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Our guest on the podcast today is author and blogger JL Collins. He blogs about financial independence and other matters at jlcollinsnh.com. JL’s first book, The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life, was published in 2016 and has become something of a bible for people in the financial independence movement. His new book is called Pathfinders: Extraordinary Stories of People Like You on the Quest for Financial Independence.

Background

Bio

Jlcollinsnh.com

“JL Collins: The Case for Simplicity,” The Long View podcast, Morningstar.com, April 5, 2022.

Pathfinders: Extraordinary Stories of People Like You on the Quest for Financial Independence—And How to Join Them, by JL Collins

The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life, by JL Collins

Saving, Spending, and Lifestyle Creep

Lifestyle Creep: What It Is, How It Works

How ‘Geographic Arbitrage’ Can Make You Money,” by Eric Reed, smartasset.com, May 30, 2023.

Why Your House Is a Terrible Investment,” by JL Collins, jlcollinsnh.com, Sept. 22, 2023.

Higher for Longer vs. the Stock Market,” by Ben Carlson, awealthofcommonsense.com, Oct. 3, 2023.

Investing

Things Important, and Unimportant,” by JL Collins, jlcollinsnh.com, March 1, 2023.

Stocks—Part XXX: jcollinsnh vs. Vanguard,” by JL Collins, jlcollinsnh.com, Sept. 16, 2023.

Other

FI Chautauqua

Mr. Money Mustache

The Richest Man in Babylon, by George S. Clason

A Wealth of Common Sense

Quit Like a Millionaire, by Kristy Shen and Bryce Leung

Mad Fientist

Transcript

(Please stay tuned for important disclosure information at the conclusion of this episode.)

Christine Benz: Hi, and welcome to The Long View. I’m Christine Benz, director of personal finance and retirement planning for Morningstar.

Jeff Ptak: And I’m Jeff Ptak, chief ratings officer for Morningstar Research Services.

Benz: Our guest on the podcast today is author and blogger JL Collins. He blogs about financial independence and other matters at jlcollinsnh.com. JL’s first book, The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life, was published in 2016 and has become something of a Bible for people in the financial independence movement. His new book is called Pathfinders: Extraordinary Stories of People Like You on the Quest for Financial Independence. JL, welcome to The Long View.

JL Collins: Christine, it’s a pleasure to be back. Thank you for having me.

Benz: Well, we’re excited to have you back. We do want to talk about your latest book Pathfinders, which is a collection of essays from real people about how they found their ways to financial independence. Can you talk about the genesis for the book?

Collins: I published The Simple Path to Wealth in 2016. And within months of that book coming out, I started to receive notes from people talking about how they were taking the principles in that book and adapting it to their unique situation. And that was remarkable to me because when I was writing the book, I was writing it for one specific person and that’s my daughter. And she was in college at the time, so at the beginning of her journey. And she’s also, of course, an American. So, the book has an orientation of addressing someone at the beginning and it’s very U.S.-centric. And yet I was getting these stories from people all around the world taking the principles that, of course, don’t necessarily … Some of the things I say in the book don’t necessarily apply to them like the nuances of 401(k)s in the U.S. But they’re able to look past all that, identify how that relates to the opportunities they have in their own countries, and adapt the principles. And by the same token, people further on in their lives and in their journeys who perhaps had some situations they needed to unwind in order to get on the simple path were able to take this book that had started from the beginning for a beginning journeyer and adapt it to their situations. I just thought that was endlessly fascinating. And so, for years now I wanted to do a book like this sharing those stories.

Ptak: How did you identify people to be contributors and how did you decide which contributions would make it into the book?

Collins: So when I contracted with Harriman House to produce the book, we started to flesh out just what it was going to look like. We decided that rather than the original concept that I’d had of like a dozen or maybe 15 case studies, we wanted a much larger range of perhaps shorter stories. And so, what I did is I reached out on my social media to my audience, and I told them about the project and invited people to send in their tales. And of course, that was a moment of truth for Chris, my editor, and myself because we weren’t entirely sure that we’d get enough or what level of quality they’d be or what have you. So, it was a make-or-break kind of moment, but we got a great response. And not everything was usable, of course, but we had so many responses that we had more than enough to come up with 100 that made it into the book. And so yeah, it turned out to be a great source of material that came, frankly, pretty easily.

Benz: Most of these people, I would gather all of these people, are not professional writers, but there were some surprisingly good essays from a writing perspective. Can you discuss maybe one or two that stand out as your favorites either because you love the story or because you really enjoyed the writing?

