Episode #169: Jeremy Jacobson, “We Ended Up Saving Roughly 70% Of After-Tax Income For About 10 Years”
Guest: Jeremy Jacobson is a former engineer who retired at age 37 after building a saving and investing plan that allowed for early retirement. He and his wife now share their journey on the Go Curry Cracker blog, covering everything from travel tips to finance and tax insights.
Date Recorded: 7/9/19
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Summary: In episode 169, we welcome our guest, Jeremy Jacobson. Jeremy begins with his backstory of being an engineer by trade, and after paying off his school loans and taking a vacation, he decided to apply his engineering framework to approach saving and investing. He walks through the plan that allowed him to retire at the age of 37.
Meb then asks Jeremy to expand on his investment portfolio. Jeremy explains what going through the GFC did to his portfolio, and the realization that it didn’t impact his day-to-day life at all, in relying on income from his portfolio.
Meb asks Jeremy to discuss geographic arbitrage, and what that looks like for he and his family. Jeremy walks through his annual budget, and how that is used as a guide to where they travel and how long they stay there.
Jeremy follows up with some ideas on how he carefully optimizes his taxes living abroad.
As the conversation winds down, Jeremy covers some travel hacks, and what is coming up for he and his family.
All this and more in episode 169, including Jeremy’s most memorable investment.
Links from the Episode:
- 0:50 – Welcome to our guest, Jeremy Jacobson
- 1:09 – Go Curry Cracker Blog
- 1:52 – Jeremy’s origin story
- 6:30 – How Jeremy’s life evolved from working to freedom
- 8:12 – Jeremy’s approach to investing
- 10:02 – Jeremy’s conviction in staying in equities
- 12:59 – Understanding portfolio yield and why you shouldn’t panic when the market drops
- 13:13 – The Meb Faber Show – Episode #18: “People Need to Ratchet Down Their Return Expectations”
- 15:57 – Importance of focusing on the spending side of the equation
- 16:21 – Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence (Robin, Dominguez, Mr. Money Mustache)
- 18:06 – Building their runway
- 20:02 – Some of Jeremy’s early vacation stops
- 21:43 – Geographic arbitrage
- 24:54 – How Jeremy thinks about taxes
- 27:55 – Never Pay Taxes Again
- 29:32 – The start of the blog and Jeremy’s process
- 34:40 – How Jeremy spends his time now that he’s retired
- 36:34 – What’s on the horizon for Jeremy and his family
- 38:36 – Useful resources
- 41:30 – Most memorable investment
- 43:41 – Connecting with Jeremy: Go Curry Cracker Blog, Twitter @GoCurryCracker
Transcript of Episode 169:
Welcome Message: Welcome to the Meb Faber Show where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
Disclaimer: Meb Faber is the Co-founder and Chief Investment Officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com
Meb: Hey, podcast listeners and friends, we have a fun, and awesome, and different show for you today. Our guest is a former Microsoft engineer. He managed to retire by the old age of 37. He and his wife now travel the world, write about their experience and share the financial aspects of their journey on the Go Curry Cracker blog. Welcome to the show, Jeremy Jacobson.
Jeremy: Thank you very much.
Meb: Jeremy, amazing sound quality. Where in the world are you right now?
Jeremy: I am in Taipei, Taiwan. It’s kind of our pseudo home base. That’s where my wife is originally from.
Meb: How long has that been your current stop?
Jeremy: Well, we’ve been here on and off ever since my wife was pregnant with our first child. So we spend about half time here over the last four or five years.
Meb: Cool. How many replicants you got now? How many kids?
Jeremy: We have one, but we’re working on number two.
Meb: Congrats. Awesome. Exciting. I have a two-year-old, so if I sound a little sniffly, it’s because he spent most of the weekend coughing directly into my mouth and eyeballs, so I got whatever they have. So apologize listeners. But Jeremy, I recently came across some of your blog and work related to investing. And we’ll get into some of that too. But would love hear a little bit about your kinda origin story, you know, moving as I was, once upon a time an engineer. But how you went from the engineering world to becoming… It’s more popular. It’s sort of the concept these days. The fire movement has really gained some traction. But would love to hear about your kinda origin story. And we’ll get into all sorts of different stuff as we go along.
Jeremy: Sure. Well, as you say, I was an engineer, which is just like a fancy way of saying I did a lot of math. And one, I grew up poor, and I was basically terrified of having any debt. Anyone I knew growing up, debt was always like this really, “Oh, like, I can’t pay my bills. And I have this debt. And my life sucks.” And so I graduated from college with a bunch of student loans. And I worked every penny I had basically went towards those loans. I was trading in vacation time. I was working overtime, you know, anything I could do to get more money or spend less money to put towards those goals.
