know this answer.

Justin: Almost 11 years.

Rob: It’s funny. I remember the numbers even more than my wife does. It’s usually the guy that is supposed to forget.

Justin: We’re the same way. She’s made the mistake before of saying, “yeah, we’ve been married for a year” and it was actually three years. So, I can’t take any slack for that.

Rob: Do you have any children?

Justin: We have three children, ages two, eight, and nine.

Rob: Wow. Good for you! You’re retired and 34, now. What I’d like to do and what I think would be helpful to those listening is deconstruct how in the world you did this. Then, talk about what it’s like, now that you’ve done it. Let’s go back to the beginning. When did you decide that you might want to take a different approach that most people don’t and retire early?

Justin: I always had an idea that it was possible, dating back to even high school. Back in high school, my idea was more along the lines that if I could make $800 a month, then I could share a three bedroom apartment, pay $200 a month, and bum rides from people, or maybe have a car, and put groceries on the table. It wouldn’t take that much to get it, and interest is about 5%, on an investment account. I did some calculations and decided it wouldn’t take that much to save up and do it. I realize in hindsight that that is a very naïve approach to how to construct a good, early retirement plan that lasts 50 years. I finished college and started working, and didn’t need to spend all the money I was making. It wasn’t a ridiculous amount of money. I started out at less than $50,000 a year, in engineering, and started maxing out my 401K and IRA, from the start. That was even before my wife started working. She was still in school and giving birth to our first child. We started out living on less than one salary, from the get go. We didn’t really increase our lifestyle that much, other than having three kids which will obviously increase the cost for lots of things. We kept those increases pretty moderate, though, and found ways to save money as we got older and got wiser on where and how to spend money, and how to economize in different areas. I’m not an extreme early retiree, frugal, kind of type, but I do a lot of DIY fixes on my house and I try to do that on my car, too. We don’t spend a lot of money and we saved very hard core for our entire careers. A lot of that was in tax deferred accounts, so we saved a lot in taxes, as well.

Rob: What year did you graduate from college?

Justin: I graduated law school in 2004.

Rob: So you didn’t really start working until then?

Justin: Yes. I had pretty good paying summer jobs in engineering. I even had small jobs before, in high school. But the real, full time, permanent, high paying job started in 2004.

Rob: At that point, did you have any school loans?

Justin: Yes. I had law school loans.

Rob: How much were those?

Justin: We actually both went to law school. They started out at, I think, around $55,000 each.

Rob: Wow, so you obviously paid those off.

Justin: We’ve paid down a good chunk of them but we actually still have them. We have been on the income based repayment plan for probably about five years, now, which actually reduced our payments because our income was never really, really, high. We’re still on the income based repayment plan. I’m not sure what the payments will be long term, but, because we have three kids, the income based repayment calculations made our payments very low and our interest rate is less than one percent on these loans, so we’re not in any hurry to pay them off.

Rob: Your wife still works at the moment?

Justin: As of today, yes. I’m not sure when her last day is going to be but it is coming up, probably, very soon.

Rob: Okay, so how will they calculate your payments when you are both retired?

Justin: Don’t quote me on this, exactly, but it’s roughly your adjusted gross income. There may be some adjustments further to that, but they basically look at your adjusted gross income. Because of the way our financials accounts are structured, our adjusted gross income is very manageable from year to year. Probably, in most years, while our kids are still in the house, our payments will be around zero or very close. I think that this year they will be $40 a month. That’s down from around $300 a month when I was working. There’s a big decrease because of our adjusted gross income being lower, but there may be years where we have higher incomes and pay $500 a month, or more. Mathematically, to me, it is just about a 15 percent tax rate above a certain amount.

Rob: When you graduated law school, were you married?

Justin: No. Actually, we got married in the last year that I was in law school.

Rob: Alright. You have some school loans. What I’m trying to get at is the practical side of being able to save as much as you did. For example, what kind of car do you drive?

