Millionaire Librarian

A Middle Class Path to Early Retirement

recent posts

about

  • The Big Decision I Made Five Years Ago that Allowed Me to Retire at 38.

    The above two houses are very similar. Both are around 1200 sq ft. Both have central air and were updated in the last 10 years. However there are two key differences; the price and the location.

    One house is in rural Oklahoma in a small city of 20k people and the other is in Nashville where housing prices have boomed in the last decade.. Unsurprising to many people, the Oklahoma house costs much less but how much less may be shocking. The Oklahoma house is $80k while the house in Nashville is an astonishing $389k. The old adage rings true “location, location, location,”

    However, what many people don’t truly realize is that by choosing Nashville over rural Oklahoma you are enslaving yourself to decades and decades of work. By picking rural Oklahoma you could retire early.

    In 2020, I chose to live in rural Oklahoma and retired late last year at the age of 38. Though possible for many but not all, I found a position paying 90% of what I would have made in a large city. I bought a cheap house like the one above, and I saved and invested exclusively into index funds until I could retire. I did this on a public servant income where I never made above $85k.

  • Moving Abroad With a Baby Girl.

    My family has tossed around the idea of moving to latin america for years. Initially we were looking at Boquete, Panama. I closed this pathway due to the government requiring a large deposit of 200k in their banks or real estate. That was too much for us.

    A few months ago we discovered Ecuador. We found out they only required a little less than $50k investment and upon further exploration we found out that our bachelor’s degree satisfy a requirement for a temporary visa.

    After much thought and hundreds of monte carlo simulations we have decided to move to Cuenca, Ecuador.

    With the influx of cash from selling cars and household goods we have decided to pay off lingering student loans that will no longer be forgiven.

    Part of my worry about this decision is that we will remain largely invested in the US centric S&P 500. We do not feel good about the future of America or its stock market. However, I try not to base my investment decisions on political changes no matter how extreme so I will remain fully invested mostly in the US.

    Despite these academic beliefs, I am worried. I believe we are the closest to severe recession or depression since the great recession. Tariffs cause inflation and effect the lower and middle classes most. I also worry that once foreign countries move their trade to other countries then they will be reluctant to move it back; especially during this presidency.

  • Learning More about Real Estate.

    Since moving last July we have been renting our house in Altus Oklahoma. That has been a great decision.

    As fate may have it that we will probably be moving back to Montgomery Alabama. There are better work opportunities there than anywhere else at this time for us. Montgomery is also a good area to buy and own rental property.

    Success with the Oklahoma property and us probably moving back to Montgomery has led me to be bitten by the real estate bug again. I have been reading retired Air Officer RIch Carey’s blog since 2019 who has been very successful investing in the area and reached out for some neighborhoods to limit my search. I’ve also found Coach Carson and a great spreadsheet he made about assessing the potential of a property. As a note, I plugged in my numbers for the Oklahoma house and they are excellent.

    All of this research has been entertaining as I have still a lot to learn about real estate. It is a financial frontier with areas I still need to explore. Also looking back at the other two properties I have owned in the past I regret having sold both of them.

    Our plan currently (which probably will change) is to purchase a house to live in and when we move and then use as a rental later. I also want to buy a new rental house every two years with 20% down until we have 4 or 5 total rentals. When I have modeled this scenario in ProjectionLab it has done much better than continuing to invest solely in index funds. The houses will be in traditionally blue collar neighborhoods.

  • Financial Expert Short Biography: Dave Ramsey

    There is a lot to say about Dave Ramsey. On one hand he is probably responsible for helping more people with debt in the US than anyone else.

    On the other hand his views lack nuance and he demands obedience from both his staff, fellow personalities, and viewers.

    Part of what makes him so successful is how he entertains by beating simple messages into followers. Part of this simplicity is because of the fundamental religious foundation of his views.

    There can be little nuance when you believe sin is being discussed.

