Welcome to interview #3 in the “FIRE with Kids” interview series!
Unlike the first two families featured in this series, today’s interview features a younger family who is much earlier on in their FIRE journey.
Meet Matthew, the 27-year-old blogger behind Time Value Millionaire.
Although on his own FIRE journey for a few years now, Matthew discovered the movement much earlier on in his career (and life) than I did. He’s a husband, a new father, and has a home garden that is bound to fill you with envy.
I hope you enjoy learning more about Matthew and his family. I’m excited to share their story with you!
About the FIRE with Kids interview series
I designed this interview series to connect with and share the stories of other families with kids (or dependents) who are pursuing financial independence, with or without early retirement.
Reaching financial independence is a huge feat regardless of your circumstances. However, adding kids into the mix provides another layer of nuance and additional challenges.
I hope that by sharing different stories and voices, more people will find an example that they can connect with and feel empowered to begin their own FIRE journey.
We believe that families come in all different shapes and sizes, and all are welcome here. If you’d like to share your family’s story, please read my interview series intro post for further details and contact me.
Now on to Matthews’s interview…
BACKGROUND
Tell us about your family
The TVM Household is comprised of four family members: Myself (27M), Mrs. TVM (30F), our first child (born earlier this year) and our eccentric 2-year-old golden retriever.
We live in small coastal town in South Florida, where we own our home. I currently work as a Project Manager for a Fortune 500 company. Mrs. TVM is a Stay-at-Home Mom (FYI – she’s got the much harder job).
FINANCES
Do you budget and/or regularly track your expenses?
To be honest, we don’t budget in the traditional sense of the word.
With that being said, if we know there are big expenses on the horizon (auto insurance, house repairs, etc.), we will temporarily restrict our discretionary spending and call that a “Bare Bones Month.” We have an inside joke that if either of us are looking at making a discretionary/non-critical purchase during a Bare Bones Month, we keep each other accountable by saying “Bare Bones!”
While we don’t budget, we have manually tracked every penny that we have spent over the last 7 years in a spreadsheet that we call our Dream Sheet. Yes, you read that correctly. It’s called the Dream Sheet because that’s where dreams come true.
For us, manually entering and categorizing every transaction (often done on a weekly basis) provides us a check on how we are doing for a particular month. Furthermore, it provides a level of accountability that we wouldn’t get by using an automated expense tracking service like Mint.
By categorizing each expense, we can do better detailed planning when evaluating our FI/Retirement goals. It gives us peace of mind knowing that we have over 7 years of data across 10 different budget categories when determining what our spending will look like in retirement (average spend / category, lifestyle inflation, spending outliers, etc.).
What are your average annual household expenses?
We don’t share exact dollar figures.
Besides income taxes, where do you typically spend the most money each year?
Our largest monthly expense is Housing (Mortgage, Insurance, Taxes, HOA fees, etc.).
This is followed up by food/dining out and then household expenses (housing supplies, decorations, housing repairs, etc.)
Fun Fact: While we were aggressively paying down our car loans in 2020, we spent 3 times more on our transportation category than we did on our own housing! (No, they were not Lambos, LOL).
We love “value-spending” … what do you happily splurge on?
Our garden/orchard, hands down!
We have over 30+ different varieties of tropical trees and fruits on our 0.15-acre property, including mangos, ylang ylang, vanilla, cocoa, coffee, soursop, pomegranates, etc.
However, that has turned out to be a great investment in terms of both food production as well as my own mental health. Not only is there nothing better than a fresh mango off the tree, but I always have things to do in the garden that help me manage my stress.
Our other splurge is buying premium coffee blends. We really enjoy tasting different types of coffee from all around the world. Our favorite hands-down is Kona Coffee, which we purchase from one of our favorite local coffee shop for $65/pound (usually bought on special occasions).
What’s your annual household income and/or typical savings rate?
We don’t share our household income.
However, our historical savings rate over the last 7 years has been ~ 35%.
That 35% savings rate is comprised of contributions to our 401(k), HSA, Roth IRAs as well as leftover money in our checking account each month. Although our savings rate has taken a beating in 2022 from all the major home repairs we’ve been doing!
