Domestic GeoArbitrage Explained
Episode 050

00:00:00 Jonathan: You're listening to ChooseFI, the blueprint for financial independence lives here. If you're looking to unlock the secrets to financial independence and early retirement, you're in the right place. Stay tuned and join a community of like-minded people who are getting off the hamster wheel and taking control of their lives in the pursuit of financial independence. ChooseFI, your home for financial independence online.

00:00:42 Jonathan: All right, guys, very excited to bring a special episode to you today. We are bringing on Mr. Groovy from freedomisgroovy.com. Mr. Groovy was actually recommended to us by Fritz from Retirement Manifesto, who said this is the guy to get on to talk specifically about the topic of domestic geo-arbitrage and how, in theory, we understand how powerful this lever can actually be. But if you actually do it, it can take you from a precarious financial situation to borderline at the gateway of financial independence with that one single choice. And I think the story that we're going to talk about today is one that there are literally hundreds of thousands, if not millions of people that over the coming five to 10 years, if they wanted to, could pull this lever and immediately be at the gate to financial independence. So I hope that we're able to kind of dig into this story with Mr. Groovy and extract some of these really valuable gems of information that you can take and incorporate into your own life. I believe this episode will be particularly interesting to my co-host, Brad, because this is a choice that he himself made almost 10 years ago. And I know that he has thrived because of it. So with that, Brad, what are your thoughts?

00:01:55 Brad: Hey, Jonathan. Yeah, this should be fun. And not only did I make an almost identical decision, just in general, right, going from a high cost of living area to a significantly lower cost of living area. But I actually moved from the very precise place that the...

00:00:00 Jonathan: You're listening to ChooseFI, the blueprint for financial independence lives here. If you're looking to unlock the secrets to financial independence and early retirement, you're in the right place. Stay tuned and join a community of like-minded people who are getting off the hamster wheel and taking control of their lives in the pursuit of financial independence. ChooseFI, your home for financial independence online.

00:00:42 Jonathan: All right, guys, very excited to bring a special episode to you today. We are bringing on Mr. Groovy from freedomisgroovy.com. Mr. Groovy was actually recommended to us by Fritz from Retirement Manifesto, who said this is the guy to get on to talk specifically about the topic of domestic geo-arbitrage and how, in theory, we understand how powerful this lever can actually be. But if you actually do it, it can take you from a precarious financial situation to borderline at the gateway of financial independence with that one single choice. And I think the story that we're going to talk about today is one that there are literally hundreds of thousands, if not millions of people that over the coming five to 10 years, if they wanted to, could pull this lever and immediately be at the gate to financial independence. So I hope that we're able to kind of dig into this story with Mr. Groovy and extract some of these really valuable gems of information that you can take and incorporate into your own life. I believe this episode will be particularly interesting to my co-host, Brad, because this is a choice that he himself made almost 10 years ago. And I know that he has thrived because of it. So with that, Brad, what are your thoughts?

00:01:55 Brad: Hey, Jonathan. Yeah, this should be fun. And not only did I make an almost identical decision, just in general, right, going from a high cost of living area to a significantly lower cost of living area. But I actually moved from the very precise place that the Groovies moved from, which is Long Island, New York. So yeah, it's going to be a fun conversation for me to just compare notes with him and see what decisions they made and compare notes on positives, negatives. And it should add some flavor, certainly, to the audience that I did the exact same thing.

00:02:27 Jonathan: All right. Well, let's not waste any more time. We're going to go and bring Mr. Groovy on. But to set this thing up, I think the most important question that we have to ask in this entire interview, Mr. Groovy, in Long Island, do you go to the food store as well?

00:02:37 Mr. Groovy: Yeah. I say a bunch of kind of weird things. One, I don't say grocery store. I call it the food store. I don't know if that's a thing on Long Island, but I know both my wife's family and my family say it that way.

00:02:49 Brad: Yeah. We say the food store, too. I know I sound like a rube, but that's what we call it.

00:02:54 Mr. Groovy: Nice. I'm vindicated.

00:02:56 Jonathan: I don't know if you're vindicated. Rather, you're the contagion that is that word is then spread to an entire geographic location. Like, clearly, you have a very distinct Long Island accent. Brad somehow doesn't. But there's maybe traces there, especially when it comes to the food store. Sounds nice.

00:03:12 Mr. Groovy: Well, thank you, sir.

00:03:14 Brad: I don't know how I avoided the deep Long Island accent, but yeah, people think I'm from like the Midwest or something.

00:03:21 Mr. Groovy: Yeah. People have a hard time pinning down where I'm from, but guys, I'm totally screwed. My father was from Queens, New York. My mother was from Boston, Massachusetts. So I'm really screwed.

00:03:33 Brad: No way, man. It's the voice of an angel.

00:03:35 Jonathan: Well, let's got I've got a little bit off topic there. But fortunately, we do have time in this show. I'd love to kind of just hop right into your story. Could you maybe before we go directly into the topic of geo-arbitrage, could you maybe talk us through a little bit of your backstory and how you found the financial independence community?

00:03:46 Mr. Groovy: Yeah. I mean, for most of my life, I'm a bit older. I just turned 56. So most of my life, up until my 40s, I was a financial moron, for lack of a better term. And basically what changed things was getting married. And we didn't get married till we were in our early 40s. Mrs. Groovy kind of woke me up, not that she was on top of her game financially, but she knew she recognized we were having problems. And she went to the library one day and came back with what's Dave Ramsey's book again is classic financial piece. Is that what it's called?

00:04:25 Jonathan: No, no. His actual book was Total Money Makeover.

00:04:28 Mr. Groovy: Exactly. That was the one. That was the beginning. That was the start of our turnaround. This is interesting because I've mentioned in previous shows that Dave Ramsey was the gateway to personal finance for me. And J.D. Roth mentioned something similar. And we're in the FI community, and I think the FI community, in many cases, we get to the point where we feel like we've kind of graduated past the point of what Dave Ramsey can really offer us. But there is this commonality that he is a gateway for many people to personal finance. And I'm curious, if he is what you discovered, what sort of makeover did you actually need in your life? And what sort of steps did you take once you found his philosophy?

00:05:05 Mr. Groovy: I would say, I mean, believe me, this sounds ridiculous, but something as simple as an emergency fund, I never heard of that concept before. And it was like, like I said, my whole world changed just on that one simple concept. And then take it from there, paying yourself first. Never heard of that before.

00:05:30 Brad: So before you found Dave Ramsey, what was your financial life like? So you're saying affectionately you guys were financial morons, but what did that realistically look like? Were you the ultimate living paycheck to paycheck? Were you just not aware of the concept of emergency fund and that kind of thing? Or were you truly just, all right, the money comes in and we spend it all and it all goes out?

00:05:49 Mr. Groovy: I would say we would definitely live in paycheck to paycheck. And it was mostly because we were just doing what everybody else was doing. We were being normal. We never gave it any thought. And once we discovered Dave, it was the light bulb moment. We started thinking about these things and like, oh geez, every once in a while the car breaks down. So it'd be nice to have an emergency fund. Hey, you know, one day we'd like to retire, it'd be nice to start paying ourselves first and invest in a Roth IRA. It's kind of bizarre. We both had master's degrees, but we didn't know that the elementary stuff of personal finance. And the interesting thing about that is soon as we discovered it, we went into it 100%. We weren't opposed to being wise with our money. We weren't worried about what people thought, what clothes we wore. We weren't worried about what car we dropped. We just never thought of it before. It really opened up our world.

00:06:46 Brad: Yeah. That's amazing. So Mrs. Groovy comes home with Dave Ramsey's book and it sounds like truly that was this light bulb moment. Do you recollect like what changes you made in those first couple of months, six months, a year, even like that puts you on a different path?