    Despite this Dave is one of the best speakers against debt when 56% of Americans cannot afford a $1,000 emergency expense. However, he is a debt crusader even when vanquishing debt is not financially optimal like delaying investing to pay off low interest debt.

    After you are finished paying off debt comes the time to start investing and this is when his advice is especially poor. Dave recommends four types of funds with category names that are vague. All of which you can get through his SmartVestor Pros for very high costs. He also chooses these funds by historical returns. This is such bad advice that it is required by regulatory agencies that “Past returns are not indicative of future returns.”

    Also, his advice fails when he recommends a safe withdrawal rate. He recommends that you can withdraw 8% which is much higher than the Trinity studies proven and tested 4%. This advice is dangerous and his justification is that the market on average returns 10%. The problem with this advice is sequence of return risk. If you start withdrawing 8% during a market downturn you will run out of money in less than a decade. It reminds me of the parable of the 6 foot man who drowned in a river that was on average 4 feet high. Its not the average that you should fear but the extremes.

    Overall I think Dave is somewhat helpful. As a viewer you can also expect to see a good tongue lashing eventually. Honestly his debt advice isn’t terrible. and helps many people get the wake up call they need. However, once someone transitions to investing money they would do much better to listen to the Money Guys, Money with Katie, Kosher Money, or anyone considered a Boglehead,

  • Financial Expert Short Biography: JL Collins

    The personal finance expert landscape is always changing and I enjoy listening to almost all of them. I am going to review, compare and contrast various financial experts. Please comment below if you have a financial expert that you would like me to review.

    JL Colllins is my favorite financial expert. When I was a librarian I often recommended his books to military trying to learn more about personal finance. He has three books which I have read multiple times. In the chronological order there is the Simple Path to Wealth (TSP), How I Lost Money in Real Estate before it Was Fashionable, and Pathfinders.

    TSP lays out the simplest and most powerful way of building wealth I have found. Collins is a self-defined Boglehead which I have found to be the most academic and least exploitative personal finance community. This group follows the teaching “St. John Bogle” which promotes utilizing index funds.

    Collins is known as the “Grandfather of Financial Independence.” He was early on the scene of the modern day FIRE movement (Financial Indepepdence Retire Early).

    One area Collins’ advice is controversial is that he prefers renting to owning a house. His second book details renting out a condominium that he calls an alligator. This is because the property ended up “eating him alive.” We recently ran a comparison between renting and buying and currently we are getting much better deal renting. Theres some great rent vs buy calculators that I recommend people utilize trying to make this decision.

    JL believes while working to invest in one fund, VTSAX or the Vanguard Total US Market. This idea is simplistic but is powerful in that you just put your money in the fund and sit back and watch it go up. No rebalancing or complicated strategies. When you are retired you add bonds to “smooth the ride.”

    Collins also popularized the idea of FU money and how when you buy investments then you are effectively buying back your life. Another idea I have revisited recently is allowing money to let you live on your own terms including taking large breaks from work.

    Overall JL is my favorite financial expert. He is not a provacateour like many financial expert “influencers.” His advice is simple, thought provoking, honest, and powerful. He embraces frugality but makes it purposeful. His advice is simple but that makes it purer and easier to follow.

  • Schwab VS Fidelity VS Vanguard

    There are three major discount brokerages; Schwab, Fidelity, and Vanguard. All three have have rock bottom fees and expense ratios which is the most important part. In this post, I will discuss, compare, and contrast each company.

    Charles Schwab was the first discount brokerage I used. Schwab is publicly owned, has low prices, and mostly great customer service. I have had some issues with my wife rolling over an IRA previously, Where Schwab excels is in their user interface platform. In my experience it is the most intuitive. Another benefit of having a Schwab Brokerage is having access to Schwab Bank. I lived overseas in Korea and Schwab Bank has free ATM withdrawals and excellent exchange rates. This made Schwab Bank exellent to use internationally. Overall I feel Schwab is the best company to use for most people.

