450 | Catching up to FI | Becky Heptig & Bill Yount

0:00Hello and welcome to Choose a Fi. Today on the show we have Bill Youn and Becky Heptig who are the host of the new podcast Catching up to Fi. And this show has really struck a chord with the FI community. And I think, honestly, it's one of the most exciting additions to the FI community in a very, very long time. And the need is obvious. There are so many people who are getting a late start as they think about it, whatever they define that as. And they're wondering, can I do this? Can I pursue financial independence at X age? Whatever that is, 35, 40, 50, 70, whatever the number is. they believe it's maybe too late and that they're playing catch up.

0:39And I think this new podcast has really filled that void to talk precisely to those people. And I'm excited to chat with them just about their lives and story, but also about quite literally catching up to FI and what is someone who thinks of themselves as a lead starter? Where are they? What can they do? And how can we help them? So with that, welcome to Choose FI.

1:08All right, Becky and Bill, thank you for being here. And Becky, welcome back. So you told your story on episode 152, which actually came out almost four years ago, which is astounding. It's amazing that it was that long ago. Yeah, it is wild. And that was basically at the start of your retirement. So you and your husband, Stephen had reached FI just a short bit before that. And that was, okay, hey, we've hit FI, but we got started at 50. We were really net worth zero or close to zero at the age of 50. And that's a remarkable turnaround. It was. When we started on that journey, we didn't know where it was going to go, where it would end, but you kind of feel like there may not even be an end.

1:53We might not ever get there. So it really does feel like it could be too late. Yeah, I hear you. And it definitely can feel like that. And that's a beautiful thing about your story. And obviously, I would suggest and we'll link this up in the show notes. Everybody check out episode 152. So you can find that show notes or choose a by.com slash 152 or just obviously find it in your podcast player. So Bill, welcome to choose a by. I know we've been corresponding for many years now. And it's just absolutely wonderful to have you here. So you are an emergency room physician. That's correct. And you're still in practice and you got obviously a very late start.

2:29You, as you've said on your podcast and others, you kind of fell prey to many of the lifestyle traps that maybe physicians fall into some potentially dead and not living like a resident once you have that income. I'd love to hear just a little bit about your story. Well, thanks again for having us today. And it's really fun to be here with you and get this message out there. It's an important one. We feel that we're the silent majority. And the fact that we've seen a boon in community membership and listeners really speaks to the fact that we're hitting a chord. As far as my story goes, yes, I was pretty much the typical physician.

3:08Came out of residency, didn't know how to partition my paycheck. I spent first, saved last, succumbed to all the lifestyle inflation issues, new houses, new cars, and just making all the mistakes, whole life insurance, financial salesmen as investment advisors. And we just didn't pay attention. We weren't intentional. We had no idea what we were doing. We didn't pay attention to net worth, spending tracking. We just live life. And I think this is a common message for people out there that are late starters. It's a very common story. And woke up 20 years later, about age 50, like Becky did. It just was an age-related thing.

3:47and the fact that our kids exited the nest and we thought the world would take care of us, that finances would take care of us. And we realized that our net worth was nowhere near it needed to be. And we launched into the rabbit hole and we're about six, seven years into the journey, about six, seven years more to go. We're in the painful part where we're in what we call the muck in the middle where we just got to do the work, spend the time, save the money. It's quite frankly, boring and stressful. The initial phase was just a lot of fun. Yeah, I hear you. It's definitely, it can be that mucky middle.

4:28I'm curious. So boring and stressful, that actually, that interests me. So boring, I see 100 % because I think for most people who get into the world of financial independence, it is that lightning bolt kind of change in mindset. And I want to talk to both of you about, about change in mindset, but it's that lighting bolt. It feels exciting, right? Hey, I'm making all these changes. I'm seeing my net worth grow from zero or whatever it may be and starting to see changes. So I get that it certainly feels boring for most of us because this is not a get rich quick scheme, right? Let's all be clear here.