Collins: There’s kind of two questions in there, Christine. The one is the stories and the level of writing. And a lot of credit goes to Chris Parker on this, who is the editor of the book, because Chris and I went through these stories and selected the ones we liked. But then, because they’re not necessarily written by writers, as you point out, they needed to be cleaned up. And if I had done that, all of these stories would read as if they were in my voice. And that’s not what we wanted. But Chris, being the professional editor he is, he managed to clean up the prose and what have you. And yet in every one of those 100 stories, you can hear the unique voice of the person who contributed. So, huge task on his part and amazingly well accomplished.

As to my favorite, that’s kind of like asking me who my favorite child is, right? I love them all. I went this morning, actually, Christine, and reread the interview that my daughter, Jessica, and I did with you that serves as a conclusion to the book. And frankly, I hadn’t looked at that in a long time. So, I fell in love with that again. You did such a masterful job with the questions that you came up with and led us through that interview amazingly well. But in the contributor stories, the range is incredible. We had, tearing something out of the headlines. We have a story from a guy in Ukraine who is following The Simple Path to Wealth. And as a matter of fact, in the last couple of days, he’s invited me to be on a podcast that he does in Ukraine, which, of course, I’m going to do. But we also got a contribution from a guy in Russia. So, here’s a country that’s been invaded and is at war. And here’s a country that’s ostracized by the rest of the world and under incredible sanctions. And yet both of these people are figuring out ways to adapt The Simple Path. But I think, and of course I love the investing—there’s a section on investing. I love those stories because investing is near and dear to my heart. And, when somebody says, “I avoided debt and I’m living on less than I earn. But I was investing for 20 years, and I just wasn’t getting anywhere. And then I discovered The Simple Path to Wealth and now I’m financially independent.”

Well, obviously, I love hearing that. But I think in some ways the stories that are most meaningful to me are the stories that have come from people who have started with extremely humble backgrounds. There’s a story in there from a guy who was a migrant child laborer and who’s now financially independent. There’s a story from somebody else who talks about how when they were growing up, the person with the flush toilet was the rich person. And I think the reason those stories speak to me so strongly is ever since I started writing in 2011, the blog, there’s been this pushback in the broader world about this idea of being able to achieve financial independence. And it’s, oh this is only for, high-income professional engineer-type people. And it’s not for ordinary folks, and I couldn’t possibly do it given my circumstances. And I tell people, if you read this book, you will never be able to say that again because I can almost guarantee anybody listening to us who reads this book is going to read about people who probably started further behind the eight ball than they are. So, you may choose not to follow this path after you’ve read the book, but you won’t honestly be able to say that it could not be done or that you could not do it. And I respond to that.

Ptak: We want to go back to the book in a moment. But since you mentioned it, what do you think of the critique that financial independence movement is largely the province of well-educated people with high salaries? You encourage people to save half of their salaries, but that’s obviously easier to do if the income is say $100,000 and not $25,000. So, do you think financial independence is attainable to people at lower income levels?

Collins: Absolutely. And as I just said, if you read Pathfinders, you will read about people in those circumstances who have in fact done it. The other thing I’ll say is that I have met people who have extraordinarily high salaries, who are never going to achieve financial independence because they’ve constructed an extraordinarily high lifestyle. And I can remember back in the ‘90s, I was having lunch with a friend of mine who was in the financial business. And this guy, this was just before Christmas, he just gotten his annual bonus. It was $800,000, which was real money back in the ‘90s. And you know what he and I talked about at lunch? How he couldn’t make ends meet with a bonus of $800,000. Now that probably sounds absurd to most of the people listening. It sounded absurd to me. But when I sat back and listened to him talk about the houses, the cars, the private schools, the exotic travels, this lifestyle that he cobbled together.

Well, he was right—$800,000 plus his annual salary was not enough for that lifestyle. But the same token, I have an old high school buddy who has never made more than $40,000 a year, and he is financially independent. So, it’s important for people to recognize that financial independence isn’t a set number. It’s not you have to have this dollar amount. It’s a combination of two numbers: what your requirements are, which you have a lot of control over, and what your income and your total portfolio is. It’s that combination. And if you have that out of balance with too much spending, then it almost doesn’t matter how much you make. On the other hand, you can achieve financial independence with remarkably modest incomes.

Benz: I want to stick with this topic of what you call lifestyle creep in the book. And there’s a whole section about lifestyle creep, which obviously can be deadly to someone’s financial plan. Maybe expand on that. Talk about why that is so problematic, how many of us find ourselves on this treadmill where you’re constantly spending more, you’re earning more, spending more. What steps can people take to beat it back?

