Episode #
013

FIRE: Financial Independence, Retire Early with Eric Richard

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Episode Summary

Retirement has a synonym: financial independence. Both terms are used to define a financial status that, once reached, means you’re no longer dependent on outside sources of income. Eric Richard worked his way into a lucrative corporate job in supply chain management, but with that came long hours and a terrible commute. After realizing that frugality can go a long way, he saved $500k and traveled around the world.

In this fun and wisdom-filled episode of The New Nomad, Eric joins Andrew Jernigan and Allen Koski in educating and inspiring our audience to achieve FIRE (Financial Independence, Retire Early). Most people dream of retiring early and our 3 nomads share their experiences, ideas, and tips on how to do just that. From being frugal and investing smartly, it’s an episode full of gold nuggets that will surely be handy one of these days.

From the episode

What You'll Learn

Timestamps

[3:16] The one who owes money and the one who makes money

[7:01] On smart and practical spending

[13:53] Automate and save

[16:23] Practical and comfortable traveling

[19:43] Saving tip: Invest

[22:17] Colombia: not just about Narcos

Show Transcript

Allen  

Welcome to The New Nomad. We have a really interesting guest today, Eric, otherwise known as Nomad On Fire, and fire in this case has not been burning the house down it means financial independence retire early, will be with us today to share some of his his lifetime optimization strategies and his learnings, etc. Really exciting to hear his thoughts today. But before we do that, I'd like to bring in my co-host, Andrew Jernigan, who himself has been on fire in different ways. But we were both reflecting upon how important it is to prospectively get your financial house in order, because it does give you so much more opportunity for freedom of travel, expression, etc. How are you doing today, Andrew?

Andrew  

Doing? Well, it's a it's a fun day in my world. And as I have, as we broach this topic, think about things that Eric will probably bring to mind. My mind flashes back 20 years almost as I was preparing to for to go to live for a while in Ghana, West Africa. And the group plan that I was given, gave just a tiny bit of life insurance for myself, and even less for my wife. And I went out to my corner agent trying to get life insurance everywhere, declined, declined, declined, because those applications said, Are you going to be outside your home country for more than two weeks, and then next year? And I was thinking, Man, I want to protect my wife and kids if I die. I was young, you know, I had a three-month old, well, not at the time she wasn't even born yet. But I was preparing to go to Ghana. When we moved to Ghana, she was three months old. And you know, I had my will,  I had my power of attorney, I'd left with a family member. I had all these things as we left this international, I mean, this life in my home country for skipping continents non-stop for the next 20 years. And so many times, we live for the moment, and we don't think ahead. So it's gonna be fun. You, you've been very intentional Allen, as you've travelled the world, you're you're very wise with how you live life and how you think of those that you have around you. So I want to hear your thoughts on this.

Allen  

Well, sometimes I could be accused of being cheap. So I'll just leave it at that.

Andrew  

You said it

Allen  

But the you know that it's it's all intentional in the sense of so I've been able to visit 70 countries. And you know, you look for great bargains, you save your money you live below your means I one of my favourite books was the Millionaire Next Door, where you know, you don't need to change a car out every three years, I'd rather drive an old car, and then go on and around the world trip. That's why I think it's going to be so exciting to have this conversation today. Because, you know, there's some lessons to be learned. And I'll just share one lesson that my dad gave me that I think was fantastic. When I first got out of college. He says, Allen, there's two types of people: there's a type of person that always owes money and there's always the type of person who has their money, make money, you probably want to be on the make money side of things, because it'll give you a lot more flexibility.

Andrew  

That was Yeah, that was right after you'd spent the better part of a year in England, right?

Allen  

That's right. That's right. But I will say this with my first few dollars, I opened up a mutual fund in 1988. And I can admit, I'll just, I won't go into dollar cost averaging here. And then what I also learned from Eric is, you know, he saves as much as 60% and invests and you know, this is something that's you know, incredibly important and I can say this today it's really makes a lot more freedom. Now that your money is making me money then the work and let's bring Eric into the conversation. I know we're putting a lot that out there but Eric, I know we give a lot a lot to start with here.

Andrew  

He is on fire!