Justin: We still drive the cars that we bought back in undergraduate school, actually. I bought a Honda Civic and my wife bought a Honda Accord. We financed both of them at a pretty low rate and have paid them off, but we have been driving them for 15 years, now. I actually don’t drive a lot, these days, because we live in the city and it is fairly walkable. That is one aspect of not increasing the lifestyle a whole lot. We just kept the cars that we have had all along that are relatively modest, economy cars. They’re sedans.

Rob: Even with kids?

Justin: Yes. As hard as this is to believe for some people, you can actually fit three kids and two adults in a Honda Civic.

Rob: Alright. You maxed out your 401k, and your wife maxed out her 401k. Was that pretty much every year once you started working?

Justin: As far as I remember we have always maxed them out. We always would have a little extra space above that to save in our taxable accounts.

Rob: I know you had a 457, at one point.

Justin: Yes. I worked for the state for almost three years. We actually had a 401k and a 457 plan there. I don’t think it’s a widely known fact that you can actually contribute the maximum amount to both of those. It was $17,500, in 2014. I think it was $18,000, now. So, you could put $36,000 in a year, total, into your 457 and 401k. If you’re a state employee, check that out. If you want to have an extra $18,000 deduction, it could be sitting there waiting for you and you just don’t know about it.

Rob: I’ve never worked for the state government or any government, for that matter, so that’s not something I was familiar with. Obviously, that is a huge way to shelter money from taxes. Did you guys use IRAs?

Justin: Yes. We used IRAs. Most years we qualified for the traditional IRA deduction. We actually would, typically, contribute to the traditional IRAs when we could. There were a few years where our adjusted gross income was too high to contribute to traditional IRAs, so we put money in ROTHs for a few years.

Rob: When you add this up, and I assume it changed a bit over the roughly 10 years that you worked, but how much were you saving each year?

Justin: Starting out, probably with the 401k, an IRA, and maybe some on top of that, about $20,000 or so— maybe, $22,000 or $23,000 on $50,000 income.

Rob: But that’s for each of you?

Justin: Yeah, that was starting out. Then, once my wife got a job, it climbed. We were saving probably $50,000 a year. I think the last year, before I quit working, we saved probably $80,000 or $90,000 a year, out of $140,000 earned income, roughly.

Rob: Again, most of that savings is retirement accounts. But some of it was taxable.

Justin: Yes. Almost all of it was in retirement accounts, but some was in taxable accounts. To give a breakdown of roughly where we are, I think I checked on Friday, and we have about $400,000 in investments. It’s roughly $300,000 to $350,000 in taxable accounts, about $900,000 in tax deferred accounts like a 401k or traditional IRA. Then there’s less than $100,000 in ROTH accounts.

Rob: Okay. What is your philosophy on investing? How have you put this money to work?

Justin: I started out, when I got out of college, not knowing a lot about investments. I grew up in a house where my dad watched the nightly business report almost every night, so I’d heard of stocks before and I kind of knew what the stock market was, trading, and roughly how companies work. Law school helped me figure out what companies are in terms of a legal entity and their shareholders. That’s what you are buying, a small piece of a business, when you buy stock. I actually started out investing with Edward Jones, because I didn’t know any better. That was who my family had used, before. I quickly realized there was a much better way to save and invest for almost no fees. I switched to Vanguard, very quickly, after I started working and seeing those huge sales charges from Edward Jones. I’ve been with Vanguard and have an account at Fidelity, as well, just because my wife’s job is regulated by FINRA, so she has to hold an account at Fidelity. If you look at my holdings, they are all index funds, very low cost. It’s almost all admiral funds at Vanguard. My expense ratio is .17 percent. There are a few funds, like the International Value Fund, that don’t have a great index fund alternative, so I have an actively managed fund at Vanguard for that.

Rob: An actively managed mutual fund?

Justin: Yes, if there was a great index option, I’d probably go for it.

Rob: I’m just goofing you.

Justin: Those fees add up. You know, there are some low fee, actively managed funds that are pretty good, but when I’m faced with a .0 something percent expense ratio versus .4 or .5 percent, I would take the lower one.

Rob: What is your stock to bond allocation?

