How hacking my wants helped me experiment with early retirement

During his Third Tuesday Toronto talk on How to Live an Amazing Life (see notes), C.C. Chapman saw me sketchnoting near the front and called it out as an example of a creative and unusual profession. He asked (probably rhetorically) how I explain it to other people. I said that I usually told people I was retired, which boggled even more people. He said I should tell my story more.

So this is where I am, how I got here, and what I’m learning along the way. I’ve been extraordinarily lucky, so this is definitely not a recipe for how you should live your life. (Hard to plan for luck!) But maybe it helps show some of the possibilities, and maybe that will shape some of your decisions, and maybe that will lead you to living an even awesomer life than I do. (Please share your notes!)

How I prepared for this phase

It helped that I had never been buried in debt. I graduated without student loans, thanks to scholarships, assistantships, and my parents’ financial support. My mom had drilled into us the importance of never carrying a credit card balance and of living within our means. I’ve never had a car, so I’ve never had a car loan. W- owns the house we live in, so I’ve never had a mortgage. My parents are doing all right, and so far they haven’t had any major health issues. This gives me a lot more space than most people have, and I’m grateful for this excellent start.

I had saved the majority of my income ever since I started working at IBM. I grew up reading personal finance books, so when I started working, I was excited by the opportunity to practise good habits and resist lifestyle inflation. I knew I wanted to try other things someday, and a good nest egg would help me with that. I remembered how my sister saved up for her trip to South Africa. She told us how she would say to herself something like: "One hamburger here, or one more day in Africa?" That made it easier for her to make frugal decisions. I also learned how to think about expenses in terms of how much time it took me to earn the money to pay for them. Was that purchase really worth several hours or even days of my life? Usually, the answer was no.

Keeping my wants simple meant that I didn’t feel deprived. I kept the same lifestyle I had enjoyed as a graduate student, aside from occasional new expenses like buying office clothes. I still enjoyed home-cooked meals, books from the library, and taking public transit or my bicycle; I didn’t need to swap those out just because I was earning more. I didn’t buy designer handbags, perfume, or makeup. W- and I agreed that we wouldn’t buy each other gifts. Stuff was just stuff, after all. Reading books like A Guide to the Good Life: The Ancient Art of Stoic Joy helped me realize that a lot of luxuries that other people might consider part of happiness are entirely optional and could easily be substituted by inexpensive or free activities that I enjoy. I’m a happy person by default, and I’d learned early on that happiness doesn’t come if you chasing after it. That and growing up in an advertising photography studio probably helped me gain a resistance to marketing, which made it easy for me to focus on simple joys.

I’d learned from Early Retirement Extreme and Mr. Money Mustache that reducing your expenses can drastically increase the rate at which you earn your freedom. A penny saved is more than a penny earned. If you spend $2 for every $4 you earn, you free up a year for every year you work. If you reduce that to $1 for every $4 you earn, you free up three years for every year you work. This gave me even more incentive to shift my spending to the things that really mattered to me instead of frittering it away.

After I filled up a decent-sized emergency fund, I split my savings among long-term investments as well as a short-term opportunity fund. The long-term investments were for peace of mind, while the opportunity fund was for learning how to make better decisions. I figured that as long as I was saving at least 10-20% for the long term, I’d be well ahead of where most people would be at my age. In practice, I ended up saving much more than that, and it was liberating.

Following Tim Ferriss’ advice in the 4-Hour Work Week to figure out the actual costs of your ideal lifestyle, I realized that I didn’t actually need that much money to support the modest lifestyle that I wanted. After tracking my expenses for more than seven years, I had a good idea of what my core and discretionary expenses were. When I estimated how much I needed, I was pleasantly surprised to discover that I was practically there in terms of my opportunity fund. I set aside what I needed for five years using laddered GICs, and I left my long-term investments alone as a safety net.

As I was building up that opportunity fund, I started planning what I could do with it. I wanted to learn about building businesses that could fit into the kind of lifestyle I wanted: plenty of time at home with family and other interests. I talked to many mentors about their careers – consulting, web development, startups, small companies, large corporations. Many people wished they had more time, but they were handcuffed by their financial commitments: a mortgage, college educations, private schools, expensive hobbies, and so on. If I kept my expenses low and saved up enough, I could free myself (even temporarily), and then explore from there.

I decided that instead of waiting until I had sorted everything out, I would take a risk and move some years from my "retirement," like the way Stefan Sagmeister interrupts his work with year-long sabbaticals. But I wanted more time than that, and five years seemed like a good chunk of time to work with. Statistically speaking, most businesses fail within their first five years. If I gave myself at least five years without worrying about cashflow, I probably had a decent chance of learning enough about business to build something that can last me a while. Besides, five years would be longer than my high school, longer than the time I spent in university, longer than the time I worked at IBM… If I could learn so much and grow so much during those periods, I should be able to make good use of five years too. I figured that if I could give myself the space to explore these possibilities, I should, since not many people get a chance to do so.

Like the way I get ready for other risks, I plumbed the possibilities of failure. What if I ended up with nothing to show for the five years? I’d probably have at least a story, though – people are really good at rationalization. What if something happened to W-? If I kept in touch with people and I kept my skills sharp, I could probably go back into web development or consulting easily. What if? What if? What if? When I was comfortable with the downsides as well as the upsides, I gave myself the go-ahead.

The timing worked out wonderfully. I had a one-on-one meeting scheduled with my manager to discuss the results of the yearly performance review. He told me that once again, I’d received a top rating. I told him that was fantastic – and that I was planning to leave in order to start on this experiment. I really liked working with IBM and was happy to leave at a convenient time for the team, so they asked me to stay on for a couple of projects that needed my web development skills. A few months later, I wrapped up all my work, and I started my experiment in February 2012.

