436 | From Vision Board to Action: A FI Success Story | Rakesh

0:00Hello and welcome to Chooseify. Today on the show we have longtime community member Rakesh, who actually grew up in India and has lived in the US now for over 13 years.

0:30Rakesh's son appeared on episode 305. He was a seven-year-old boy at that point. And he asked us about how would I learn about investing? And it was just the cutest thing in the entire world. And I think we had a 10-minute segment on that, just speaking directly to him. So it's really cool to speak with his dad today and just talk about this remarkable journey of action and all the things that him and his wife and his family have taken from this show, from this community, but more importantly, what they've done, what they've implemented, and where they're going. With that, welcome to Choose a Fi.

1:14Rakesh, welcome to Choose a Fi. I'm so happy to have you here. After so many years of us emailing, this is wonderful. Thank you, Brad. Thank you for having me on your show. I have been the fan of the show for three long years now and me and my son we always here on our way to school and work so this has been a nice experience overall and we have been taking action in our lives not just listening but taking actions so when I found Chooseify back in January 2020 and And before that, my life had, I would say it was good. I was saving a little bit, but it did not have any purpose. So I did not know what I was saving for.

2:00And like any other guy or immigrant guy in this country, I was thinking that I was going to work forever. I came out of nowhere. I'm going to build a name for myself, but I was not taking any action to do that. So when I came from no money background and I had a lot of money earning in dollars, so I thought that I could spend everything and live a lavish life. But I was wrong in that and I have learned my lessons over it. At some point of time before 2020, I had$15 ,000 in credit card debt. So it was mostly spent on things I did not need and on travel. And those things piled up over the months.

2:48And then one day I had to decide what to do with the credit card debt and started watching YouTube videos and whatnot. And I paid off that credit card debt. And suddenly, as part of YouTube algorithm, I found Chooseify. So it was autoplayed on my phone. Thank you, autoplay. Yeah, it was thanks to YouTube algorithm. them. It was actually Mr. Money Mustache and Mr. 1500 episode. I could not recollect the episode number but that was the first episode I heard on YouTube. I did not have a podcast player back then on my phone. So immediately once I stumbled upon Choosify YouTube channel, I could not stop.

3:35Then I immediately switched over to podcast. I started listening from episode number one. So that's how I started my five journey back in January of 2020. Wow. Oh, that's amazing. And yeah, just a footnote that I think it was episode 131 was that one with Mr. Money Mustache and Mr. 1500. What a cool one to come in on, especially to hear from both of them. And yeah, it's amazing that it resonated with you so much. And it's, yeah, you talk about inflection points in life, right? it. And sometimes we just get the information we need at the time we need it. I think back to my early days and I found J.D.

4:17Roth and Get Rich Slowly way back when, when he has his original blog. And then for me, it was Mr. Money Mustache as well. And the shockingly simple math behind early retirement, that was like the lightning bolt that really changed my life. And then you keep going, right? J.L. Collins and the simple path to wealth. And it's still remarkable and humbling to me that choose a pie now is that answer for a lot of people. So, uh, so well, thank you, obviously, most importantly for being here, for being part of our community and for doing this, for taking action. Like you said, why was I saving? What was the purpose?

4:52And I think a lot of people before they find this concept of financial independence, there is no purpose. So why would you do that? Why wouldn't you live that lavish lifestyle? Like you said, when you have money coming in for so many of us for the first time, whether you're an immigrant or whether you're just a 22 year old kid who got out of college and has never made any money. And all of a sudden you're making whatever it is, 40, 50, 70 grand, something crazy, right? Like you wonder, like, why would I save? And yeah, I'm curious how you answered that question. Yeah, as I said, I did not have a purpose to invest.

5:27But when I stumbled upon Chooseify accidentally, then I thought that, okay, now I'm 35. And Mr. 1500 started his journey at age 37, 38. I'm a couple of years younger than him. If he could do it, definitely I can do it too. And at that point of time, his kids were at the same age as my kids. He had young kids. And I started drawing a vision board for myself, but it was just handwriting. And I just made a graph and said that in next one month, I should be doing all these things like contributing to my 401k and getting at least the employer match. then because it was January of 2020, I got to know that I could still invest for 2019 Roth IRA.