Justin: Almost 100 percent stocks. That is pretty well thought out. We only spend somewhere between two and half to three percent of our portfolio balance, each year, which is roughly covered by the dividend yield. We keep about two years’ worth of cash on hand. That fluctuates, some, depending on what we are doing spending and investing wise. We have about a two year cash buffer which is probably about three percent of our portfolio. The dividends and taxable account come in, as well, each year. We can basically go two years without selling anything. If the market crashes, we will live off our cash and hopefully it recovers within a couple years. Otherwise, we’ll end up selling at a down market.

Rob: Well, you always have your dividends, too.

Justin: Yes. The dividends plus the cash we have on hand will last us about two years. We start looking at it and we’re like, “Well, okay. We’ll be fine today, tomorrow, and next year. However, in the third year are we going to try to cut spending even more, find a part time job, or just sell our investments even if they are down?” I’m pretty flexible in terms of withdrawals and what we’re going to spend. We could always find some very part time work to make some money if we really wanted to.

Rob: Yes, a lawyer with an engineering degree. I think you guys could probably find something, if you had to.

Justin: Yes. Even working at Home Depot or somewhere a little bit, would pay the bills. I haven’t had a problem, so far, finding very part time opportunities to make a few bucks, here and there. If I really wanted to, I could probably make enough to live on by doing some freelancing.

Rob: How did you decide on the two year cash reserve? Is it just what you felt was right and comfortable? Or, was there some math behind the decision?

Justin: There’s not really a lot of math, other than just knowing the rough history of the market. A lot of the downturns were only about a year or two long. If you look back, every once in a while you will see periods where the markets are down three years in a row, in the negative, but even the Great Recession of 2008, 2009 only had two down years. By the time 2009 came around, the year ended up on a positive. I think we were in recession for 18 months, then, maybe 21 months. Maybe it lasted longer than that. Anyway, the market recovered after a few years.

Rob: Where do you keep your cash?

Justin: It is actually at our credit union that pays one percent, right now. I am still easing into things and I haven’t found a better short term storage place, but it’s paying at one percent which I think is pretty competitive compared to a lot of the banks around.

Rob: As you were saving money and thinking about retiring early, did you have some method to calculate what you would need before you felt comfortable retiring at such a young age?

Justin: I use the four percent rule, in general terms. That was more of a guiding principle than an exact science or number. I actually adjusted it down below four percent just because of the fact that after I started accumulating a lot of money, I figured out that I would be in my 30’s when I’d be able to retire early. I decided somewhere between three percent or three and a quarter percent would be about where I’m comfortable with in the trade off of risk and the likelihood of having that money last forever.

Rob: With four percent, you just took your annual expenses and just multiplied by 25?

Justin: Yes. Once I got closer, I started dividing by 3.25 percent, so it is roughly 33 times what I needed each year. If I needed $30,000 a year, that would equate to about a million dollars in assets.

Rob: Was there any point along your journey where there were sacrifices that you had to make that were really painful, where you really wanted something but decided you couldn’t if you wanted to retire early?

Justin: I don’t recall any really painful sacrifices. Obviously, you have to be mindful of your spending. If I was totally oblivious to it, I’d just spend everything, and never have anything to save. I don’t really view them as sacrifices, at all. We made small changes here and there to just get by cheaply and not spend a lot of many. However, things like a bigger house or a new car are things I’ve never really cared much about. I think my wife wanted a new car, for a while, but she realized that if you spend money on a new car it means you have to x months or years longer to pay for that. We spend money on maintaining the car, so that it runs properly and won’t break down on the side of the road. I’m just using it as an example, but just as long as the car is functional, runs properly, and won’t leave you stranded, it is serving the purpose of what a car should do. It’s nice to not have to take care of a really nice car or worry about if somebody dings it, or bumps into it, or scratches it. It’s just another ding, it’s not a huge deal.
Rob: Do you guys own a home?

Justin: Yes. We own a home, here in Raleigh.

Rob: How’d that happen?