Allen  

You are on fire. Sparks Yeah, that's right. We'd love to hear how you made this work. And some of the tips for our folks and I hope we didn't go down any primrose paths here and are beginning but love your your feedback on some of our thoughts. Well, first of all,

Eric  

Thanks for having me on the show. Super excited to be here. This This will be a blast. Yeah, love some of the things that y'all brought up. I would say for me. Originally, you know, started working, graduated from from college, had a decent savings. You know, I contributed in my 401k and had a Roth IRA and maybe some some cash savings on the side. But then late, mid to late 2015. I found out about financial independence. I was just kind of mindless. You know, scrolling through Facebook one day and found an article about it, probably wouldn't recommend that for the listeners, but in this case helped me out and would say, totally changed the trajectory of my life. So with that, it was also kind of perfect timing, because I also just a few months later received a pretty large promotion at work. And with that had the opportunity to move to Austin, Texas.

So I did a few things. Yeah, you kind of mentioned, you know, avoiding lifestyle inflation. I think that's a huge one. And that was a, that was a big one, especially for me, because I would say, I'm a natural spender.

Allen  

Okay

Eric  

So I really had to educate myself, I guess, and really had to try to develop, you know, a new mindset around money and around spending, and realising just from previous life experience, that buying material things, you know, wasn't going to make me any happier. But kind of having this vision in my mind of what the future could hold in terms of time, freedom, travel, being able to spend time with family and friends, that kind of kept me going. And I was able to, maybe not by some of those material things, but a few, I guess, you know, I guess maybe actionable things. In terms of lifestyle, inflation, I lived with my brother, which was a great opportunity. So having a roommate is an awesome way to save, save some money. And we lived in an apartment that was in a great location in Austin, not quite downtown, but just south of downtown. So just being that I don't know what it was quarter, half mile south is probably $500 less than in rent a month. So that was a big, big way to save money.

You mentioned car before, that was a huge one. For me, I would say my favourite kind of car is one that gets me from point A to point B and is paid off. So I don't have a monthly car payment. That was a big one. I think some other things, I just tried to make it a game, I would say like I you know, would analyse my spending at the end of every month and just kind of challenge myself and see where I was spending and areas and then just kind of evaluate, Hey, is this really bringing me you know, happiness or more joy in my life? And if the answer was no, then see if there's a way that I could cut back or cut that out?

Allen  

You know, it's interesting, isn't it? Maybe I'll ask it this way. Do you also think there's a bit of a generational thing? In the sense that, like, I looked at my dad's generation, obviously depression, save, save, save, then you then you had the baby boomers to a certain extent, we're fortunate where the economy picked up, but they were spend, spend, spend, and then I see, even my kids now, they're like, you know, we really want to save and get ahead of things. Um, you know, talk a little bit about that. I mean, I think there's a different mindset between acquiring tonnes of stuff, versus acquiring experiences and what people save for.

Eric  

Yeah, I've talked about that with a few other folks. I think that is an interesting dynamic. And in something I don't know, if it's, you know, yeah, if it's a generational thing. It did seem like maybe the boomer generation, it was, you know, a successful life was kind of having those material things, right. Who has the biggest house? Who has the nicest cars, kind of the fanciest things? Where yeah, I don't know if it's the millennial generation, and just some of the things that have happened and, you know, you know, my lifetime and everything growing up. Um, but yeah, I guess it just seemed to me maybe the advent of the internet and remote work, you know, there's, I think a lot of factors at play, but it always just, you know, even early in my career, I think after my first year of work, I knew that some sort of you know, x salary or x job title like wasn't going to make me happy and fulfilled in my life. I wanted those experience in terms of travel and just having that freedom to just relax and spend time with with family and friends and just kind of enjoy life.

Andrew  

Well, so if someone was wanting to learn more about the about Fire, what are the top three things you would tell him? You did say don't don't go to Facebook and learn? You know, where would you say cuz some people hearing this, they may be expats already living overseas, they may be that team member saying, Okay, we've got folks, remote team members that they want to, you know, nudge say hey, check this out as say you're trying to help people and financial responsibility with a sudden in a new role as country manager and some some new environment. Fire is a new concept, new thought for many people that are listening today.

Eric  

Yeah, just in terms of what I would share with people or some resources

Andrew  

Yeah, resources. What if someone is new to this concept? You know, other than going to Facebook and searching for a group You know, where would you How would you advise someone to learn more about it? And even Are you a coach in this area? Tell us about, you know, how do you advise folks?

