Momentum Series Interview: Our Financial Path – Road To Freedom
We’ve reached feature #6 in the Momentum Series – an interview series to share the stories of bloggers from across the personal finance community.
The goal is to showcase their story, the wins, the losses and the actionable advice and tips that others can take value from. Whether that be conquering debt, maximizing their career earnings, their own road to financial independence or health & wellness strategies that keep them on the right path.
Today’s Momentum Series interview is with Mr. & Mrs. XYZ the bloggers at Our Financial Path.
Two fellow Canadians that run a great blog. They write about getting out of debt, saving for your goals, investing for retirement, travel hacking and reaching financial freedom.
They also recently became new parents and are aiming to retire before the age of 35.
If you want to connect with Our Financial Path:
Here is the Momentum Series Interview: Our Financial Path – Road To Freedom.
Hi, we are Mr. and Mrs. Xyz from Our Financial Path. We are young professionals that saw the opportunity to work hard, play hard, and retire early. We both were reading a lot about financial independence and we started our own blog to share our knowledge, adventure, and journey towards early retirement.
We are Canadians that inspire to live a fulfilling, plentiful, and happy, life all while saving to reach financial independence. We currently saved about a third of our FI goal and we are aiming to retire before 35.
We started blogging after reading so many blogs about early retirees. We wanted to share our journey and stay accountable along the way.
- Mr. Xyz studied in Finance.
- Mrs. in Engineering.
We chose to cruise up the corporate ladder rather than consistently pushing to over-perform and impress our bosses. Instead of working long hours and taking on extra projects, we much prefer spending time with our family.
At the point we are at, we are on track to retire at before 35 so the stress and eager to move up isn’t there anymore.
However, we are currently on parental leave for the year.
How did you first get introduced to the path of financial independence?
We first found out about financial independence with the random button on Reddit, I was just discovering new sub-Reddits and really got interested in this amazing community.
From there, we both read MMM, JL Collins NH, and all the good stuff out there. Once we started to realize the possibilities, we were just amazed to see how people are able to retire in their 30s and 40s. We then made it our goal to reach financial freedom and retire early.
What was your overall life plan or thoughts on money and retirement before that point?
Before that, we were saving a bit but nowhere near the high savings rate we have now. Once we set our mind on a house, we started saving aggressively to build up a down payment in a single year. From there, we just kept saving as much as we could.
What are your short-term financial goals? Are you doing anything specific or making any changes to achieve these?
We try to have a general idea of where we are heading, what we are looking for in terms of investments risks and returns, and what we aim to spend during the year.
For 2018, we are trying to cut a few expenses that might add up to considerable savings over the year. We are also planning to down-size a bit in the coming year so this would change our housing expenses going forward.
In terms of investments, we are pretty optimistic about our projected total returns on our investments. We are highly diversified in multiple index funds tracking many asset-classes and market capitalization over multiple continents and recently started diversifying into cryptocurrencies too. We do not plan to change anything from our current strategy and plan to continue contributing towards our longer-term goals over the course of 2018.
Over the next 3 years, we will be focusing on our new-born daughter, spending as much time as possible with her.
In terms of goals, we would really like to stay on parental leave longer than a year. If our side hustles can cover our expenses, we might delay going back to work for a while.
We are planning to retire early, in the next decade. With the right steps over the next 5 years, we will have all the chances on our side to reach this massive goal.
It can be broken down into a few lines:
- Keep our savings rate over 50%.
- Keep our main spending categories on track to achieve that said savings rate high (Housing, Transport, and Food, mainly).
- Invest in low-fee, highly diversified, index funds and never panic-sell when equities will fall. Markets will come back up; passive investments are the way to grow wealth.
- Max out our tax-advantaged accounts every year with said investments.
- Always remember to enjoy the journey and keep at it.
What are your long-term financial goals? How are you going to achieve these goals?
Over the long-term, we want to reach financial independence and retire early. The simple steps above will inevitably grow our wealth. We cannot know how long it will take, we cannot predict future returns, but we can know that these are putting all the chances on our side.
What was your biggest “financial win” or moment of clarity in the early stages of your money journey?
Our best financial decision was to start investing in low-fee index funds. This diversifies our portfolio and keeps the fees to the bare minimum.