00:07:02 Mr. Groovy: Budgeting. I never tracked what was coming in and I didn't track what was going out. Something as simple, putting a spreadsheet together, tracking, first of all, we had no idea what was coming in and then we had no idea what was going out. So the first couple of months it was just, uh, we think $6,000 is coming in. We think, I thought we were spending $400 on groceries. We were spending close to $800 on groceries for two people. So that was an eye opener. Just getting a budget, putting on paper what's coming in and what the heck you're spending on. And from there it just, as I call it now, back then I didn't, but function and brain. Once you see what's on paper, once you see the money coming in, the money going out, you can fix it if there's a problem.

00:07:49 Brad: What year was this that you found Dave Ramsey?

00:07:49 Mr. Groovy: 2003.

00:07:50 Brad: So would you say that it was a total one 80 or how quickly were you adding new skills onto this? You know, in the past we've talked about these small slash marginal gains that are made over time and how they compound. How quickly were you adding to your personal finance toolbox and skillset?

00:08:07 Mr. Groovy: At this point, we're in our early forties, 42, 41, right around there. Have nothing saved for retirement. First thing we did was spend less than we earn and we started saving money.

00:08:19 Brad: All right. So you have this light bulb moment. You start creating a budget, you have some sense of what's going on, but then what, what actual tangible steps, like, was it just as simple as just knowing how much money was coming in and coming out that led you to make changes or like what actual changes did you sell your car? Like where was all the money going and like, how were you able to create that space between your income and your expenses?

00:08:47 Mr. Groovy: No, excellent question. First of all, food, we were spending $800 a month for two people and we quickly got that down to $400 a month. So now you're talking $400 a month in savings just by being mindful, just by thinking about food and what are you going to do? Less eating out, more eating at home. So I mean, that's just a perfect example. Then once we saw what we were spending, we got to the point where we were saving, you know, 15 to $2,000 a month pretty quickly.

00:09:20 Brad: That's amazing. So that's a huge margin just by being mindful and I think that's a perfect way to put it. I guess I'm also curious, did you have any debt at any point? Were there credit cards, were there student loans, were there anything like that?

00:09:27 Mr. Groovy: When we got married, you know, thinking back, you know, I was thinking about this the other day, what our consumer debt situation was, it was probably around 30,000. I mean, nothing horrible. I mean, between a car loan, student loan and credit card debt, you know, like I said, it's, it wasn't horrible, but it was significant, about 30,000.

00:09:49 Brad: So now you have this huge margin in your life, right? Let's say $2,000, right? So $24,000 a year you've created. At what point did you start attacking that debt or? What was your actual strategy as far as debt versus saving for the future, an emergency fund or whatever you want to call it?

00:10:07 Mr. Groovy: So this is weird because once we got our light bulb moment with Dave Ramsey, that's when we decided to leave New York. So it was like in conjunction. It kind of happened at the same time. So when we discovered Dave Ramsey, we decided we wanted to get out of New York. So our main concern there was basically twofold. We wanted to get rid of our consumer debt by the time we left New York and wanted to make our transition to whatever destination we were going easier. So we figured the most money we have or had, that would make things easier. So it's weird. As soon as we decided to get our financial act together, we already had a plan. We already had a year. Our goal was to get out of New York in 2006.

00:10:50 Brad: A couple of things come to mind. We need to obviously dig into all the resistance to leaving your home because I mean, you can tell New York is ingrained even into your voice. Every little bit of you screams New York.

00:11:02 Brad: Obviously your family is from New York. I mean, this isn't just, oh, pick up and leave. There's a reason that not everybody just does this automatically. There's resistance. But before we walk through that, I guess what I'm curious about, once you had this light bulb moment, did you start to have any savings aside from this? I mean, you're planning this transition. Are you putting any money aside to plan this escape strategy? Is there anything else that you need to do to prepare to leave New York?

00:11:30 Speaker 1: Good question. Basically, in our minds, we want to keep it simple, just save as much money as you can. We called it our transition fund. Our goal was to save $2,000 a month. Unbeknownst to us at that time, this is in 2003, I had a one bedroom condo in Long Beach, Long Island, and it was becoming a hot area. We were aware that we were building equity in our one bedroom condo. So that was part of our transition fund in the back of our mind. We knew if we played it right, we would walk away with a lot of equity. So between the savings and the equity that we thought we had a legitimate shot at, that was what we concentrated on.

00:12:11 Brad: Before you sold the house and you pulled out that massive amount of equity, which I know you're going to end up with, did you guys have any money really set, like any significant amount or is it just, well, we were probably going to be okay, we could cash flow it? Did you have any sort of, did you have 30 grand, 20 grand in the bank?

00:12:31 Speaker 1: Going back, what is it, 14 years now. When we left Long Island in 2006, we had $80,000 basically in cash. So between 2003 and 2008, our transition fund, not including the equity that we'll be talking about shortly, was about 80,000. So that was our primary objective. Any overtime opportunities I had, I jumped on it. I even took a part-time job in a warehouse. So we just became saving monsters and as far as 401k, as far as Roth IRAs, they weren't even on the radar yet.

00:13:06 Brad: So from 2003 to 2006, you started to accumulate a rather sizable amount of money, close to $80,000. Was this going into the stock market or was this in cash? Was it in a savings account?

00:13:17 Speaker 1: No. It was in cash. Like I said, we were very ignorant and just in a savings account.

00:13:22 Brad: And your life at this point in New York, do you have any idea of what your expenses actually were in New York in 2006, how much your life was costing you?

00:13:27 Speaker 1: Oh yeah. $4,500 a month. And you've started to hatch this plan that allows you to move somewhere else that in theory has a significantly lower cost of living. Did you start announcing your plans to friends and family?

00:13:44 Speaker 1: Not initially. Mrs. Groovy, God bless her. She has a relatively small family. Her mom and dad were already in Florida. My family, I mean, they're ensconced, they're locked into Long Island. So it was kind of hard saying, hey guys, I'm leaving. So we didn't announce it initially. Like I said, it was a tough call. I do love my family, but we had to do what was right for us and Long Island just wasn't working. So no, we didn't tell anybody initially about, I would say 2004. By 2005, everybody knew. Friends and family knew.

00:14:20 Brad: And was there a sense of betrayal? Was there a sense of hard feelings? Were you supported in this idea?

00:14:26 Speaker 1: No. And it's the beautiful part of the story. Everybody said, yes, do it. Now, like I said, I don't know if they, it's because they didn't like us, but they were very supportive and that was a big help.

00:14:39 Brad: Yeah. It's an interesting place and I don't think people who don't live there, who didn't grow up there really have any comprehension of it, but it's amazing how, like you said, ensconced people are there. They have their lives and they never look off that Island. And I know we have tried to talk to people about our move and how significant it was for us financially and just how amazing it's been. But there's just something about that place. It's like the pull of family. It's the pull of friends and the beaches being right nearby and the New York sports teams or something. You know, it's all these things that are tied up together, but like people have a hard time escaping like the tractor beam that is Long Island. And to your point, when you tell people that you're actually leaving, people are thrilled for you because they know they should be making that decision, but it's just so hard. And we experienced that exact same thing. I mean, people were absolutely thrilled for us. And again, we've talked to dozens of people over the years about the move, but not one single person has ever moved off the Island since we have in my family and friends. It's astounding.

00:15:45 Speaker 1: Wow. Yeah. I was very fortunate. And, you know, for years, I know exactly what you're talking about, because for years, my family, friends, all the people I know, they complain. They complain a lot about the traffic, the weather, the taxes, but they don't do anything about it.

00:16:02 Brad: Yeah, they really don't. It's so bizarre.

