[Happy Friday!! Got a special guest to the site today, Bob Lai from Tawcan.com, who talks about what it’s like growing up in a family with FIRE in their veins. You can’t always help who your family is or how they manage their money, of course, but when you find someone rockin’ it (family, friend, colleague) be sure to latch on and learn from them! It’s all about who you surround yourself with!]
At FinCon17, I was invited to a FIRE (Financial Independence Retire Early) beer tasting party by Carl from 1500days. At one point of the night, and many beers in, I joined Carl and a few bloggers on discussing what his life has been like since retiring from his job…
“FIRE is not a foreign concept for me at all, it runs in my family!” I blurted out at some point in the conversation. J. Money later heard of this, and asked if I’d share how impactful this has been, both in my life and my personal finances.
Below is a little about each of these family members of mine, followed by the lessons learned growing up around them. I hope you find it useful.
Cousin #1: We Work Because We Love To
One of my cousins, let’s call her Cousin #1, and her husband met at medical school and opened a medical clinic together in Taiwan after residency. Although they make good income, they are also careful with their expenses and investments.
Cousin #1 and her husband invested in the stock market, but the key to their financial success really came from purchasing several apartment buildings in nearby universities. Because university students always need a place to stay, these apartment buildings are constantly in high demand.
Based on their rental property investments alone, I had a suspicion that they were financially independent. This was later confirmed when we talked about their rental income. Cousin #1 and her husband have been financially independent since the late 2000’s when they were in their mid-40’s.
Despite being financially independent, they both continued to work at their clinic because they enjoyed what they did and got their schedules down to only 3 times a week. They also employed people at the clinics and felt responsible for their employees.
Since reaching FI, they have been reinvesting their passive income to purchase even more rental properties and stocks. Their passive income has not surprisingly increased over the years. They have also been able to give back to the community using their passive income.
They are enjoying FI life while still working because they love what they do.
Cousin #2: Life Planning vs “Retiring Early”
When I talked to Cousin #2 about his early retirement, he emphasized that he does not see it as “retiring early” but rather life planning.
While studying Management Information Systems at college, he realized that if he was still sitting in front of a computer coding programs when he turned 50, life would be extremely boring. Therefore, during the 3rd year of university, he started learning about finance and economics. He spent time learning how to read company’s financial statements, the different financial indicators, and how to evaluate the price model of bond and financial derivatives. Once he was familiar with these topics, he started investing in the stock market.
Cousin #2 also pointed out that high income does not automatically lead to financial independence or early retirement. He stated that to achieve where he is today, he had a secret weapon – cash flow.
While he was single and later once married, he and his wife were spending less than 50% of their take home income for over 15 years. Because he had a plan and his wife was supportive of the idea, saving over 50% income was not difficult at all for them. Rather, it felt like a seamless process.
My cousin called it quits when he was 42 years old. He went from working over 12 hours each day at a Taiwanese high tech company to becoming a stay-at-home-dad.
Roughly 80% of their passive income is generated through their stock portfolio and 20% comes from real estate. His wife still works today. But just like Cousin #1 and her husband, Cousin #2’s wife works because she enjoys what she does.
Since retiring, Cousin #2 has also been able to focus more on exercising. On weekdays, he would take his kids to school in the morning, then head out biking for around 40 km (25 miles) or play badminton before picking them back up again. On weekends, the family would often go on trips or go out camping. He has been able to enjoy his life more and pursue his interests. Early retirement life is good.
When I met up with him in Taiwan in October, he told me that he has been reading my blog. He was intrigued about my FIRE plan, and over dinner we chatted about FIRE, investing, and life. It was great that we could openly discuss such financial related topics!
My Father: Forced FIRE
I still remember the day my dad told my mom and my younger brother that he had handed in his resignation letter. We were all in the hospital after my mother had just completed a minor surgery, and from what I could recall there was a lot of tension between him and the president & CEO of the company. My dad hadn’t been enjoying his job for years, and as someone who worked directly below the president & CEO, he had to make a lot of tough decisions against his will
My dad’s resignation roughly coincided with our immigration to Canada. He resigned about a month before we all left Taiwan to start a new life.
When we immigrated to Canada, my dad tried to look for a job but there was nothing related to his field of work. After evaluating our household finances, my dad decided to just stop working.
He was 43.
Although my dad stopped working, his life was still quite busy. My dad, alongside with my mom, became the biggest supporters for me and my brother. Without their support and help, I wouldn’t have been able to learn English and get out of my ESL classes in under a year.
Growing up, my dad would drop off my brother and I at school every morning, then pick us up afterwards. He attended all of our extra-curricular activities, ranging from basketball games, volleyball games, field trips, band concerts, etc.
When my brother and I needed help, he was always there.
FIRE was not prominent back in the late 90’s and the 2000’s. In fact, we didn’t even know the terms “early retirement” or “financial independence.” We simply viewed that my dad was forced to stop working, and my parents had to figure out how to support our family financially in other ways.
My parents started looking into passive income streams, and eventually found success in three key areas: stocks, GIC’s (The Canadian equivalent of CDs (Certificates of Deposit)), and rental property.
It also helped that frugality and stealth wealth were engraved in my family’s DNA. Growing up, we didn’t have any fancy toys or fancy clothes. We were thrifty and mostly wore second hand clothes. We focused on simplicity, value, quality, and experience. There was no need to show off by driving fancy cars, wearing expensive designer clothes, or having the latest and greatest electronic gadgets. Our family only ever had one car, which my parents would drive for 7 years+ before exchanging it in for a newer one.
Thanks to my parents, both my brother and I were immersed in the family financial decisions. We learned about saving money and the different types of investments.