Collins: I think the reason that so many people are on that treadmill is we live in a culture that encourages that. We live in a very commercial culture, and this is not some great conspiracy, by the way, but there are lots of companies out there, including the companies that I recommend people invest in through their index fund, that are working hard to market their services and products. And that creates an aura of you need this, you need that, your life will be better with this, your life will be better with that, or your life won’t be any good without it, or you won’t find anybody to love if you don’t drive this certain car, whatever it is. So that is a huge drumbeat that encourages people to spend every dime that comes their way and, worse, to borrow money to spend more. So that’s something that I think most people are not aware of. It’s this undercurrent that is just kind of the way it is. It’s stunning to me that it’s accepted in the United States that it’s normal to carry debt. That’s like being covered with bloodsucking leeches from my point of view. I don’t think it’s normal at all, and you certainly can’t achieve financial independence if you’re carrying all this debt.

So I think that’s what lures people into lifestyle inflation. You come out of school, you start working, now you’re making some money, and there’s all these messages of what you can do with that money and all these messages that you deserve—you work hard, you deserve this, and you deserve that. So, it’s not surprising people get drawn into this. And you have to become aware of it, and you have to be willing to say, well, yeah, there are a lot of things I can do with my money, but one thing I can do with my money is I can buy my financial freedom. And of course, you buy your financial freedom by living on less than you earn and freeing up capital to invest. And for me, of all the things that I could spend my money on, spending it on my financial freedom was priority number one.

Ptak: I think we’re going to want to go back to the topic of debt, which you mentioned, a little bit later in the conversation. Before we did that, I wanted to ask another question about saving/spending lifestyle creep. I think you’ve told people that keeping tabs on the big three categories of spending—those being housing, transport, and food—is a good way to ensure that lifestyle creep doesn’t cause trouble for a financial plan. Do you think there are other off-the-beaten-path categories that can wreak havoc on a budget? I think that maybe one of the contributors in the book had mentioned kids sports as an example. Are there others that come to mind?

Collins: You named the big three and of course they are the big three for a reason. But sure, there are lots of things—travel can be one of them. Kids sports can be one of them. And, again, we live in a culture where the opportunities to spend money are almost without limit. So, it’s a matter of priorities. As I said earlier, I don’t think anybody can read Pathfinders and honestly say that they couldn’t do it. A lot of people are going to read Pathfinders and perhaps say, I don’t want to do it. And that’s legitimate. If there are other things in your life that are more important than your financial freedom—I personally have trouble understanding that—but nevertheless, that’s true for a lot of people. And if that’s the case and you make the decision that you would rather spend your money in different ways, well, it’s your money. It’s your life and you can do as you choose. The only thing that I hope with my book, The Simple Path to Wealth, and now Pathfinders, is at least people will be aware that there is another path other than the path of just spending everything. Whether they choose to walk down it or not is entirely up to them.

Benz: Contributors shared their own specific paths to financial freedom and independence. Several of them mentioned something that was kind of new to me, which is this concept of geo arbitrage. Can you talk about what that is and how it can be effective for people who are aiming to control costs and target a high savings rate?

Collins: We were talking earlier about high incomes, and of course a high income if you deploy it well is obviously an asset to achieving financial independence. And I can’t remember exactly which story it is, but there’s a story in the book of a couple who are in Silicon Valley, and they’re in the tech world, and they’re making big salaries. But they managed to live as cheaply as possible out there and accumulate money, and they were both originally from Ohio. And at a certain point where they had enough money, they left California and moved back to Ohio, which had a considerably lower cost of living. And that’s geo arbitrage in a nutshell. You earn your money where you get paid the most and then you spend your money in a less expensive part of the world. It could be a less expensive state in the United States, or it could be an entirely different country. And geo arbitrage is now very popular with the rise of what’s come to be known as digital nomads. These are people—and my daughter is one of them actually—who have jobs that pay well, but she works remotely. She can work anywhere in the world. She can choose where to live and so there are people who will travel to inexpensive parts of the world and earn high incomes and that’s geo-arbitrage. Or they’ll just continue nonstop traveling. Or as my daughter has chosen to do, they’ll live in a less expensive part of the country for a while and then try a different part of the country.

Ptak: I wanted to ask you about maybe what’s the inverse of that. I think that one of the contributors said that moving to the more expensive area was a decision that had paid off for her family because they had better schools and could be out and about in the neighborhood. The point was that cheaping out on a home’s location isn’t always a great decision even if the overall goal is to keep costs down. Do you agree with that?

