Chris Mamula, the “Dirtbag Millionaire,” describes the mistakes he made on the way to FIRE, the challenges he facing in his early retirement and the origin story of a book that will outline a Blueprint to Financial Independence based on the information shared by members of the ChooseFI community.
What Sparked Your Dirtbag Millionaire Mentality?
Early in Chris' professional career, he took a trip out to the Grand Canyon. It was the first trip of many adventurous vacations out West. While he developed a love for climbing, he encountered many outdoorsy people along the way that referred to themselves as “dirtbags.” The term came from the climbing community in Yosemite to describe people that were literally eating cat food and living in caves to survive so that they could do what they loved every single day. Dirtbags represent people that had sacrificed everything for their values but the message seemed to be that you had to be poor and all-in on that dirtbag path.
On the other end of the spectrum, people in Chris' professional life were working normal jobs. However, most were not happy about their lives. They worked their jobs because that is what you were supposed to do. At the end of the day, those colleagues were spending whatever they brought in because that was part of the lifestyle.
I found these people that were the most passionate about their lives were these “dirtbags” and they were doing these things that they loved to do. But it was kind of the opposite end of the dichotomy. You had to be poor and you had to go all in on that path. And it just seemed to me, just logical, that you can have the best of both worlds, so that's where I came up with that “dirtbag millionaire” terminology.
Chris saw both extremes and decided that he wanted to live his life somewhere in the middle. The idea of the best of both worlds is what sparked the idea of “Dirtbag Millionaires.” He wanted to pursue a balance that allowed him to do spend more time outdoors without being an all-in dirtbag. He wanted to do his job well and enjoy a good career without spending his money just to spend it.
Although he had not been introduced to a formal concept of FI, Chris and his wife did decide to save a lot of their money.
Why Save So Much?
Remember, saving 50% of your income is definitely not the norm. Chris and his wife choose to save his entire income and live off of hers because they knew they could be happy without a lot.
The couple started their careers with salaries in the mid $30,000s and quickly increased with a max of around $85,000 each. They still lived an enjoyable lifestyle but were able to put away Chris' entire income into savings.
As our incomes both grew, we were able to increase our lifestyle but still only living on her salary. So, I never really felt sacrifice, which made it easy for us because we did have a little bit of lifestyle inflation. But also our savings went up with that and we were always saving that 50%.
The hard part was deciding not to give in to the temptation to grow into their income. Even with all of this saving, they did not have an end game of early retirement.
The first paycheck of each month went to paying off their mortgage early. The second paycheck each month went to an investment advisor.
Related Episode: How To Calculate Your Savings Rate
The Million Dollar Mistake
It sounds like Chris and his wife were doing everything right. Saving half of their income and investing a portion of that each month sounds amazing. And it was! However, their investment advisor led them to some massive financial mistakes.
Chris had found this advisor through a referral from his parents. Without asking too many questions, he decided to trust whatever the commission-based investment advisor said. The advisor directed them to purchase things like front-loaded index funds and a variable annuity fund. Both provided a good kick back to the advisor but their return on investment was less than stellar. Plus, the average expense ratio of 1.25% was taking a serious bite out of their growing portfolio.
The couple continued to follow this investment advice for around a decade until they realized they had a sizable investment portfolio and considered early retirement. At that point, they found the FI community and realized that they needed to move their money away from this advisor.
In the last year alone, the investment advisor cost them around $20,000 in fees and a missed tax opportunity.
When you look at the age we were when we were making the mistakes and you look at the amount of money, the magnitude of the mistake, it's easily a million possibly a two million dollar mistake, when you figure how many doubles you lose with compounding over that period of time.
Looking back, Chris estimates an extremely high loss based on the time of the mistake and the amount of money involved. The most frustrating part is that Chris did all of the right things by traditional logic. He asked for a referral, invested and saved his money, but a fee-based investment advisor hurt his financial future.
After this experience, Chris learned that variable annuities are likely never a good option. Also, actively managed funds can incur capital gains whenever the managers decide to sell shares. You would not have any control over that, but it would trigger a taxable event.
The whole experience made Chris feel like he had been ripped off. And that's when he started writing about personal finance as a way to help others avoid his mistakes.
Last Day Of Work
Even with his financial advisor mistake, Chris was able to reach retirement at 41. On his last day of work, Chris admitted that it was surprisingly more bitter than sweet. He had gone to the same job for 15 years and those coworkers had become a second family, so saying goodbye was hard.
It was difficult to realize that the thing you went to every single day for years was going to be gone on Monday. Although the new reality was exciting, the change was difficult.
Realize that your path isn't going to look like anybody else's and you are going to experience things differently and there's no easy answers… you're always going to have challenges. You just need to appreciate that.
Not everyone is focused on leaving their job, but it was difficult for Chris to do. His advice to early retirees is to realize that there are no easy answers. You have to take your own path and find your own happiness in early retirement.