Justin: I found a good deal on a house that was being auctioned by the city as surplus property. We bought it for maybe $20,000 or $30,000 dollars below market value. It needed a little bit of work but it wasn’t a foreclosure, it was just a utility project related acquisition. Then, the city got rid of it. We bought it and moved in a little over 11 years ago. It’s probably two thirds of the median house price here in Raleigh. It’s in a relatively affordable neighborhood and that’s part of our ability to retire early. A lot of our peers, where we worked, ended up moving to fancier neighborhoods as they increased their income. They took that income and qualified for bigger mortgages and ended up moving out to the nicer, brand new neighborhoods and buying bigger houses.

Rob: How did you find out about this? It was surplus property. If someone else wanted to do what you’ve done, how would they go about trying to find these kinds of auctions where they live?

Justin: They have a website for the city of Raleigh, and I know other cities have it, as well. I know our city has vacant lots and some small houses for sale, from time to time. Sometimes they have big problems, but sometimes they just acquired the house to build a road in front of it or something. It was cheaper to just buy the house than to pay the homeowner damages, or whatever, if they are trying to take their property. That is what we did. The house has sewer easements on either side and they had to dig those up. Instead of trying to deal with the homeowner and relocate them and everything, they just bought the house from the lady for $145,000. We bought it for $110,000 from the city, so they took a big loss on the house, but for them it was cheaper to do that than to deal with the construction project and an angry homeowner. I’d check out city websites. I actually worked for the city, for a while, so I went and talked to some of the people there and got the backstory on the property. They were pretty open about. I think if I was a member of the public they may have told me about the property and they came out and showed it to me and walked me through the bidding process. It was a relatively easy process.

Rob: How did you finance it?

Justin: When we first bought it, we had a little over half of the purchase price in cash from saving money during college. We started a small business while I was still in law school that made a decent amount of profit. The whole thing was paid for in cash, but I want to say about a third of it was money I borrowed from my parents for about six months until I could refinance it into my own mortgage. The other two thirds, roughly, was money that we had on hand.

Rob: What business did you start in law school?

Justin: It was a data collection business in the engineering field. It is very labor intensive, so we ended up slowly growing over time. We didn’t do a lot of work, but we got very lucky and landed a $42,000 dollar contract the year before I finished law school. I was working 16 hours a day for about five weeks and we had 12 or 13 people on staff, temporarily.

Rob: While you’re in law school? I was a slacker compared to you. This is unbelievable.

Justin: The opportunity fell in our lap. We had done good work for this client, before, so they gave us a huge job. We were cheaper than the competitor because I was just in law school.

Rob: And a couple of kids in college.

Justin: Yeah. We had virtually no overhead costs and I think we made $32,000 profit on the $42,000 job because of our very low cost structure.

Rob: When you left law school, did you just dissolve the business? Did you sell it? Do you still have it?

Justin: I dissolved it. I tried to sell it as an ongoing business and I just couldn’t find any buyers. I started working for an engineering company and it would have been a conflict of interest to keep that business. They were in the same line of business so I ended up selling my equipment for a few thousand dollars to the company that I worked for.

Rob: Alright. So you paid cash, or for a large part of the home in cash. Some of that cash came from the business you just described. Today, you say you have about $1.4 million invested. When you started working, after law school, you had student loans. Were your investment accounts at zero? You had this money from the business that you used to buy the house, but other than that were you starting from zero? In a span of 11 or 12 years you’ve gotten from zero to $1.4 million?

Justin: It was roughly zero. With the house, like I mentioned we bought it for a couple $10,000 dollars of the roughly fair market value for it. I ended up doing a cash out remarket finance for it in maybe 2004, 2005 and took around $60,000 of equity out of the house. Some of that was money that we had put in ourselves, from the business. It wasn’t like we were truly doing a cash out refinance. It was sort of like cashing out our own cash that we put in it. Anyway, I got cash out refinance from the bank and put that money in the market back in 2004 or 2005. We started back then with about $50,000, we might have had a little bit from savings. I think I had done IRA contributions even when I was in college. So we had between $50,000 and $75,000 right when we were starting out.

Rob: Did 2008 and 2009 scare you?