Collins: Well, again, that becomes a matter of priorities. So certainly, you can go, as this Silicon Valley couple I just mentioned—you can live in expensive parts of the country or expensive parts of the world and find ways to do that economically. And certainly, for instance, if you live in a large city, a New York or Chicago, there are certain parts of that that are going to be more expensive—rents, mortgages obviously come to mind. But then maybe you don’t need a car. And I spent the first decade of my adult life in Chicago. I’m a Chicago native, and I didn’t have a car and I lived in an unfashionable part of the city where rents were a whole lot lower. And that worked out just fine. And yet I had access to all of the walkability and wonderful opportunities that a big city offered. So sure. But it’s easy to convince yourself that you have to live in that area and then you have to have a certain kind of apartment and you have to have a certain lifestyle. And well, the next thing you know, all of your money is being taken up in that. And again, if you’re clear that that is the decision you’re making and that you’re buying that rather than buying your financial freedom, then I’m not going to argue with you. That’s your choice. But I would hope that everybody, after reading my books, is clear on what decision they’re making when they do that.

Benz: We’ve previously talked with you about homeownership and mortgages and so forth. We’re at an interesting juncture where interest rates have risen very quickly, and many people find themselves with mortgage rates that are well below prevailing mortgage rates if they were to go out and get a new mortgage. So, a lot of people are just stuck where they are. A question for those folks is how would you approach the decision about whether to prepay the mortgage if say you have like a 3% mortgage interest rate and yields today, interest rates on fixed-rate investments are much higher than that.

Collins: I actually wrote about this a few years ago when interest rates were much lower. And what I’m about to say is not carved in the stone, but just as kind of a guideline, my way of thinking about it is if I have a loan that is at an interest rate of 3% or less, well, that’s a very valuable asset, especially in this environment of much higher interest rates. So, I would be inclined to pay that off as slowly as possible, and rather than any money I would have taken to blow out that debt, I would turn around and invest because as you point out, I can simply get a better return and that’s the smart financial thing to do. If I had an interest rate that was 6% or higher, then I’d be more inclined to be aggressive about paying it off and I would do that for two reasons.

One is I just don’t like debt, so I’m more comfortable not having it at all. And the other thing is when you start talking about a 6%, 7%, 8% interest rate guaranteed, that’s a pretty nice guaranteed return. And of course, when you pay off a debt, you’re basically getting in a sense the return of whatever the interest rate is. So now, if I can get 6%, 7%, 8% guaranteed by paying off that debt, then that seems to me to be the obvious move. But then between that say 3% and 6%, depending on where you fall and depending on your own emotional feelings about carrying debt and also your feelings about the risk of investing it outside of paying off your debt, I think then it becomes a little tougher call and more of a personal call. And so, I’d analyze it along the lines of how much do I want to be rid of this debt, how confident am I about the return I can get if I keep the debt and invest the difference outside those kinds of variables?

Ptak: Whether to take on college debt is a huge issue for many young people and their parents as we know. When is it advisable, if ever, to take out student loans and how can people make sure they’re being smart about whatever amount of student loan debt they’re taking on?

Collins: Wow, Jeff, that’s a tough question and in some ways above my pay grade. I just hate what’s happened with the easy availability of student loans. It wasn’t the case when I was young. And the reason I hate it is you have a situation where these loans are guaranteed by the government, so lenders are happy to extend them and they are basically pushing them on young people who barely know what a loan is and who too often fall in the trap of graduating with tens of thousands, sometimes hundreds of thousands of dollars in loans. And I think it’s deplorable. And of course, whenever you take anything and you figure out a way to let people borrow money to buy it, that thing is immediately going to become more expensive. So, when I went to college, I went to the University of Illinois, I paid for it myself because that was doable in those days. But the accommodations were just very basic. I lived in a cinder block dorm the first year. When my daughter went to college back in, I think she started in 2010, I was a little stunned at, first of all, how much more college cost, but also how much more lavish the living conditions were. And of course, the schools have spent tons of money on their buildings and what have you because they have figured out a way to get people to pay a whole lot more for the product. So, I don’t know what the answer is. I would certainly just say be very, very cautious in taking on whatever debt, in any debt you take on, be very cautious, but especially with the student loan stuff.

Benz: I too was in that same cinder block dorm complex at University of Illinois. We want to talk about investing and you referenced higher yields earlier, J.L. You’re generally pretty pro equities, but the higher yields do make bonds and cash instruments look a lot more attractive today than they did a couple years ago. How should that affect how people approach their asset allocations?

Collins: Well, I don’t think it should affect it all that much. And the reason I say that is when interest rates rise, and of course this is not the first time I’ve gone through interest rates rising. In the ‘70s when I was first starting out, inflation was high and interest rates were high. And the returns on fixed income were high. You could get a 15%, 16% return on a money market fund in those days. But what people lose sight of is that the reason for that is inflation is high. And so, the raw interest rates you get from an investment is not the end of the story. You have to compare that against the lost purchasing power due to inflation. So, when interest rates in money market funds were 15%, inflation was running at 18% or something. So you have to look at the real interest rate. And the other thing that is striking is that high inflation is actually good for stocks. Ben Carlson, who writes A Wealth of Common Sense just a few days ago, maybe last week, had a great post analyzing just how stocks performed in different inflationary environments. And the fact is that stocks perform much better in high-inflation environments. So yeah, you’re getting a higher return on your bonds or your money market fund these days. But you’re probably also over the years going to see a higher return on your stock portfolio. I’m going to stay with the same kind of allocation recommendations that I’ve made for those reasons.