And then one day, I paid them off five and a half, six years into my post-college career. And I took my first real vacation as an adult. And I was scuba diving in the Philippines, like eating shrimp the size of my head, scuba diving every day, enjoying sunshine. And after two and a half weeks of that, I was basically like, “I don’t wanna go back to the American dream thing that I thought I was doing before.”
Meb: Where were you living at the time?
Jeremy: I was in Chicago. I was working at Motorola in the first, four, or five years. And then I moved to Seattle for Microsoft.
Meb: All right. So you got back and you said, okay, you had a little bit of this revelation. What’s next?
Jeremy: I kind of applied all that engineering analysis approach to… Instead of trying to build phones, and laptops, and whatnot, I started trying to build a strong financial position. And so rather than take a personal finance or investment approach to things, I kind of took an engineering approach. What can I strip away? What’s the simplest way I can do this? And how can I get to the point where my money pays my bills instead of my time, my degree? We kind of took the approach of… My approach to investing is kind of the way most Americans that kinda dedicate themselves to sports. I sit on the couch, I drink a beer, I kind of pay attention to the highlight reel maybe, like, once every couple months, that’s all I do.
And we took the heavy savings approach to things. We at the time, we had a house, we had a car, I had a motorcycle, you know, we were kinda following the American dream thing. And we got rid of all of it. Sold the house, sold the car, sold the motorcycle. We were looking at how can we spend as little as possible so we can save as much as possible and front load sort of frugality and get compound interest working for us as much as possible. And so we ended up saving roughly 70 plus percent of after-tax income for about 10 years.
Meb: Goodness gracious.
Jeremy: My main mode of transportation for several years was a bicycle I bought on Craigslist for $50. And I sold it later for $60. We were living in, like, a kind of a crappy studio student apartment. And we were making all of our meals at home. And even the big things in life, we kind of took the super frugal approach. Our first honeymoon was a 10-day hiking trip that cost $0.
Meb: Where’d you go?
Jeremy: We hiked around the Wonderland Trail around Mount Rainier.
Meb: Oh, cool. I’ve never been hiking up there. But I’ve done sort of the Olympic Peninsula quite a bit, but never to Rainier.
Jeremy: Yeah. It’s stunning and beautiful. Yeah. And you’re kind of reaction is similar to a lot of people’s. It’s like, “That sounds like a really life I wouldn’t really necessarily wanna live, super bare-bones, and must have been a real sacrifice.” And the way I kind of think about it is we spent very little money. And you can think of it as a sacrifice. Yeah, our first honeymoon was $0 and spending time outdoors. Our second honeymoon was in Hawaii, which was also $0. We travel hacked our flights and hotels. But now, we’re seven years into a 60-year honeymoon. So I don’t know if it was that much of a sacrifice.
Meb: Yeah, I love it. So at what point while you’re working did you kinda envision this future of kinda where you are now? Was this a well-thought out plan? Was it something that as the years went by, you said, “You know what? Maybe this is something we can do.” How did it kind of evolve from where you were prior to picking up shop and moving?
Jeremy: Yeah. Well, when I first came back from that first real vacation as an adult, I put together a 50-page business plan. And I found it years later, super naive and very simple. But it was the starting point of trying to piece it together. And I guess at the core of it was the idea of everybody…all the kind of mainstream advice said, “Your house is a great investment. Focus on that. And then try to save 10% of your income so you can have a comfortable retirement when you’re 60.” I think what I stumbled on is if I save 10% of my income, that means I’m spending 90%. So maybe after nine years or so, I have enough money to take one year off.
But if I can get to half, then I’ve accelerated my retirement by at least nine x, right? Because after one year, I’d have enough money to take one year off. And if I could do even better than that, 75% or so, then after one year of work, I’d have enough to take three years off. And so I kinda have this idea of probably about 10 years. I’d take a normal 30, 40-year career, compress it into 10, and then I’d have enough. And we actually hit the point where our investments were paying all of our bills in Seattle after about seven.
Meb: So what was the investment approach? Like, you mentioned a lot of people… I think the vast majority of people, the investment path is usually real estate, or maybe a retirement plan. But what was kinda your approach to it? Was it pretty typical, slightly different? How did you think about it?
Jeremy: Well, I tried a lot of things. Real estate investment was really popular at the time. I started the hardcore savings in 2002, 2003. And housing prices were skyrocketing everywhere. And I looked at that and realized that I hated it, you know, the idea of landlording and so on just didn’t appeal to me at all. I knew nothing about investing at the time. Buy low, sell high, like, sounds great. And so I hired a financial advisor. And as these things go, asset under management fees and so on, like, that was basically disaster, but I learned a lot.