So far, it’s awesome

Thanks to amazing people, I hit the ground running. I had expected to flounder around a little trying to find ways to create value, but people stepped forward right away with suggestions. A former colleague had read my blog posts preparing for the experiment and wanted to know if I was interested in working with his team, so I had my first consulting client lined up. Another friend needed help with Rails development, so I experimented with that as well. I picked the brains of mentors who helped me spot opportunities and avoid pitfalls. I read forum messages and blog posts. There’s so much out there to learn from.

I tried out different business models and found ones resonated with me. I got better at floating ideas and getting to that first sale. I dove deeper into skills that I wanted to improve, like sketchnoting and programming. If this is what I can learn in a little less than a year and a half, I can’t wait to see how the rest of the experiment will unfold.

If things work out really, really well, this is how I imagine this five-year experiment succeeding: I’ve learned and shared a ton, and I’m ready for more. I could easily see it extending to a lifetime. Wouldn’t that be neat?

After C.C. Chapman’s talk on how to live an amazing life, the people I chatted with told me they didn’t pick up anything particularly new, although they enjoyed his talk. Likewise, there’s very little that’s new in what I do, if there’s anything new at all. I just want to illuminate possibilities and show that you can get there in small, non-scary steps. I want to help people explore these paths, whether it’s experimenting with life, quantifying/analyzing your decisions, sketching your notes and plans, writing code for fun… I work on this by learning, writing, drawing, and making things, and I’m going to get even better at this learn-share-scale cycle as we go on.

If you want to do this too…

Hack your wants. I have simple wants, and what I want the most is time. I deliberately dig into what I want and what I can give up. Wants are more changeable than you might think, and letting go of attachments can actually be pretty fun. Frugality follows naturally from this, and savings follow frugality. I think it’s easier to shape your wants than it is to force yourself to be frugal if you don’t want to be. Then save, save, save, because that safety net makes all sorts of interesting things possible (and less stressful).

Have a supportive partner. This is a huge part of what makes it possible, and I often thank W- for helping me explore this experiment. He thinks it’s a good experiment and could possibly pay off well for us in terms of the decisions we want to make in life, and that means a lot to me. We have a simple lifestyle and are both frugal. It’s super-helpful to have a spouse who’s on the same financial page. It’s easy to imagine how this could’ve gone differently. If W- had disapproved of the idea or if we had a two-income mortgage, it would be much harder to explore this, or I might not even have tried it. I could probably have done this on my own, but it would have been more difficult to save up, the jump would have been much riskier, and it wouldn’t have been nearly as much fun.

It’s a little difficult to tell people, "Oh, make sure you have a supportive partner," so this is not really advice. But if you do happen to have a supportive partner, work on making the most of life together. Be that supportive partner, too. Investing in relationships pays off a lot.

Get help from other people, and help others. I learn a ton from people’s experiences as shared in books, blog posts, forum messages, e-mail, Skype / Google Hangout / phone / in-person conversations, and so forth. I get opportunities from people who are willing to take a bet on me. I always learn a lot while answering questions or helping people out. I’m amazed by the results of betting on other people, too – the world is a candy store of talents.

There’s a lot that I’m forgetting to explain because I take it for granted or because I don’t know that it’s missing, so please ask! =)

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  • http://mindey.com/ Mindey

    Tears come to my eyes, when you say “Have a supportive partner.” It’s really big thing. To all who have not — I just would like to encourage by remembering Steve Jobs’ words — “keep looking. Don’t settle.”

    • http://sachachua.com sachac

      Sometimes people are less supportive than they could be because they’re afraid or worried. If W- had been more hesitant about this idea, I would have asked him what he was concerned about, and then worked on addressing those risks. For example, some people don’t feel safe unless they have $X in the bank, or they don’t feel comfortable with big changes until you’ve proven yourself through small successes. I know I wouldn’t have felt comfortable making a big leap without first testing lots of small things along the way! =)

      But yes, when you’ve got a partner on the same wavelength as you, life is awesome. I’m so glad W- and I are both geeky – we can make really bad puns and help each other out with stuff. We agree on all the things that matter. (Except for text editors – he uses Vim and I use Emacs, but that’s okay. ;) )

      • http://mindey.com/ Mindey

        // when you’ve got a partner on the same wavelength as you, life is awesome. //

        Exactly! Isn’t this what your blog is about? :)

  • http://mindey.com/ Mindey

    I’d like to add, how much supportive partner is important: when I found a soulmate on-line, we started communicating over SSH and GNU Screen. We started writing PGP-encrypted diaries, with VIM editor’s gnugpg plugin, and our common encrypted WIKI. We started keeping deadline list, our set of goals and our heuristics (Wisdom of Life). We exchanged screencasts via RetroShare, which is P2P, public key cryptography based communication platform, with personal mail and chat, independent of any corporation. We shared our encrypted to-do lists, both short-term, long-term, and project files. We’ve set up VIM to show it all nicely in conveniently placed windows, so we can see each other’s thoughts while working during each day. We bought drawing tablets (digitizers), and we started teaching mathematics to each other, and learn. We started reading books on-line, while sharing screens. We started writing our respective diaries in each other’s language, to make reading for each other faster, without the need to look at dictionaries. We started using Google Calendar to plan events, such as the readings, or coding together, or watching movies using self-made VLCIRC python script. Our life just got a lot more fun and organized. With that infrastructure and constant thinking together came better organization of tasks, and everything. I started applying statistical analysis algorithms to the data in the diaries notes, and many other things. P.S. My happiness and successes in life certainly don’t come so much from the material things, as much as from the exchange of minds.