00:16:04 Speaker 1: Yeah. I mean, there are so many good things about living there, but, but as you said, so many bad things and people really do complain a lot about it because it's legitimately difficult to get ahead. And this is not a conversation about Long Island per se, it's interesting that you and I both happen to live and grow up there, but this is more a discussion about high cost of living areas in general, which is it's very difficult. It's not impossible by any means, as we've seen on past episodes with Paige and Sam and people like that. You can definitely reach financial independence in a high cost of living area, but it's extraordinarily difficult. And in my opinion, like you always have to give something up. So like we could have made it there. Laura and I were both CPAs. We had, you know, a reasonable income. We could have done what everybody else did and succeeded to some degree, I suppose. But we always felt like we couldn't do everything. We couldn't have that significant savings rate. We couldn't save for retirement, save for our kid's college, go on vacations, do all these things that we really don't want to compromise on. And that's why we left Long Island. And I'd be curious to hear your thought process behind why you left and what you thought you would have given up by staying, I guess.

00:17:12 Speaker 1: Yeah, I hear you. I think the genesis of my move really started when I went to Buffalo University. You know, I was 18. I left for college. The first time I left Long Island, I thought Long Island was the center of the universe. You know, who doesn't want to live in New York on Long Island? Anyway, I go to Buffalo University, great people, great town. We had fun in small town America. And all of a sudden it dawned on me, you know, there's something, there's a life beyond Long Island. The world doesn't revolve around Long Island. So that was always in my head. And then moving down to North Carolina, I gave up nothing. The weather's nicer. The core government services are just as good as Long Island. I do the same thing I do in North Carolina as I did on Long Island. So I don't know why anyone stays on Long Island, to tell you the truth.

00:17:57 Brad: Yeah, I hear you. I'm sitting here cracking up, trying not to laugh over you because that's exactly what I feel about Richmond. It's Richmond, at least the part of Richmond that I live in, it's basically the epitome of suburbia, just like Long Island. And I think that is a misconception actually about Long Island. People think it's either like the Hamptons or Queens. And it's really like it is suburbia. It's the original suburbia. So like where I live in Richmond is basically the exact same place as Long Island, just without the traffic, the bad weather, the surly people, right? And everything's kind of nicer and newer. And it costs a third of the price. It's crazy. Like I agree with you. I don't know why people stay there and it's the cost of living is just so significant.

00:18:51 Speaker 1: It struck me when you were saying that your expenses month to month in Long Island were $4,500. In my mind, I was actually, I'm going to be honest, I was actually thinking that's actually not too bad for a high cost of living area. For someone that's kind of gotten their act together, I'm sure you could have done it less with some of the things that the skill sets that you've learned now, but $4,500 doesn't seem too bad. But I know from reading your blog that part of that is that your housing to some degree was already baked in. And I wonder if that cost of living hasn't gone up even farther over the last, I guess, 10 years or so.

00:19:10 Speaker 1: Oh God. Yeah. Because don't forget we're talking about 2003 to 2006. And also don't forget I was living in a one bedroom condo and my expenses were $4,500 a month. Never mind a house. So just to give you an example, my taxes, my property taxes on my one bedroom condo in 2003 were $5,400. If I had a house, they'd be at that time to be eight to $10,000. So the only reason our expenses were $4,500 is because we had a one bedroom condo. If we had a house, they would be over $6,000 easily.

00:19:44 Brad: Yeah, there's no doubt about it. And that condo you bought for 70,000. So the mortgage on that is pretty low obviously.

00:19:51 Speaker 1: Yeah, there are all those things that go into even a condo or a co-op, which is also prevalent on Long Island. Like I lived in a one bedroom apartment that was a structured as a co-op and I had to pay the mortgage and then I had to pay a monthly maintenance which was like $800 a month for a one-bedroom apartment it was crazy so I had my mortgage and then that maintenance fee which is taxes and some other nonsense and then all the other expenses of life so yeah I hear you completely and what it's like on Long Island to answer your question is really in almost any town that you would want to live in a starter house is gonna be 400 plus minimum and you probably have to put some work in it and also like the taxes are just absurd like I am NOT someone who ever complains about taxes in general I think my tax burden is fairly reasonable but when you look at the real estate taxes on Long Island houses and then compare them to my house here in Richmond for instance my friends are paying twelve thousand to fifteen thousand dollars a year in real estate taxes and I pay like two thousand and I would argue to Mr. Groovy's point the government services here are as good or better in all likelihood better in almost every single aspect and I'm paying a sixth of what I would be paying so it's that is just such a massive massive expense that I cannot overstate how significant the taxes are in Long Island.

00:21:12 Speaker 1: Brad I got one for you my former supervisor on my last job on Long Island lives in Woodbury, Syosset School District. Last time I spoke to him was three years ago so I bust his chops I go Doug what are your taxes up to? Now he had a ranch right around 25, 2600 square feet nice ranch you know built in in the 60s but he's on an acre of land thirty six thousand dollars a year this is three years ago could you imagine paying three thousand dollars a month just on property taxes?

00:21:41 Brad: That's crazy, I mean right when you said Woodbury and an acre I mean that's one of the most expensive places to live.

00:21:46 Podcast Extro: You've been listening to ChooseFI Podcast, where we help middle-class America build wealth one life hack at a time.

00:21:51 Jonathan: In America, and that's not shocking to me, which is sad. So yeah, I mean, like that's a big aspect of cost of living certainly.

00:21:55 Brad: I'd be curious to hear other areas where you have found. In particular, I know for me, car insurance was a big one. My car insurance is about a third of what it was in New York. Also, utilities and heating costs. I know like Laura's parents spend a fortune on heating oil in the winter, and here, I mean, our utilities are like $100 a month; they're virtually nothing. So those are the two big ones for me. Other than housing, I'd be curious to hear yours.

00:22:25 Brad: I'm having flashbacks here, 2006, a 600 square foot one-bedroom apartment. Our electric bill was usually between $160 and $170 a month. Our electric bill right now, this is 2017, I have a 2,000 square foot house, and our electric bill is $112 a month. Mrs. Groovy and I were here all day, so the air conditioning is running all day. I mean, utilities, car insurance. When I was in Long Island, I was living in Long Beach, so I also had to have flood insurance. Just to give you another example, my homeowners association was $67 a month; we had nothing. We didn't have a gym, we never—I mean, well, we had a pool, we had on-site parking, that was it.

00:23:10 Brad: For both you guys, I'm just trying to keep a running tally, and I'm kind of in my mind trying to convert from an annual cost to a monthly cost, but this— you keep coming up with these new line items; it's literally breaking my mind.

00:23:17 Jonathan: Yeah, it keeps on going. Because then tolls, there are no such thing as tolls south of Washington DC. It's incredible. I mean, just to go over a bridge was going to cost you $12 bucks.

00:23:26 Brad: Yeah, I know every time we drive back home, it's something like $50 in tolls; it's absolutely absurd. So yeah, I mean, it's everything, Jonathan. It's just even geographically being on an island there, the distribution costs are more significant. There are plenty of unions, so wages are union wages, and it all gets trickled down, so goods cost more. You go to the food store, as we say, and things cost more than here in Richmond, and I'm sure in Charlotte as well.

00:24:02 Jonathan: So it's hard to quantify exactly how much you're saving, but it's almost every line item. It really is just about everything in life, which is astounding.

00:24:07 Brad: There are two things that are really powerful. One is that you would have no idea how much you're hemorrhaging to taxes unless you tracked it, which is why tracking it is ultimately the most important step in this decision. It all starts, you know, you making this decision was not possible without you tracking your finances. It wasn't even on your radar until you actually started to look to see where your money was actually going or how much you were making compared to how much you actually had to use. The possible utilization of that dollar.

00:24:37 Brad: The other thing is that it's so much more dire now for someone than it was for you in your specific situation. Even if someone was willing to live the most perfectly optimized lifestyle and be willing for them and their family to live in a 600 square foot one-bedroom condo in New York, they're not going to be able to do that for $4,500 right now. That's going through the roof.

