Episode Transcript
[00:00:00] Speaker A: Welcome to the what's yous Investment Podcast, presented by Ignite Funding with Ron Arceo with featured guests. Weekly podcasts that explore your time, talent, and treasure, like share and follow. For more what's your investment? Let's get to the show.
[00:00:16] Speaker B: Hey, what's up, everybody? My name is Ron Araceo, and welcome to the what's yous Investment Podcast, a series on people's investments. Now, you may be wondering, what are we talking about? Why are you even here? If you're at a financial podcast, of course you'd be talking about investments, but this. This story is a little bit different. We're here with Doug Norman. He's in Hawaii, where I came from. Love that place. I miss it back home.
And he's been helping primarily military people in the service, help them reach, plan, reach, get to retirement, get to a. What they call the fire number.
And he'll explain that a little bit if you don't know what it is.
But he's here with us. He's been working with people in the service for quite some time now. I know he's been in the Service for about 20 years now, active duty or not. 20 years now. He's been in the service for 20 years of active duty in the Navy and retired in 2002.
Wow, you was right early.
[00:01:17] Speaker C: Yeah.
[00:01:18] Speaker B: You're. You're 41 years old. That's.
[00:01:23] Speaker B: I don't even know what to say that. That's a great intro already. Doug's main thing is helping the military. Right. People with their personal finance and then tying that into.
[00:01:35] Speaker B: Family and enjoying life on that level. Right. So he loves to surf.
[00:01:40] Speaker C: Absolutely.
[00:01:41] Speaker B: If you look at life as enjoying the. Riding the wave. Oh, my goodness. I really want to look at that right now. And you retired at 41, and I just turned 40.
[00:01:51] Speaker C: So the clock is.
[00:01:53] Speaker B: The clock is ticking for. I got a year left.
[00:01:57] Speaker B: What I found very cool about Doug, guys, is that he donates all of his revenue to the military, financial charities. So really, the guy's doing it out of the love of his heart. And that, to me, is something super awesome. Let's get into this.
[00:02:14] Speaker C: Excellent.
[00:02:17] Speaker B: You reached at a very early age that most people wouldn't reach.
Just.
I'm over here. Just. My goodness, I wish I could do that.
And the cool thing is.
[00:02:30] Speaker B: From many different sources, I guess you could say the road to retirement within, I guess any group of people, but let's just say particularly focus on the military side.
[00:02:46] Speaker B: I don't have no skin in the game on this, so I would really Love to. For the people that are watching who do have skin in the game in this.
What's your whole ethos of what you're doing here?
[00:02:58] Speaker C: I thought we were just going to talk about surfing today, but there's this military financial independence stuff too, just a little bit.
[00:03:03] Speaker B: Yeah, we could talk about surfing. I mean, I'm cool with that.
[00:03:06] Speaker C: I've got plenty to think about it. But the whole point of financial independence is to give yourself your life choices. You want to be able to have the financial resilience, the financial freedom, the flexibility, and be able to live life on your terms.
And so we reached financial independence mainly from a high savings rate. In our case, there's many ways to do it. I mean, if you go out there and earn a high six figure income, there are people that do that and save 50, 60, 70% of your money off of that high income, you'll reach financial independence fairly quickly.
On the other hand, military families are not, as many people know already exceptionally well paid. And so they're able to save for financial independence, but it might take a lot longer. It all depends on how you handle that savings rate or how you handle your investments. And we can talk a little bit about investments for that part.
And once you reach financial independence, it doesn't mean that you stop working. It means that you've got choices now in your life. And you can choose to continue working, or you can take a break or do a job change, do a career change even, or like me, find things that you'd rather do other than working for somebody else's schedule for their time.
And the lifestyle that you create does take some thinking. Many people stumble into retirement, not always willingly. You go along in your life, you think you're doing okay, you have enough money, but you're not absolutely sure whether you have enough or not.
And one day something happens with your employer, something happens with your family, or you have a health crisis, something external forces you into quitting work and maybe you never work again. Whereas financial independence is a deliberate approach to getting to the point where you have enough money. And I'll, I'll put out the spoiler right now, it's assets of 25 times your net annual spending. We'll break that down later.
Once you get to that point, you have a choice. If work is challenging and fulfilling and you want to keep on doing that, that's great. In the military, if you're facing your 5th or 6th or 12th deployment, maybe you feel challenged and fulfilled enough with that, and maybe you'd rather move on to other things. It gives you the choices to live life on your terms.
[00:05:20] Speaker B: What are some of the things that you could say on the opposite side of that? Like you have the financial choices. Let's take it to the opposite direction. Let's say someone gets out of 20 years, right? They get out of it.
[00:05:35] Speaker B: Maybe they didn't do so well saving. Maybe they just don't have that habit.
What about those people?
[00:05:45] Speaker C: There's a whole demographic, a whole category of people who get to their 40s and 50s and for whatever reason have not started saving for financial independence.