5:03It's maybe get wealthy over the medium term, right? 10, 15, 20 years. And once you get past those first couple of years of excitement and you have everything on autopilot, it just kind of moves along and it does feel boring. But talk to me about stressful because you're the first person I've ever heard use that term. Well, when you're in your 50s, you see a lot of people that got it right retire. You see this happen. You wish it could happen to you. And then in my profession, especially, I struggle with burnout. And there's the crossover point between burnout in your primary profession and the shortfall in reaching FI, you've just missed that and you've got to work.

5:42You've got to do the work in spite of the fact that you're a little bit jealous of your friends in the FI community. And it's especially hard. You may not be aware of it if you're outside the FI community, but in the FI community, everybody gets it right all the time in their 30s, their 40s and retires in their 50s. And you didn't. And you feel like an outsider. Yeah, I think that's part of the story that a lot of us build about the other, right? About some other, like you said, everybody in the FI community gets it right. But I don't think that's true. I think that's probably what it appears like, right?

6:18So, okay, yeah, somebody found FI early, like me, let's say, or I was a natural saver, but I've made dozens of catastrophic, stupid mistakes. And maybe on the outside, it looked like I got everything right. But it's such an important point there, Bill, that it's not about reality of the situation. It's about what is the appearance? What do I think? And I think for a lot of people finding FI, Becky, right? Like when they find it late, they feel like everybody else got it right. And they feel like they're hopelessly behind. And I think that might be one of the biggest mountains to overcome in getting started.

6:58And I'd love to hear your thoughts on that. I think so. I agree. In fact, when you kind of wake up and go, oh my gosh, what have I been doing? And what am I going to do with this now? you feel a lot there's a whole big ball of emotions that comes with that and bill and i've talked about that before you feel regret shame remorse you know all those things all those negative feelings and it causes you to feel alone because you don't want to admit what you've done you've put a good face on probably most of us have put a good face on to our friends and family and i mean to be honest we look like every other american right we're living paycheck to paycheck We're spending everything we make and sometimes plus some, but everybody else looks like that too.

7:42So, you know, you don't want to admit to your friends and family for sure that I've screwed this up. And sometimes it's hard to admit it to yourself. So there's some hurdles. There's some emotional hurdles that sometimes folks have to get over before they get to the excitement of the rabbit hole of information and learning. So there's a process there at the beginning. Yeah. I think, like you said, it's a dual-pronged issue in that you are worried about other people, right? So put a good face on. But I think the second part that you said is really where it hits is when you look in that mirror and you have to own up to yourself that, hey, maybe I didn't do this right.

8:29Maybe I could have done it better. But I think the most important thing is to get over that, right? Is to say like, okay, look, I can't beat myself up about the past because that doesn't do any good. It literally only does harm at that point psychologically, right? You cannot fix the past. You can only make changes in the present and future to make your life better. Oh, absolutely. And it's hard. You can't let yourself live there. You can't let yourself live in that muck of emotion and looking at the past. And you're right. Looking in the mirror sometimes is the hard choice. Like in our case, we knew there would never be a pension or retirement.

9:07Stephen's office didn't even have 401k. We knew it was always going to be on our shoulders. But guess what? We still didn't do anything about it. So you're like, and when you wake up, you want to go, what was I thinking? Well, I mean, we literally lived YOLO life. I had a boat named YOLO. Of course you did. That's awesome. Becky did the boat thing too. So we share the boat thing in common and the opportunity cost of things like that. Yes, there's a lot of good memories. And people that are late to FI or catching up to FI, the one thing they've probably gotten right is they've lived life. They've established memories.

9:45And we did with our kids. Just when Dai was zero, we had tons of memory dividends. We spent money on memory dividends. We didn't pay attention to our future self. We never got to know them till later. Didn't know they existed. We didn't reverse engineer our life. We just prospectively engineered our life. There was no thoughts of the future. It was really thoughts of the present. And now I'm dealing with the Facebook approach to FI, the Instagram approach to FI, where you see these success stories and everybody in some level is late, a late starter, or they can feel that way. Our audience is comprised of some 20-year-olds, some 30-year-olds, predominantly 40 - and 50-year-olds.