00:24:58 Jonathan: So I just want to highlight there are advantages that you're going to have that we're about to discuss, but on the flip side of that, it’s just astounding to me how much more of a benefit someone would have for making that decision today than they did even back then.

00:25:13 Brad: Oh absolutely! So let's go ahead and talk about this house equity situation, how that really set you up for this transition. The moment we decided we're going to leave New York, it was 2003. I get that letter from the mortgage company telling me what my mortgage payment is going to be beginning in 2004. I mean, at this time, my taxes were $3,700 a year, again, for a one-bedroom apartment. So I get this statement; it goes up to $5,400, and I looked at Mrs. Groovy and I said, "What the heck are we doing on Long Island?" Unbeknownst to me, she wanted to get out of Long Island since we were married, but she never said anything because of my family. I'm very close to my family. So that was the moment we decided this is enough, no more. Let's get out of here.

00:26:02 Brad: And like I said, at the time, we knew our condo was building equity for whatever reason. Maybe people were tired of going to the Hamptons. Long Beach got on New York City's radar, and they started building new condo developments in Long Beach, so it became a hot neighborhood again. We had no idea, but we knew we were onto something good. So we said to ourselves, before we sell, let's do our upgrades. Let's redo the bathroom; let's redo the kitchen. Let's just make this an immaculate one-bedroom, a beautiful one-bedroom. And so that was what we did—we had three years. We saved our money, and we did every room in our condo.

00:26:40 Jonathan: And do you want to know what we sold it for?

00:26:44 Brad: Yeah, I would love to! So you’ve I guess initially put down $7,000 to purchase this $70,000 condo in 1997. What did you end up selling it for?

00:26:50 Brad: Yeah, in 2006, we sold it for $340,000. It was, you know, I knew it was a joke. I didn't understand it. It didn't make any sense to me. I remember discussing with my friends who were in the mortgage business, one who was a lawyer who did closings. I said the prices don't make any sense; it's supposed to be a reflection of household income. My household income hasn't gone up fivefold in eight years. So I didn't understand it. I wasn't arguing with it, but that's what happened, and it was just dumb luck.

00:27:22 Brad: When we decided to leave Long Island, I had 17 years in my government job. Now, I could have left then; I was entitled to a mini pension. But if I had 20 years in it, there was a bump in the percentage for every year of your service. So it went from 1.5 percent to 2 percent for every year just by going an extra three years. We did the math, and it really made sense. So that's the reason why we picked 2006. It was just dumb luck, and it also turned out to be the height of the real estate market on Long Island.

00:28:03 Jonathon: So what was so amazing to me—and maybe you can just confirm this number—but with this housing bubble that you essentially rode that wave, when you sold it in 2006 for $340,000, even after closing costs, even after all appropriate taxes, even after the remodel that you did, you still pulled out $250,000 in equity from the sale of that condo, is that right?

00:28:21 Brad: Yes, and even to this day, I'm floored. I remember it’s funny because when I did refinance probably in 2004—and I remember I was so nervous—I took out an extra $20,000; meanwhile, other people were using their homes as, you know, ATMs. So after paying everything off, my mortgage, all the fees Nassau County hit you with, when you sell a house in Nassau County, we walked away with a quarter of a million dollars.

00:28:53 Brad: A little aside: when we agreed to sell our home, we went to contract with the buyer. They started making some demands like, "We want to close in a month," and I remember Mrs. Groovy saying, "Well, they can't dictate to us when." Well, I'm saying, "Mrs. Groovy didn’t give us a quarter of a million dollars; I'll do whatever they want. Let's just make them happy; let's get out of here before it all collapses."

00:29:12 Jonathan: Well, it sounds like you read that one right. I just—I think it's so interesting, Brad. I did go ahead and take the time just to run the math on that. So if you're able to take the $7,000 that you put down and then nine years later pull that out, $250,000—that's a 48.5% year-over-year return. That is amazing!

00:29:29 Brad: Wow, I never did the math; that is pretty remarkable. Just the sheer fact that you guys were able to make that move and pocket that $250,000, I mean, so many people up there are house poor, as I'm sure you know. I mean, people might have some assets, but it's stuck in that house.

00:29:46 Jonathan: And I mean, you actually lived the dream, as many Long Islanders in their dream scenario would sell and move someplace low cost of living and pocket the difference, buy a place in cash. I mean, like this actually became reality for you.

00:30:07 Brad: And I'd love to hear about the actual move, like how you decided on Charlotte and just talk us through what that process looked like. Oddly enough, at that time, believe it or not, I was kind of pushing Mrs. Groovy towards Las Vegas. Because Las Vegas was still at that time very affordable. It hasn't—didn't become a hotspot, but for various reasons, just so you know, Mrs. Groovy's a redhead; she doesn't do well in the heat.

00:30:27 Brad: So anyway, I was open to anything. Mrs. Groovy said when she graduated high school—and she's from Brooklyn—she did summer theater in North Carolina. And she said she liked it down there. I said, "Fine, North Carolina is perfect for me."

00:30:44 Brad: At the time, you know, we had the internet; it was not as robust as today's internet, and you could go online and look at what housing prices were in North Carolina. We knew that we would do well moving to North Carolina. We had no specific city. We were aware of Charlotte; of course, we were aware of Raleigh. We decided, "Well, we got to go down and investigate."

00:31:11 Brad: Two weeks before our first visit to North Carolina, at this time, we didn't decide where we were going to go, there was an article about Charlotte in the travel section of the New York Times. My sister-in-law sent it to us, and it talked about Charlotte being an up-and-coming city. Mrs. Groovy and I looked at each other and said, "Well, let's check out Charlotte." And that's how it started.

00:31:38 Jonathan: So let's dig into the weeds there a little bit about Charlotte. What changed for you? So let's say you make this move. Did you purchase a home? Did you pay for the home in cash?

00:31:46 Brad: Yep. At the time, like I said, in 2006, before we sold our home, we had about $80,000 in cash. So what we did was we did a couple of trips to Charlotte. We also looked at Raleigh, that area. We liked Charlotte better. We found an area that we liked, a nice neighborhood.

00:32:05 Brad: A little aside: Mrs. Groovy does not drive, so we wanted to pick an area that was on a bus route to uptown Charlotte. We both had to find jobs. So we looked for an area that was affordable and was on a bus line. And we found a really, really nice community.

00:32:27 Brad: We bought a condo for $88,000, a two-bedroom, beautiful condo. What we did is we had $80,000. I don't remember the particulars; I think we took $60,000 of our money and we borrowed $28,000 from my mother-in-law and bought the condo.

00:32:49 Brad: I think in March of 2006, we didn't move down until May of 2006. We bought the condo before we moved down, and we needed that, what would you call it, a bridge loan from my mother-in-law just so we could buy the condo. Once we sold our condo and we had our profit, we paid her back.

00:33:12 Brad: So our two-bedroom condo in Charlotte was $88,000 and we bought it outright.

00:33:18 Jonathan: All right, so just doing the math, it sounds like now you're in Charlotte; you have a fully paid-off two-bedroom, beautiful condo, and you have somewhere just less than $250,000 in cash, right? Because you had the $80,000 plus the $250,000 you cleared from the sale of the Long Beach condo, and you bought an $88,000 condo in Charlotte.