Eric  

Yeah, I mean, I haven't specifically coached anyone, but that's definitely something I would be really interested in, in doing in the future, potentially. I mean, there's some great, you know, podcasts and blogs out there. Mister Money Moustache is one of the most popular ones, he's got a lot of great content, I think, you know, the first thing I would just, I guess, for me, what really helped is kind of just immersing myself in that information in any way possible. Like I would say, I was obsessed, just so passionate about it, I would spend my time on weekends, reading any article, you know, about financial appendant independence, or, you know, adjacent to it, I had a long commute at the time, and I would just queue up my podcast with a ton of financial independence content. There's a lot of, you know, I think the the basics is you just, you have a large enough nest egg, or you have a cash flow that work, at some point, right becomes optional to you. A lot of people seems have found quick success with with real estate. For me, I guess, I went down the more traditional path of kind of like the 4% rule, and just investing in like low cost index funds, trying to build that nest egg. And then, you know, based on the 4% rule, if you withdraw 4% of your portfolio, you know, however, you have, however much you have amassed, you know, you could withdraw from that in in perpetuity. So I kind of went more of the the stocks route, but there's definitely some interesting ways that people even on, you know, lower salaries have found ways to be frugal and just, you know, save and invest and reach financial independence.

Allen  

Well, it's, it's interesting, you mentioned that, because then you and I are pretty congruent in the sense that I always felt that index funds were a tremendous way low cost. And obviously, the stock market over a long period of time, has returned much more than you would expect from bonds or other things. The interesting little console that I might add, is I took 10% of my money, and I made it my own venture fund. And I, you know, you take a little bit of a risk. And, you know, perfect example is, if you're early into a read, like public storage, that can really explode your returns, or if you were somebody who, you know, and this is about people's personal experience. Oh, my God, this computer is fantastic from this company called Apple. Maybe I would like to just buy a few shares.

So maybe a quick, you know, mentioned, I was listening to your podcast, we talked about personal relationships. But I also think about personal relationships lead to investing. A lot of my best investment ideas came from people who I like I talked to when they like, you know what, we loved staying at La Quinta hotels. And I'm like, I know nothing about La Quinta hotels, and then you look up, and she's like, two bucks a share. So maybe ask you a quick question. That is, you know, you've got it, you've got a good network, you've saved a lot. You know, is there something, you know, and index funds incredibly solid way. But it's it what do you think about venturing and maybe and being aggressive once you get to a certain area that you say, you know, what, if I really believe in this one, this could make a big difference.

Eric  

Yeah, I think that's, I think that's a great piece of advice. I agree completely. I've told people the same, you know, I think 10% sounds like a good number, just in terms of I think that can keep it fun as well. Right. I think a lot of the recommendations I would give is, you know, you try to automate those savings and investments as much as possible. But just to you know, yeah, things that you personally like, if you know, anything really, I don't know, crypto I'm personally not invested in crypto or like if your friend or a family member is starting a business, I think keeping like 10% for more of that like fun investing I would call it or things that are a little bit more risky, you know, they could go way up, they could go way down or you know, so yeah, I think that's a great piece of advice.

Allen  

What do you think Eric, you have to be prepared in that venture fund to lose it too. I mean, for every for every winner, there's an Eastman Kodak out there waiting that seems solid and but it is an interesting approach. Now when you've when you've been able to travel, I take it you do it in a manner that's not extravagant but really probably allows you to get into the cultures more. share a little bit about when you travel and how you put, you know, many of your your knowledge to work there too.

Eric  

Yeah, absolutely. I mean, I'm a big fan of just like renting and Airbnb, so just an apartment in a city, you know, you can find some some great deals, I would say on that some places, you know. If you book off of Airbnb as well, or if you negotiate with a host, you can get some some great deals, especially for, you know, extended stay. If you're doing a month +, you might be able to find some, some good deals there. And then yeah, I mean, I try to live, I would say, like a local as much as possible, you know, cook meals at home or, you know, just eat local foods in the area.

Yeah, I would say that's, that's pretty much it, you know, definitely, definitely more of a slower travel type of thing. I don't want to, I want to feel like I'm living in that place. But then it's still, what's cool is like, you know, say if you're from the US, right, and you live in Austin, you could do, you know, you could do side trips, I don't know, Houston, or Dallas or something. But if you go somewhere across the world, right, and you make Chiang Mai, Thailand, your home base, you know, I went to Cambodia as a side trip flights, I think we're only like $40. So there's so many cool places that you can see and things that you can experience that are I would say: A cheap and also, you know, B just very close, depending on you know, what area of the world you're in.

Andrew  

I you hit on something that that resonates with me, because so many times so much of the money goes into food. Of oh, where can I find the best American hamburger in x city, and you spend 25 bucks on a hamburger that tastes strange, versus why not go ahead and spend three bucks, where locals eat instead of searching out where your countrymen might eat, you know, or let's you know. If it's a Irish pub, and you want some Guinness high, you're gonna spend a fortune for it in Chiang Mai, compared to going and getting an incredible rap that locals made for next to nothing. And so you know, searching out for your, for your Guinness, because it's good for you, it's gonna cost you a fortune compared to buying that Brazilian beer, that's gonna be dirt cheap.