And then a couple of years after that, while I was commuting by bicycle and bus, I was able to read pretty much everything on personal finance that the library had. I couldn’t buy books myself, I got them from the library. And I started looking at…my goal was I wanna spend zero time on asset management. So I’m just gonna accept market returns, I’m gonna do index funds. And that’s really where all of our money is now. We have about a 90/10 stock bond split. We’re now about, say like, 60/40, 70/30, somewhere in there of U.S. international.
Meb: Yeah. You know what’s funny? I think that’s originally where I came across your blog. It was on your international post about…we spent a lot of time talking about trying to convince our U.S. investors to even think a little bit about diversifying globally. And it’s always a challenge. I think that’s originally how I found some of your work. So you had a great quote. And we’ll take this back to 2015. But it’s interesting because so many people as we talk about real estate, almost everyone I talk to assumes real estate is the most amazing investment on the planet because they look back 10, 20, 30, 40 years and like, “Wow, my mom bought this house for 20 grand. Now, it’s 200,” or whatever it may be, “And look how much money it’s made.”
And I’m of the opinion that I might say real estate is fine. But one of the reasons that I’m not a real estate owner, by the way, but I think one of the biggest benefits is it actually forces people…it’s forced savings. Any money that people put towards a mortgage or put towards a house, that’s something they would spend otherwise because people can’t help it. So that goes along with everything. It goes along with automated 401(k) savings, it goes along with any sort of automated hack that makes people forced into it.
Anyway, you had a quote where you talked about the past 100% equities where you say, “We lost 10 years worth of spending in 2008. Some people freaked out, I did too, but for a different reason. I was upset that I didn’t have extra cash to buy more stock. During the downturn, I realize the value the portfolio didn’t impact our life one little bit. Dividends are still being paid and our daily lives were exactly the same.” That’s a pretty, I think, profound realization. Maybe talk a little bit about that and kinda how you think about the investment side of funding, I guess your whole world, whole lifestyle?
Jeremy: Yeah. I guess the realization that I went through in 2008, I had just become a millionaire on paper shortly before the late 2007, 2008 crash. And that was nice. It’s kinda interesting to look at the computer and see two commas in the number. But that didn’t change our life. And then we lost something like $400,000 on paper. And we were kind of in the Seattle Bubble. Everybody I knew was working at Microsoft or Amazon or nobody got laid off. Everybody still had these nice paychecks coming in. And so life didn’t really change. And we were already living super frugal. I was still riding my bicycle, I was still living in student housing, and then the number didn’t matter. Everything just continued as normal.
And so contrast that, I guess, with my experience in, like, 2000, when I lost, like, $1,000 on paper or something, you know, and that was kind of like a big freak out. You know, I could have put that thousand dollars towards student loans. And so I guess the sense of maturity of investment maturity and internal realization that we’re gonna be okay, really, no matter what happens. And so I’ve gone from spending hours reading, and studying, and kind of paying attention to the portfolio to where now I just spend an hour a year.
Meb: This is actually a topic that I don’t think I understood the mathematics of this until not too long ago in my career. And I think it was due to an article Robert Arnott, who we’ve had on the podcast, had written. And it was this concept of if you have a portfolio that has a yield with quoted security, so-called stocks bonds, and if you look back over the past 150 years in the U.S., a simple example would be half stock half bond portfolio going back to 1900. And you look at an after inflation basis, the yield is actually pretty darn stable, meaning if you’re living off just the yield and you don’t need the principal, then it doesn’t vary that much.
A simple example would be, of course, if you had a stock portfolio yielding 5%, and it got cut in half. Well, assuming that the yield stays consistent, all of a sudden, it’s now yielding 10%. And the principal bouncing around really doesn’t affect the income that much. And that was something that was a bit of a surprise to me that I didn’t really understand. So kudos to you for understanding it. But it’s an interesting concept because the volatility of markets is so extreme that that’s what really causes people to behave poorly when they don’t really need to.
Jeremy: The volatility is kinda, like, a roller coaster ride. The foundation is very solid. And part of that consistent yield, I did look a lot at sort of portfolio longevity and research of what’s been done as far as how much can I spend from a portfolio and have it, say, survive the worst periods in economic history, and in the so-called fire community and so on. You see a lot of references to things like the Trinity study, or the 4% rule. It’s, like, if you can spend less than 4% of your portfolio value the day that you retire, the odds are pretty good that you’re going to end up even after 30 years of having something worth two, three, five x what you started with. And in the worst case, you’ll end up with having roughly what you started with. So we started with the idea of, we’re gonna spend less than 4% in the early years so that we could kinda continue to reinvest the rest and let the portfolio continue to grow.
And that’s where we kind of stumbled into the geographic arbitrage side of things. So we kinda started our full-time travel in places like Mexico, Guatemala, Thailand, where we could live, like, royalty for $2,000 a month. And even now, we’re in one of the cheaper places to live in Asia that’s still a first world country. And our entire cost of living is less than what it costs for a one bedroom apartment in San Francisco.