    Another great company is Fidelity. Fidelity is privately owned and generally is a great company to work with. They have low prices and fees and amazing customer service. One place they are lacking is their online platform. I had a 401k with them and changing what I was invested in was never very intuitive. Due to mostly their lackluster interface I rank Fidelity second best, but I don’t hesitate to use them if they have a feature that is better than Schwab.

    The last company is Vanguard. Vanguard has a unique organization where the owners of funds are the owners of the company. This means that the company’s goals and your goals are aligned. Vanguard also invented the index fund and has a great variety of index funds. Jack Bogle was the founder of Vanguard and the “Boglehead” philosophy is what I most closely identify as.

    However, Vanguard is known for having a less intuitive interface and worse customer service than the other two companies. I actually own Vanguard’s VIOV ETF through my Schwab brokerage. Through this tactic I am able to get more variety of funds with arguably better customer service.

  • Knowing What You Own

    I watched an interview of author Jason Zweig and he spoke on the importance of knowing why you own something.

    I own index funds. They are the best way to own a diversified portion of the stock market. They also are cheap which means you keep more of your money invested.

    By owning index funds, I am putting my faith in the United States stock market which means I am putting my faith in the United States economy. Investment wise there isn’t a surer bet.

    Many knowledgeable investors recommend further diversifying into international stocks. For some time, I followed their recommendation, but continued poor performance and immature foreign accounting pushed me into only owning domestic stocks currently. JL Collins also speaks and writes how by owning domestic companies gives you international exposure because the companies sell their products internationally.

    Jason Zweig’s also explained that if you own individual stocks then you need to know the business. This is different than what the stock price has done. He recommended reading the last 3 years of annual reports as well as the last 4 quarterly reports. This is because you are speculating when you only track the stock price and where the stock ultimately lands is dependent on the underlying business fundamentals.

    Knowing what you own is useful for many reasons, but most importantly it stops you from selling when the price drops dramatically which is a real killer to wealth building.

  • The Presidential Election, Markets, and Limiting Social Media.

    President Donald Trump was resoundingly elected as president. He won every swing state, but many citizens fear we may have had our last democratically elected president. Ray Dalio’s predicted that the current political and societal atmosphere mimics the populism of the 1930’s. That looks correct. In America, half of the nation is in mourning and the other half in celebration.

    The markets are favoring certainty and have shot up. Small cap value jumped 6% the day following the election. This is the largest jump in one day I can remember and has been a silver lining. Also, Missouri passed multiple liberal ballot measures including a state-wide minimum wage and encoded abortion rights in their state constitution.

    Going forward I think it is important for me to stay away from catastrophizing social media echo chambers and watch the world turn slowly from my front porch.

  • U.S. Politics and War in the Middle East

    We are around 5 weeks from electing our next president. Iran sent 200 rockets into Israel. People are anxious and worried about all the uncertainty. What should you change regarding your investments?

    The answer, as it often is, is you should change nothing.

    My stocks have value because they are partial ownership in American businesses and the American economy. There will be bumps along the way but I am betting those thousands of companies will continue to find ways to innovate and be profitable. If I am wrong then we have more important issues to worry about than currency. Presidents are important but economies are resilient, persistent, and grander than any one person, even the president.

  • Behavioral Strategies for Saving More Money

    1. Automate saving and investing. When you automate something you make something that is hard for most people easy to accomplish. You learn how to live on less when the money is not in your account. This is due to the money being less accessible and often having to pay penalties to access it.
    2. Automate bills. If you can minimize how many transactions you manually pay then you lower your decision fatique and make better choices.
    3. Anchoring. Anchoring an amount you want to save can help you achieve your goals. Setting an expectation that is reaching but achievable can give you a goal to hit.
    4. Require Purchase Downtime. Require a week of considering a purchase before you make a purchase in a certain category or over a certain amount.
    5. Framing. Frame your savings as life or security purchased. You can strengthen this mindset by reflecting on the power of compounding over long periods of time.