6:20So I did that for my wife and myself. Then I immediately contributed for 2020 Roth IRA for myself and my wife as well. So it was right before the pandemic hit. So if you remember back then February and March the market were fluctuating and as an early investor in the stock market those were the not so good days or not so good feeling but as I went through that journey and because it was pandemic and I was walking a lot because we could not have a human contact with outside world so I was walking on the trails and I was listening to all the podcasts of choose a fi i know that you are a huge fan of warren buffett and you quote warren buffett probably 500 times on 500 episodes so that's when i said okay when it rains do not go with a spoon go with a bucket to fill water so i said okay market is fluctuating this is the best time to double tip on it and i invested everything i had so i mean i would say that i am an average guy I was good at math, but while applying it in real life, I was really dumb.

7:40But I started automating things. As I listened and learned from the podcast, I said, OK, my paycheck is this much. 20 % should go to my 401k. Then rest of should go to Roth, HSA, and then rest should go to brokerage account. And I have started splitting my paychecks, one for my expenses. and the other one for savings. So I started there, but now I have three or four different accounts. That was my first point. So saving and spending were two different accounts. I did not mix up those so that my math does not screw up. I like that. So, okay, I have a million things to ask, obviously, from just the last couple of minutes, but let's start right there, actually.

8:28So these different accounts. Now, you said essentially like one paycheck is going to saving and then the other is going to spending roughly. Like, did you have them literally going into different checking accounts or did you just have like the automation? I guess, talk me through the intersection of the automation and these accounts. Yeah. So, I mean, before I speak to that, I had brick and mortar banks who were paying me 0.01 % interest. So I closed them immediately. I I had initially I opened an account with Fidelity. There I put the amount which I wanted to contribute to my brokerage account.

9:09And I had other online savings account and checking account where I used to save$500 per paycheck. And then the rest were automatically deducted from my paycheck like 401k and HSA. And Roth IRA money was also going to that online savings account where I used to keep aside$500 for me and my wife to invest in Roth IRA. So 12 months, a thousand per month,$12 ,000. That was my strategy back then. But now I have moved on with that. Every January, I'm just investing in one month. So this is a new calendar year. I can invest everything at one go. So that was the thing. Yeah, that's great. Isn't that an interesting evolution, right?

10:01Of like how your FI journey, how most of our FI journeys work. At the beginning, obviously, you're not sitting on a boatload of money. So you basically have to cash flow, if you will, these savings accounts in order to max them out if that's something you've decided to do. And of course, every single person out there, we're not saying you have to max out your 401k and your Roth IRA. You have to figure out what works for you. But Rakesh, it sounds like you and your family decided, okay, we are going to do this. So at the beginning, it was, all right, if I'm going to put in, again, we're just rounding, if it's$6 ,000 for each of us into a Roth IRA, well, that's$500 a month, right?

10:42So therefore, that's what's getting transferred. But it sounds like now in 2023, after three years of really five savings, and then prior to that additional savings, now you're at the point where you can just put it all in in one fell swoop and just max it and then not have to think about it anymore during the calendar year. It's just, hey, January 1st rolls around. It's time to max out whatever. And it might be, right? The Roth IRA or the HSA or things like that. Does that sound roughly accurate? Yes. So I was a freshman in 2020, but I graduated. And I mean, we all have our individual journey, how we approach five.

11:20and as we get to think more in our journey, then you go to the next step. So what I can do to make my life easier so that I do not think, hey, every month I need to put$1 ,000 aside. So that is the beauty of FI because once you start automating things, you do not have to think about it. Yeah, that speaks to my soul. That's for sure. You know that obviously and people think I'm a broken record now with my use of that Todoist app. And it's not that I think Todoist is any better than any other task manager by any means. It's just that I've bought into it so much that everything in my life goes in there.

12:01And like you're saying, it's essentially then automated. Like you don't have to think about it anymore. And I think that's a goal of a lot of your to-dos and your tasks and your recurring tasks and also your personal finances. I think like we wanna get these things out of our brain so we're not stressing about them so much. even if it's not the legitimate stress of, do I have enough money? That is the stressor for most people when it comes to money. But even still, for people like us who are in the fortunate position, we've been saving money, we have a savings rate, it's still on our mind of, oh, did I move the money over this month?