Justin: Not in terms of investments. I was actually secretly relishing the opportunity to buy all of the stocks for half off or more. I even changed my asset allocation to get a little bit riskier.

Rob: How do you get more risky than 100 percent stocks?

Justin: I switched it up a little and tried to get more international small caps, some international real estate, and some more emerging markets. Some of that was just availability of exchange rated funds to easily implement that strategy. But it was also realizing that long term I am comfortable taking small risks on a bunch of different sectors that will hopefully not all go down at the same time. I moved into those, I believe, in November of 2008. It wasn’t quite the very bottom. I missed the bottom by a few months but the opportunity to purchase things at half off or more was just incredible. The only fear I had was because my company laid off close to half their people. I survived all the cuts and everything, but it was a really tough time for industry. My fear was more directed at losing my job and losing my ability to keep buying all these new assets at half off. Like I said, we’d lived off of one income or less so as long as one of us have a job we would be totally fine from a cash flow stand point. It would just be a missed opportunity of not being able to save. I just kept maxing it out and maxing out everything I could to put it into the market. I knew that it would be the buying opportunity of a lifetime for me. I just kept on putting it in the market.

Rob: It was a great opportunity. That is for sure. Do you credit your parents? You seem to have had a good head on your shoulders from a young age, when it comes to money. How did that come about?

Justin: Growing up, we never really wasted money. We were middle class, growing up. Actually, the house that I grew up in is almost identical to the house that I live in, now. They live on the other side of town, in Carrey, but I’m 20 minutes away. Being comfortable not living in a mansion and not having luxury cars or maids, not going on ski trips all the time is how I grew up. I pretty much live how I lived growing up. I’m sure that mentality of what is normal is what shaped me growing up and being comfortable with later in life.

Rob: Tell us about your website. You started Root of Good. Why did you start it and tell us what folks can learn if they head to your blog.

Justin: Right after I decided I was retired, I said, “What am I going to do all day?” I’ve always wanted to do something on the internet or start a blog or a website. I just sat down one weekend and Googled things like “how to blog”, “how to set up a blog”, that sort of thing. I got into it and realized it’s not that hard to do. I just figured out a name, which was probably the hardest part. I got my domain name and set up everything and started typing away. I didn’t really know how to do it, for sure, but figured other people had done it so I could do it, too. There’s YouTube videos out there that will help you get set up on the technical side. I did it on a whim, more or less, hoping that I could set it up and get enough Google Ads revenue to cover my website hosting costs. That worked out pretty well. In terms of what you can learn, I talk about a lot of early retirement topics, both the financial side as well as the psychosocial side, so the psychology of how you deal with people. How do you tell them you’re wealthy or not tell them you are wealthy? I put out an article recently on do you hide your wealth? Do you tell people that you are retired early, or do you just say that you’re a stay at home dad? There aren’t a lot of people out there that are very young but that have money to live off of comfortably and be financially independent. You’re sort of in a weird place and you don’t want to create weirdness around you. I explore some of those ideas. I have a bunch of articles on there about taxes, investments, and money management in general. I don’t have any great frugality stories, but I do share my expenses on there each month. A lot of people like that to see opportunities for savings without slashing their lifestyle a whole lot. I’ve got some good feedback from those sorts of articles.

Rob: Have you had friends or family that have given you a hard time or that have given you a weird vibe, because you’re retired at such a young age?

Justin: Not that I can think of. There may be some unsaid things that I just don’t pick up on, but everyone has been happy and supportive. It comes down to if I had friends that would have been jealous about that then are they really your friends? I’m pretty open about the fact that I don’t have to work anymore, but it doesn’t come up a lot in conversation with most of my friends. It’s just sort of who we are, but we can still hang out and drink beer and play games or whatever.

Rob: Right. Why did you retire before your wife?

Justin: I actually got let go from the government job. We were close enough where I just decided I was done. She’s been hanging on. She has a lot of time off, so her schedule is fairly flexible and it lets us still do the traveling we wanted to do. She’s just sort of reaching the end of all the extra benefits and time off, so it’s a matter of what she’s time she’s able to get off in the next few months. She may go sooner rather than later.