Do you have any income streams in addition to your primary job?
Not yet.
Do you have any debt? If so, what is your paydown strategy?
The only debt that we currently have is our mortgage.
However, we did have two significant auto loans between 2019 – 2021. Mrs. TVM had an auto loan before we met, and I financed a new car purchase after totaling my car in 2019 (no one was hurt). We decided to aggressively pay off both auto loans off ASAP. Frankly, it was getting annoying to see that money leaving our bank account every month.
Furthermore, we’d already made the decision that Mrs. TVM would eventually be a Stay-at-Home Mom. And the only way that was going to work was if those loans didn’t exist. So, we paid them off like a mad man (all the money we received from our wedding went towards those loans).
In regard to paying down debt vs investing, I believe it’s all relative.
As an example, our mortgage rate is currently around 4.2%. If I believed that I could invest and make more than that 4.2%… then I wouldn’t put extra money towards my mortgage. That’s because I’m potentially leaving money on the table.
However, on the flip side imagine that I had a credit card charging me 16% interest. I highly doubt I’d be able to make that rate of return via investing, so I would pay off any credit card debt first.
For us, it’s looking at the opportunity costs of each situation and ensuring that we are maximizing every dollar.
What’s your current investment strategy?
As you might expect from someone pursuing FIRE, it’s pretty vanilla.
We invest via automatic contributions to my 401(k) & HSA. These contributions go into a couple large/small index funds, with a small percentage going into company stock. Every now and again I’ll contribute to my Roth IRA that contains a single REIT fund.
We do own a few cryptocurrencies; however, it makes up less than 1% of our entire portfolio.
From a short-term perspective, any funds that we may need in the immediate future is held in a high-interest savings account.
Financial Independence / Retire Early (FIRE) with Kids
When did you discover the FIRE Movement, and why did it appeal to you?
I discovered the FIRE Movement back in October 2016.
One day when I got home from work, I stumbled upon a Yahoo News article featuring Sean from My Money Wizard.
I was absolutely fascinated by the idea of him saving so much money so quickly. The fact that we were similar in age and income showed me that if someone around my age could hit a goal like that, why couldn’t I?
I 100% credit starting my path to FIRE based on the inspiration I got from that article.
Furthermore, the FIRE Movement appealed to me because I was never fond of the idea of sitting in a cubicle for 45 years. I wanted to have freedom on my own terms. Knowing about the time value of money, I knew that time was on my side. If I started building a nest egg early on, I could substantially cut the amount of time that I’d be in a cubicle and use that time instead to live a happy and enriching life.
Where are you currently at on your financial independence journey?
As of July 2022, we are 13.2% FIRE.
We are currently Coast FIRE, meaning that we technically don’t need to save another nickel in order to hit our financial goals (assuming we retired at 65).
However, we are still aggressively saving so I can hopefully escape the cubicle life closer to 40!
Is there a target “FIRE Number” or safe withdrawal rate you are working towards?
We don’t share our FIRE Number. However, we are working towards a 4% withdrawal rate.
With that being said, we are pursuing a combination of Coast + Barista FIRE.
Are you planning to retire early? If so, what do you envision early retirement will look like?
I would say the goal is less “retiring early,” in the absolute sense, and more retiring early from corporate life.
The goal is to transition to something low stress where the work aligns with my passions and interests.
Do you plan on working after reaching financial independence? If so, will you make any changes?
Not in the traditional sense.
I enjoy writing, so I can see myself continuing to write for Time Value Millionaire.
My long-term goal is eventually starting a fruit tree nursery.
The money from the nursery would be used to fund a community garden where we can grow fresh produce and donate it to those can’t afford fresh/nutritious food.
“Welcome to the Garden of Feedin’!”
Did you make any changes to how you manage your money after discovering the FIRE movement?
Absolutely. Because our savings rate is one of the most important metrics to achieve FIRE, we made it a priority to consistently strive for a savings rate of 30% / month (minimum) to achieve that goal.
What’s the worst financial mistake you’ve made?
Oh goodness, that’s a fun question.