And many military families are like that. There are a couple of apocalyptic stories about somebody who's been in the military for 20 or 24 years and has never managed to save a dime.
But on the other hand, I hear that from people who are never in the military career or for whatever reason. Low income, medical debt, excessive student debt, consumer debt, right? Something has kept them from saving for financial independence and they finally, they're ready to work on that. And it's compound math. It's amount of time you start where you are, whether you start at age 14 or whether you start at age 45, you start putting money away and start waiting for compounding to do its work. And there are some ways to invest more aggressively than others. And there are ways to invest safely so that you have a reasonably leisurely approach to financial independence without worrying yourself about volatility. That's an asset allocation question. But the whole point is that even if you come to realization that you want to be financially independent and you're in your 50s or 60s, it can be done. In my case and in my spouse's case, we had plenty of active duty time, including plenty of times when we couldn't spend any money at alts.
Hard to fritter your money away when you're making 72 day patrols underwater or when you're deployed to the western Pacific and it's months between liberty ports.
So those savings rates help.
A bull stock market always helps. And it might be other investments as well. It doesn't have to be. The stock market could do just fine on real estate investing or some other extraordinarily profitable career or owning your own business. Those are all very good ways to reach financial independence.
I've been listening to these stories now for 23 years, and so I know a lot of different ways to do it that I was not aware of when I was saving for financial independence back in the days of stone tablets and wooden styluses and smoke signals.
[00:07:48] Speaker B: So that's pretty awesome. That's cool.
Okay, so you got into this right after, I'm assuming, right after you got out or like how did you become financially independent throughout the time you were active? Because I'm assuming you're active for those 20 years. You said you're active for 20 years.
20 years. 41.
Right off the bat, what were you doing right off the bat? We got a bunch of 18 to 20 year olds that could potentially be.
[00:08:16] Speaker C: Exactly.
[00:08:17] Speaker B: Enlisting. Right. And, and what, what is you started from, if I'm doing the math properly, 20 years active, financially independent by 41. 41, which allowed about 20 years. So people an active for about 20 years. You really were at the beginning of doing all this.
[00:08:32] Speaker C: From the start.
[00:08:33] Speaker B: What were the biggest lessons? I guess if you could tell yourself if you could go back, I should have asked this at the end. I usually ask this at the end. If you could go back in the beginning of your career of this, what would you tell yourself?
[00:08:46] Speaker C: Well, I'd tell myself that I always have to learn some financial literacy. And the point of financial literacy is that you're ready to learn and then you learn. And for everyone who wonders if they can go back and if they were starting over and what kind of advice would they give to their younger self?
That younger self has to be ready to listen. And When I was 18, 20, 22 years old, I was not ready to listen. I was pretty sure that I knew everything. Life was a lot simpler back then. And I didn't even think about financial independence back then. One of the things I was thinking about back when I started my Navy career was that five years later, I was probably going to have to get out of the Navy. That's what everybody else would tell me. Everybody else would do that. And I'd need a transition fund. And so I started saving that transition fund early on. That was, that was the beginning of the financial independence for those who have a spouse. I will point out that getting married does marvelous things for your financial independence because now you're giving another touchstone where it would be good to be ready to learn some more financial literacy and start accelerating your savings rate, especially if both of you are working.
The big touch point for us though was when we started our family. Up until we got to about the 9, 10 year point, we were all go Navy, having a wonderful time, getting promoted, getting qualified, doing great things.
And then we started our family and I wanted to spend more time watching my daughter grow up. I was not as interested in spending 60, 70 hour weeks at a 247 watch station, solving problems for the submarine force.
We were good at that and we had seen a lot of that, and now we wanted to spend more time on the quality of life and family. That really made an impact on us and put us at a decision point. Are you going to stay in the military? Are you going to get out? We had saved a transition fund. So hypothetically, we could have gotten out of active duty, but there were other reasons that we needed to stay on active duty that were based on fear or ignorance or the fact that we were getting up two or three times a night to feed a baby and change diapers.
So it's actually fairly difficult to get a plan right at the very beginning for your financial independence. What happens in a.
At some point you have that event, ideally it's an epiphany on your part, but some kind of event says, hey, I'd better straighten my life out. I'd better become financially responsible. I'd better start investing and saving for retirement, because whatever gig I'm working on right now, whatever lifestyle I have right now is, it might not be sustainable.
So that's the advice I'd give to my younger self, is get financially literate. And I would also add to that, the advice that my daughter now tells her demographic is if your parents could reach financial independence, then how hard could it be?
And the answers, what that means is the answers are much easier to find today than they were way back in the 1980s and 1990s.
You've heard of the book you, Money or your Life that came out in 1992, just a few months after we'd started our family.
You've heard of the book the Millionaire Next Door came out in 1996. We read that and realized that we were probably surrounded by millionaires next door. But more importantly, we could emulate their behavior out of that book. Of course, today all that stuff is what we would think of as conventional wisdom. And it wasn't around in the 1980s. 1990s.