Rob: I appreciate your time. I have one last question for you, if you will. On your journey, have there been any books, investing, personal finance, anything that stands out that you read and think really helped you achieve what you have done, retiring so early?

Justin: There are a few books. Probably, the best one that I refer to when they ask about investing is the Bogleheads, Guide to Investing. That one is very good and they’ve updated it recently. It’s very helpful to an entry level person.

Rob: That’s a great one.

Justin: That one is probably the best one just for the pure finances and getting your mind wrapped around efficient financial lifestyle in terms of saving money, taxes, insurance, investments, and everything. That’s probably the top one. I’ve read a bunch of William Burnstein’s books that are more in depth on investing. I started reading, Your Money or Your Life, book that I think is pretty dated and has a lot of outdated financial advice. I don’t think I finished the book and I don’t recall exactly why, but it’s another good one, I think, for learning about the tradeoff of what you are earning and what you actually want to get out of life and equating your paycheck to time. You’re trading your life in exchange for money and when do you want to stop doing that?

Rob: Yes, it is a good one. It’s chapters on investing are not good, at all.

Justin: Yeah, I think that is where I dropped it, when it began talking about treasury bonds.

Rob: Right. It is really good though in terms of the value of your time and what is most important to you. Those are all good ones. I appreciate it. I wish you the best. It is great to hear your story. What I like about it is, not only can it help people that may want to retire early, but it can also help people who are beyond retiring early, they’ve just started too late. You’ve shown that you can do it within 10 years. If somebody is 60 and they are worried about retiring at 65, well it’s not too late and you have time. You can learn a lot from the early retirees.

Justin: By the time they are 50, usually your earnings are a lot higher than somebody in their 20’s would be, so you could really probably turbo charge your savings even more by the time you are 50. You may have the kids out of the house already, too, so you don’t even have to pay for the kids anymore.

Rob: I’m 48 and we have the kids out of the house so I can speak to that. Not having your son take 45 minute showers and eat all the food in the house definitely reduces the monthly cost, no doubt about it. Alright, Justin, I appreciate it.

Justin: No problem, Rob. Thanks a lot.

Author Bio

Total Articles: 1083
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

SJB says:

Great interview and write-up. One question I have that was not addressed was how are health benefits handled/factored into the early retirement strategy once both (husband and wife) stop working. I’d love further insight. Thanks!


Good question. We plan to use the Healthcare.gov health exchanges to find a Silver plan. With our income level and family size, plans are around $1000 per year (yes, year!) after the ACA subsidy.

As we get older, health costs will rise since those in their 50’s tend to have more medical issues than those in their 30’s like us. At that point, our kids will all be in their 20’s and we won’t be responsible for their costs any more so we’ll move kid-related spending to healthcare spending to cover higher medical costs.

For a little more info on our health insurance plans in early retirement:

Hope that helps!

John says:

I would like to know which accounts Justin draws his income from? He stated that a majority of their savings is in retirement accounts so do they just live off the taxable accounts? Since his wife is still working maybe they do just use taxable accounts now but what about when she retires?

Right now we’re taking all the dividends from the taxable portfolio (around $10k per year).

We have a little over $300k in the taxable brokerage accounts, so that should last around 10 years (while spending $32k/yr) even with zero real rate of return. Maybe 15 with a little bit of side income and some average investment returns.

As we deplete the taxable accounts, we’ll be converting from traditional to Roth IRAs each year (around $25k/yr to keep our AGI low). Any amounts converted to a Roth can be withdrawn after five years.

Initial Roth contributions (the $5500/yr contributions you can make each year) are okay to withdraw at any time (not the gains though) without penalty.

The plan is to withdraw from Roth’s in 10 to 15 years once we build up the Roth balances and deplete the taxable investments.

I also have about 2 years’ expenses in a 457 plan which allows penalty free withdrawals at any time, so I can use it to supplement our withdrawal plans as necessary.