Ptak: So many of the contributors to the new book were outside the U.S. and discussed their struggles to invest in the ultra-low-cost way that we can do so readily here in the U.S. Do you think U.S. investors are maybe a little spoiled in terms of their access to very low-cost index funds and ETFs?

Collins: Absolutely. And I don’t think most of us are aware of it because most of us don’t have any exposure to what it’s like in the rest of the world. But when I would travel to Europe and I’d give talks over there or other parts of the world and I’d hear these stories. And of course, I didn’t know until I started doing that how lucky and privileged we were in the United States. But you’re absolutely right. This is the best country in the world to be an investor in, partially because of the economy we have. By the way, it’s the only country in the world where you can invest just in this country. It’s the only one that has a large enough economy for that. But also, because the tools we have available and how low the costs have become are just incredible. And other people in other parts of the world have a much more difficult time. The expenses tend to be much higher. The options tend to be much fewer. And that’s one of the reasons that I’m fascinated by those particular stories in Pathfinders and how those people, even with those obstacles, and even with those differences between their country’s markets and those of the United States, are able to take the U.S.-centric book that I wrote in The Simple Path to Wealth and say, yeah, I can’t necessarily invest exactly the way this guy’s recommending. But I can see how I can apply it to the situations that we have in our country. I think that’s incredible, and it warms my heart candidly.

Benz: I wanted to ask about geographic exposure. You mentioned that the U.S. market is a market where one could reasonably put all of their equity exposure into it and be well diversified. How about people who are living in smaller markets? How would you suggest that they approach their geographic exposure for the equity component of their portfolios?

Collins: I think for those people, assuming that they have access to it, what they want is a world fund. And you have to be a little careful here. It’s not an international fund and those tend to be funds that exclude the U.S. But if you buy a world fund, you’re basically buying every market in the world, including the U.S., and you certainly want to have that in your portfolio. So, if that were available to those folks, that would be my recommendation. And in fact, when I’ve given talks overseas and we start talking about specifics, that’s exactly what I recommend to those people. They could, I suppose, if they had access to it, invest in VTSAX as an example, which is Vanguard’s Total US Stock Market Fund. But I don’t know, I think if I were living in Germany or the Netherlands or what have you, I don’t know how comfortable I’d be putting all my money in some other country. I know that’s probably not entirely logical, because it is the same investment that I’m in. But I think for those people, if I were in those countries, I’d go to a world fund.

Ptak: You just mentioned Vanguard Total Stock Market Index fund, which gets repeat mentions in the book. It does seem that some former Vanguard fanatics complain about customer service and other aspects of investing with the company. How would you advise people to decide which company to do business with?

Collins: So, I have my own issues with Vanguard. There is no company that is perfect. I wrote a blog post a number of years ago. I want to say it was titled J.L. vs. Vanguard. And that was based on, I decided to accept their offer for a financial advisor to make recommendations. And the recommendations that were made were a suite of about four or five, I think it was five or six different funds. And when you really sat down and analyzed them, they simply duplicated what I recommend in VTSAX, the Total Stock Market Index Fund, and VBTLX, the Total Bond Market Fund. It was just kind of silliness. I do recognize that Vanguard has its issues. They just revamped their website. And I find it very difficult to navigate in ways that it didn’t used to be. Having said all of that, I’m still going to keep my money at Vanguard. And the reason for that is that Vanguard has a unique and important characteristic. And that is that it is owned by the people who own the funds. So, Vanguard’s interests are directly aligned with those of us investors.

And that’s unique. So, if you go to any other company, and by the way, if somebody wants to invest in Fidelity or T. Rowe Price or whatever, those are all fine companies. But there are divided loyalties. Because if you’re in Fidelity, which is privately held, Fidelity is trying to serve two masters. It’s trying to make money for the people who own it, which is a perfectly reasonable thing to do. It’s what every company does. And it’s also trying, hopefully, to make money for us investors. T. Rowe Price is a publicly traded company. So obviously, it’s trying to make money for its shareholders and also take care of its customers. But Vanguard is unique in that its investors and its owners are one and the same. And that’s the way Jack Bogle, the founder of Vanguard, designed it. And that’s the reason that Vanguard’s core mission is to drive down costs. Whereas any other investment company is going to want to raise the amount that they can charge for their product, just like every company wants to. There’s nothing inherently wrong or evil about that. But it’s just not quite as aligned with my interest as an investor as Vanguard is.