Tools are out there, whether you're ready or not, whether you're in a position in your life to actually start saving money. If you're carrying exceptional loads of student debt, consumer debt, or medical debt. Well, that's a different situation.
[00:12:14] Speaker B: Yeah, yeah. I mean, those are things where there's steps and processes to. To, oh, yeah, become financially independent, whether. Whichever stage you're in.
Cool. I. I think this is great. I think that. Yeah. So you decided to, at that point, decide to get out, work on the family.
And she was already at the financial Independence stage.
[00:12:39] Speaker C: At that point, we kept going after our daughter was born. And at that point, we decided that we would just continue as long as we could stay together, stationed together. That's the whole point that was a theme of our careers, was both on active duty. We want to be stationed together, especially now that we're parents. We don't want to both be deployed at the same time. And there are many ways that military families figure out how to have kids and how to raise a family, even if both parents. Parents are on active duty. It's not pretty, but it can be done.
And we were trying to do that as best we could. We mostly, again, out of fear and ignorance, stayed on active duty for fear of being stationed at separate places. Today, going back to my younger self, I probably would have told myself, hey, you need to leave active duty at 12 or 13 years of service, Go in the Navy Reserve, anchor yourselves on Oahu, where we really enjoyed living by then, Right, of course.
And take care of your family while your spouse finishes her career. Instead. We got as far as we could, and one day the unrefusable offer landed in her side of the court, and she ended up making the choice to go into the Navy Reserve. I will point out that by the time that happened, we actually reached financial independence a couple years before I retired.
And we joke today, we joke that at the height of the Internet bull market, everybody was financially independent for about 15 minutes.
But in 1999, when we reached that, life did not suck. And I had made the decision to finish out my active duty, and my spouse felt like she'd gone as far as she could go. So she went into the reserves for different opportunities and a much better quality of life. And today I get a lot of questions about should I stay, should I go? What does life look like in reserves of the National Guard? So that's how that worked out. And my active duty pension, of course, covered most of the expenses. We had also built up quite a bit of savings and investment over all those years of dual employment and a high savings rate.
And we were motivated to save for financial independence by that point. So we knew from the millionaire next door and your money, your life, what we could do and how we could do it.
And today, all those tools and techniques are on the Internet, and they're far more widespread than they were back then.
[00:14:44] Speaker B: And really, if you're just active in understanding how to build financial literacy, kind of like how you're saying, learn, you know, once you learn something, you got to learn it, got to learn more Again, which I love. I love the fact that you solve a problem and then because of the fact that you solved it, another problem pops up which could be a better quality problem. Right. But that's the exciting part.
So let's go into why you started doing all this. So you did all this, decided what was the deciding factor. Why did you decide to want to be financially. I know you're. I don't know. Yeah. Did you mention anything in that?
[00:15:17] Speaker C: I don't know, just the part about being able to watch our daughter grow up and. Okay, well, reach the end of our naval careers at.
This is a story that I don't get to tell much often anymore, but at one point, near the end of my career, I guess I was about 14, 15 years of service, my father came out to Hawaii to visit his granddaughter. And we're all driving around and at that point I was beginning to look at other options. I knew that I was probably going to retire at 20 years of active duty. And if you've got that time, if you see that coming that far ahead now you can spend your time getting ready, thinking about other careers.
One of the things we used to do back then is sit you down in front of a desktop personal computer in a learning center somewhere on a military base, and you would go through a skills and assessment workbook and you would go through all these surveys of where you might have some potential for earning money in a career after the military.
And you're in the military, you're usually told that you're barely capable of functioning at your current assignment, let alone getting promoted to something better. And you're worthless and weak. I call that the military inferiority complex, because we're really actually ignorant about what goes on out there in the civilian world and what kind of skills we could bring to a civilian career.
So I was going through all that discovery and assessment process, and at the end of it, I discovered that I would make an excellent middle level manager or nuclear Engineer, which after 20 years in the Navy's submarine force running nuclear reactors, wasn't exactly a big surprise. And I was griping about that to my father. He had spent his younger years in the commercial nuclear power industry and he completely understood why I was disgusted with what I'd learned from this.
And he looked at me and he said, he said, you've been in the Navy quite a while. Have you managed to save any money?
And I said, well, yeah, as a matter of fact, we're doing pretty good on that part. You know, we've been saving and Investing regularly to earned incomes. It's all coming together. Compounding is starting to do its thing. And he said, well, why would you want to work after the military?
[00:17:16] Speaker C: And that was the first time anybody had given me permission to stop doing the traditional military thing of leaving active duty and starting some kind of bridge career, climbing the corporate ladder, trying to become a chief executive officer. It was the first time in my life somebody said, hey, why don't you just go enjoy your life? You've got enough money to do the things that you already enjoy doing. Maybe you should just do more of that and be there for your family, be there for your spouse, all those other things we talk about, but rarely have the financial resilience or the flexibility to do that. What would your life look like if you had enough money tomorrow? And the answer is, well, I don't know. I haven't had enough time to think about it. But as you're getting the end, near the end of a military career, you always know when you're scheduled to leave the military, leave active duty. And you always, hypothetically would be able to make time to plan out that transition and think about your next steps.