Kenneth says:

Wonderful interview with Justin, Rob. Of course I know him from the MMM site. I didn’t get it right financially until about five years ago, and I’m 65 now. But Justin’s story gives hope to people of all ages as you mentioned.

Thanks for the kind words, Kenneth!

It’s definitely easier to start when you’re young, but better to start late than never!

yyzguy says:

It would be nice if you could schedule a follow up interview in 1 or 2 years.

I too am an Engineer, though still working at age 50. I remember during college and the first few years after, that young engineers (me included), somehow have a confidence level that we/they can jump out of the workforce and jump back in at anytime, because engineers are so smart and valuable. That just isn’t true and keeping up with the state of the art is crucial.

$1.4 million is a nice retirement fund, but I have reservations on whether that can last a lifetime, especially with 3 young children. Oh…there was no mention of how to provide for their college education.

And I also wonder at what age can these kids still fit into the 15 year old Hondas. Something bigger will be needed.

Although legal, I think using his extremely low income to qualify for income based student loan payoff seems tacky.

Maria P says:

We too fit 3 small kids (1, 3, & 5 y.o.) in the old Honda (and old Saturn sedan, which we first thought was impossible, but found out otherwise 🙂 It’s a good question, but as of now, the bigger the kids get, the less space they take, because the bulky infant/toddler car-seats are replaced with the much smaller booster seats, then with no extra equipment. and I hope that when the kids are big enough to not fit into the back of the car, they will be driving themselves 🙂
To be completely honest, we just bought a van, just because when someone comes for a visit, taking 2 cars to go anywhere is much less fun, and also because the transmission on the old Honda went kaput (make a note and be careful hauling firewood in a trailer with a Honda Accord 😉

Maria, we’ve noticed the same thing. The oldest is turning 10 and once the car seats turn into booster seats turn into just the kid, there’s a lot more room. You can fit about 2 toddlers in the back of a Civic but more like 4 10 year olds. 🙂

We’re probably upgrading to a minivan or something that seats 7-8 for our next car, too. For the exact reason you cite – if even one person tags along, we have to walk or take 2 cars. A 7 seater could at least fit our family plus 2 friends or our family plus grandma and grandpa. It would also make long road trips slightly more comfortable.

Minivans aren’t wildly more expensive to purchase or operate than Accords, so I think we’ll be okay financially.

Hello, fellow engineer! I was a civil engineer, if that helps explain the potential for jumping in and out of the working world. When I look at state of the practice in 2004 vs. when I left 10 years later, it was essentially the same software and practices in use.

We upgraded a few times from v. 5 to v7 (I think they are rolling out v8 now!), but the basic functionality of the software in use hasn’t changed (it just looks fancier and has more bells and whistles). Maybe in 10 more years it will be something completely different, but I bet I can spend a few thousand bucks on a training class and get up to speed enough to land another job.

Plenty of parents take 5+ years off to raise children and then somehow manage to find paid employment. I figure I can do the same and even have the convenient excuse of taking care of kids to explain my resume gap!

yyguy says:

YYZ guy here again.

Indeed Civil engineering probably doesn’t change as rapidly as my field, electrical engineering. Advancements in concrete and steel are probably pretty easy to pick up once you know the basics.

Though I imagine there are always new techniques in other areas of design such as earthquake resistance, etc. And other fancy materials as well.

I am surprised the software hasn’t changed considerably. Seems like my co-workers are always needing new CAD software!

As far as kids needing less space….well, maybe I was wrong, as I don’t have any kids of my own.

However, I know plenty of parents that seem to need more space because of athletic equipment or band instruments.

One of my very favorite children of a friend is a tiny little girl of 16 years that can fit just about anywhere. But that doesn’t include the trombone or the skis or the friends that she has…they all take up plenty of room.

Good luck with your retirement.

I think the CAD versions change every few years, but the fundamentals of the software don’t change as much (points, lines, layers, spaces, etc). I rarely used CAD anyway (always had techs for that). The harder part would be switching from one CAD package to another, and that’s going to be hard to switch regardless of whether you are employed or not.