So, you know, thinking differently than thinking the same way in all these applications that we've just talked about. You know, oh, I always travel the very best airline possible. Why not travel the budget airline. When you're in such a country, it's not like you got to have your United points or your Lufthansa points to get from Chiang Mai to Vietnam. It's it's shifting the way we think. Whether it is going local, saying you know, I'm going to go to Target versus, you know, the Tide Target 16 bucks when the grocery store right next to target sells it for $9.99 for Tide. It's just thinking differently, really has a domino effect in every aspect of our life, whether it's going to the thrift store and getting a really great pullover for 10 bucks or grabbing it for 78 bucks at the really cool sports shop for the exact same one. So shifting our behaviour takes reprogramming, doesn't it?

Eric  

Absolutely, yeah. Yeah, definitely, definitely agree with that. And I think an important piece that you mentioned is kind of those small changes, right? If you save, you know, five or six bucks on the on the Tide pods, that might not seem like much. But once you start finding those opportunities everywhere, it compounds and grows and grows, and then if you're funnelling those savings, you know, towards investments, it's amazing to see how that can continue to snowball and build relatively quickly.

Allen  

So you talked about automating your savings. Was that more along the lines of like $1 cost averaging approach? Or is it just explaining to somebody who's a real lay person on how you do that?

Eric  

Yeah, I mean, yeah, you get some some benefits of dollar cost averaging, right? You're having those consistent investments, you know, mine were on a monthly basis. I think the biggest thing, I guess, for me, in regards to that, though, was more psychological. Like I always tell people if you're a natural spender, it's so hard if you have that money sitting in your account, and then you wait until the end of the month. Let me see how much is left and then I'll determine what I'm going to invest, right? Where if it's automatically withdrawingiIt hits your check. account and then right away, it goes out to an investment account. You never see that money, right? So you never feel like, Oh, I could, I could go treat myself to a steak dinner, you know, whatever it is. Right. So I think psychologically, it helps because you're not seeing that money in your account and you know, that it's automatically getting taken out. And then you don't have to, yeah, you don't have to worry about it.

Allen  

To the end, it's a great approach. In by way back to the just kind of the thought of, of travelling efficiently. And you mentioned, you've been to Cambodia Remember, you know, flights through certain areas, I'd like you to point $40. So if you're running if you're working out of a hub and spoke, you might get to see a lot of different areas and, and it's mostly on the local airlines. Now, there's a fine line that you want to make sure it's an airline that has a good safety record, etc. But, you know, when you travelled about which, which leads me to a question is, you know, you've you've done a lot of unique things. And so could you share with our Nomad family or remote listening family out there maybe an overlooked person, place or experience you would suggest that our listeners discover?

Eric  

Yeah, am I able to my able to answer all three?

Allen  

You can do all three. That'd be fantastic.

Andrew  

You got it, Eric! We want to hear it.

Eric  

Um, I don't know if he's overlooked but I really like Johnny FD. He has a podcast called Travel Like A Boss. Probably not overlooked. He's he's got you know, a lot of followers. He runs a I think bi-annual like Nomad summit, I was able to attend one at the beginning of last year in Chiang Mai, that was a lot of fun. He has a great backlog of podcast episodes. Like I think he's been recording since maybe 2015 or 2016. So early.

Allen  

Early on. Yeah.

Eric  

So he was one of the first people that I found about that was kind of talking about a digital nomad lifestyle and more mainstream. So I think there's some some great, you know, interesting content their place. Um, I really enjoyed Medi in Colombia, like I that's one of probably next travel destinations. I really want to go back there. I'm just great weather, friendly people, good food. You know, I think sometimes, I think the US is if you're from the US, right? I think sometimes people's perception of Colombia is still that it's a very, you know, dangerous place, right? There's, you know, Narcos on Netflix and all this stuff. But I was just I would say that I was amazed by like, how safe I felt and and just kind of the the culture and just the friendliness, and you know, how welcoming people were there, in. You know, not the cheapest place in the world, but still, you know, very affordable, I would say like, you can get a very nice brand new apartment with like a rooftop pool. Right? So you're not sacrificing anything in terms of luxury or quality of life, but it's only like $800 a month, right? So that's probably way more affordable than what you're gonna find in any major US city.