10:29But it's a common path emotionally, financially. There's several stages to it. And it's the shame, remorse stage. It's the excitement stage. It's the mucky middle stage. It's, again, the excitement stage when you see the light at the end of the tunnel. And then there's a realization phase that, yes, you've done it, and you're living it like Becky is four years in. You know, Bill, I'm so glad that you always sort of bring me back to, you know, I think a lot about those negative emotions at the beginning, but you do a good job of bringing me back to, but look at what you did get to do. We still did create memories.

11:07I mean, that's why we spent money is we enjoyed life. We just should have enjoyed it in a little bit different way. We could have had an enjoyable life and saved money at the same time. We just didn't think we could. Right. Yeah, that is the beautiful balance point that I think we're all striving for. And I don't know that many of us get it exactly right. I think we all tilt in one direction. Maybe I look back and say, oh, you know, I probably could have done this a little better in the sense that I don't think I ever thought of myself as a as a miser or frugal or cheap or whatever the the words we would use to describe it negatively.

11:44right? But did I have as many amazing experiences as I could have if I had made just a couple of little changes, right? It doesn't mean I needed to save zero, just meant, okay, maybe instead of optimizing for a 50 % savings rate, you know what, maybe 30 or 35 would have made for a better life balance. And it's easy to say on this side of it, and obviously I'm not regretful that I've reached financial independence. Obviously, now I have, hopefully, another 50 years to kind of make up for that and or just do what I want. But nevertheless, nobody wants to wish away time. And I think it's important that both of you are saying, hey, look, these weren't wasted years.

12:25It's not like I was literally burning money in a fireplace and sitting there and doing nothing. I was, in each of your cases, you were living your lives and you were creating memories and you're doing, hopefully, wonderful things. But clearly, that's not the balance point either, to have zero dollars of savings or close to it and have to totally make up for it at the age of 50 or X, whatever that age is. Well, it seemed like we were burning money in the fireplace. You might have with the boat, Bill. We built two houses. We overspent on houses. Our biggest mistake by far was at the Great Recession.

13:02We were spend first, save last, low savings rate, probably single digits, actually. We renovated a house to the nines. The Great Recession occurred. We were upside down. We were house poor, so saving very little. And then we got scared. And we did the cardinal sin. We sold at the bottom of the market. We just de-risked because we were fearful. We didn't stay the course. We didn't know to stay the course. And then during the bull market, we had a lower savings rate for two-thirds of it, and we missed it. There was a lot of that occurred during the bull market. And we missed, not completely, but largely missed the boat on that, which made our journey a little bit harder.

13:41I think Becky had a little bit different experience with the wind in her back in this era, right? I did. Of course, at the beginning of that era, I still didn't know what I was doing, but we had at least started saving money. And some of this boils down to really simple ideas and simple tasks. And people will ask me a lot, you know, what advice do you have? My advice is save money. I mean, that's what we didn't do. We set ourselves up for the pain we experienced because we didn't even have an emergency fund. We didn't have savings of any kind when life whacked us in the face and it got real painful real fast.

14:23So we could have definitely made better choices back then. We had fun with life, but we were ignoring the things that we should have also been doing at the same time. Yeah, I understand the point, certainly. But again, you can't beat yourself up about the past, right? And what we have to do is take action. And I think that's what I'm most curious about in each of your cases. And I know it's kind of weird having two guests with two totally different stories. So let's go one by one and maybe we can each just unpack one of your stories at a time. So I think the biggest question that I get from people who have found FI quote unquote late, again, whatever that means to them is, let's say hypothetically, they're like a Becky in that their adult lives are moving along.

15:09They have a mortgage, they have cars, they might have kids, they're saving very little or zero. They're the typical living paycheck to paycheck American. And maybe they've found FI and they need to know, how do I dig out from this? What can I do? What are the actual tangible steps I can do? Because it feels insurmountable. It feels like all of these structural costs are just built in. How do I do this? How do I unwind this? And I think that to me is the single biggest question that people have that I've noticed. And I'd love to hear maybe later we'll talk about other major questions that you found.