The dumbest financial mistake I’ve made was purchasing a brand-new & completely unconventional sports car. Oh, and the icing on the cake was that I purchased said sports car 1 day before a major hurricane hit where we lived. #YOLO
I fully understand that from a purely financial perspective, buying a brand-new sports car is completely sacrilegious to everything that the FIRE Movement stands for. I am also fully aware that I could have easily saved/invested that money instead.
So, while it was a “financial mistake”, do I regret it?
Not at all. I wanted this particular car since I was 12 years old; it was and still is my dream car.
A major reason on why I pulled the trigger on that purchase was because I had saved A LOT of money at that point. I honestly felt like I deserved it and was something I wanted for a long time. FYI, I’d do it again!
In your opinion, are there any negatives to pursuing FIRE with kids?
From a strictly math perspective, having kids can potentially push back your timeline with the additional expenses to account for. I thought I read somewhere that a kid costs 250K to raise or something like that… and that doesn’t even include if you wanted to help out with college!
For us personally, we didn’t mind pushing out our FIRE date so we could start a family.
At the end of the day, there is so much more in life than making decisions strictly based on whether it makes financial sense or not (vroom vroom). Mrs. TVM & I always knew we wanted kids so that was always part of the plan, even if it meant pushing our date back a few years.
The few months that we have been parents has been worth every second.
How do you plan to teach your kids about money?
Send them to TimeValueMillionaire.com
Joking aside, we plan to be forefront and honest with them about money. Money won’t be a taboo subject.
I come from a household where money was never discussed. Same with Mrs. TVM. If I didn’t get my Bachelor of Science in Finance, I wouldn’t know anything about money.
The primary idea that we want to instill in them is the value of a dollar. When I was a kid, I got paid $0.01/rock for removing rocks from farm fields (rocks are no bueno for farming equipment). That experience taught me what it meant to actually earn an income and made me more conscious of my spending/saving habits.
While we don’t plan for them to pick rocks out of fields, I can see us doing an allowance based on the number of chores and the quality in which they do them.
WRAPPING UP
What advice would you give to families just starting out on their FIRE journey?
I would encourage families to seriously consider the cost/benefit analysis of downsizing to a single income family.
From a financial perspective, we couldn’t fathom spending what we were quoted for daycare. It’s honestly just outrageous. The amount we would have spent on daycare would have cost a good portion of Mrs. TVM’s old salary.
From a family perspective, there’s a certain peace of mind knowing that Mrs. TVM is the one raising our child, not someone else. Additionally, the amount of stress associated with coordinating daycare, especially with the pandemic still going on, just wasn’t worth it to us.
To be honest, I never thought we’d be a single income family. However, it’s turned out the best thing we could have done.
Where can readers learn more about you and follow your journey?
You can find me on my blog: Time Value Millionaire. I’m also on Twitter.
Do you have any questions for the FIRE with Kids community?
I’m curious as to how those in the FIRE with Kids community actually calculate their financial independence numbers.
Specifically, do folks itemize/know how much they spend on their kids growing up and then subtract that from their spending to get their FI number? I’m interested in hearing the different techniques/approaches that others take when accounting for kids in their FI goals!
Rich Frugal Life’s answer to this question: We calculate our FIRE number using the quick and dirty 25x expenses (the 4% rule). For this calculation, we exclude daycare and preschool costs. They are pretty significant in the early years and non-recurring afterwards (we paid around $13,000 per year when our daughter was in full time care). That said, we left all other kid costs in the base expense number. There will be ongoing costs to having a child for a long time. In our more sophisticated, excel-based FIRE model, we map expected kid costs out year by year, including college tuition. I also track kids costs separately.
Is there anything else that you’d like to share?
As new parents, I’m looking forward to reading others’ stories showcased in this series who are a little further along in the parenting gig and learning from them.
I also wanted to give a big thank you / shout out to Mrs. RFL for coordinating this series!
I hope you enjoyed FIRE with Kids interview #3!
Thank you again Matthew for taking the time to share your family’s FIRE story!
If you have any other questions for Matthew, or an answer to the question that he posed to the community above (re: How kids costs are factored into your FI Number calculations), please share in the comments below.
Are you ready to share your family’s story?
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