00:33:39 Speaker 1: So that's amazing.
00:33:41 Speaker 1: What do you do with that money then?
00:33:43 Speaker 1: Well, we were still getting our sea legs, so to speak, with personal finance. At that time, believe it or not, it was in Bank of America. It was in a savings account.
00:33:53 Speaker 1: And Mrs. Groovy was very fortunate. She kept her New York job. She gave her two weeks' notice and the company liked her so much, they said they want her to telecommute.
00:34:05 Speaker 1: So that was a big win. We weren't expecting that, so she kept her New York job and she worked from home, which was awesome. A New York salary, a New York benefit, it was great.
00:34:13 Speaker 1: So basically, we had this big chunk of money. Even after buying that condo, I forget the exact number, it was over $200,000. It almost sickens me looking back on it. We just started dollar cost averaging, which today I wouldn't do. But back then, we started doing our Roths.
00:34:31 Speaker 1: At the time, I think it was maybe 300 something a month to max out for the whole year. And we put $3,000 into a brokerage account with Fidelity every month.
00:34:40 Speaker 1: Wow, so dollar cost averaging $240,000 worth of this big pot of money you have at $3,000 a month. I mean, that's going to take 80 months, right?
00:34:49 Speaker 2: Yeah.
00:34:53 Speaker 2: Well, let's walk that through. I mean, are things crashing on the way down right now? This is 2000, 2008, 2009. You're watching the housing market burst. That's the killer.
00:35:02 Speaker 1: That's the killer because, again, when we moved down in 2006, things were still okay. Fortunately for me, I had so much time built up at my government job, I was still on the government payroll for a year.
00:35:17 Speaker 1: So basically for that first year, we had our New York salary. At the time, 120, 125 a year, no bills. So we had tons of money coming in and we were dollar cost averaging $3,000 into our Fidelity fund every month.
00:35:33 Speaker 1: At this point too, we started contributing to our retirement plans at work. So yeah, looking back, we didn't play that exactly right because when the market crashed in 2008, 2009, here's an interesting story.
00:35:47 Speaker 1: I remember we had over $100,000 in the bank just sitting there and I looked one day and I saw an article about Bank of America being a dollar a share. It may have been under a dollar.
00:35:58 Speaker 1: And I jokingly said to Mrs. Groovy one night, why don't we put $50,000 on Bank of America if it was back to $12 a share. If we were to put $50,000 at $1 a share, I mean, we would have had $600,000 in a year, but we did our dollar cost averaging.
00:36:18 Speaker 2: Yeah, so clearly at this point, Warren Buffett's model of running out with your wash basin to collect gold raining from the sky wasn't ringing through in your mind. But I am curious, at what point on this journey did you find, I guess, the mustachion community or the FI community?
00:36:35 Speaker 2: Is index investing something that you use now or was this on your radar at this point back in 2008, 2009?
00:36:42 Speaker 1: Not on our radar back in 2009. I can say we were still learning. And for our Roths, just so you know, we were doing target date funds.
00:36:57 Speaker 1: And similar with our workplace. There was really no coordination between the 401k to 403b, the Roths. We were investing, but we weren't investing wisely. I mean, it wasn't bad, but we weren't at that level yet.
00:37:10 Speaker 2: So it sounds like at an optimal level, it doesn't sound like you were making all the right moves, but you were still winning while doing this just because your cost of living had gone down so far.
00:37:20 Speaker 2: And it sounds, based on the numbers that I read on your blog, your cost of living immediately went from approaching $4,500 a month in New York all the way down to somewhere in the low threes, low twos, is that right?
00:37:34 Speaker 1: Little lower. I would say we were, when we first moved down, especially when we were living in a condo, a two-bedroom condo, I think $1,500, $1,800 a month.
00:37:44 Speaker 1: We're basically a third of what we were spending in New York.
00:37:48 Speaker 2: So you guys have a huge hammer just to crush your savings goal. I mean, right out the gate, you're able to save 50 to 60% more than you were in New York.
00:37:57 Speaker 1: Oh yeah. I'm more on top of my numbers now, but back then we were easily saving 50% of our household income, easily.
00:38:04 Speaker 1: Just by making the move, which obviously when we talk about something like the shockingly simple math of early retirement, that is taking you from having no retirement plan to potentially early retirement, right?
00:38:16 Speaker 2: Yep, and it's interesting you brought that up because I give Mrs. Groovy credit for Dave Ramsey. I get credit for Mr. Money Mustache.
00:38:25 Speaker 2: I thought I was working till 67, and in 2014, I stumbled across the shockingly simple math.
00:38:32 Speaker 1: Yeah, and that was an absolute light bulb moment for me as well. I mean, when you see it on paper, it's just so obvious, right?
00:38:40 Speaker 1: Like it's something that you didn't consider because just thinking about you and Mrs. Groovy, right? You moved down to Charlotte, you bought your condo in cash.
00:38:49 Speaker 1: Your expenses are virtually nothing at that point. You have almost a quarter of a million dollars in cash sitting there, right, from the sale of your Long Beach condo.
00:38:56 Speaker 1: You're saving five to $6,000 a month in all likelihood just based on back of the envelope math. Like you are sitting pretty, right?
00:39:07 Speaker 2: Like that's amazing, but yet you still thought before you found that article, before you had that light bulb moment, which I don't know what light bulb moment number that is, but it's certainly a major, major moment in your life.
00:39:20 Speaker 2: Like you thought you were working till 67, and like what did it look like the next, did you talk to Mrs. Groovy and say, wow, our entire lives just changed? Like what does that conversation look like?
00:39:30 Speaker 1: Well, first off, she said, you're not working to 67. You know, we'll get a divorce before you work to 67.
00:39:38 Speaker 1: And once I discovered Mr. Money Mustache, I said, Mrs. Groovy, check this article out. Check this guy out, his website. He's a nut, but he makes sense.
00:39:47 Speaker 1: And she was all in. And this was in 2014, we did a rough calculation and believe it or not, at that point in 2014, given our annual expenses and what we accumulated at that point, we were pretty close to 25 times our annual living expenses.
00:40:08 Speaker 2: What's so remarkable about this is based on at least that first year where you said your life was only costing you around $1,500 a month, Brad, I'm just recalling earlier in this conversation, you said your friends were paying $12,000 to $15,000 a year in property taxes.
00:40:21 Speaker 1: His life cost less than their property taxes.
00:40:23 Speaker 2: Yeah.
00:40:24 Speaker 2: It's amazing. That is absolutely amazing.
00:40:26 Speaker 2: There's no starker example of geo-arbitrage just here in the US than that. That is brilliant.
00:40:33 Speaker 1: It's a game changer. When you really think about it, it just made sense for us and thankfully it worked out.
00:40:39 Speaker 1: Practically speaking, just to put some numbers on this and to use that stark contrast of that $1,500 a month in living expenses, if you get to a point in this world where your life only costs $1,500 a month, and for some people maybe that's a reality, for other people that's aspirational, but that's $18,000 a year, multiply that times 25.
00:40:57 Speaker 1: Practically speaking, $400,000, $450,000 gets you to I think what you call the mustachioed threshold. Am I right about that?
00:41:04 Speaker 2: Yeah, absolutely. Just really remarkable how quickly.
00:41:07 Speaker 2: If you compare and contrast your situation, you went from, and honestly this is retrospective looking back at this, what really was an extraordinarily precarious financial situation.
00:41:19 Speaker 2: Any margin you had in your life was based on an artificial housing bubble that you came out better for wear on that one, but practically speaking, that was an artificial bubble that you rode to the top.
00:41:31 Speaker 2: This one choice allowed you to essentially be at the gateway of financial independence.
00:41:37 Speaker 2: It strikes me though that even if you hadn't ridden that housing bubble, let's say that you hadn't experienced that 48.5% year-over-year rate of return on your house and you had just moved to the same geographic location back in 1997, 1998 and had no housing appreciation.
00:41:56 Speaker 2: If you're able to cut the cost of your life by $3,000 a month due to the difference in taxes, due to the different costs in food, due to the fact that you don't have to pay for as much heating, you don't have to pay for all these ridiculous homeowners association type fees, but you're able to reclaim $3,200 a month and you invest that and you don't get these ridiculous rates of return, but you're able to match the historical returns of the market over time.
00:42:22 Speaker 2: I guess practically speaking, it's been closer to 13%, but we'll just go with 8% for now. For that nine years, that's actually $531,000, which would have also gotten you to FI.
00:42:34 Speaker 1: So this math isn't just based on you getting some ridiculous return on a housing bubble that isn't replicable. It's just based on general math that anybody can benefit from.
00:42:44 Speaker 1: Absolutely.
00:42:45 Speaker 1: Absolutely. When I think about the numbers, if I remained on Long Island, my monthly expenses would have easily been close to $7,000.
00:42:53 Speaker 1: I would have had a $300,000 mortgage moving to North Carolina. My monthly expenses around $1,500, maybe $1,800 a month and no mortgage, no debt, and basically $300,000 in equity.
00:43:06 Speaker 1: I mean, it's a no brainer.
00:43:08 Speaker 1: And Jonathan, the point that you just brought up is really important and I wanted to emphasize this.
00:43:12 Speaker 1: It's not that the Groovies just got lucky. Sure, they timed the housing bubble perfectly.
00:43:18 Speaker 1: I'm sure they laugh all the way to the bank and think about it pretty often about how incredible that was.
00:43:23 Speaker 1: But this was about moving to a lower cost of living area and creating that margin. And they would have reached financial independence, according to your calculations, in under 10 years anyway.
00:43:35 Speaker 2: That's the story. That's the story of geo-arbitrage in the US.
00:43:39 Speaker 2: And sure, it helps if you're able to pull out a bunch of equity on a housing appreciation, but that is not necessary.
00:43:46 Speaker 2: And that's really important for everyone to hear and understand.
00:43:49 Speaker 1: Brad, just to give you a little more information, when we finally retired last year, I don't want to give you exact numbers, but I just want to confirm all you were saying.
00:43:59 Speaker 1: We were over 30 times our living expenses. I'm not going to give you how many times, but we were over 30.
00:44:05 Speaker 1: As Jonathan said, you take away that $250,000 windfall, we still would have made it. It's really remarkable and it's encouraging.
00:44:13 Speaker 1: I wanted to spend a lot of time harping on that because I'm so thrilled for you that you did get that housing appreciation.
00:44:20 Speaker 1: But when I was looking at the numbers, my takeaway was that it wasn't necessary for you to achieve this.
00:44:26 Speaker 1: It really wasn't. The power of the story was just the stark contrast between cost of living in a 600 square foot single bedroom condo in New York versus moving anywhere.
00:44:41 Speaker 1: I don't care what state you landed in, moving anywhere where you're able to create a $3,000 a month space between what your life costs and what you're actually earning, and then just taking the difference and investing it over time.
00:44:55 Speaker 1: That to me, I really was hoping we were going to highlight that because that's the encouraging
00:44:59 Podcast Extro: You've been listening to ChooseFI Podcast, where we help middle-class America build wealth one life hack at a time.

