Capital Investment Advisors

#125 – Prioritizing Your Finances and The FIRE Movement with Sam Dogen

Financial chaos can catch us off guard, but we can combat this unforeseen challenge through knowledge and being prepared in advance. To help we’ve called on the Financial Samurai himself, Sam Dogen. He is the mastermind behind, writer, podcast host, author, and a legend in the financial planning, retire early, and FIRE Movement world.

Sam reveals how and why he got into writing, what his life in retirement looks like now, along with how to not feel guilty working if you have children. He also explains how his financial needs evolved once he stopped working and his frequent pull to return to work, provides details from his book Buy This, Not That: How to Spend Your Way To Wealth And Freedom, bad debt versus good debt, and shares a helpful home buying rule. Furthermore, Wes and Sam talk through buying your piece of America now while you can and address a valuable spending rule.

Watch the full episode! 

Call in with your financial questions for Wes to answer: 800-805-6301

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This information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations.  This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

Read Show Notes From This Episode (click to expand and read notes from the full interview)
      • Wes calls Sam a legend in the financial planning, retire early, FIRE Movement, world. Wes has been reading his stuff since 2009.

    Sam wanted to leave finance, to stop being “the bad guy.” And he wanted to start writing. Writing became almost like an addiction and it probably wasn’t the best to always be thinking about it while he was working. So, he wanted to figure out how to get severance and get out so he could focus on the writing, etc.

    Sam had been working in institutional equities. Corporate finance. Wealth management. In that industry, you eat what you kill. You have to grind to keep making money.

    Sam’s severance package paid for 5 years of living expenses, living in San Francisco. Then he had about $80,000 in passive income (rental properties, etc.). Worst case he could go back to work after a year or two. Also, his wife was working. He got married in 2008 during the global financial crisis.

    Sam was very diligent about it all.

    While Sam was working he knew that thing about having a really difficult job was that you had to think ahead because you can’t last. It’s too intense.

    His schedule now is that he wakes up early. Writes from about 6:30am – 8am or 8:30am. He tries to do it all before the kids get up. The kids are 5 and ½ and 2 and ½. Once they’re up, he wants to spend as much time with them as possible. Tries to outperform the average (120 minutes per day) by spending 200-300 minutes a day with the kids. Then I tried to play some tennis. Eat lunch. Take a nap while the kids take a nap.

    If you want to get rid of the guilt of working while you have kids, try to spend at least the average amount of time per day with them. The guilt starts to go away.

    What counts as time with the kids? There’s a scale. A 2-hour drive in the car with them only really counts as 2 hours if you’re having a conversation with them.

    Sam calls it “fake retired.” Wes calls it the Retirement Grey Zone. Sam says there’s no shame in doing what you want to do. There’s never any shame in doing your best and living the lifestyle that’s best for you. The people trying to shame you – something is going on with them that they’re trying to work out.

    A common criticism is that he got to work at Goldman Sachs and make a ton of money and that’s why he can do this. Sam says yes, he was lucky but 20 to 30% of that was the extra work he put into making that happen.

    Wes’ criticism of the FIRE movement was, how do you do it with kids?

    Wes asks about how financial needs evolve. Sam kept an open mind to see that passive income wasn’t enough and that it would evolve with the family once they had kids. His wife stopped working at age 34 or 35. He went first and then her. She helps Sam edit, files the taxes, and spends so much time taking care of the children. She’s the night watchwoman because the little kid isn’t sleeping well. She also does so much of the business side of the Financial Samurai.

    Hawaii is cheaper to live in than San Francisco.

    From time to time, he feels a “pull” to go back to work. In 2017, when his son was born, he decided to be a better parent and better provider. Must be in the DNA. In 2021, he noticed how beaches and tennis courts were packed on the weekday during the pandemic. This made him realize that if you can get paid to work from home, not working, might as well get a job like that.

    His book is “Buy This, Not That.”

    Sam has his pop-up reminders turned off because he’s so used to not being on a schedule. So he almost forgot about doing this interview.

    Wes loves the idea of thinking in terms of probabilities and not absolutes. If you can win 51% of the time over the long term, you’re going to make a lot of money. The biggest thing is to avoid “not trying.” If you see anything under 100% as a failure, you won’t try.

    There’s a great saying “If I knew then what I knew now . . . “ If you want to avoid saying that, read a book by someone who has already learned the lesson.

    Bad debt vs. Good debt. Debt is on a spectrum. Bad debt is consumer debt. Things we don’t need on a credit card. Good debt is anything you can use to acquire an asset.

    Home buying rule: 30/33 rule. Don’t buy a house more than 3x your household income. He had stretched it to 5 times because rates were low. Think rationally so you don’t get hurt. Don’t go overboard.

    You’re neutral real estate if you own your home and nothing else. Long real estate if you own more. Short real estate if you only rent the place you live and own nothing. Sam thinks the real estate market will fade over the next 12 months. He thinks there will be some amount of discount coming up.

    Work from home is going to be here for the rest of our lives. Demographic shifts will go toward lower-priced housing areas. Invest in that. Foreign investors are coming again. As the pandemic fades, you’ll see it even more. They’ll come to the coast first, and then move inland. For all of our problems, the US has outperformed so many other countries. Sam says to buy your piece of America now while you can.

    Wes brings up that the more income streams you have, the more your happiness levels rise in retirement. Wes asks Sam about this.

    He likes the dividends of dividend stocks but not the low returns. He likes the high returns of real estate but not the amount of work it takes to fix things. He likes online real estate.

    Spending rules: If the amount of money you’re saving each month doesn’t hurt, you’re not saving enough.

    Sam says don’t write a book to get rich. (laughs)

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