The Challenges Of Early Retirement
He published an article on Market Watch entitled “This first year of early retirement has been one the hardest of my life.” His honest look into early retirement got some negative pushback from the mainstream. However, it was a way to see into the early retirement life for some.
One of the most difficult parts of the first year was money disagreements between him and his wife. Although they were both natural savers and always on the same page about money, their reasons for saving was different. She saved for the security that money brings. He saved because he did not want his life to revolve around work forever.
As soon as they hit their FI number, Chris was ready to make the leap to a new life. However, she was not ready to move into retirement yet. The difference between their reasons caused some heated discussion about their RE plans. The only way to get through it was to continually talk about their money differences until they were able to set up the systems and attitudes that work for them.
Chris's one piece of advice to a couple in a similar situation is to communicate. Talk about more than the budget that will get you to FI. Talk about the reasons that you are each pursuing FI.
Change Is Hard
Once you get to FI, remember that change is hard. If you plan to make a lot of change in a short amount of time, then it may be especially harder. Planning a longer transition may help to easy that stressful period.
Although Chris looks back on their decision to leave the East Coast and move across the country, it is impossible to say that it was an obvious choice. Moving anywhere new is always a challenge. You have to rebuild your support system, find new friends, and just adjust to an entirely new place.
I had a routine in the morning before work, I had a routine after, and then just everyting changes. Having unlimited freedom–it sounds awesome, and in a lot of ways it is. But in a lot of ways, it just presents new challenges…I don't regret where I'm at. But that doesn't mean it's easy every day and it's all just rainbows and unicorns.
Not just an entirely new place, but an entirely new life with unlimited freedom. Time gets filled with projects but you have the ability to set up your own schedule. It can come with challenges like finding what you really want to do. It is critical to realize that your priorities will not just magically change once your hit FIRE. Life will always have its challenges.
Whatever your priorities are, just remember to be honest with yourself. It's important to be brutally honest about how you want to spend your time.
For Chris, that means he is still writing in the morning and working on several personal finance projects like Can I Retire Yet and the Blueprint Book for FI. However, he has the time to ski whenever he wants to and spends a lot of time with his daughter. Of course, Chris has not been bored yet and wouldn't change a thing!
Writing About His Journey
When Chris started writing about personal finance, he wanted to start helping other people by sharing his story. His story shows that you do not have to be perfect to make FIRE a reality. For Chris, the biggest key was his savings rate.
If you save 50%, then it almost doesn't matter. You are almost guaranteed success.
However, he realized that everyone has a different story. It is easier for someone to follow a path that is similar to their own. Although there is a lot of content about paths to FIRE, he wanted to create a place for anyone that wants to pursue FI to learn about the different levers available. The decision to pull different levers will depend on your own starting point and goals. Although the principles of each journey are the same, the individual paths will be different.
The ChooseFI Blueprint Book
Around the same time as Chris had this idea, ChooseFI came onto the scene. With the podcast, Jonathan and Brad built an amazing repository of stories that led FI with detailed information about the levers to pull along the way. Jonathan and Brad knew that at some point they wanted to restructure the information into a more linear path for people pursuing FI as a potential book.
Out of the blue, Chris sent Jonathan and Brad an email about pulling the stories from the FI community into a book. Both parties were on board with this amazing FI playbook, so they got to work. The goal was to create a resource for the FI community to use and accelerate their own paths to FI.
Everyone has to create their own road map to FIRE. With the tools in the Blueprint, the goal is that you can build your own path to FIRE. The rules of money are important and learning them can allow you to truly optimize your way to FI.
The book is in the final stages and will be released soon to wherever books are sold. Once you have the information, learn it and take action to build your own path to FI.
Best Way To Connect With Chris
You can easily reach Chris through Can I Retire Yet.
The Hot Seat
Favorite blog: Impossible to pick a single favorite, so here are a few: Early Retirement Extreme, Mr. Money Mustache, J.L. Collin's Stock Series, the White Coat Investor, Go Curry Cracker, Mad Fientist, Our Next Life, Coach Carson, Slowly Sipping Coffee, Financial Mentor, and Can I Retire Yet.
Favorite article of all time: “Dirtbag Millionaires”
Favorite life hack: Realizing that the story you tell yourself about yourself becomes your reality. You have to be able to tell yourself a story and truly believe it so that it drives action and really turns your life around.
Biggest financial mistake: Giving control of my money to a financial advisor without understanding the conflicts of interest that go with that or doing due diligence.
Advice you would give your younger self: Learn the rules. Money is such a powerful tool but you have to understand the rules. Realize that the norms like retiring at 65 and leasing your car are not really rules, but there are actual money rules that you have to follow. You have to understand the rules behind investing, the tax code, and basic math. There are rules and you just have to learn them.
Bonus! What purchase have you made in the past 12 months has added the most value to your life? My young daughter's ski lessons because they built up her confidence. Now the whole family can enjoy time on the mountain together.
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New to FI? Be sure to check out Episode 100: Welcome To The FI Community!