Meb: One bedroom apartment in San Francisco now is like $5,000. My Lord, that city is bananas. You brought up an interesting point about the spinning side of the equation. And I tend to be somewhat of a minimalist. But I was just at the beach with my family in North Carolina and had brought along a bunch of the old school personal finance books, I’d ordered a bunch that I’d actually never read a lot of the kinda most famous personal finance books. So I’m gonna blank on who to attribute this to.
The concept is not that proprietary, but just the thought process and it was talking about purchases in terms of time where you said, look, let’s say you make 50 bucks an hour, or whatever it may be, and that chair, well, that’s five hours of your time. That laptop, that’s 20 hours of your time. It takes three days of work just to buy that. And it was an interesting way of framing it that I think is instructive for people on a lot of the spending because it gets so easy to buy things that nobody really needs or wants. But if you think of it in somewhat of a different frame, which is, “I need to sacrifice X amount of time to do that,” it makes it a little different way of thinking about it.
Jeremy: Yeah. That’s probably your money or your life, the book that’s from…
Meb: Is that Napoleon Hill, no?
Jeremy: That is Vicki Robin.
Meb: Yes, yes.
Jeremy: And the really interesting thing there to is if you’re making 50 bucks an hour, after an hour, you don’t actually get 50 bucks, you get something more like 30. You look at what you spent on taxes, and then you don’t actually work eight hours, you work 10 because you had an hour commute each way. And you had to have a special uniform for your job, whether it be like a suit or whatever, right? So you have actual costs related to your job. So you do the math, and you’re like, “Yeah, 50 bucks an hour. It took me three days to buy the laptop.” But after all the expenses [inaudible 00:17:49] to actually working, it actually took you a whole week.
Meb: Yeah. Well, I have two coworkers that live about an hour away from our office. So I consistently give them a lot of crap about optimizing that part of their lifestyle. I said, “Look, I’m not gonna lecture you but I think you’re both crazy.” So we’re coming up to about, let’s see, 2012 maybe? And had you guys planned out this pathway to, “Hey, we’re going to do this?” Was it something like, “Hey, when we get to X, Y, Z, in assets, we’re going to do this.” Or what was kind of the thought process and how did you eventually build the runway and take off?
Meb: We had kind of a dollar amount of mind where we wanted at least the option of living our desired lifestyle in Seattle, which is gonna be, like, somewhere between three and five x the cost of what we were actually spending at the time. But we knew we wanted to travel, and so we’re going to start out spending much less than that. And we hit that dollar amount actually in 2009 or so. And then at that point, our investments were actually…we were ready to quit at that point. We talked about it and we talked about it. We kept hemming and hawing. And at that point, I had an opportunity at work where several my friends were like, “We’re gonna join this new project. And we want you to come with us, but it’s gonna be at least a three-year commitment.” And I kinda had to either pull the cord completely or do that. So we made the three-year commitment.
But now, I was basically saving my entire paycheck at that point. We were living off of more or less interest and dividend income, and the whole paycheck just went into additional stock. And so I just pulled the plug in October 2012 with more money than we thought we’d ever have. And we spent several years kinda touring around low-cost of living countries. And the portfolio just continued to grow, and grow, and grow faster than we could spend it in. And so here we are now with 100% control over our schedule and our lives and more money than we ever thought we’d have. And it’s like a fairy tale. I almost can’t believe that we did it.
Meb: Where were some of the places that were stops? You mentioned Guatemala on the early vacations. One of my favorite places ever was the volcanoes around the lake there. I don’t know if you ever traveled there. What a special place. But what were some of the first stops?
Jeremy: The place around Lake Atitlán in Guatemala. We rented the penthouse of a hotel there with, like, amazing views over the lake for something like $200 a month. And I mean penthouse is what they called it, you know, it was a total dump. But the views were to die for. So we’ve now been pretty much through most of Mexico. We started in Mexico and we had this grand plan for the first year, we were gonna go through all of Central South America and end up in Patagonia somewhere at the end of the year. And it turned out that we were still in Mexico.
Meb: The Mexican pace of life got to you. I love Mexico. I spend a lot of time down there.
Jeremy: It’s a beautiful place. It’s even cheaper now than it was then. The peso dollar exchange rate. And the weather is perfect. The food is perfect. The people are so friendly. It’s amazing. But we had this conversation where it’s like, “I don’t wanna go anywhere. But we have this dream that we were gonna travel the whole world. So I guess we should get moving.” And we did a little bit more of Central America. And then we worked our way over to Asia, traveled a bunch to there. We’ve now been through every country in Europe. We now have a four-year-old. And he has been to 41 countries I think. So except, let’s see, South America and Africa, we haven’t been to yet. But we’ll have to hit those one day.