On the other hand, I got a tremendous amount of pushback on leaving active duty, retiring from the military and stopping working because, you know, I'm too young, I'll be bored.
What am I going to do all day? And in fact, one of the reasons that I learned to surf was the joke. What are you going to do? Surf all day? Nobody can do that. And my daughter and I and my spouse, on the day I actually formally retired from the Navy, we went out and took a group surfing lesson and we all three got up on a board. And 23 years later, we're still enjoying that.
[00:18:39] Speaker B: I hope you got a picture of that.
[00:18:41] Speaker C: Well, you actually can't. Well, I wish there was a picture of that too. It would have been very embarrassing, I'm sure.
But you actually can surf all day. And all those other realizations lead to designing your new life. And today, again, plenty of books and websites out there that talk about making that transition. When you have enough money, it's a tripwire that tells you that you need to think about life after earning income and maybe you want to keep doing it. There are many other ways to do that after you have enough money for whatever your lifestyle is. So just have to be willing to work for it and you have to be responsible for your own entertainment.
[00:19:15] Speaker B: Awesome. So.
[00:19:19] Speaker B: Kid goes in at 20, gets out 40ish or so. 20, 20 years, which is A perfect time, especially with.
[00:19:28] Speaker B: You can kind of even see the growth of that 20 to 30 year time frame. It's almost like the, the number that you kind of want to just keep going for. And usually, I mean we only have, say we live to 90, we only have three sessions to go through that 30 year period. So earlier the better, obviously. But. Okay, so let's, let's talk about that. So people want people that are getting out of, out of the service, out of active duty and moving into a, a. Some of them, let's just say they want to start a business. Some of them, they want to do other things.
[00:20:03] Speaker B: Some of them want to do consulting. Some of them want to do.
[00:20:08] Speaker B: Chill on a beach for a while. Right. Whatever it is.
[00:20:10] Speaker C: All of them want to go chill on a beach for a while. Yeah, yeah.
[00:20:13] Speaker B: And say that's the thing. And they get to that point.
Is there. You mentioned 25x.
[00:20:22] Speaker B: Assets in assets versus your, I'm assuming your monthly spend yearly.
[00:20:27] Speaker C: Annual net annual expenses. Yeah.
[00:20:30] Speaker B: Okay, cool.
[00:20:31] Speaker C: So let me, let me unpack that a little bit. Yeah. What happens is first the demographics.
It's not well known that 85% of the people, 85% of the people who join the military never make a pension. Never any kind of pension whatsoever. 85% of the people that join the military leave before they vest in a pension plan. They leave before 20 years of service with very good reasons. And a lot of that has to do with how your workload is and what specialty in the military you're in. We joke, and this is totally joking because I no longer have the data to keep this, this research current. But we joke that the Air Force and officer will probably 50% of the Air Force officers serve for at least 20 years and retire. Whereas on the other side of the spectrum, only about 8% of the Marine infantry sergeants actually serve for 20 years to get to retirement. But 15%, one out of six people actually gets that pension. So for the rest of the military families, what happens is you serve in the military until you reach that point where you're done. You're either told that you're not going to reenlist, you're not going to be able to continue your career, or you say, I'm out of here, I've had enough.
When that happens, you've built a transition fund and there are many counseling services and many ways to make that transition.
But at that point, you're probably not financially independent. You're probably looking at some kind of bridge career now along the way, maybe You've been buying investment properties, maybe you've got a couple of investment rental properties that for whatever reason you decided to invest in real estate and you realize what you could do with that and you're going to start building that up into full time income. Now we all know that investing in real estate and landlording and all the other types of real estate, we know that is not as passive as it sounds. But on the other hand, when you get out of active duty now you have the time.
And even better, if you left active duty for the Reserves or for the National Guard in your service or any other service, you are probably drilling one weekend a month and going on active duty a couple of weeks a year. You have a little bit of money coming in. And so working on that real estate career when you're not at drill weekends or other military stuff, that works very well with some work life balance adjustments and quality of life is better.
If you've been investing in the stock market again, now you have the time to sit down and figure out what you really want to do with investing in the stock market. By that I mean you are probably going to get more efficient at investing in passively managed index funds with low expense ratios. I'm not talking about choosing between Nvidia and Tesla or cryptocurrencies. All of those are all. There are people who have made those work, but they have the extraordinary tolerance and.
[00:23:09] Speaker C: Extraordinary tolerance or extraordinary luck to make that work.
So that's another way to do it. And then starting your own business.