There’s also a certain stage of engineering career where you have people that work for you doing CAD and don’t touch it as much. 10 years of management experience and your tech skills would be just as obsolete as if you retired early for a decade. 🙂

The folks needing stretched SUV’s to haul 16 year old tiny daughters amaze me too. 🙂 We just don’t have that much stuff, but maybe we will one day (and the kids have friends). So we’ll be ramping up the vehicle size to a minivan/mid size SUV (used, of course!) sometime in the next decade when one of our cars die or when we need a larger car. So far we have done amazingly well with our Civic and Accord (including a 2300 mile weeks long road trip up the East Coast into Canada and back to North Carolina).

Nancy Charest says:

I think that Justin likes to game the system a bit and I’m still a bit unclear on what money they actually live on. Here’s the important thing to consider while reading how Justin got all of his money — if you don’t enjoy playing home investment banker or are not really capable of understanding all of the tiny differences between one account and another, you might just be better off saving a considerable portion of you income, putting it in stodgy investments and don’t smack yourself for not having more. Remember the people who lost money in 2008 – 2009 thought they were smart too. If you are smart but not Justin Smart pick the low hanging fruit and be happy with your life.

We live on around $32k/yr and have a ~$1.4 million portfolio (though it fluctuates +/- $50,000 in any given month).

It’s nothing fancy – all index funds, mostly ETFs or Admiral shares mostly from Vanguard. No need to be an investment banker – just pick a simple asset allocation and stick with it for the next several decades (adding to it and rebalancing occasionally).

I like your advice – make sure you’re comfortable with what you have and the risks you are taking by living on your portfolio. After all, if it doesn’t work out, it’s you (and not me or Rob!) that will be figuring out how to make things work in a pinch.

Sam says:

Rob: I like how you interview your guests. I find your questions straight forward and easy to understand. You are also very courteous to your show guests. I was a little surprised that this new episode was not in the new format. I enjoy your Q&A section, where you answer other listeners questions as if “what would Rob do?”.

As for Justin’s early retirement plans….humm? First, let me say: personal finance is just that: Personal! What works for some, may or may not work for others. Bravo on his tremendous saving strategies and congrats on is 7 figure portfolio.

Personally, I am not a fan of Justin. He’s just gaming the system. His early retirement strategy is basically taking advantage of the government. Using the ACA credits and the income base student loan repayment (IBR) in his way is not what the program is all about. I guess his intent is to never payback his student loan in full. After 20 years, the program will wipe out his remaining principle balance. For all I know, Justin may also be taking advantage of Medicaid or the Food Stamp programs with his low income.

Early retirement with a seven figure nest and using governental poverty programs is in poor taste!

Mike says:

Agree wholeheartedly with last comment (Sam). Although “legal” it seems integrity is questionable when student loans aren’t paid back. Why should taxpayers take the hit? Also, I’m still questioning how you can retire by taking 4% of your taxable savings. I know you said the objective was to deplete in 10 years and then withdrawl from Roths, but I’m not sure that’s wise. Anyway, my sense is your living off your wife’s income, scamming the system with minimal payback of your loans, Obama care and who knows what else. Not sure if full story is being told. That said, great job on your savings!

Nancy says:

I’m pleased to see others were concerned, as I was,, with the decision to take advantage of income based student loan repayment to not pay back one’s student loan. I doubt the intent of the program was to allow individuals to retire in 10 or 15 years having paid the bare minimum while saving and investing $50k or more a year. And while I support the poor having affordable access to healthcare, things need to be tweaked to consider assets. Justin is not the only one gaming the system. I live in a 55+ community which is generally conservative politically, but many have no problem getting free or low cost insurance through the exchanges until Medicare kicks in while living off of sizable portfolios.

These stories of people retiring at a young age are quite incredible. I’m very impressed that a father of three children found a way to retire by the age of thirty three years old. I’ve always thought that the financial crisis in 2008 would have brought everyone down, so it’s really quite remarkable that Justin found a way to take advantage of buying stocks at half off of their usual price and take more risks with his asset allocation to earn more money. It seems like knowing how and where to invest your money is a good way to accumulate enough money to retire at an early age.