Benz: We’ve touched on some of the key themes of the book. And the book is organized by theme. One of them is family and the role of family and thinking about family in the realm of our financial plans. I smiled to myself because you made a casual reference to something that you called “dragged-along spouses” who you noticed at some of these financial retreats that you’d hold. So, these would be partners of people who are very engaged investors, but the partners aren’t into it at all. Do you have any thoughts on how people with disengaged partners can get their partners more engaged? It’s something I think about a lot because I talk to a lot of people who are the engaged person who want their spouse to come along for the ride.

Collins: Well, just like you just did a little bit ago, you’re asking me a question, Christine, that’s a little bit above my pay grade. When we experienced it at Chautauqua—which are the retreats that you’re referring to—what’s really interesting is these dragged-along spouses, as we’ve come to call them, show up and they’re a little uncertain. And sometimes you’ve had cases where they were even a little bit hostile. And I think they come expecting this is going to be a week of people talking about spreadsheets and all the boring stuff they don’t care about. And instead, what they find is about 30 people deeply engaged in living life in extraordinarily creative ways because that’s what financial independence allows you to do. And when they see that, they see the, instead of the number side of it, and maybe the effort side of it, they see the fruits of the labor, so to speak.

And that makes almost instant converts. I don’t think we ever had a dragged-along spouse who left without a changed view of what this stuff was all about. So, I think with that in mind, if I had any advice to give, it would be to get your partners out to FI events. And when I started Chautauqua back in 2013, I started it because I couldn’t find any to go to or speak at. And now, of course, there are lots of them. And I think that’s a great way to get your partner into the environment, so to speak, and to meet other people who are doing it. And just see the joy and satisfaction and opportunities that pursuing financial independence opens up.

Ptak: How important is financial compatibility for couples? It seems like a lot of the essays alluded to the fact that the two partners were generally on the same page in terms of prioritizing savings. And you’ve said that you and your wife are quite financially compatible, hence the question.

Collins: I think it’s pretty critical. I wrote a post early on with I don’t know how certain it was to my daughter, certain key points to keep in mind. And one of the first key points was to be careful who you marry. Don’t ever marry anybody who’s fiscally irresponsible because they’ll happily squander your money after they’ve squandered their own. And interestingly, I got some pushback on that. I had people respond saying, how dare you? Who you marry and who you love has nothing to do with money and how crass. Well, I’m sorry to break the harsh reality to you, but financial conflict is the biggest conflict in marriages. And so, you are going to be well-served if you take some time to make sure that you and your potential spouse are on the same financial page. You mentioned my wife and I are, and I used to tell the story that that was just a happy coincidence, that she and I never really discussed any of this stuff until we got married. And then it turned out that we had this great compatibility. Well, I told that story in front of her, in front of Jane one day. And she looked at me and she said, what are you talking about? She said, on our first date, you started telling me I needed to save 50% of my income. So, I guess maybe we had conversations that I didn’t remember. But yeah, I think it’s pretty important.

Benz: You’ve referenced FIRE, and financial independence and financial freedom a few times during this conversation. You’ve been called the godfather of FIRE. But you’ve said subsequently that you’re passionate about the FI piece, the financial independence piece; you’re kind of indifferent to the retire early component. Can you expand on that?

Collins: Well, so first of all, that nickname the godfather of FI, and it was FI rather than FIRE, because that is where my focus is. That comes from Kristy Shen, who is the author of Quit Like a Millionaire. And she was also a speaker at our Chautauquas. And probably five, six years ago now, she, at one of the Chautauquas, she started referring to me as the godfather of FI. And I candidly, I kind of cringed at the time. But I’ve grown to love it. And it’s a great bit of marketing. And so now I’m pleased whenever I hear people people say it. But yeah, I like the FIRE acronym because it’s clever—it’s financial independence, retire early: FIRE. But for me, it was never about retiring early. I’m still working and I’m in my 70s—I’m working on books and that kind of thing. But I’ve always loved working. I was interested in having initially what I call FU money, and then financial independence because I didn’t want to have to work all the time. And I wanted to have the freedom to step away from jobs if for whatever reason, I got tired of it or whatever, I just wanted to go do something else. And that was a hallmark of my corporate career during those years.