I can tell you that out of all military families, at least half the spouses, if not 90% of the spouses, are frustrated at trying to build their own career while their military spouse is on active duty. Because you're moving every two to three years, you're in different parts of the world. You don't really have a chance to build maybe the traditional business you'd like to build. But everybody wants to build their own business. And so when that active duty person backs off of their active duty career and goes in the Reserves or Guard or goes cold turkey, full civilian, maybe now the spouse can launch their career. And so that gives another stream of income. And one person's working, the other person's raising the family or working on their own investments. That's how that works. Now that's all on the income side. That's all going out there and earning money and figuring out how to tremendous, how to turn your human capital into tremendous amounts of income.
There's also the part where if you have gotten out of the military and you're on your own, and you have time to do things on your own. You can go back and look at all your spending and redesign your life.
So if I tell you that your financial independence is based on your annual net expenses, that means if you can throttle down your expenses to the things that are really important to you, then you're going to reach financial independence a little faster. I'm not.
There's a perception among the financial media that reaching financial independence and being frugal means that you're going to be dumpster diving for your food and recycling your toilet paper and shopping at Goodwill for the rest of your life. And that's one of the famous expressions is, well, I don't want to live poor for the rest of my life. And that's not what I'm talking about at all. When I'm talking about frugality. I mean that you're living a lifestyle that you enjoy and is sustainable and it's not deprivation.
Military families are really, really good at finding that deprivation point because they've been forced into it every year for most of their active duty years. They know where to back off a little bit and spend a little more money or find another way to enjoy themselves. Themselves. But if you can nail your expenses down and focus on the things that are worth your money, the things that bring value to you, then do more of that and cut out the waste. Just focus on getting rid of things that you feel bring no value to your life. And that alone will cut down on your annual expenses and give you more ways to save and invest for your financial independence. And again, back in the 90s, this is kind of tough to do on a piece of paper with pen and pencil or maybe a calculator.
Today the Internet is full of websites that say, well, if you're going to say this much and you're going to invest it this way, then you should reach financial independence in five years, six months, and 27 days and a half an hour.
[00:25:56] Speaker B: Yeah. So, yeah, investment calculator. We just put one on the website, actually.
[00:26:00] Speaker C: Tools are much better for that kind of stuff. And you can sit there and tinker with it and say, well, do I really want to cut that out of my life? And. And how fast am I going to get the financial independence if it's going to lengthen my roadway to financial independence, Do I really want to work longer for this thing?
And that way you can make an informed choice instead of just guessing at it.
[00:26:19] Speaker B: You know what I love about this is that it's not just this conversation, at least it's not just targeted towards military. It really is principal, foundational.
[00:26:31] Speaker B: I love the value versus waste. I mean, that's a big deal. You know, most people don't think about that. I'm thinking, I'm thinking about it right now, like as you're talking, like, okay, I can check that off as wasteful, wasteful, wasteful, wasteful, wasteful.
That's, that's. I love that. You know, and a good segue to this next portion of it, which is about our three T's.
How do you value your time? And how do you even usually value your time? How do you invest and value your time when you have all this going on? Public speaking, writing the book or writing couple books, surfing on top of that and then doing more public speaking, doing.
[00:27:12] Speaker C: Not necessarily in that order, but yeah.
[00:27:14] Speaker B: And then surfing some more.
[00:27:17] Speaker B: How, like I'm going to assume it's all three of them surfing. But I digress on that one.
What do you invest your time in.
[00:27:27] Speaker C: When you reach financial independence and you have control of your time? There's not a magical fairy or unicorn that comes out with an organizer to show you how to be better at managing your time time. That's, that's, that's not going to happen.
If you suck at managing your time before you reach financial independence, then you will probably suck at managing your time in your financial independence. The only difference is now that you have enough spare time in your life to do something about that and get better at managing your time.
So if you're sitting there in work and you're trying to imagine this financial independence lifestyle, all I would say is think about the things you enjoy doing. There's many tools out there to help you do a, a mind map or some brainstorming and figure out what you enjoy in your life that you want to do more of once you stop working for money full time.
And then again, figure out what it's going to take to get from here to there. That's the ideal transition from working for a paycheck to figuring out when you're going to have your resignation drafted for your boss and when you're going to start your financial independence. Once you are financially independent, the most valuable asset you have for the rest of your life is time. And you're stuck with a finite amount of that time.
You have no idea how much it's going to be. You know what your average lifespan is going to be, but you don't know when you're going to walk out in front of a bus or when some medical issue is going to crop up. So the people that have reached financial independence and spent a few years living this lifestyle become very jealous of their time, very, very careful of how they expend their time. So you're going to try to stop doing the things that you don't enjoy doing.
An example of that would be workplace meetings, mandatory meetings, mandatory training, commuting. The other things that make it harder for you to get your stuff done because you're competing for some activity with everybody else. And one example of that is if you are financially independent and don't have to go to work during the normal workday.
