Why I chose to walk away from Early Retirement and why I think I made the right choice.
3 years ago I was on track to hit my magic number within a year. That’s the investment or net wealth number I had calculated that if I hit, I would be able to stop working my corporate job and sail away into the new world of Early Retirement where I didn’t have to answer to a boss’s email first thing in the morning or scramble to find a way to give a diplomatic response to a stupid question or feign interest in a boring meeting. That place where the subtle dread that installs itself as the sun starts going down on a Sunday evening would simply vanish and be replaced by a growing and ever constant excitement of all the new things to come. I had been diligently ensuring my wife and I were saving upward of 60% of our income every year for over a decade. In addition, we had four properties which were bringing in a reasonable income and which had been growing at a regular pace every year. Our first boy was in a public school which was practically free and our net wealth had been growing exponentially along with our ever advancing careers. Then everything changed. Let me first be frank about one thing. Sailing away from a corporate role for me doesn’t mean I stop working and sit at home, taking care of the kids, going to gym every morning and amazing my friends with my extensive new-found knowledge of French and Italian wines. For me it means being able to take on roles or projects that excite me, not for the financial reward, but for the challenge and achievement of accomplishing something. With that out of the way, what changed? It wasn’t just one thing but a series of decisions and events, each with a particular objective in mind that when tied together, meant my retirement date got pummeled. I believe this can happen to anyone who is on the FIRE route and I’m assuming it generally does, no matter how diligent one can be. I believe this for one reason: things change. If there is ever a constant in life, it is that things change. Change is river underpinning the journey of life and we have to adapt to it, whether it changes our long terms goals or not. Change is exciting, it brings new challenges and new things to learn. Change, however, doesn’t mean we always have to change our long-term aspirations. Sometimes we seek out the very change that confounds us. Let’s look at the 3 factors that changed on my journey, that was so close to achieving its long-term goal and why I believe I made the right decision at every turn. 1. Schools The first big factor related to my first son’s schooling. Given that we are living in a foreign country in Europe, schooling in my mother tongue was not at first possible. We were living in a cute little suburb outside from the center of town. We had bought a house with a garden and had been renovating it over the past 6 or 7 years. Financially we had stretched ourselves to buy the house as we had kept our previous apartment in the center of town. This decision had been a key to building long term wealth. Our house was in the last phase of renovations as we were putting the finishing touches to the top-floor master bedroom and bathroom. Our son was loving his school, but I could see that his English was far from being as strong as his French. I am convinced that in today’s ever smaller world, being, at least, bilingual is essential. His Spanish nanny was working on his Spanish, but his English was trailing. So, we decided he had to move to a bilingual school. If we wanted to give him the best chance to follow an international career or even just to make the most of his international heritage, we needed to find him a school with a more international outlook. The bilingual schools are, for the most part, in the center of town and focused around the Eiffel Tower, not the cheapest real estate in the world. A few phone calls and a couple of meetings later and he was accepted into a bilingual school in the center of town. I believe it is the right choice for him and it will arm him with invaluable tools for the future. Bilingual educations don’t come cheap, but it wasn’t the cost of the education that set us back a few years, it was the cost of the housing. 2. Housing Initially we contemplated commuting to the school, but this was short lived as my job was in the opposite direction and the “drop off and into the office” route took just over 90 minutes on a good day. Impossible for me to waste so much time commuting. So, we decided we needed to change the location of our primary residence. Like we had done several years earlier, we contemplated holding onto the house and renting it out. However, a quick study of the local rental market put an end to that thought. The house mortgage was almost paid off, so the rental would have been a solid steady income, however the demand in the area for rentals was sparse. A second factor also helped us decide to sell the house: Real estate prices around the Eiffel Tower. The Eiffel Tower area has some of the most expensive real estate in Europe. It is a beautiful area, with the grand park in front of the Eiffel Tower, the Seine river, amazing buildings and some great market streets and shopping. It is also an area pretty much known all over the world. Tell anyone you live next to the Eiffel Tower and they can pretty much situate where you are from. All of that comes with a price. We weren’t ready to down grade on living space and so it became evident quickly that we needed the money from the house sale to buy into the area. We found a great apartment quickly with the right floor space. It was located right next to the Eiffel Tower park, close to the metro and schools. It was, however, 3x the initial price of the house. Luckily our renovations and general house price increases enabled us to put down a hefty down-payment and after 4 months of professional renovations we were all moved in. To date the real estate prices in the area have gone up by over 20%. That’s 3 years of return, so not spectacular, but good enough and given inflation has been relatively low, by historical standards, the real return has been quite close to the nominal one. I’m confident that if Brexit is confirmed, the upside can be quite spectacular. The new mortgage was double the old one, despite the heavy upfront payment and that alone would have been enough to push out my RE date by a few years. But there was one last factor that played into this change of plans: a career change. 3. Career After 6 years in the CFO seat of a 1billion market cap company employing 15,000 people, I’d been able to make tremendous impact on my company and learn an enormous amount about myself, getting ahead, transforming, failure, the digital world and making money. However, I was getting bored as I knew the job, the industry and the company far too well. Wait, I can hear you saying, you were at the top of your game and you were getting bored? That’s it! I was getting bored. I’m not one for routine and when you know something so well, it becomes routine, so I knew I needed to change I could have stuck with it, earned my bonuses and waited for my stock to vest every year, or I could have taken a risk into the unknown, forgone my stock options and learnt so much more about myself and the world. Without too much hesitation, I took the risk and changed company, and industry to boot. Changing industry was probably the bigger risk and the biggest eye opener. In my previous company, I thought I knew the role inside and out. I was comfortable making the hard decisions and my network in the company and industry meant things were always comfortable as I knew who to turn to. Suddenly I knew no-one, and the industry was completely different to my previous one. The company is bigger – 5-billion market cap with roughly the same number of employees, but the products and way of doing business are as different as fire and water to my previous gig. I was thrust out my comfort zone and it sparked things I hadn’t expected, one of which was this blog. Even though things are still hard, as I learn and grow in the company, I believe I am better for it. It has pushed me to contemplate a lot about myself, my journey and how I view the world around me. I’m becoming more mindful and introspective and that is helping me improve my leadership and my life. This change, while stimulating, caused my RE (RetireEarly) moment to be pushed out even further. My previous date was almost guaranteed, as my stock was not performance based and so I could count on it coming due every year and calculate with virtual certainty my FIRE (FinanciaIndependence-RetireEarly) date. My new stock is performance based and my company and industry are going through massive turmoil as the digital world starts taking a chuck out of it. The latter was one of the main reasons I took the job as I found the challenge too great to walk away from. Imagine what you can learn when everything you know is so rapidly changing? However, if my move doesn’t work out then the performance won’t be there, and the stock money won’t either. That’s a bold move, but one I believe will make more of a difference to me than my earlier path and FIRE date. Am I crazy to have made these decisions? What do you think? One thing to know, is that if the performance of my company is as planned, then the payoff is much bigger versus that of my previous company and my FIRE date is only 3 years away even with the new apartment. Nothing like a challenge! The CFO
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