Meb: So you mentioned this concept that obviously the U.S., God forbid San Francisco, I live in Los Angeles, and it seems to be getting more and more insane. The other day, I was laughing on Twitter because I posted there’s something like 50 houses for sale over $50 million. There’s some absurd statistic including a couple over $100 million. It feels like the world is going insane here. And my little sleepy beach community is now no longer so sleepy or so cheap. But talk to me a little bit about this concept of geographic arb. And part of that that I know a lot of people talk about in communities that keeps people worried about being outside the U.S., is they’re always sweating, “I’m not gonna get good medical care somehow.” Ho do you guys think about… Do you intentionally pick out some of these countries as low-cost of living? Or do you kind of wait until you get there and figure it out? How’s that whole thought process work out?
Jeremy: Yeah. Well, we have an annual budget target. And I didn’t think we were gonna make our way to Europe for quite a while. But then the dollar rose and the Euro plunged and thought, “I have to go check that out.” And so after we were there something like four months or so, “You know, we’re trending towards spending more than we want to. So now let’s go to the other side and spend something like way less than what we can.” And so then we merged into say, Thailand, Vietnam, and so on. That way, we end up with a really nice average for comfortable cost of living below what we think our portfolio will support. And then one day, we kinda woke up and we thought, “You know, I think we’re ready to have kids.” And so then we started looking at medical.
We looked at Mexico, we looked at India, we looked at Thailand, like, they’re all popular places for people to go to actually have help with pregnancy. I had a Vasectomy 20 years ago or something. So we needed a little bit of help. So we were looking for IVF clinics. And we actually just decided to come back to where my wife grew up in Taiwan. And it worked great. We got the same results as our friends in the Bay Area in Seattle. Our Bay Area friends paid something like 150K, our Seattle friends paid something like 40K, and we paid less than 10. Really, the only difference is where we had it done. And we kinda take that same approach to everything that we’re looking at as far as medical needs. You want great dental care, Mexico and Thailand are good. You wanna get eye surgery, find the place in the world where you have the most experienced doctors with the lowest prices, and you get great quality and low prices. So the place that we avoid for doing pretty much anything medical is the U.S.
Meb: Oh, man.
Jeremy: You walk down the street in say like Thailand, there’ll be a doctor’s office and they’ll have a whiteboard with services and prices just written upfront. And they’re negotiable. You know in advance exactly how much something is going to cost. And you decide just like every other purchase, “Do I want this? Do I need it? Is the price right?” In the U.S., you have no idea.
Meb: Yeah, you get a bill at the end. And then you’re like, “What in the world is this so expensive for?” The one thing about Uncle Sam, of course, is that he will not be denied when it comes to the taxman. Is that something that plays a large impact? Are you able to navigate that pretty simply? How’s trying to avoid paying too much to the big IRS? How does that work?
Jeremy: I mean, this has actually kinda become my stick. So we over the last six years, we’ve had a taxable income over $600,000. And we’ve paid about $1,000 in income tax.
Meb: All right. So we don’t have to publish this episode now that the IRS is listening. Assuming you did this legally, what’s the route?
Jeremy: A hundred percent legally and respectfully following both the letter of the law and the intent. So part of it is if you have earned income and you’re in the U.S., there’s actually very little you can do to minimize your taxes. You can contribute to an IRA and a 401(k), and that’s about it. But if you are getting your income from, say qualified dividends and long-term capital gains, you can actually…a married couple can earn a little over $100,000 a year and pay 0% in tax. We’re outside both the U.S. and all the state tax clause, so we have no state income tax. If anything, any state considers us a resident, it’s Washington, which has no income tax.
And for the first several years, we had no earned income whatsoever. And what I was able to do is…I think our first year out, we had something like, let’s call it, like, $50,000 in investment income. And I was able to then sell a bunch of stock, buy as part of like kind of portfolio rebalancing, buyback other stuff. And everything that I sold was realizing the capital gain. But at a 0% tax rate, all I effectively did was raise our basis. And I also took something like $10,000 of my existing IRA and did a Roth conversion, so just moved that over to a Roth. It was 100%, taxable, but completely wiped out basically by our standard deduction. And so our $50,000 in income on paper then looked like $100,000 in income, still $0 tax bill, but now with higher basis in the portfolio, and our overall value of our Roth had grown. We’re looking at zero tax now and zero tax in the future as well.
Meb: What do you think if you’re…and this was one of the more popular articles, as you’re thinking about taxes. Is there anything that you’ve kinda gone through this experience? Anything people should be aware of that they could put into their planning, maybe now, maybe later, that is something that you found is a useful just way point or any ideas or concepts to be mindful of?
