If you would listen to Rob Weagley tell it, it’s a foolish game to try and pursue early retirement. He was recently quoted in The St. Louis Post-Dispatch speaking approvingly of bloggers that encourage readers to get out of debt, but he took a needless shot at investors pursuing an early retirement. Here’s his full quote on the usefulness of the personal finance blogosphere:
“There are dozens of similar blogs on the Internet in which people who aren’t financial experts share stories and tips for dealing with money.
They are generally a good thing, because they motivate readers to improve their finances, says Rob Weagley, who chairs the department of personal financial planning at the University of Missouri-Columbia.
“I think these bloggers can sometimes get people excited, turn the switch on and get them to actually do something.”
That said, he notes that not all the advice is good. The kind of blog that promises too much, like retirement at age 40, is probably not helpful.”
That’s the dumbest thing I’ve ever heard—Mr. Weagley needs to check out Jason Fieber’s blog at www.dividendmantra.com and see a living, breathing case study on how to reach financial independence and retire early. There, Jason clearly chronicles his life goals, lives deliberately, and notes every stock purchase that he makes on the path to retiring by 40. He doesn’t have an extremely fortuitous $100,000+ salary either. Instead, he saves his money because he’d rather become an owner of businesses that generate stockpiles of cash that grow over time rather than blow his money on toys that are cool and fun in the moment, but provide short-term pleasure that prevents you from making optimal forward progress in your life.
Philosophically, this leads into a complaint I have about the typical personal finance philosophy that I encounter: generally, we cheer on and laud people that are trying to erase $100,000-$150,000 worth of debt. That is good, and there is nothing wrong with that. My problem is that the same generosity of spirit should extend towards people that are trying to go from $0 in net worth to $150,000 in net worth.
You know, I went to a private school. A lot of my friends graduated with $50,000+ debt. At least some of them are having to make debt payments in excess of $600 per month. It’s a grind, and definitely a burden, but they find a way to do it. But what is interesting though is that the fervor that many people have to go from –x to 0 does not equal the same fervor to go from 0 to +x. I’m guessing the people who find a way to pay $600 per month to tackle their student debts won’t have the money to buy $600 worth of Exxon, Procter & Gamble, and Johnson & Johnson each month. That’s a shame, because the payment of debt is often associated with paying off past deeds, when the building of wealth puts you in a position to own your time and create impressive future deeds.
It’s logically inconsistent to suggest that it is reasonable to write a blog dedicated to finding $800 per month to pay down existing debts, but it is suddenly unrealistic to suggest that someone with no binding debts can find a way to invest $800 per month. We have a schizophrenic relationship with wealth in this country—it’s perfectly okay and laudable for the person to discuss strategies and exact figures for paying down a $150,000 debt, but we suddenly get weird when it comes to flipping the conversation to building $150,000 in real wealth. Usually, the experts label the pursuit of wealth building as “unrealistic” not realizing that the same amounts of money it takes to build wealth rapidly is comparable to the amounts of money it takes to knock out an existing debt commitment.
I think it is crazy for Professor Weagley to label retirement by age 40 as “probably not helpful.” I find blogs like Jason Fieber’s to be the most helpful of all—he talks about his dream, he converts his end goal into a number, and then he reverse engineers the process so that he can calculate the amount of money he has to set aside each month to make it happen. And then he chronicles his journey on the “Dividend Mantra” website.
I think what Weagley was aiming to say is that most people won’t be in a position to retire by age 40. He’s probably right. But I hope you never think in those terms. It’s not about trying to be average. By reading about finance in the firstplace, you’re probably better than average, economically speaking. Instead of worrying about what most people do, you should ask the question: What do I want? From there, you should calculate the amount of necessary to make that happen. At that point, it’s just numbers. Find a way to meet them, and the dream is yours.