It's a wonderful thing to go shopping at 9 o' clock on a Tuesday morning when nobody else can be there. And you also, when you're in financial independence, you actually watch what's going on on the weekends. You watch your calendar. Make sure you don't schedule any activities anywhere for running any errands or chores on Saturday or Sunday because everybody else is doing that. You can do it at nine o' clock on a Tuesday morning.
You also have to bring some balance into that. I focus. The best time management tool I have learned now is to spend my time during the day with one activity.
And today this is it. This is my one activity of the day.
[00:29:52] Speaker B: Yeah, the big one. The one big thing.
[00:29:53] Speaker C: The one big thing. And the rest of the day I have. I can go play if I want. I can go work on something else if my interest spikes during this conversation. Frankly, I spend a lot of time emailing back and forth and communicating with other people who have questions about stuff like this.
I will point out though, priorities. I check the surf forecast every afternoon for the next day.
[00:30:13] Speaker B: Priorities.
[00:30:15] Speaker C: I paddle out two, three times a week on the days when my spouse and I are at a beach cabin. You know, maybe we'll take a staycation here on Oahu and stay at a cabin for four or five days. Well then there's not just dawn patrol, there's also sunset surfing and I'll go out and do two a days and that's, that's not sustainable. But, but my technique dramatically improves when you're paddling out twice a day.
[00:30:36] Speaker B: Yeah, and I guess that that brings me back to something.
[00:30:42] Speaker B: During these 20 years you will get to the talent part. You've, you've refined talent in such a way of like seeing things long term. Many people are very right short term kind of situations.
What, how, how do you invest?
Well, first of all, what is the talent that you invest in.
[00:31:01] Speaker B: The way.
[00:31:02] Speaker C: I spend my time, I would call that paying it forward.
When you're in the military, one of your primary duties is taking care of each other. You know you're watching out for your teammates, your shipmates, your wingman, your battle buddy. And that gradually builds to where you're watching out for the welfare of more and more people.
And as you get better and better at it, and as you get promoted and you go to higher and higher billets, you end up having to be responsible for taking care of more and more people.
When you get out of the military, you're going to miss that.
No matter how unhappy you were when you were on active duty, when you leave active duty, if you're working by yourself in a corner, quietly and totally solo somewhere, without any contact with the outside human race, even if you're a submarine veteran, that's probably going to make you lonely and you probably want to work with a team and you probably want to take care of some people. So I'm paying it forward to all my shipmates who saved my career when I was on active duty, but who also helped me reach where I am today. And so I'm giving that for. That's, that's the thing that I invest my time in today is the, the writing, the speaking, the coaching, just the endless discussions on the Internet that help people figure out what they want to do with their lives financially.
What got us to financial independence was investing. I mentioned earlier. Here comes again.
Passively managed index funds with low expense ratios in the stock market in equities. And today there are many funds that do that. The one we happen to invest in is an exchange traded fund called the Vanguard Total Stock Market Index. We don't even keep it with Vanguard, we keep it with Fidelity.
But we are able to invest in that and leave that there for the long term.
We've dialed in our spending. One of the things you go through as you're leaving active duty is you figure out your budget and your expenses and your savings rate. And so you're regularly in autopilot investing in those funds.
Now when you're building wealth, that starts out looking pretty linear, even though there is exponential compounding going on. We just can't appreciate our human perception of exponential compounding. It pretty much sucks.
But you reach a critical point where you've built up enough compounding that the next year it goes up a little sharper and sharper and you see it turning a corner and going hyperbolic. That happens around 14 or 15 years of that Saving and investing. But the grunt part, the boring part, the hard part, is just to keep putting that money inside every month. Investing in your asset allocation in autopilot. I tell people in your military you have tremendous likelihood of continued employment until you're done with your obligation.
And so you can afford to have an aggressive asset allocation. If you're in your 20s, you can, you can afford to have an aggressive asset allocation. If you're in your 30s, you probably still can afford to have an aggressive asset. The point is getting comfortable with the volatility that that implies while you're investing in assets that rise with faster than inflation. Now there are other people who are just totally uncomfortable in the stock market, but are wonderful with real estate.
And of course, if you can invest in real estate with leverage and it's already appreciating at about the rate of inflation, but you've leveraged that with a mortgage or with value added rehabs, well, that works great too. It's just a matter of what you are interested in doing and how much control you want to have over it.
[00:34:11] Speaker B: Right? Yeah. And it's almost a style. Almost. There's, there's a style in there.
So I'm assuming that the talent that you invested in is, is really that long term vision of, of financial understanding and financial learning. Yes, I think that in itself is you stacked on the information over the 20 years and you know, paying it forward for your through time, through the effort. I would say the effort of public speaking and doing these things is not easy to be able to do that out of the comfort, out of just your heart. Right. Which leads to the treasure. Right. So I'm assuming this leads into you investing and I don't let me put words in your mouth, but investing, what is it that you invest your treasure in? I mean this, this all seems like a fulfilling thing for you and it almost seems like something that people almost want to invest in because I think just the way you are, like just, just the energy, it's different. It's not try hard or anything like that.