00:45:01 Brad: Message for the people that are listening to this. There's people right now back in your home city, both in your home city, which is somewhat interesting, that they're not going to be able to get a $70,000 condo. That's not going to be there. They're coming in right now and their options are $300,000 single-bedroom condo and they're making $60,000 or $70,000 a year. Or maybe it's even worse. Maybe due to lifestyle inflation or the career path they chose, they're being pressured to get the $600,000 or $700,000 house and do whatever it takes to get that mortgage because that's the key to homeownership. Trust me, the housing in the last 10 years, it's gone up to $600,000. If you ride it out another 10 years, it'll be worth $700,000 or $800,000. So no matter what it takes, you've got to get in that home. The message, the takeaway message on this episode is it's a lie.

00:45:49 Jonathan: Oh, absolutely. So you've made this move. You landed in Charlotte. We talked about your dramatically different cost of living. I'd be curious just maybe as kind of a final thoughts type segment about geo-arbitrage generally. I'd love to have you and Brad just compare notes for a couple of minutes. Any final takeaways that you would want to give to family and friends back home or maybe someone that's considering this?

00:46:10 Brad: My first takeaway is, I mean, obviously you got to give it some thought. We gave ourselves three years to do this transition. And I think my number one takeaway is the biggest transition fund you can put together, that's the key. One, eliminate consumer debt before you make the move. And if you can come to your new destination, your new home with positive net worth, it's a home run. I mean, I've seen people do the transition with no net worth, just coming down with no debt but no equity. And they've done fine. For us, like I said, I would say concentrate on just working on that transition fund. Get rid of the consumer debt. You come down with $50,000 or head out to wherever you want to go with $50,000, you'll be sitting pretty.

00:47:03 Brad: And yeah, my advice to people who are contemplating this move is more in the psychological realm. It's not easy to make that decision. It's hard to leave the place that you've lived your entire life and your family and friends are there and that's just what you know as home. It was difficult even for us. And we just sat back and really discussed and said like, what do we want our lives to look like? What is the most important thing? And we know that family is always going to be there. Our family, even though we're 400 miles away from New York, they come down all the time. My in-laws are here every other month or maybe even more frequently. My parents come for a couple of weeks a year. We see them plenty. We get more quality time with them now than we would if we lived a half hour away and we saw them once a week for an hour for dinner or something like that. It's amazing. How many girls get to spend a week with their grandparents a couple of times a year? How cool is that?

00:48:00 Brad: And also friends. Obviously friends are important, but as you get older and as you have kids, you get busy. My group of friends back home, they just don't see each other all that often. If we were staying for family and friends, which is what a lot of people do, not just on Long Island, though it's especially prevalent there, but other places. You're staying for family and friends in a lot of cases and spending so much on this high cost of living area and it's just, it doesn't make sense. The family will be there. The family will always be there and your important friends you'll stay with and keep in touch with and you can't just stay to see friends a couple of times a year. And that was something that we were considering and I'm sure Mr. Groovy can back me up. That's just the way it is on Long Island and people are so enmeshed in this community, but you just have to realize like what's better for your life on a 50-year period.

00:49:02 Brad: And both my family and the Groovies can say like we reached financial independence in under 10 years by making this move and by being intentional, focusing on our own families, our own happiness. And it worked out exceptionally well for us.

00:49:06 Jonathan: Brad, let me throw this at you. You're absolutely right. Family and friends. What worked out for us even better. My family started following us. We were the pioneers. We showed the way, saying, Hey, you don't have to put up with the Long Island taxes, the Long Island weather, the Long Island moxie. And they started following. So now I got the best of both worlds. I'm in a low-cost of living state and my family's down here too.

00:49:27 Brad: Wow. That's amazing.

00:49:31 Jonathan: I know one thing I've neglected to mention on the podcast previously is that my brother actually moved down here to Richmond and followed us down, which was awesome. So that was the one family member, the one person who did make the move and it worked out well for him. He enjoyed living here. He actually took geo-arbitrage a step further and he moved down to South America.

00:49:46 Jonathan: So he lives in Santiago, Chile. Now he's a, it's amazing. He's a math teacher there. So he was a math teacher here in Richmond and he wanted to do this international teaching. And it's the most amazing FI hack. This is for the audience out there. Like, if you're a teacher and you're contemplating some type of change in life or lifestyle or focusing on FI in a different way, like look into international teaching. I know my brother makes somewhere in the vicinity of like twice his salary and they pay for his apartment.

00:50:25 Jonathan: So he pays essentially no cost of living. His savings rate is astronomical. And he lives in this wonderful metropolitan city where the beach is 40 minutes away, the mountains are 40 minutes away. It's like, it's the coolest thing. I mean, he met his fiance there. They're gonna get married next year. It's like, it was the best, literally the best thing that ever happened to him was taking geo-arbitrage, not only the US geo-arbitrage, but then the international. And it's been amazing.