12:36You don't want to have to deal with that. And that's why setting up an automation like you've done, it's so brilliant. It gets that decision and that decision fatigue out of your brain to focus on more important things. And that's really wonderful. So one of the other things I wanted to ask about, and it sounds like if you talk to JL Collins, maybe you were starting to invest at just the best time, right? But for most of us who our brains get in the way, hey, you're starting to invest really in earnest after you found Chooseify right in the beginning of the pandemic. And it's easy for us to say, certainly three years on, oh, the Buffett quote, the I'm going to go in carrying wash tubs, not teaspoons or whatever it is that he says, or buckets or whatever it may be.

13:26But at the time, for a lot of people, myself included, I didn't know what the world was going to, what was going to happen. It was scary. I'd love if you possibly could to put yourself back in your brain and your psychology at that point and say like, oh, wow, I just found this message of FI and I'm investing. And then all of a sudden the stock market just dropped 50%, but you didn't stop. Like you said, you doubled down on it. I'd love for you to talk through that because I think that's really an important takeaway for the audience. Sure, Brian. So January 2020, I maxed out Roth IRA for 2019 and 2020 and then starting fair we had the news about pandemic and whatnot but I created my vision board I am a simple person so once I fix my eyes on something I do not think about anything else I just want to say that when I started back in March 2020 when the whole world was shutting down and we had fluctuations then I had to just stop for a moment and talk to my wife about it hey this is what I'm doing do you understand the risk I gave her the example of 1929 it could something happen that our portfolio can go down from say$24 ,000 to$2 ,400 so it could go down 90 % we do not know but she gave me the permission or autonomy to do hey I trust you just do your thing so we have been married for 10 plus years I have I have known you when you put your mind into something you would do it so so I just I remember downloading personal capital on my phone and I was just looking at it 10 times in a day like hey what's happening because that is the initial period of my investing I was so stressed out but slowly things got better and I never stopped investing but back in June 2020 I deleted personal capital from my from my phone and I thought that when I got into other guests on your podcast and some of my personal research I got to know that people do their net worth statement quarterly or half yearly or annually.

15:52So I because the market was fluctuating so much and I was scared of it. So I started doing monthly net worth statement. So the challenge for me was not to look at the market for a month and do my monthly net worth statement then I graduated to quarterly and as of 2021, 2 and 2023 I am doing yearly net worth check I'm not even looking what is going on stock market I get to know the normal sentiment from Twitter because I'm really active on FinTwit and I get to know the normal sentiment how the market is behaving, but I do not log into my Fidelity account where my brokerage and 401k and everything is there.

16:40I do not look at it. If you ask me how the market is doing today, I will not be able to tell. That's incredible. So from checking essentially 300 times a month to once a year. Yeah. I mean, that is something we can all really aspire to. I think going back to Mr. Buffett, So I'll give my 501st time I've maybe quoted or paraphrased him. He talks about, yeah, if the actual stock market closed down for five years, he really wouldn't care one iota because their time span in terms of their investments are not in days, weeks, quarters, or even years. They're in decades. And why should you care about the random fluctuations?

17:26And now obviously this is at the margin, right? But like, why should you care about the random fluctuations when you're investing for 10 to 50 years? I think that's what a lot of us, and listen, I could take many lessons from you, frankly, because I get bogged down in the emotion sometimes and do really stupid things that I know that I shouldn't do. I certainly have done that in my past. And I think hopefully at this point, I've figured it out. But yeah, I mean, just literally taking things off your phone. I know it sounds like such a minor thing, but I suspect now there are going to be thousands of people listening to this who maybe they check whatever account.

18:06It might not be personal capital. It might be Vanguard or Fidelity or God forbid Robinhood or something like that. And they just get it off their phone. That would be a great step. If you're listening to this podcast for this hour, and that's the one takeaway, that's probably going to help your life dramatically. And I would extend that to, hey, is your phone really serving you in a lot of ways? Is the Twitter app serving you? Is Facebook or those notifications that are constantly pinging and constantly getting your attention, are those serving you? You can shut off notifications in about 15 seconds.

18:41It's really not that hard. That'll make your life better. You can uninstall an app. The end of the world is not going to come if you uninstall an app. So I mean, this is what we're here for, right? Like these little things, because the little things are the big things. So yeah, I love, love, love that you've, A, you got rid of that personal capital on your phone, and B, that you're, I mean, you're down to one a year. That's like living the dream as far as I'm concerned. Now I have set my password so difficult that I do not remember it. It is on last pass a password management app so every time i have to check the account i have to log in on my desktop application not on my phone so i have made it difficult for myself that even if i want to check it hey you know there is a war between ukraine and russia the oil prices are going up it will impact the inflation is high i get the general sentiment but on a daily basis This inflation report is coming today, not coming today.