[00:35:10] Speaker C: You know, I have, I have had this conversation before with other people. So I have had a little bit of time to work on the answers. I have a shipmate of mine. The last time I stood a mid watch on a submarine was 1992.
And I had a shipmate of mine who over 30 years later still tells me about those days when he and I were sitting in the control room of the submarine.
We had done all the things we needed to do for that, that mid watch and we still had three hours left. And so you naturally start to talk about life after the military. And he still remembers those conversations about saving for financial independence, wanting to spend more time, all that stuff.
So I try to recreate that same environment for somebody today. And I'm investing in their financial independence and just spreading that and giving more families the choices.
I tell our daughter and son in law, and this conversation comes up almost every week. I say we are really nice people, but we're doing this because we wish we'd had these resources. We had the support when we were your age. We wish we'd had those really nice parents or grandparents standing by to help out. We wish we'd had the Internet and the World Wide web and all those resources that we could tap into to figure out what's going on. We wish we'd been able to invest in passively managed index funds with low expense ratios. You could not do that in the 80s or 90s very easily. We wish we'd had all those resources. And so I just spend my time, I enjoy this, communicating what's available. Now, public speaking, yes, that's. That is a challenge and it's an effort, a sustained effort. You only get better with public speaking by doing more of it, like guesting on podcasts.
But I started with the Navy with instructor training school and eight years of instructor duty. And that just is something I've always felt is challenging, fulfilling, and I enjoy doing it. I also get tremendous value out of going into a meetup where I'm with a small group of people. By small, I mean as few as a dozen, maybe as many as 50 or 60 people. And we spend either a couple hours of an afternoon talking about financial independence and how to get there. Many times we'll do a case study. What do you got? How much are you going to get? Where are you going with it?
Other times, it'll spend an entire weekend just gathering somewhere at a retreat center with these 50 or 60 people. And we might have a couple of presentations by a few of the speakers that are there. But most of the time you're sitting around talking about what do you do? What are your concerns? Where are you going? How are you going to get there?
Many people know now who I am and what I am happy to do because I tell them, you know, when we're at this meetup, here's what I can help you with. And so, you know, they come with a list of questions and spreadsheet and we talk through all that. And that's where, well, it's spreading the financial independence movement in a way that I wish had been available to me in the 80s and 90s.
I would have started a lot sooner. I would love to start a lot sooner now. Everything worked out right. Everything worked out fine.
We could have done it much more efficiently and with probably a higher quality of life.
[00:37:57] Speaker B: That's awesome. It's great to hear. I mean, it's great to hear the hope that's there for others that, that were. That you guys are actually laying out for people to see and really, you know, touch, you know, you guys. Very authentic is what I.
[00:38:10] Speaker C: What I mean, it's, it's hope. Yes. It's an opportunity, but it still looks a lot like work.
[00:38:16] Speaker B: Yeah. Yeah. And you know what the thing is, is that you were able to do it within 14, 15 to 20 years.
There's proof behind it for you personally and people that you know. And I think there's, there's something here that, you know. I think the common thread is, is take care of your finances, invest in the things that you're comfortable with, investors.
[00:38:40] Speaker C: And surf.
[00:38:43] Speaker C: Keep an eye on it. Keep going. That's exactly right. There's. There's this whole. We call it the boring middle. You know, the time between, after you get all your finances straightened out and you're on the path.
Until that day, you notice your investments are starting to turn the corner and go exponential. That that could be five or 10 years in the boring middle. And it's boring because it's working, but it's also boring because you don't feel like you're doing anything and you can't make it go any faster, and you really wish it would.
[00:39:08] Speaker B: One more question. I asked this earlier, but if you, if you were talking to someone that came in at 20, maybe not yourself, someone that came in at 20, and we went through all this and you are here talking to that person right now.
What's the one thing you'd want to tell them?
[00:39:27] Speaker C: The very first thing is track your expenses.
Spend a few months watching where the money goes. Don't. Don't change your life. You know, this isn't like January where you're going to go to the gym and work out for six hours every day for the rest of your life.
Just start tracking your expenses. However you do that, whatever's working for you, track those expenses for a few months and watch where the money goes, and then we'll talk. But by the time you've tracked your expenses for a few months, you probably already know where you're going to Cut out the waste.
[00:39:55] Speaker B: Let's talk about, let's. Let's finally talk to the person that's leaving active duty or the people that are, that have left and don't know what to do.
Or they're in the, in the boring middle.
[00:40:06] Speaker C: Right?
[00:40:07] Speaker B: They're in that boring middle. What's one thing you could say to them.