00:50:50 Brad: I got a quick question for you. Did you have a what the frig moment when you moved down to Richmond? Because Mrs. Groovy and I, our second week down here in Charlotte, after getting everything situated, getting cable, all the utilities, everything transferred to our name, all the basic stuff that's involved with moving, at two weeks, I remember walking to a Dairy Queen and I said to myself, what the frig am I doing in North Carolina? Turned out to be the best move of my life. But that first two weeks, it was weird. I didn't know anybody. I'm in an area that I didn't know. Did you have that moment?

00:51:25 Jonathan: Wow, what a great question. My recollection and my memory is that no, I didn't have that freak out moment. But it's possible. I mean, like, we were just so excited. Like, it was really an adventure for myself and Laura. Like, we had just gotten married. So we actually, similar to you, where we bought the place a couple months earlier, we bought our house here in Richmond in, I think it was August of five. And we got married in November of five and actually moved down right when we got back from the honeymoon. So it was like this amazing adventure for us. You know, we had just gotten married. We have this new life and it truly was this new life. You know, we picked up and moved 400 miles away. So I mean, you couldn't change more in a short period of time than we did.

00:52:10 Jonathan: So also I did know some people through work, though I had never actually met them in person before. We had tax personnel on Long Island and in Richmond. So I moved down. I was working with people that I had corresponded with for years. So, you know, we had like a little bit of a safety net. I had some friends from college who were still here. So yeah, I never had that freak out moment, but yeah, I suspect if I just randomly happened upon, you know, I woke up in Charlotte one day and I would said like, what the heck did I do with my life? Like, yeah, I mean, it is a little weird. It's not easy to just pick up and move your whole life. But like, we were always content with the decision. Like we knew that it was the right decision for us.

00:52:53 Brad: You know, what I love about your conversation and you tiptoed into it a little bit, Brad, and I think both of you probably understand this at some level, but I think it's worth mentioning is that just like with many things in life, you have to ease yourself into an idea. And we talk about this idea of international geo-arbitrage or maybe what you would just call traditional geo-arbitrage, which is going just anywhere in the world and trying that out for a season of life.

00:53:01 Brad: But what I love about this conversation is that, well, maybe when you're looking at it from the outside end, this can seem like this really drastic decision, but it's really not. I promise you Brad sees his family more often than I see mine, which is really sad because mine are in the same state. They live less than two hours away. Brad sees his on almost every other weekly basis. But if you can just baby step your way into this and try a level of domestic geo-arbitrage that allows you to cut your FI plan in half, how much more possible is it to go to some incredibly exotic destination like Chiang Mai, Thailand, and go from whatever living expenses you may be experiencing in North Carolina and cut that in half again, which then cuts your FI plan in half again.

00:54:02 Brad: So, this doesn't even have to be the final destination. This could be the safe experiment that lets you see, you know what, our family is stronger when we move to maybe what could be considered an uncomfortable situation, one that we have to redefine ourselves in. And once we've done that and we have the confidence that comes from achieving a life in a new area, why not try and take that next step and do what Brad's brother did and go to Chile? Just completely blow up the game and reclaim your life.

00:54:25 Jonathan: So, I love that this conversation opens up that door. And thank you so much, Mr. Groovy, for coming on the show today and sharing your story with us.

00:54:32 Mr. Groovy: Oh, my pleasure, guys. It was phenomenal just discussing my situation. And I said, I hope people take that leap because they're gonna love it if they do.

00:54:42 Jonathan: Well, if they do, I hope that they will share it with us and share it with you. What's the best way for people to reach you?

00:54:47 Mr. Groovy: Freedomisgroovy.com. And I'm on Twitter. It's Freedomisgroovy.

00:54:52 Brad: All right, we'll put the links to both those in our show notes. Now, before we let you go today, we wanna give you the chance to tackle the hot seat. Are you ready for this?

00:54:59 Mr. Groovy: That guy's voice. I live for that guy's voice.

00:55:02 Brad: In a world. I don't know where you got him.