But I never particularly was interested in retiring early. And a lot of people do it. And I have no problem with that. But the other thing is that this whole retirement, this word “retire,” seems to be a pretty loaded term. And there’s so many people who push back at the FIRE community, saying, “Well, if you quit your job and you retire, and then you start doing something else that makes money, well, you’re not retired anymore.” Mr. Money Mustache coined the, I think it was he, that coined the term, “the internet retirement police.” And so, retirement is kind of this buzzword that gets a lot of people bent out of shape for no particular reason. For me, financial independence just means that you have more options. And if one of those options is, when I’m done working, I want to go putter around the house and garden, or I want to travel the world, or whatever you want to do, that’s fine. But the other thing I’ll say is that as I’ve met a lot of people in this community, if you’re focused enough and hardworking enough and smart enough to achieve financial independence, it’s almost inconceivable to me that you’re just going to sit on a beach somewhere and do nothing going forward. And a lot of times when you start doing those other things, they wind up paying you money. I always thought that was a good thing. And sometimes they even wind up paying you more money than your regular career job did. So, I think that’s the reason that I focus more on the FI part.

Ptak: Maybe in a similar vein, do you think that some FIRE proponents are unreasonably negative about paid work in that they think of work as something to be slogged through and gotten over with as soon as possible? What would be your advice to people who are working long hours in jobs that they hate just so that they can retire sooner?

Collins: When I have those conversations with people and, and frequently I have them at Chautauqua, they center around this idea of what’s come to be known, the 4% rule. And so, I’ll be sitting with somebody and they’ll say, “I’m in this soul-crushing job and I can’t stand it, but if I retire now, I’d have to withdraw 5% to meet my needs. And of course, that’s higher than the 4% rule. And so, I have to keep slogging.” Well, to those people, I say, quit that soul-crushing job. Because first of all, if you look at the Trinity study, 5% has a remarkably high success rate in and of itself, so you’re probably going to be all right from that point of view, especially if you keep an eye on the market and adjust things if the wind turns into your face. But also, as I said a moment ago, the odds that you are never going to make a dime again are very unlikely. And so, let’s suppose that you’ve got $1 million invested, which implies you can spend $40,000 a year at 4%. And you’re spending $50,000 a year and you’re in this soul-crushing job. My question is going to be, do you think you could figure out a way to pick up another $10,000 during the year? And again, maybe not everybody can figure that out, but anybody who’s gotten to the point of having $1 million of investable assets, I’m pretty sure they can. And so, yeah, I think with a soul-crushing job, you want to stay in it as short a time as possible.

Of course, the corollary of that is I have people who achieve financial independence, and maybe then some, and they say, “I don’t need to work for money anymore, but I like my job. I don’t want to have to give it up.” I’m like, well, you don’t have to, that’s the whole point. You’re not required to quit your job when you reach financial independence. It’s just one of the options.

Benz: You’ve referenced Chautauqua a couple of times. Can you talk about what goes on there?

Collins: Well, the first thing I have to sadly report is that last year was the last year of Chautauqua. I did it from 2013 until 2022. Of course, missed a couple of years with COVID. I loved every minute of it. And it’s one of the great highlights of my life. But it’s enormous amount of work. It would be 14 consecutive days, because we tended to do two weeklong events back-to-back of being on. And I was always committed to making sure that my interaction on the last day of the second week of Chautauqua was as positive for that attendee as the first. It’s just gotten a little bit beyond my capabilities at this point in my life. But with that said, Chautauqua was a weeklong event. We limited the number of attendees to 30. So, we had this very small group of people, and we’d go to some really cool, exotic place. And we’d hang out and have cool conversations. And we’d show them a little bit of the countryside. We’ve done it in Ecuador, in Colombia, in England, in Greece, in Portugal.

So, we’d show them little mini tours around wherever we happen to be. We’d always have a pretty cool venue and, and people really bonded in ways that I didn’t expect. In fact, I can remember the very first Chautauqua that I did, about midway through the week I could tell people were having an incredible time. And so, I made it a point to walk up to everybody and ask them, what is it about this event that is really speaking to you that’s so cool? And of course, I was hoping they’d say, “Oh, well, J.L. it was your talk.” And I have to report not a single person said that. What they all said, without exception, was that it was the other attendees—that they were with these people. And we had incredibly diverse attendees come to this. Diversity of every kind you can imagine—racial, age, economic status, sexual orientation. Incredibly diverse people, but they all had this one thing in common. And that was that they were walking this path toward FI.

And for most of us, that makes you a unicorn in your day-to-day life. And they’d come to Chautauqua and suddenly as diverse as this group was, they were surrounded by people who got it. They didn’t have to explain themselves. They could start having conversations at a higher level. And that’s what made it so powerful. And that was something that frankly, I didn’t expect when I was putting it together. I expected the cool location and people do love that. I expected the presentations from the four speakers and people love those. I expected the one-on-one sessions would resonate with people, and they did. But the single biggest thing was that they got to hang out with like-minded people.