19:42I'm not looking at it because when I was reading Mr. 1500's blog, he had a goal for every year. His first blog was, I should be at this much by end of 2013. I should be at this much net worth at 2014. So I was following that. So I was thinking, OK, I can do one year net worth statement and see where I am. And you believe me or not, when I did my 2022 net worth statement, I was slightly higher than my 2021 statement. Really? Because I had never put so much money on the stock market like I did in 2022. Because I thought, okay, market is down and I'm hearing all this inflation, mortgage rate hike, fade rate hike.

20:32Okay, let me just put everything that I have. and there is another story to it. I will probably share it. Okay. The cliffhanger, I like it. Yeah, okay. We will definitely, definitely come back to that. But yeah, and that's what I was saying about like JL Collins would approve, which is, hey, when the market's down, you're buying these slices of these great companies at a discount. And it's only the psychological part that's hard. It's not actually like anything else. If you got a 20, 30, 40 % discount, you'd be doing card wheels, right? But when it comes to stocks, it's because we let our brain and our emotions take over that it seems difficult.

21:15So I think just like, frankly, you said about Mr. 1500, if he could do it, I could definitely do it too. It was like giving permission. And that's why we do these stories because somebody is going to listen to you saying this, and they're going to remember that the next time we have a correction, which is coming. It's invariably coming, whether it's six months from now, six years from now, there are always, always, always, always corrections, bear markets, massive plunges in the stock market. But as Brian Feraldi in his book, Why Does the Stock Market Go Up? Over time, when you look at that chart, you don't see those fluctuations.

21:53And that's not easy in the moment to do that, like I've said, psychologically. But it sounds like you have internalized this maybe better than anybody I've ever seen. And like you said, or your wife would say, hey, when you set your mind to something, you follow through and it makes sense. And I wanted to ask, it's funny, we have a whole list of things that we want to get through and I suspect we're going to have to do a round two, but you said about the vision board and I just can't gloss over that because that sounds really cool. Like I know you said that vision board at the beginning and okay, I'm going to contribute to my 401k and get the match and I'm going to do my Roth IRA for this year.

22:28And you actually threw in a cool little tip, which is you can actually max out or contribute to your IRAs, your Roth IRA and traditional IRA up until the tax deadline for the prior year. So up until April 15th, like let's say for argument's sake, we're recording this in April of 2023. You can actually still contribute to your 2022 IRAs. And it sounds like you did that for a couple of years prior. That's a cool tip that most people don't know about. And now, obviously, they're hearing it again. But anyway, so you mentioned those things on your vision board. But talk me through the vision board specifically and how you use that maybe still to this day.

23:07Yes. So when I mentioned that when I used to invest, I did not have a purpose. And those investment was not in the United States. And I used to receive my salary, spend everything. if I had little bit left I would send it back to India that I will put in a savings bank which would earn me five to seven percent interest per annum because the inflation is high that's why they have more interest rate in India and if I had anything left I would buy jewelry for my sisters or my mother because they are fond of gold jewelry but when I got to this investment thing So I would say first few weeks of the investment, as I said, Roth 401k and you have that new student mindset.

23:55You wanted to do everything all together. And in that, I probably made a couple of mistakes tax wise because I over contributed somewhere or I did not do the conversion, backdoor Roth conversion at the right time. it had some gain on traditional IRA. When I had to convert, I had to pull back something. So that's why I created this vision board. The vision board was non-linear. It was like weeks, months, then years. So in next few weeks, I want to learn this and apply it in my investment. I want to learn how do I open my Fidelity account to invest. So that was my first task. I learned it, watched few YouTube videos learned it and that was checkmarked.

24:45The next thing was how do I invest in my 401k because I had no idea how to invest in my company 401k and how much match they give. I had to go back and read the annual enrollment letter that I had got the previous year September or October. So I had to learn everything and I gave like in couple of months I should be able to read everything and then start investing and even if I cannot reach the 19 ,500 limit at least let me get up to the employer match so I do not want to leave any money on the table so I just wanted to utilize everything and then when I was maturing out of all of this then I set a purpose first purpose is my retirement and at that retirement I set a goal it was back in 2020 so I said okay by 2030 by end of this decade 2029 2030 I should be financial independent whether I am retired or not and my second goal was to retire by 2039 when I'm an empty nester and my kids are out of the home.