00:55:03 Jonathan: But that's awesome.
00:55:05 Jonathan: That's awesome.
00:55:09 Jonathan: In a world drowning in debt and rampant consumption, trapped by the chains of lifestyle inflation, these questions highlight the secrets of those who are broken free. Welcome to the ChooseFI Hot Seat.
00:55:39 Jonathan: Question number one, your favorite blog that's not your own.
00:55:40 Brad: Guys are killing me. This is like picking my favorite child. There's so many great bloggers out there. I love Montana Money Adventures.
00:55:49 Jonathan: Have you heard of that site, Jillian, yet?
00:55:51 Jillian: No, I haven't. Tell me more.
00:55:53 Brad: If you get a chance, check out that site. In Montana, husband, five kids, under 40. They're doing a gap retirement right now. I mean, they are killing it. Great story, great person. I mean, I just love everything they're doing out there.
00:56:11 Jillian: Wow, that's really cool. We love hearing new blogs that we'd never heard of. Does she go by Miss Montana, by chance?
00:56:16 Brad: That is her.
00:56:17 Jillian: Okay, I've seen her comment, I feel like, on 1500 Days or some other websites, but yeah, I've never checked out the site, but that's gonna change now.
00:56:26 Jonathan: Excellent. All right, question number two, your favorite article of all time, and this can be one that you wrote or somebody else's.
00:56:32 Brad: Sure. I hate to be ordinary, but I'm gonna have to go with the shockingly simple math behind earlier retirement by Mr. Money Mustache. If it wasn't for him, I'd still be working.
00:56:44 Jonathan: Nice, go with the classic. All right, question number three, your favorite life hack.
00:56:47 Brad: No bread and no sugary drinks. I don't diet, but by eliminating that, doing a couple other things, a little intermittent fasting, just being a little, saving my sugar for Saturday, I've gone from 215 pounds to 185 pounds. Actually, a little bit less. I went on a scale the other day, 180 pounds. Not bad for a 56-year-old.
00:57:10 Jillian: Yeah, you're crushing it. How tall are you?
00:57:12 Brad: Six foot.
00:57:13 Jillian: It actually sounds like we've kind of landed on something similar. So I'm doing the six and one as well, kind of saving my, I guess, cheat day for Saturday. And I occasionally do intermittent fasting, although lately I've been latching on to maybe just doing a periodic fast like once every couple of weeks or so.
00:57:30 Brad: That's awesome.
00:57:30 Brad: And guys, your podcast, what was it? Small Waste Fat Wallet, one of the best ones I ever heard. I mean, you're still in my thunder. I'm listening to them going, these guys are me, but they're 25 years younger.
00:57:43 Jonathan: That's great, it's amazing.
00:57:45 Brad: Yeah, we definitely have locked in on a lot of similar stuff health-wise. It's, yeah, I mean, for me, I've just tried to cut carbs and sugar as much as I possibly can.
00:57:53 Brad: And yeah, the intermittent fasting and also the multi-day fast that Jonathan just undertook, those are interesting things to me as well.
00:58:02 Jillian: Have you ever done one of those multi-day fasts?
00:58:04 Brad: No, I have not done that. I've done the 24. I don't know if Mrs. Groovy will let me do the multiple day.
00:58:11 Jonathan: Isn't that funny? That's where my wife is at well. She actually gets angry with me when I try it.
00:58:17 Brad: You know, I'm a Tim Ferriss fan, so I'm definitely curious about it. I would love to give it a whirl, but we'll see.
00:58:23 Jonathan: Very cool, thanks for the feedback on Skinny Waste Fat Wallet. I'm glad that resonated with you. It certainly is just kind of filtering through all the garbage that's out there and trying to pull those little bits that have stood the test of time that don't blatantly have some supplement to sell you right behind them.
00:58:37 Brad: I have one question for Brad. I know he's a pull-up guy. Have you ever done a muscle-up?
00:58:41 Brad: I have not done a muscle-up. That's a good question. I know I just recently started CrossFit, and yeah, muscle-ups are one of the advanced movements, but yeah, I've never tried, frankly, so I don't know if I physically can do it.
00:58:53 Jonathan: Took me two years. I didn't think I'd ever get one, but I finally got. Actually, once I got the first one, the others started coming pretty quickly, and I got up to nine in a row.
00:59:04 Brad: So let me know when you hit it. I mean, it's a great milestone.
00:59:08 Jillian: Wow, that's really cool. I love the fact that you kept at that for two years. I mean, I talk about that all the time in the podcast, is making incremental progress towards goals, and just the sheer fact, what does that look like when you try to attempt that for two years?
00:59:23 Brad: Oh, it was, did everything. I did the weighted pull-ups. I even got the straps to the assisted pull-ups to get into that, just to feel what the transition was from the pull-up to the dip.
00:59:38 Brad: And the key for me, what really turns around, once I lost that weight, boom, that's when I got my first one.
00:59:44 Jonathan: That's awesome, man. I saw your setup, your less than $100 setup when I was digging through your stuff. I was pretty impressed by that very minimalistic approach to fitness.
01:00:00 Brad: If I only knew what I know now, 30 years ago, rings will kick your butt, and it's a great tool. Just that, I guess it's coming back into favor now because of CrossFit, but when I was young, growing up, they were unheard of.
01:00:13 Jonathan: I might have to get a pair. I have a little home gym set up. I don't know if I need more space. I feel like they probably need to be higher off the ground, more room than I would have, but I might just get a pair and throw them on those pull-up bars that I have, Brad, or hang it from the ceiling or something.
01:00:21 Brad: That's cool. That's a good idea. I like that.
01:00:22 Jonathan: All right. Question number four, your biggest financial mistake.
01:00:23 Brad: Okay. Yeah. I've done a lot of them. One of my biggest was when I went to school, Buffalo University. This is 1979. College was so freaking cheap back then. I graduated in five years with a lame major, sociology. My last semester, whatever it was, 15 credits, I took five classes, $542. That was my tuition, and I wasted that.
01:01:05 Brad: I didn't have the stomach for work. I did nothing. But even though that was a big mistake, I still think my biggest mistake, 2009, I had $100,000 in cash sitting in the bank. The stock market crashed, went from $12,000 down to, I think it was $6,700, and I still did the dollar cost averaging. I didn't throw it into an S&P 500 index at that time.
01:01:16 Brad: I didn't put it on a stock. We talked earlier about Bank of America, $1 a share. If I just would have put $25,000 on Bank of America, I could have had $250,000 in a year. Looking back, that was my biggest mistake.
01:01:29 Jonathan: Question number five, advice you would give your younger self.
01:01:35 Brad: I thought about this, and over the last year or so, I kind of had an epiphany. I would say, good habits don't discriminate. As soon as you befriend them, they'll befriend you. I didn't realize that until I was in my 40s. I was making excuses. I was worrying about what other people had. I never looked what I had and the opportunities that were all around me.
01:02:04 Brad: Like I said, I was a financial moron prior to 40. As soon as I started behaving wisely, making wise choices, everything just opened up. Nothing could stop me. Not the evil 1%, not the rig system. Nothing could stop me.
01:02:22 Jillian: That's brilliant. That's the internal locus of control that we talk about here on the podcast. It's believing that you can impact change on your life and that you're not beholden to these outside forces that everybody else is so worried about when they're watching the news nonstop and freaking out about this or that.
01:02:39 Brad: You control what you can control, and you are truly taking control of your life in that regard. You don't have to worry about that.
01:02:45 Jillian: I don't think about these outside forces. I don't think about how angry or aggrieved I am. It's nothing like that. I have this wonderful life, and I make the choices that better my own life. It's a really mentally freeing way to look at life.
01:02:59 Brad: Exactly. All right. Now, we do have a bonus question for you. Your favorite purchase made on Amazon.com over the last year?
01:03:06 Brad: This is an easy one. My pickup for trash.
01:03:09 Jonathan: I saw that. Let's talk about your trash videos for the people that want more information. Tell us about your side gig on YouTube.
01:03:13 Brad: Yeah, Freedom is Groovy. I started a YouTube channel. It's hideous. One of the reasons why I started it was that's one of my weak points. I am not comfortable talking in front of people. Everybody says the greatest fear is talking in front of an audience. That's me to a T. I freeze up, and I said, I got to get over this.
01:03:36 Brad: Not that I'm going to be giving a speech anytime soon at FinCon, but I didn't like that aspect of my life. I freeze up. I stutter. I look like a frigging moron, so I said, let me just go out there and just talk. That's how it started.
01:03:49 Brad: This is Groovy convinced me to go on Amazon, get that trash picker up, and just go out there and start filming it. That's how it began.
01:04:00 Brad: Again, if you go to that channel, you're not going to see anything spectacular, but it's cathartic. I enjoy it. I do it once a week.
01:04:09 Jonathan: If I'm ever driving through Richmond, you want to pick up trash with me?
01:04:12 Brad: Yeah, man. You got it.
01:04:14 Jonathan: You bet. That would be awesome. I'll torch you for 15 minutes.
01:04:18 Brad: That's all I ask.
01:04:19 Jonathan: Very nice. Very nice. Well, thank you so much for coming on the show today and joining us. We really appreciate you taking the time to share your story.
01:04:23 Brad: Oh, thank you, guys. Like I said, you guys are, in a short time, you're my go-to podcast. You guys are really, you're kicking butt.
01:04:31 Jonathan: That's really kind. We greatly appreciate the kind words.
01:04:34 Brad: Yeah, and hopefully we'll get a chance to see you at maybe an upcoming Camp Fire event. That would be really awesome.
01:04:38 Jonathan: And to our community, I hope you got value from this episode. Honestly, what I really want to come across is this is not to bash a particular geographic location, although I get that that probably came through, but rather is to show you the power of the tool, to show you the power of doing the math.
01:04:51 Jonathan: And I hope that you're willing, what you take away from this is just the fact that first, you just have to start. You just need to start tracking your finances. Once you've done that, you're going to be positioned to decide whether or not this is a tool or a lever that you should be considering.
01:05:05 Jonathan: And if so, I hope you're able to make a choice that's in your family's best interest, just like it was in Mr. Groovy's and it was in Brad's. But either way, it starts with just doing the math. Thank you so much for listening. Thank you so much for being here and for being a part of this community.
01:05:16 Jonathan: If you want to support us, here are four easy ways. One, press the subscribe button on the platform that you're listening to this on and leave us an iTunes review. If you want to do that, just go to choosefi.com slash iTunes.
01:05:26 Podcast Extro: You've been listening to ChooseFI Podcast, where we help middle-class America build wealth one life hack at a time.

01:05:29 Jonathan: Two, use our page to sign up for travel rewards credit cards. If you want to travel the world with miles and points instead of your hard-earned dollars, then just go to choosefi.com slash cards and get started today.

01:05:38 Jonathan: Three, if you're working on the milestones of FI, set up a personal capital account to track your progress and use our affiliate link. It's completely free and just go to choosefi.com slash PC, P as in Paul, C as in cat.

01:05:48 Jonathan: And four, and most importantly, find your friends, coworkers, and family members who might be open to this message and tell them about the podcast. Have them start with episode 38, The Why of FI, and right behind that, have them go listen to episode 21, The Pillars of FI. It is a fantastic starting place.

01:06:02 Jonathan: All right, my friends, the fire is spreading. We'll see you next time as we continue to go down the road less traveled.

01:06:08 Podcast Extro: You've been listening to ChooseFI Podcast, where we help middle-class America build wealth one life hack at a time.