Benz: I want to go back to the book and talk about some of the contributions in the book. Were there any in the book that really surprised you, where someone made you think about some aspect of financial independence or getting to a healthy financial life in a way that you hadn’t thought about it before?

Collins: You know, Christine, not really. And I think the reason is, as I said toward the beginning of our conversation, I’ve been hearing these kinds of stories for years. Ever since The Simple Path to Wealth came out. Not these specific stories because we solicited them at a certain point in time. But stories very, very much like them. I suppose the ones that surprised me the most was, again, getting the story from Ukraine and from Russia, given what’s going on in that part of the world. That was unexpected. The stories themselves are not as unexpected as you might think. But just that they came from those countries at war is still stunning to me.

Ptak: The Simple Path and the financial independence movement more broadly generally rests on some time-tested concepts like living within your means and setting funds aside for the future. Have you pondered why it suddenly caught fire as something radical?

Collins: You know, Jeff, that’s a great point. And somebody once said, this is the kind of stuff we talk about in the FI community is stuff our grandparents knew. My book is certainly not the first book written about it. There’s a book I love called The Richest Man in Babylon. It’s very short. It’s very simple. It’s kind of a parable. I think it was written 100 years ago. And it basically says the same thing I say, which is don’t go in debt. Live below your means and invest. So, yeah, these are time-tested concepts that have been around for probably eons. I’m not entirely sure why they have blossomed in the last decade or so. I think part of it is that when I was starting out, and I started investing in 1975, there was none of this information out there, or at least it was not readily available. And I was wandering in the wilderness figuring this out for myself. And of course, I went down a lot of blind alleys. And I knew no one. This goes back to the Chautauqua conversation from a moment ago. I knew no one who thought about this the way I did, who was walking the path that I was trying to walk. Everybody else was buying the biggest house they could afford and driving the most expensive cars. And they didn’t seem to be the least bit interested in this investing stuff.

So, it was kind of a lonely journey. In fact, I questioned, what am I doing? Nobody else is doing this stuff. And I think with the internet and frankly, blogs like mine and a lot of others that came out at the time, like Mr. Money Mustache that came out at the same time mine did. And now a lot of blogs, it’s just more people are aware that they’re not alone when they think this way. And again, that’s one of the reasons Chautauqua resonates so strongly with the people who attend is they get to experience being with people. Because it’s not common in your day-to-day life. But with the internet and events like Chautauqua, suddenly, you’re in touch with people. In the case of Pathfinders, people from all over the world who are doing this. One of the things that’s exciting me about Pathfinders is you can read The Simple Path to Wealth and say, wow, that really sounds great in theory, but does it really work? Can ordinary people really do this?

When you pick up Pathfinders, and you’re going to read 100 stories from 100 people who are doing it from just incredibly diverse backgrounds. And I think that’s got to feel inspirational to anybody who’s thinking about walking on the path or anybody who’s in the middle of walking down the path. Because there are times it can be challenging. And you might say, gee, do I really want to keep doing this? And, you’re going to find these inspirational stories.

Benz: I wanted to ask where you get financial information and wisdom? It doesn’t seem like you’d be the type to be watching a lot of CNBC, for example. But can you talk about your must-read columnists or bloggers or authors? You mentioned Ben Carlson earlier. Are there any others?

Collins: Well, so at this point in my life, Christine, I really don’t seek it out so much, because I spent decades figuring this out. And I’m kind of comfortable with where I am. Ben is someone who came onto my radar relatively recently. I want to say sometime, maybe early this year. And I think his work is phenomenal. And he’s very prolific. He puts out a post every day. And, I used to think, oh, I got to save that one. I’ve got to save this one. And, next thing you know, you’re saving them all. Mr. Money Mustache, who I alluded to earlier, he doesn’t write as much anymore. I don’t write as much anymore, for that matter. But he’s got a blog filled with great content. Kristy and Bryce from Quit Like a Millionaire do great work. The Mad Fientist, he does very little anymore. He was, in the early years along with Pete, Mr. Money Mustache, and myself. But he’s got a portfolio of great work that impressed me at the time. And I’m sure it would impress me if I reread it. Of course, there are a lot of new voices out there that I’m not as familiar with as I should be that are worth checking out.

Benz: Well, J.L., as always, this has been such a fun and informative conversation. Thank you so much for taking the time to be with us. And congratulations on the book.

Collins: Well, thank you for that. Thank you for having me. Thank you for the great questions. This was a lot of fun for me, too. So, I hope our listeners enjoy it.

Ptak: I’m sure they will. Thanks so much.

Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: And @Syouth1, which is S-Y-O-U-T-H and the number 1.

Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at [email protected]. Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. While this guest may license or offer products and services of Morningstar and its affiliates, unless otherwise stated, he/she is not affiliated with Morningstar and its affiliates. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)

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