Another great decision I have made was to marry my wife. Having a great partner who follows common goals and strategy is a great way to build wealth.
Have you made any major financial mistakes? If so, what was the outcome and what did you learn from these mistakes?
Our biggest mistake was to buy stocks without knowing anything about them and try to day trade. The very first year we started investing, we blindly bought stocks in hopes of good earnings announcements but, honestly, we did not even know what the companies were selling.
After a few months, we had one bad day where we lost $2000 in a single day. After that, we stopped trading without research and stopped day trading altogether. We now invest in index funds with Vanguard.
As you’ve progressed in your financial life, what have you changed or implemented to set yourself up for success?
We definitively became more minimalist since we discovered financial independence. We stopped shopping as an “activity” and are much more selective with our expenses.
If you could give one or two pieces of advice to someone at the start of their financial path, what would it be?
If you are starting out, the best advice we can give you is; start now. Compounding returns are magic and are the best tool to build great fortunes on average salaries.
In addition, automate your savings and investing so that you don’t even need to think about it. Once you invest every paycheck, you will be forced to live only on what is left and end up much richer over the long-term.
What are some of the most influential resources that have shaped your money mindset or financial situation?
Another great resource we suggest (and it’s free!) is Personal Capital. Their tools for investors are outstanding and really helps understand your finances.
As a fellow Canadian, our investment tools and specific assets allocation can differ from the books and blogs of our American neighbours. Can you explain your investment strategy?
We follow a fairly simple 3 fund portfolio as our base holdings. We invest through Vanguard, mainly into the US Total Market (VTI), All Cap Canadian Index (VCN), and International Indexes (VWO)(VEA).
You can see our exact holdings and asset allocation in our Open Book series.
You write openly about your asset allocation, can you share that below with insights on those holdings?
For Mr., we try to keep a portfolio holding in 40% American stock market, 30% in the Canadian stock market, 25% in international equities, and 5% in bonds. For Mrs., we try to keep a portfolio holding in 40% American stock market, 30% in the Canadian stock market, 25% in international equities, and 5% in bonds.
Within these, we include small play money investments such as cryptocurrencies in our American allocation and more recently, a cannabis index fund in our Canadian allocation.
Do you have any Canadian specific resources you’d recommend to other Canadians looking to start their own financial independence journey?
We built our own investment portfolio but if you are looking for a more hands-off approach, we suggest Wealthsimple.
This Canadian company offers financial planning services without charging the exorbitant fees the Canadian banks are charging. They use a Nobel Prize-winning approach to build you a diversified portfolio of low-fee funds in minutes.
As new parents, do you any advice for fellow couples who may soon also be adding a little one into their lives? Whether that’s financial, lifestyle or otherwise.
The best tip we can give you is to stop following every mommy-blog out there. They are packed with product suggestions and reviews (which can be helpful) but in most cases, you won’t need all of that. Companies invent a bunch of things and they are apparently all “essential” but very few are.
You’ve also written about happiness and living a stress-free life. Are there any specific strategies or changes you’ve made in your life to implement?
- Living closer to work (10-minute commute!)
- Only work as much as expected of you (40h work-week, no over-time)
- Live close to the activities you enjoy (we live near nature and hikes)
Are there any resources you would recommend to readers looking to better master their own happiness?
We also started a Better Self series recently on Our Financial Path.
Since starting your blog Our Financial Path, how has that impacted and influenced your financial journey?
Starting our blog definitively kept us accountable. We enjoy keeping track of everything and all the research we did for our own journey is now available for all of you online.
What are your goals with Our Financial Path?
We started helping our readers one-on-one and that has been super powerful. We hope to continue this and continue changing lives, one at the time.
If you could recommend 3 of your blog posts to Making Momentum readers, what would those 3 posts be?
Any final pieces of advice or recommendations?
The journey to financial freedom is a long one. It is a slow process of diligent savings, frugality, and investing but we like the liberty it gives us. Without this little nest egg pilling up, we would not have this sense of freedom and power over our own destinies.
JL Collins NH did a great post about F U money and the power it can give you over your life. Even if we did not reach financial freedom yet, we do feel better now with our little stash.
Start saving and gain your freedom.
Any special shoutouts?
We would like to give a special shoutout to Scott for putting this interview together. Thank you for inviting us.