[00:40:12] Speaker C: Collectively, if you're getting ready to get out of the military, Use all the resources that are out there, especially on LinkedIn and there's some on Facebook. Financial groups as well. Military financial groups, use those resources. We're out here wishing that we could help you avoid all the stupid things we did and all the smart things we should have done. And we can guide you through that. There's plenty of resources and checklists and timelines and all the skills, all the tools you need to get out of the military and succeed in whatever your next step looks like. And when you're in a boring middle, we talk about that incessantly at financial meetups and on Facebook groups, for example, or on social media. And the idea is, if it's boring, it's working.
So maybe you could raise your savings rate a little bit if you think you want to go a little faster. Probably not worth it. Or maybe you just need to leave your savings rate alone and spend a little bit more money on your own experiences. Not consumer items, but experiences and quality of life. And that way that helps you get through the boring middle part. I will say that if you. Quality life, absolutely. Work life, balance, and that leads right into the next discussion, is that if you're on the road to financial independence and you have enough resilience to survive a prolonged unemployment period, and you are miserable at your current job, it's time for change.
You figured out how to get on the path to financial independence. You're working it. It's going to happen.
And maybe it's worth interrupting that smooth, boring middle part with a short period of changing jobs, whether that's a lateral move at your business, whether that's going to a completely different corporation or completely different career. I mean, the more disruptive it is, the more planning and the more impact there's going to be on your life. So maybe it's a little difficult to arrange, but it's time for a change. If you are frustrated with your current situation in the military, we have this conversation all the time, right? Every time you reach a decision point, whether you want to be retained on active duty or when you want to do something else. And my advice to everybody in the Military is do not gut it out to 20 for the pension. You have reached a point where you understand financial independence, where you reach financial literacy and you know how to do this. You don't need to do it on active duty. You do not need the pension. There are far better ways to reach your financial independence and so those are a big impact. Hearing that when I was at the five or ten year point would have meant there would have been some changes in my life that would have worked out a lot better.
[00:42:33] Speaker B: Cool. I think there's, there's a lot here to chew on. If people want to get to learn to know more about you, they can go to, they can meet you on Facebook. They can do next gen finance on Facebook.
Doug. Norman.
N O R D M A n.
That's not. Not Norman. N O R M A n D N O U N O R Sorry. Sorry. Doug.
Sorry. People listening. D O u G N O Yes. R D M A N My goodness. Sorry.
[00:43:05] Speaker C: Of the north.
[00:43:07] Speaker B: Yes. Of. There you go.
Duh. Ron.
[00:43:11] Speaker C: I've had time to think about this.
[00:43:13] Speaker B: LinkedIn. He's on LinkedIn. And then MilitaryFinancialIndependence.com is the website you can check him out at. We've had an entirely honored time to be here with you, Doug, and really understanding what it takes for people that are in active duty, that are getting out of it, that are getting into it, what are the top main things that they need to be kind of really understanding. And one that is really understanding the financial literacy part and then learning to learn and then there'll be more learnings and then more learnings along the way. And really being able to put something away is really the key key. I think the key agenda of this, this, at least this episode is learn how to put it away.
Wherever you're at, you'll be able to reach it.
You just need to set the goals in the right space for your own self, for your own fulfillment and you can go from there.
A lot of stuff to chew on. I think there's a lot of places we can talk about this in other areas. Maybe in the blog, maybe when we do this, come back again, maybe in the future.
[00:44:14] Speaker C: Absolutely.
[00:44:14] Speaker B: Is there anything else that you want to let the viewers or let the viewers let the listeners know before we get out of here?
[00:44:20] Speaker C: No, you're going to put this in the show notes, but people are welcome to email me nordsnordsmail.com in fact, it looks like it's right there on the video. Nordstrom, nordsnords Gmail.com I get a lot of people who stumble across that email address on the Internet and realize, hey, that's the guy. I could ask him a question. And that's what I do is I answer those questions.
[00:44:41] Speaker B: It's not every day you get to be in front of people that are doing it and actually giving you the time of day to answer those questions and use those resources like Doug said. So Nords Nordstrom.
[00:44:58] Speaker C: Perfect.
[00:44:58] Speaker B: Awesome. Well, it was an honor having you here, Doug.
[00:45:03] Speaker C: I see you guys. This is fun. I enjoy this too. Thank you.
[00:45:05] Speaker B: Loved it. Yeah. See you guys later.
Hey, thanks for watching the what's your Investment podcast. Please like follow and comment. And don't forget, check out our other videos. We got the Deeds in the Desert and the Day in the Life episodes. See you there.
[00:45:19] Speaker A: Thank you for tuning in to this episode. Welcome to this episode of what's yous Investment? Brought to you by Ignite Funding. Don't forget to, like, comment and follow. For more, check out our other podcast, Deeds in the Desert and let us know who you would like to come onto the show. We'll see you next week.
[00:45:36] Speaker A: The views and opinions expressed by guests on this program are their own and do not necessarily reflect those of Ignite Funding. Ignite Funding does not endorse or promote any individual brand or investment featured in this podcast. This content is for informational purposes only and should not be considered investment advice. All investments involve risk, including the potential loss of principal.