Jeremy: Yeah. I think the article you may be referencing, it’s a pretty popular one is called “Never Pay Taxes Again.” It outlines my four-step strategy end up with a long-term $0 or minimal tax bill. And at the core of it, you’re looking at how do I spend more years doing nothing? How do I choose leisure over labor? And if you can take whatever form it is, whether it’s a short-term hiatus, or it’s early retirement or it’s a gap year in between job changes, those are great opportunities to have no earned income for an entire tax year.
And in that time, you can kinda tag team between Roth conversions, moving money from your traditional IRAs to Roth IRAs 100% tax free, so that you basically paid zero tax going into the traditional, you paid no tax on the conversion, and you’ll not pay no tax on that principle and future gains. And then on your taxable accounts, if you can harvest capital gains, you take something you have a gain in, sell it, buy it back again, you now have a new higher basis. And so you’ll never pay tax on that game either. And the more years you can do that, the lower your overall lifetime tax bill is going to be. So at the core, choose leisure over labor for as many years as possible.
Meb: I’m just gonna convince my producer. Your goal now is to take no income [inaudible 00:29:25] a year. I’m gonna pitch this to my employees, “You guys get no pay the rest of the year. It has to be a full year. So I’m gonna reduce your tax bill.” That’s interesting. So you started writing the blog, I think, right when you took off, is that right or about the same time?
Jeremy: Yeah, end of 2012.
Meb: And so I imagine the original goal was a little bit diary part just ways to share some of the ideas. But I imagine it’s also contributing, at least some now at this point, to y’alls ability to travel the world. Talk to maybe a little bit about the whole blog process and also what…if there’s any other particularly popular posts that you think would be worth highlighting as well over the past, what is that now, six years?
Jeremy: Yeah. I started the blog largely so friends and family could kinda follow along in what we were doing. And when I announced at work that I was quitting, I had hundreds of offers for coffee and beer, you know? Like, “Tell me what you’re doing. Let’s go have coffee and tell me about your plan.” And, “You’re really retiring or you’re going somewhere else?” Consistently, like, everybody had kinda the same financial questions. And so I just started writing about those, like, how do I…rather than give the same answer 100 times, I’ll just write it once and let everybody else read it. And that led to things like my never pay taxes again post. And then everybody, of course, is like, this is BS, like, this isn’t real, right? So then I started publishing my tax returns.
So I got the last six years of tax returns up there. And that got some attention, right? We’ve now been on like Forbes and ABC World News Tonight and so on. And that traffic has generated income for us. And last year, the blog basically paid most of our bills. I think it’s something like $75,000 we made last year. And that’s me doing less than four hours a week of just writing stuff on it. And that would normally come with a big tax bill. But if you are outside the U.S., more than 11 months out of the year, then you can claim the Foreign Earned Income Exclusion. And so I’m able to basically say up to $100,000, none of it will be taxed. And so now, we have kinda three arms of the taxman that we’re avoiding. We avoid it on our IRAs, we avoid it on our capital gains, and now avoid it on our earned income through the Foreign Earned Income Exclusion.
Meb: Do you have to pay anyone income taxes on that when you’re in…
Jeremy: So if you don’t live anywhere, if you’re a full-time nomad, and don’t spend enough time in any one country where they consider you to be a tax resident, then no, nobody cares, they don’t wanna tax you. Or if you spend most of your time in any one of the no income tax countries or territorial tax countries where they only care about income that’s sourced from within their own borders, then you’re able to live basically completely tax-free.
Meb: All right. All this time we spend talking about opportunity zones and tax hacks in the U.S. Man, we need to de-dollarize our investments. Any other posts that over the years have been particularly you think interesting that we haven’t touched on at all?
Jeremy: Yeah. I mean, I guess some of the other bigger ones are kinda related to our travel hacking efforts. We flew business class from Hong Kong to, let’s see, to Paris. Retail price one way for those flights was like $8,000 a person, and we paid $200. Most of that is just through…I routinely apply for something 10 plus credit cards a year.
Meb: Oh, my Lord.
Jeremy: We pay all of our bills, including rent where possible, Airbnb and so on, of just putting them on the cards, generating a ton of points, and the 10 new cards a year, like, the signup bonuses. And then we use those and sort of finding the loopholes, you know, like we did in the tax system, finding the sweet spots. You find that kind of like in airline mileage conversion kind of sweet spots. And then we are able to get kind of incredible redemption values for points for things like business class to Paris.
Meb: I love it. We need to be a little more thoughtful about that here as well. You’ve been doing this for years now. Any other travel or expense hacks do you think are particularly useful for people to think about or that are maybe a surprise to people or ones they just don’t take advantage of?
