“Go small, go now” is a common motto heard in the sailing community when talking about the “right time” to cut the lines, leave the rat race behind, and begin your sailing adventure. The idea is that you don’t need a massive boat that will drain all your money and that you don’t need huge amounts of savings. Instead, what you need is a sense of adventure and the realization that if you don’t do it now, it may never happen. Go small, go now.
I hate that motto.
I understand it. I get the spirit of it. But like most one-size-fits-all life advice, I find it naive. The idea that anyone, at any time, can just quit their current life to fulfill a drive for adventure completely ignores the fact that we all live complicated lives. It is great that some people can go small and go now. But most people can’t. Some are taking care of family members that depend on them. Some have medical issues that need to be resolved. Some are buried in student loans or credit card debt. Some have work commitments and their abrupt departure would harm others. Some simply don’t have the funds to last more than a few weeks. And some value the security of knowing how they will pay for food 2 years from now.
So we chose not to follow “go small, go now”.
We will “live small, go when ready”.
As we explored how to retire early and got to know the stories of “young” cruisers that are out there sailing now, we identified three general types.
You’ll find what we call the Brave Youngsters. These are mostly young couples that had regular jobs that allowed them to save enough money to quit their jobs, buy a small boat, and start their journey with just a few months worth of expenses in their bank accounts. Their plan is often to find a way to make a living while cruising when their savings run out. Some are successful. Others are back at work. Some found success by creating high-quality video content that fans financially support through Patreon and similar websites. But that’s the minority. Most often, we see couples that find regular jobs at marinas, have skills that make them extra cash, or even come back to land during the offseason to replenish the cruising kitty. They are resourceful. They’re grinders and risk takers. They may not know where their money will come from in 2 years. But they have time. They are young. They always have the option to come to back to land and reinvent their lives.
Clearly, this is not us. We are not that young. We don’t have “useful” skills. We are not video people. And we are too risk-averse to quit our jobs without knowing how we will eat in 2 years.
Then we have the successful Business Owners. These range from young tech entrepreneurs, to middle age business owners, to doctors, dentists, and other professionals with their own practices who had very successful yet short (by choice) careers. These people usually worked extremely hard and were fortunate enough to sell their business and accumulate the type of wealth that allows them to sail indefinitely. They don’t ever have to work again.
Unfortunately, this is also not us. Although some of our readers may know that I am the founder of a software startup, more than 90% of similar early-stage companies fail. So our plans and hopes do not depend on this company surviving. We hope that is the case but we will not depend on it. We are risk averse. We’d like more certainty.
And finally, you will find the Frugal Paycheck Workhorses. These are young(ish) and middle age couples with regular jobs and biweekly paychecks. These are the couples that decided to live frugally, worked like their dreams depended on it, and made smart financial decisions many years in advance. They are the workhorses that drove beat-up cars, split entrees at restaurants, and lived in houses well below their means.
This is definitely us.
“Driving that 1999 Corolla for so long doesn’t look as silly now, does it?”David of Sailing Kairos5.
The not truly Five Year Plan
Although in January of 2019, we started openly talking about our “5-Year Plan“, like many frugal paycheck workhorses, the plan has been in the works for many years. I would say it began immediately after we got married in 2011. Suddenly, our expenses were cut in half and our income had doubled overnight. We became DINKS.
In similar situations, most couples would adjust their expenses. Maybe we should get a bigger house. Maybe you should get a new car. Maybe we should finally get cable. Maybe we can replace that carpet with cat pee we threw away.
But we didn’t. Instead, we paid off over $120,000 dollars in student loan debt in 3 years and fixed the foundation of our house. Literally and figuratively. We only splurged in travel. We lived on less than one of our salaries and contributed the rest to the stability of the financial system.
And 3 years later we found ourselves debt free and with a sizable income surplus once again. But we kept living in the same 900 sq ft house with the single bathroom and the micro kitchen. It never occurred to us to adjust our expenses. We didn’t move. We were used to being frugal. It came naturally.
As I mentioned in our 5-Year Plan, Yolanda’s father retired at 51 after working for decades as a Millwright. He was her workhorse role model, working 4 ten-hour shifts plus weekends. Yet, I don’t understand how he did it. What level of discipline one must have to raise a family with two kids, give them everything they needed, and still live frugally enough to be able to retire to a house on a lake at such a young age. But I should not be surprised. He taught Yolanda how to calculate amortization tables – BY HAND! She took after him.