15:47But to me, this is the point. So Bill, why don't we start with you? We'll unpack your story in that regard, just the taking action, the unwinding, and then Becky, we'll switch back to you. Well, the path to unwinding is really no different from the FIRE community and the age group of 20s and 30s. You've got to rapidly increase your savings rate. We went from single digits to 35 to 40%. At that point, it got a little painful for lifestyle. But we found that saving more money didn't affect our lifestyle like we thought it would have. We were wondering, where does all this money go? And definitely, it was materialistic.

16:20At times, it wasn't just memory dividends. There was a lot of waste involved. But increase your savings rate, get involved quickly in low-cost index funds. We had to unwind some actively managed funds and working with a private bank that was charging us high fees. You've got to reduce your expenses with regards to your investments. You've got to maximize your savings rate. You've got to maximize the use of low-cost passive index funds. People wonder in our community, how can we escalate it? How can we make the path faster at a time where your risk tolerance may be less? And we don't know what to tell them exactly because I'm a little bit more risk adverse now.

16:58I can't afford to make mistakes. People do use real estate. They do use small business. But I come from a bit of a scarcity and fear-based mentality based on my upbringing and just the way things were. So it's hard for me to take the risk that some people are able to and escalate their path to FI, which is certainly possible. And we're going to talk about in our show ways that they can do that, but they have to be willing to start the small business to escalate their work effort at a time where you may be fatigued. I want to work less. And actually, I did downshift and prolong my path to five because I had to manage burnout at the same time.

17:40So it's a little counterintuitive at a time where you want to ramp up your income, which will make the hugest difference as opposed to frugaling down. But I ramped it down. And I'm fortunate that my wife is a full-time earner. So we have a pretty big shovel to make up for pretty big mistakes. Right. And that burnout, that was a really great answer to my stressful question earlier, where you said you're basically seeing others. There's some jealousy. There's some burnout. So I had never conceptualized why that kind of messy or murky middle would be stressful, but that made perfect sense. So, all right, Bill, I'm going to grill you a little bit because you gave me some general stuff, which is wonderful and I think is going to be really helpful for people.

18:20But you basically just said increase your savings rate. Right. Okay. Well, that's well and good, but actually, how does someone do this? And obviously, like you said, you have a big shovel. So let's be clear. You're a physician. Your wife is employed. So you have a nice income coming in that may or may not be applicable to everybody, but it's going to be applicable to a lot of people, which I think is another one of the benefits of people who are catching up to five people who feel like late starters is there's a reasonable likelihood they're in their highest earning years. So that actually is one of the biggest positives going for people who are catching up to five.

18:52So let's use you as an example here. Like you said, you were saving 10 % or less of your income at that point or thereabouts. Let's just say that roughly and increase your savings rate to 30 or 35. But how does that happen? Like, I know you said there was some waste, but there had to be some big moves because you have a big income. So the Delta for 20 to 25 % increase in savings rate is a lot of money. Just give us a couple of examples. And I don't need to dive into every nut and bolt of your money situation. Obviously, that's not the game we're playing here. But give us some examples of what changes you made to do that.

19:26We downsized our life. We downsized our house. Very painful things to do. We went from 4 ,500 square feet of life to 2 ,500 square feet of life and dumped the stuff, dumped the weight on our shoulders. And my wife went from more part-time to full-time. She's a physician as well. So she did ramp up her income. So overall, we saw a net zero on income. And we just focused on savings. We set goals. We put out an investor policy statement and said, we're going to stick to this. That's critical. You've got to set your life goals. Where do you want to be in 10, 12, 13 years? And anybody, regardless of their numbers, can reach FI.

20:06And we've reiterated this on our show many times. I may have bigger numbers, but we have a bigger spending rate too. And people of average joes, average incomes can absolutely do this. They shouldn't be intimidated by the fact that I'm a physician at all. So those were some of the things we did. I think downsizing is the big thing. And then working on the income side so you can increase that gap. And we found money and we increased the gap at some level. And we're comfortable at 40 % savings rate. And that, according to Mr. Money Mustache and his famous article, Shockingly Simple Math to Early retirement.