26:02So 2039, I should be able to retire. And that triggered my next, it was traveling. So after retirement, I should have a bucket. It is basically, I have two investment in my brokerage account. One is VTI, the other one is VTSX. So I mean, sometimes I just throw extra money at VTI and just invest it. Otherwise VTSAX is automatic. So whenever I have going to my brokerage account, so it will just invest automatically. It will not be there in money market account. And then I looked at my kids 529 plans because I've moved so many states. I did not want to invest in a traditional 529 plan. I allowed myself to control that fund and say that I will invest my son and my daughter and then they can use it.

27:00I still did not put it in UGMA account. I thought that okay let it be still in my control and I would invest as much as possible after my retirement, after my retirement funds for my kids and help them in their education and then finally my fourth bucket was giving. So I come from a humble background I know that how much struggle I did to reach where I am today so giving because I just found out how to accelerate my retirement I am focusing on that but I'm still trying to give as much as possible back to the society so I have a small fund for giving and I contribute to that fund and when I see that somebody who I trust sharing that hey doctors without borders need some money to help children at some country at war so I mean without thinking say it will hit my monthly budget because I have a separate budget for that I just contribute from that account say this is$200 going directly there and I do not have to think about it that's wonderful so So, right, you build giving directly into your budget, it sounds like.

28:22Yes. That's really wonderful. Yeah, I like how you set that up. And it's so interesting how this all kind of started with that vision board, which if you really think about it, it's astonishing to think what you put on that one vision board, right, from the most micro of, hey, I need to educate myself on the 401k plan at my company, right, which a lot of people just gloss over that, especially when we're unfamiliar, or were young or some combination thereof. And hey, what's the 401k match? You aren't necessarily thinking about that. Most people aren't when they go to a new job, but it's really important.

28:58And like you said, hey, that's free money that I'm giving up. That's part of my salary that I'd be giving up if I didn't put into my 401k. So you had from that most micro down to, hey, it's 2020, but in 2039, I want to be stopping working, right? 19 years from now. So that's a really cool board to kind of go through those things. And now I'm assuming at this point, it sounds like a lot of it is more of those long-term visions, right? The 2030 and 2039. But do you find yourself still going back and putting the more short-term things on that vision board? Or are you kind of like beyond that at this point?

29:35The short-term goals, I have just kept it separate from my vision board now because as I said, it was non-linear for me. So as it was growing, I have put short-term goals I'll probably come back to that because in 2023, I am hearing a theme about all the discussions in the five group or fire group. We are changing our mindset. At least Choose a Five podcast is doing a wonderful thing to say it's okay to spend. So I'm kind of coming out of that scarcity mindset or immigrant mindset that, okay, I'm allowing myself to spend. So that's why I have taken out those short term goals from my vision board and say that, yes, it does not have to be in my vision board.

30:24I'm allowed to go and watch a Dallas Maverick game in the stadium with my son or I can go to New York City to run a half marathon because those are important milestones in my life as well. Yeah, that's so great. And I think that is and obviously you're such a close listener of the show. I know you've listened to all 600 episodes, so I'm not surprised that you've picked up on that. And I suspect a lot of people have as well, which is, I think it's time that we explore that as you get further into your financial independence journey, that as Mr. Money Mustache says, the skill of spending, and we had him on recently, there's a skill of spending on both sides of this journey, which is at the beginning.

31:07And I will hold to this to my dying breath that we have not misrepresented how important that is. It is so critically important that when you're starting your journey to FI, that you get your spending under control. Like I said, till my last breath, I will stand on a hill and say that we need to be smart. You need to spend based on what you value. If you think, or if somebody tries to delude you into thinking that it's all sunshine and rainbows and that you're just going to be rich by thinking it, it doesn't work that way. You have to take action. And a lot of that action, especially at the beginning, comes from, hey, I need to cut out some of these frivolous things in my life that have just built up over the years and decades.

31:51And that skill of spending on that front side is very important. But then as you progress, you start thinking about, I don't need to, like you said, have that deprivation mindset, or I don't need to be miserly. You don't ever want to be miserly. You want to live a great life. That's what we're doing here, right? And like you said, you, I guess, won the lottery and got to take part in the New York City half marathon. You went to a Dallas Mavericks, like all these things. I took my daughter to an Olivia Rodrigo concert last year, which was awesome. And we bought them like, you know, on the secondary market and they were expensive.