Jeremy: One of the main things that if you ever try to plan a vacation with other people is largely around, “Hey, I’m going to this place on these dates. Let’s go.” You fly on a Friday night, and you come back on a Sunday night. And you only do direct flights and you pay through the nose for everything. We do a lot of our travel where we basically just you look at where your money goes the furthest. And you look at the days where it goes the furthest. So we do a lot of things like fly on Wednesday afternoon and fly the opposite direction where everyone else is going.
Meb: Is there a way to determine that? Or do you just got to kinda search around? Or how’s that…?
Jeremy: Yeah. I use Google Flights a lot.
Meb: Yeah, that’s a great resource.
Jeremy: Yeah. And you basically picture the whole globe and you’re like, “I wanna go somewhere with a beach for less than 200 bucks. Where can I go?” And then it’s like, boom, there it is.
Meb: I love it. So if I was a listener of this podcast, and I imagine the people that are currently listening, I always try to think of questions, I imagine the question that would be on most people’s minds are now that you’re retired, what do you do all day?
Jeremy: I mean, the weird thing is I actually wonder how I ever had time for a job. Life just kind of…it fills my day. I spend a lot of quality time with my wife. I swim and bike regularly. I swim like 1.5k three, four times a week. And we spent a lot of time parenting. We go for bike rides together, we play soccer in the park and so on. But I think in general, though, the what do you do all day question, I think a day is way too short of a period of time to kinda look at what you do. I kinda segmented things into three pieces. So we do a lot of travel.
So say three to six months out of the year, we’re traveling, living in new countries, experiencing new cities, kind of exploring the globe. And when you move a lot, it’s pretty tiring. So you need some recharge time. And that doesn’t necessarily need to be at home, it could be in another country. But you’re just gonna kinda stay in one place with no commitment to anything. So we might spend three to six months recharging, just reading books, swimming or hanging out by the pool, doing whatever we need to do until at some point, you start to think, “You know what? I wanna do something else.” And for us often, that is to create something.
And so most of my writing I do in big chunks where I write a ton for a few months, and then I kinda go away again for the rest of the year. And my wife does a lot of painting. She’ll go through her big creation period of just painting every day. And then we do that for a while. And then it’s like, “You know what? I’m ready to travel again.” Then you go back, figure out where in the world you want to explore next.
Meb: Loved a quote in one of your FAQs where you said something along the lines of where people asking all these questions. And one of them was, “Man, isn’t traveling with children hard?” And you say, “Yeah.” So is being at home with children to or doing anything with them it’s not a whole lot different. As you look out to the horizon, all right, so you’ve been at this for, what is it, six, seven years now? What’s on the horizon for you guys? Is it gonna kinda stick around in the same part of the world? You got some stops on the to-do list? Any goals for the blog? Anything else? What’s on your brain these days?
Jeremy: This is year seven. This is the first year where we don’t actually have big travel plans. Last year, our son said, you know, “Daddy, I wanna go to school.” And we enrolled him in a Montessori School. And Saturday morning, he’s like, “Can I go to school today?” I’m like, “No, not until Morning.” Sunday, “Can go to school today?” He’s super social and he likes spending all the time with the other kids. And so we’re kind of just seeing where that evolves. But we do have three normal vacations this summer. We just got back from Vietnam. We’re headed to Malaysia next week. And then we’ll be in Bali at the end of August. And then block-wise, I’m trying to decide…I’m getting to the point, I think, where I’ve finally answered all the questions from those hundreds of coffee chats when I first quit my jobs.
And I try to decide, do I, like, turn it off and just go on to something else? Do I sell it? Or do I kinda start to answer your new questions? I don’t know what the answer to that is yet. But I kinda figure like, I have a 16-year period where I had college, I had a career, maybe it’s time to go do something else. Right now our main focus is basically, like, we’re trying to have kid number two. And everything else just kinda revolves around that.
Meb: I love it. I can sympathize. I think we started writing the blog in ’06, ’07, and I still don’t know what to do with it. I have the same exact writing process as you do, which is it builds up over time. I vomit it out over the course of a month. And then it goes dormant for a while. It’s probably the only manic part of my life. But writing tends to come in waves. I love to slow this down. We gotta couple more questions. And I’m gonna let you go back into the…What time you got there, 7:00 p.m.?
Jeremy: It’s 8:00 a.m.
Meb: 8:00 a.m., backwards. My Lord. I was going into the future too much. All right, 8:00 a.m., you’re having a coffee. I know these are probably on the website. And we’ll direct people there as well. But any other resources we haven’t talked about today that you think are particularly useful or insightful for people. It could be on any part of this on the investing side, on looking to minimize taxes, thinking about real estate, where to live in the world, travel, expense hacks, anything. Anything we didn’t touch on you think as particularly useful as a resource?