20:41Well, it's also to retirement on time. Those numbers work for everybody. And at our savings rate, it's a 12, 13-year journey. And I think that's what Becky found too. Yeah. And I think you're about halfway through based on what you said. So you're about five to six years in, you're five to six years away. So you are quite literally in that murky middle, as you said. But yeah, thank you for giving some of those concrete examples. And I think setting that goal might be actually the most important aspect. Obviously, downsizing and downsizing your life was a big thing, but understanding reorienting from spending, from YOLO, from the boat name to, hey, we have a goal for savings.

21:16Well, when you reorient in that regard, everything else gets easier because that is the goal. And you and your wife were working together as a team to make that happen. So I think that is way more critical than I think other people might think upon first glance. So really wanted to dial into that. But just last thing before we get to Becky is unwinding and getting into low cost funds. So we actually had Sean Mulaney, the FI tax guy on episode 447. That was a mailbag episode. And we talked a little bit about firing your financial advisor and unwinding. But I'm curious at that point, Bill, was that difficult for you to do?

21:51Were there any, maybe one or two little takeaways that you might pass along to the audience for? I think a lot of people get stuck and that's really one of the most difficult aspects of FI is, okay, I theoretically know what I have to do, but it's just, it's hard to envision taking the action on it because maybe there's these couple little mental impediments. Did you have any issue unwinding? I don't know if you had a financial advisor, but unwinding and getting into low cost funds, or was it fairly simple that you moved subsequent money in or just talk me through just a couple of quick takeaways?

22:22Well, like I mentioned, we were in the private bank at a large institution with a financial salesman, not advisor, no way fiduciary. And we were spending, as I later figured out, about 1 % on getting absolutely no advice. They didn't prevent us from selling out, for example, in the Great Recession. It was a horrible thing. They just let us do without any knowledge what we thought we should do. And so pulling out from that was relatively easy. It was like, this is no help. This is a cost and these costs compound against us in a big way. I don't want to put their kids through college, which is functionally how it works out, I think.

23:04So yes, it was easy to pull away from there. And I was in a little bit of analysis paralysis as a lot of people end up in. I read dozens and dozens of books before I took action. And it doesn't take that. It takes a few basic books, a few podcasts. And we found that in our audience. They're using our podcast to take actionable steps because they don't feel alone. They do get, like you emphasize over and over and over again on your podcast, they do get actionable moments. And it was really easy. Pulled the money out of everything, transitioned it into Vanguard, and that's where you've been ever since.

23:39And it feels very good to be an owner of your own funds, to manage your life, to have that control at a time where you out of control. It's all net positive. Yeah. Yeah. And overcoming that inertia is really the hardest part. But yeah, as Sean said in that episode, and you kind of alluded to there, okay, it's actually not that hard in practical terms to move to a different institution. In most cases, you just call up the new institution because they're the one who has the incentive essentially to get your funds. And they can do in most cases, what Sean introduces is an ACAD, which is an automated customer account transfer, they really just take the lead.

24:17And mostly, it's going to be pretty seamless on the back end. So for a lot of people, this is actually a lot easier than you would otherwise think. So Bill, thanks for diving into that. I appreciate it. And Becky, so same question to you is ultimately, you're at 50. You have essentially zero net worth, zero savings rate per se, let's say, you know, we'll round to zero on both. and you made significant changes. But again, that unwinding of a lifestyle is really, really difficult for people to envision. Can you pass along a couple of really concrete steps that you and Steven took to make that happen?

24:54Absolutely. You know, the first thing that we did, and we didn't know this was the first step we needed, but we changed our mindset. And the way we got there was we had found ourselves in debt. We really had never had a lot of debt in the past. We just spent what we made. But when life smacked us in the face, we ended up with debt. And I became very fearful. Like, I don't see how we're ever going to get out of this. Like, I'm going to die with this debt. So our first step was finding Dave Ramsey. So we went through Dave Ramsey, did the baby steps just the way he lays it out, definitely got out of debt.