My relationship with money has been much more complicated. My frugality began more out of necessity than natural talent. In the
So years later, once we finished paying off all of our debts, it came naturally for us to keep our frugal life going. Then, when Yolanda’s father got diagnosed with cancer, we began to think about our future. I don’t remember when it happened. I don’t recall any explicit conversations. But at some point, we decided we wanted to buy a boat and do everything we needed to do so we could start sailing full time by the time I turned 51.
And that is our plan.
Setting up a financial plan was tricky. Until then, we had put most of our savings into traditional retirement accounts. However, retiring early involves living many years without a paycheck before being able to access those accounts. We needed a plan to save for the in-between years. We had to calculate our total income needs between our early “retirement,” when I turn 59 1/2, and then literally until we die. Then, it was just a matter of saving.
Our current savings plan/expenditures is as follows:
|Gross Income||Take-Home Income|
|Fixed Living Expenses||26%||40%|
|Emergency House Savings||4%||7%|
|Misc Variable Expenses||5%||8%|
|Liquid Retirement Investments||25%||35%|
As you can see, we save >50% of our gross salary, nearly equally divided between traditional retirement accounts and liquid investments (mostly ETFs). For most people, the idea of saving 50% of their income sounds insane. Yet, in the FIRE movement (Financial Independence Retire Early), such saving rates are considered moderate at best, as they usually aim to save >50% of their take-home income.
Although saving 50% of our take-home income would expedite our early retirement, we don’t want to wait to live our lives. Doing so is a risk. We choose to allocate 10% of our take-home income for travel. We are healthy now. We want to travel now. Traveling is not a part of our lives that we wanted to pause, on the hope of an even more exciting future. We think everyone should splurge on something that makes their lives meaningful and brings them joy. For us, that something is travel.
So, how can we save 50% of our income and still travel?
The answer is simple: we are frugal workhorses. In the FIRE movement they have obvious, almost cliche advice for those wanting financial independence: make more, spend less. Or do as we
Let’s start with the frugal part.
- We live in a 900 sq ft house that I was lucky enough to buy at the bottom of the housing market crash of 2008-2009. Consequently, our mortgage is <5% of our gross income. Although the house has doubled in value since I bought it, its current value is only about 1x our annual salary. In essence, we live in a house that is significantly cheaper than what we could afford. And we are not moving.
- We have a strict $200/month entertainment & restaurant budget and yet we are able to go out to eat twice a week. How? We always share an entree and never go to expensive places. Our favorite go-to bar has a $10 veggie burger and $5 beers. Our dinner bill comes to $25 including a 20% tip.
- We buy new clothes and new shoes only when the old ones are, frankly, embarrassing.
- We don’t buy each other presents. We are just not into the gift-giving thing. We may go out to eat during special days but we avoid physical gifts. This is actually quite smart, as the economics of gift giving are clear: gift giving is inefficient.
- I am vegetarian and Yolanda is vegan, which saves us tons of money in meat costs and will save us even more in lower health care costs when we are old.
- Relatedly, our grocery budget is more in line with that of healthy college kids than DINK professionals. We don’t spend any money on wines, liquor, expensive cheese
andimported olives, poultry, meats, or dairy. Once a year I buy meat when I host a barbecue for my graduate students and I’m always shocked when I see the bill. How can anyone afford to eat meat?
- We don’t have kids. I know. It is unfair. Those things are expensive.
We are also workhorses.
Below is Yolanda’s progressively increasing number of overtime hours that she has worked since 2012. Last year alone, she worked 61 days of overtime. That is close to 500 extra hours. That is 12 extra 40-hour work weeks, all done on the weekends. She works four 10-hour shifts Monday-Thursday, takes Fridays off, and then works most Saturdays and Sundays. She is a workhorse.
I don’t get overtime at my University job but I do what I can to contribute to our home’s workhorse culture. For example, I am now serving a high-level administrative role in my department for which I get course releases (i.e., a reduction of my teaching load). I decided I needed the money much more than the time so instead of my course reduction, I requested to get paid a supplement. This is essentially my overtime as I now teach a full load in addition to my administrative position. On top of this, I spend most weekends and evenings working for my startup and doing everything I can to make my company part of the lucky 10%. So far so good.
And that is, mostly, how we will be able to retire early and sail around the world. I say mostly because we have also been
We are Lucky Frugal Workhorses.
Feel free to ask questions below or via Facebook. We will continue the financial conversation soon and discuss in detail how we calculated the amount of money that we’ll need to retire at the end of 2023.