Jeremy: This is more a state of mind, I guess, than a resource. But we whenever I come across something where people are saying like, “Well, everybody knows this,” or, “This is what everyone does,” or, “This is kind of standard thinking.” I always try to come at it from the opposite angle. And I have popular posts on things like why we’re renters for life. You take the idea of real estate is you should own your own home and real estate is where it’s at. I look at it from the opposite angle and come to the conclusion that we’re happy renters, and we’re gonna do that for life. And the same thing with taxes, same thing with travel.
Meb: That rental question, by the way, drives people nuts. I feel like you talked to homeowners, and you mentioned that you’re somewhat agnostic as owning a home. And it’s almost like a religion, people go crazy. I got into this the other month with someone who said three or four things that I just had to bite my lip back because I was trying to be courteous in a social setting. But one was real estate never goes down, yada, yada, yada. And people love the romance of it but always forget about the expenses, the commissions, the headache. God, who was it? It’s either Clements or Zweig, I can’t remember. One of them has a quote, it’s like, “There’s 10 reasons to own a home and none of them are financial.” It’s like the number one reason to own a house is because you wanna own a home, but it has nothing to do with investing or finance.
Jeremy: Yeah. I think of it as, like, the ultimate luxury purchase. You do it because you want to, and that’s it. I have a post about how I made like $100,000 in real estate, and I’m poorer for it. I sold my Seattle home for $100,000 more than I paid for it. But if I had just rented and invested the difference, I would have had like $200,000. But I get more hate comments and emails from that than like anything else.
Meb: Wow. Yeah. The challenge is that I think people also misconstrue the concept of…you talk about this on the imputed rent topic where they said, “Look, if we could either buy this house for 1 million bucks cash or we could rent it, and then we keep the cash and invest it,” in which case, we probably end up somewhere in the same place, I feel like that’s a topic people really struggle with. Now, obviously, it’s different if you buy the house and then are leasing it, or leasing a property, or whatever it may be, which probably gets you to equity-like returns. But it’s a topic that I think is one that I don’t talk about at cocktail parties anymore. I just keep my mouth shut.
Jeremy: Nobody wants to hear it.
Meb: So as you look back, you’re somewhat of an index fund guy, which is smart and kind of put this on autopilot. But we always ask people this question is, as you look back over the years, what’s been your most memorable investment? And you can pick anything, good, bad in between.
Jeremy: Yeah. I didn’t have a memorable investment, although, it was unpleasant in every sense. In 2007 or so, I was basically lending cash to home flippers…
Meb: Oh, man, the timing.
Jeremy: …for 13% return and in six months kinda things. But then, I ended up owning a couple properties that I didn’t want because I had to foreclose when they weren’t able to make a profit, and the market collapsed and so on. And one of those properties I ended up basically bringing in a rehabber, bringing in a renter, selling it to that guy, holding the note for six years, and then finally getting my money back. And that whole post-2007 real estate apocalypse thing and my experience interacting with people who were both trying to make money in real estate and people who just wanted a home to rent made me realize that I never want anything to do with property management in any way, shape or form ever again. And you’re supposedly supposed to be able to make money in any market. And I did. But it’s the most painful profits I’ve ever made. I’ll happily just put my money in index funds and go back to sleep.
Meb: This is a very real close to home example because, in the last year, the place I’ve rented at the beach has not only termites but also black mold. I said, “Thank God, we don’t own this,” because this costs…I don’t know how many tens of thousand dollars to probably fix. But my Lord, sometimes it’s nice being a renter. What’s the rest of the day gonna look like in Taipei?
Jeremy: Well, today, I have big plans. As soon as I get off the horn here, I’m gonna go swim. Tonight is date night. We have a nice college girl coming to play games with our kid and hang out with him. And we’re gonna go for a bike ride along the riverfront. I woke up early today, so I probably got a nap in there somewhere. And that’s it. It’s a full schedule.
Meb: That sounds like a nice day. Well, look thanks, Jeremy, it’s been a lot of fun. Where can people go find more information? Where do they follow what you’re up to?
Jeremy: So check out my blog, gocurrycracker.com. That’s a fun little named remember. I write lots of professional-sounding commentary there. And check me out on Twitter where I do all my unprofessional commentary. Also, go @GoCurryCracker.
Meb: As I like to say, it’s where I try to pick fights.
Jeremy: That’s where you talk about real estate at the cocktail party.
Meb: Yeah. Jeremy, it’s been a lot of fun. Thanks for joining us.
Jeremy: Thanks, Meb. Appreciate it.
Meb: Listeners, we’ll add show note links to Go Curry Cracker and some of his most famous post. But you can subscribe to the show on iTunes. Send us feedback. We love hearing from you guys at firstname.lastname@example.org. And leave us a review. Love or hate this show, let us know. Thanks for listening, friends, and good investing.