Another benefit of non-working parents? We went on extended road trips all the time!
When I was in high school, every summer we would go on road trips that usually lasted over a month. One year, we flew to Toronto and drove around Eastern Canada and Eastern United States. Another year we drove from Vancouver to Alaska and back. Another time we drove from Vancouver to New Orleans and back. Then once to Prince Edward Island to drive around the Maritimes and Maine. Later would drive to Banff and Alberta multiple times.
Throughout these road trips I obtained immeasurable knowledge and experiences that classes or books would never give me.
5 Lessons Learned Growing Up In a Multi-Generation FIRE Family
Growing up in a multi-generation FIRE family has greatly influenced the way I see financial independence and early retirement. I have been fortunate to learn many things through my two cousins and my dad. Here are some of the main ones.
#1. FIRE has many different looks
FIRE does not have to look a certain way. Cousin #1 reached FI but continued working, Cousin #2 retired early but his wife still works, and then we have my dad who was forced into early retirement. There is no common trend in all 3 cases. If you believe FIRE must look a certain way, then you don’t know the true concept of FIRE.
Financial Independence Retire Early simply means creating freedom and flexibility in your life. It means you can make your own choices on how to spend your money and time.
FIRE gives you more power to take charge of your life, and what you do with it is entirely up to you. You are not living off an approved checklist – you are the one who creates the list! Better yet, you can decide to not create any list at all.
FIRE also gives an entire different perspective when it comes to work. When you are financially independent, you are no longer working for that paycheck every 2 weeks simply because you need the money. You are working because you enjoy what you do, not because you have to. This shift in mentality is extremely powerful.
#2. It’s important to openly discuss finances
Rather than treating money as a taboo subject, discussing money topics openly is vitally important in my multi-generation FIRE family. My parents and my brother and I talk about our salaries, stock investments, and real estate investment opportunities regularly. My parents involved my brother and I in household financial decisions since we were young. Similarly, I can talk to my two cousins about money and other financial topics anytime I want and continue learning valuable lessons from them.
The more openly we discuss money, the more we can learn from each other. Money is simply a tool in life. It is not a dirty word. Having open discussions helps to decrease possible tensions and arguments you may have with family members.
#3. Know what you want in life!
The biggest lesson I have learned from my cousins and my dad is to think about what I truly want in the future. What is keeping me motivated on reaching my dreams? What tools are available to me to reach my goals? And most importantly, do I have any backup plans in case my first plan doesn’t work out?
So what do I personally want when it comes to FIRE?
My wife and I’s goal is to have enough passive income to exceed our annual expenses. Most of our passive income streams come in the form of dividend income. This year, we are on track to receive close to $15,000 in dividend income for doing absolutely nothing while our money works hard for us.
We plan on relying on dividend income rather than the 4% safe withdrawal rule to achieve FIRE, simply because we want to pass on our dividend portfolio to our kids in the future. However, this doesn’t mean we wouldn’t sell any stocks.
Because my wife is from Denmark and I am from Taiwan and we live in Vancouver Canada, we plan to move to Denmark and Taiwan sometime in the future. We plan to live in each country for 2 years minimum to allow our kids to learn about the two different cultures and languages. We plan to explore the nearby countries while living “abroad”.
We also have a dream of traveling the world for a year with our kids. My wife and I believe this is a great way for all of us to learn and gain valuable knowledge.
Beyond that, we don’t have concrete plans. We want our FIRE plans to be flexible so we can alter our plans when necessary. This is why we aren’t perfectly set in our passive income plans and don’t even have a specific FIRE date for that matter. Whether we decide to continue working once we are financially independent is entirely undecided at this point.
#4. FIRE builds stronger relationships
Looking back, I feel very fortunate that my dad could attend all my school events. This is something both of my cousins have been able to do with their kids as well.
Being present at your kids’ school events and other important life events are extremely important. It is a great way to build stronger parent-child relationships. FIRE means having more time on your hands so you can spend more time with your kids, your partner, and other important people in your life.
My oldest kid is in pre-kindergarten this year, but due to work I have not been able to attend all of his field trips. My daughter is less than 2 and she loves to play with me. I try to spend as much quality time with both of my kids as possible when I am at home, and I try to do more every day, but other times I fail. Being FIRE’d will allow me to become even more involved with my kids for years to come.
(Editor’s note: This is exactly why I want to become a stay-at-home-daddy who blogs on the side vs a full-time blogger who dads on the side! Your kids are everything!!)
#5. It’s all about Stealth Wealth
When I examine all 3 of my family members who are FIRE’d, stealth wealth is the only common thing between them. Stealth wealth means not having the needs to show off your wealth. It means driving the same car for many years, buying good quality items that would last a long time, buying second hand products when it makes sense, simplifying your life so you don’t own random crap, and not buying things for the sake of buying them. When one gets the idea of stealth wealth and truly master it, FIRE is something that will be within a close reach.
I have been fortunate to see firsthand how several family members have become financially independent and/or retired early over the years. Life is full of possibilities and choices. FIRE is simply one great option that can bring in more choices for you and your family.
What you do with your FIRE life is entirely up to you. Be as creative as you can!
Bob Lai (aka Tawcan) is a Vancouver Canada based blogger. A millennial, frugalist, investor, photographer, cookbook author, and outdoor enthusiast, he started his financial independence journey in 2011 after a financial epiphany. Since then he has amassed a dividend portfolio paying over $1,300 per month. He created his blog Tawcan.com chronicle his quest for joyful life and financial independence.
PS: “Tawcan” is a combination of “Taiwan” and “Canada” that Bob made up if you were wondering ;)