And then experience. Um, I don't know if I have a specific experience. I would somebody told me this though, and I'm gonna steal it. I thought it was good. Usually people are like, Oh, you shouldn't do you know, the touristy things because everyone does the touristy things in this area. But I'm going to say, depending on what it is, sometimes you should do the touristy things. Like sometimes they're super popular for a reason, right? Machu Picchu. If people go to Peru, everyone goes to Machu Picchu, right? But I went to Machu Picchu. And it was awesome. Like it was way cooler than I even thought it would be. So sometimes, even if it's super touristy, and everyone does it, you should still go do it.

Andrew  

Absolutely. I'm, I'm on there with you. It's it's one of those things of one regrets. I can't believe I 10 years later of you know, I can't believe I went there. But I didn't do that or something. But you know, Johnny D, you mentioned him. I know he's living this fire lifestyle. And his he just bought his house in Kiev.

Eric  

I saw that

Andrew  

After all the things of considering Portugal considering different places. Here he is in Kiev with his own place. So think outside the box as my suggestion to people because you may find that cultures and environments aren't as green on that side of the fence as you thought they were. Even this whole lifestyle of living in another country may not be what you're cut out for. It may be better that you move from one side of your own country to another, than to leave countries. So having that awareness, self awareness. And growing professionally growing personally is so crucial as we move from country to country, isn't it? So yeah, love it. Where can people find you? social media? I follow you on Instagram. You've got the podcast tell everybody else where that is.

Eric  

I appreciate it. Thank you. Yeah, Nomad On Fire, NomadOnFire.com. Don't post as many and as many blog articles as I used to the main thing is the podcast comes out every week. So Nomad On Fire podcast, check it out on, you know all the major platforms. And then yeah, social media, I would say I'm most active on Instagram. It's just Nomad On Fire on on Instagram as well.

Allen  

Really helpful. I have fantastic a new concept for me financial independence, retire early. I think it's something that many of us can aspire to, you know, as you continue to see the studies that a lot of people want to work for themselves, or they want to have more control of their own destiny. Kudos to you for helping lead us down that path. Because I think that's something that that many of us are very interested in. Other things. I learned a lot today. So thank you, Eric. And I will continue to listen to your podcasts. I think it's tremendous. So Andrew, we had a quite a good discussion today. Talk to me about what we learned today. And maybe before you you mentioned, I will Harkin one thing he said I was able to travel to Colombia, just just before COVID. And I back up exactly what he says I was a lot of people like you're going to Colombia, it's so dangerous and scary. And you know, doing the research and due diligence, you feel very comfortable. It was a wonderful experience. Bogota, Cartagena. And just the cost of living was excellent, the food was excellent, the people were marvellous. Frankly, the biggest issue they had there was a lot of people coming across from Venezuela trying to get away from that situation, which is horrible. But beyond what I learned today, I really want to back up Eric's comment that if you've got to go travel somewhere, Colombia is a pretty good spot. And I like that. So that's what I learned today. Andrew, take it away and what you learn my friend,

Andrew  

Automate, start early, eliminate, and changeyou patterns of buying, change your behaviour, do what it takes to reprogram and reset. I think he's a great proof. The people he brings on this podcast are as well listen and fertilise your brain with the things that he puts out there because it's good stuff guys. Tune in to Nomad On Fire podcast. You know, I this is all about him today. So it's been great to have him on. So do talking, listen, learn and apply it to your lifestyle folks. Thanks again for joining us.

Allen  

So thank you for joining us and living the location independent lifestyle. Please subscribe to The New Nomad leave a great review. It helps other in our community to find out about the podcast. If you want to learn more you can go to TheNewNomad.net or InsuredNomads.com. Please keep sharing. Please keep travelling and stay well and we look forward to talking to you again. Cheers.

FIRE: Financial Independence, Retire Early with Eric Richard

About the Guest

Eric Richard

Eric Richard is a millennial on the path of FIRE (Financial Independence, Retire Early). I July 2019, Eric quit his full-time W2 job to become a location-independent entrepreneur and achieved lean FIRE. Living in Austin and working as an Operations Manager in the warehousing and logistics industry, he had a long commute, an odd work schedule, long hours, and night and weekend shifts. He found out about FIRE at the end of 2015 and immediately began to make many positive life changes in regards to his finances. Eric focused on avoiding Lifestyle Inflation and reducing costs on the Big 3: Housing, Transportation, and Food. He also utilized Travel Hacking to save money on flights and hotels. Eric now hosts the Nomad on FIRE podcast, where he talks about the digital nomad lifestyle and FI. He interviews other digital nomads, early retirees, entrepreneurs, freelancers, world travelers. Eric has visited 16 countries, including Latin America and Southeast Asia, but says he’s never touched down in Europe.