Hey FAANG FIRE!
Today’s newsletter is a special one, and not just because I was sitting at my keyboard last week eating my avocado toast while contemplating the existential implications of my new semi-FIRE life. Today we get to talk with someone whose own FAANG FIRE journey and personal philosophy mirrored much of my own— only with a three-year head start.
Just like me, our guest was part of a dual income household with children where both adults worked in tech. Just like me, our guest found the FIRE philosophy early in his career and we both share similar philosophy when it comes to investing in low fee index funds. Just like me, our guest was raising a young daughter while FIRE.
Our guest today is Dave Anderson! Dave spent over a dozen years across Amazon, Facebook, and the Bezos Academy before hitting the eject button and decided to FIRE back in May 2021. He now enjoys his FIRE life just outside Seattle, with his wife, a teenage son, and younger daughter. He also writes one of the top technology career and leadership newsletters on Substack at Scarlet Ink.
Given the many parallels, and that three-year head start, I knew I could learn a lot from Dave’s journey.
Without further ado, Dave, you have the floor.
Dave:
As Andre reached his semi-FIRE number, I thought it would be fun to post some of the things I've learned over the last few years. Because moving from FAANG to FIRE is quite a big step.
The financial independence movement is one which requires some amount of privilege. But those in big tech (FAANG) have such remarkable opportunities in front of them that it changes the game. And I have found over the years that so few tech workers realize that being employed by one of these top companies means that you are handed the keys to independence.
Eight Lessons from My Own FAANG FIRE
My most impactful "career" event was stumbling across the concept of financial independence somewhere around 2006. It was then that I transferred my mental understanding of retirement from a specific age, to a specific number.
Over the years I created spreadsheets and forecasts, and updated them religiously. In late 2019, we hit the conservative financial target we'd been aiming for. According to everything I knew about finances, we had enough to live the rest of our life.
And it's funny how this can throw you for a bit of a loop. You see, the path to financial independence is a long journey. Depending on how early you learn it, you might spend the majority of your career pursuing this point. I spent 1.5 decades mentally translating income increases into increased savings, and expenses as roadblocks to having control over my own life. Then you retire, and you realize that all that obsession is over. There's no need to calculate things, or graph data. I now spend months without updating our spreadsheets because it's not a priority.
I think the reason to pursue FIRE (financial independence, retire early) is personal for everyone. I hear plenty of people who share how much they hate their job. I didn't hate my job, really. I was lucky enough to work with brilliant people on interesting problems at Amazon. I didn't hate my daily work.
What drove me to reach FIRE was my interest in personal independence. I disliked the idea that offending a co-worker could impact my income. It gave me anxiety to think that a single bad review by my manager could change the trajectory of my family's financial security. I needed to remove the power others had over me.
Lesson One - Your money mindset should change.
Most of us chase "as much as possible" money from college onward. We hunt promotions, raises, and better jobs.
I think this mindset makes sense as you find your path towards FIRE. The path towards financial freedom consists of two major variables. Your spending and your income. Increasing your income is a dang good idea. Making more money has a direct mathematical relationship to being FIRE faster. Every bit of money allows you to FIRE that much earlier.
Particularly if you're working at a Big Tech company, this is the best opportunity for earning you'll have in your life. It is incredibly efficient for you to invest in your career and increasing your earnings. My earnings in my last year of saving was **more than 20x** what I made when I started my career. Career growth is incredibly valuable.
However, as you reach financial independence, this mindset will need to shift. That's because of the concept of enough. The math for FIRE explains how much money you need to maintain the lifestyle you'd like to have.
Once you have enough, additional money has what's called *decreasing marginal utility*. It means that each additional dollar you earn gives you decreased satisfaction or benefit. Additional consumption at this point might be nice, but it's not going to drastically impact your happiness.
To put it more simply, you have to think about what you're exchanging your life for. While working, you spend your life making money to support your family, and save for the future.
Once you hit FIRE, how should you spend your life? I don't think Netflix is the best idea, but that's up to you. I like to think of it as life satisfaction. Happiness. Connections with other people. Things which bring me fulfillment.
Once you have enough money to not need to collect more money, taking even highly paid jobs may not make sense. You'd be optimizing the wrong variable.
For an example, until recently, I was doing paid hourly coaching. Except I found over time that I didn't look forward to the meetings. I wanted to go on a walk, or write an article, or start on our taxes. I realized that the coaching was no longer something which brought me satisfaction. I decided that it wasn't a good use of my life energy.
Related, Lesson Two - Time is no longer money.
I've personally found fulfillment in doing things which I'd previously pay for. While it's not *efficient* considering my income and investments, I've enjoyed learning how to replace our home kitchen sink, or building a chicken run.
When I was working, I found it difficult to justify this type of time expense. I worked 8+ hours and commuted for a couple of hours. I was totally fine spending money to replace a sink because I had the money, and didn't have the time. Now, I'm not exchanging time for money. Instead, I'm exchanging my time for life satisfaction. And sometimes it's satisfying to do repair work on my own.
Lesson Three - Retire to something, not from something.
Stopping your full-time job likely gives you between 45-50 hours (or more) of your time to allocate. If you've been working for years, your ability to self-motivate creative projects may have atrophied.
Some people have zero problem filling their time, others seriously struggle. I've certainly read people talking about how they had to go get a job because they found they just sat around all day. I hope that won't be you.
Think of the RE part as retiring to something, rather than retiring from something. What I mean is that you really don't want to retire to get away from your job. If you dislike your current job, find a better one. It's depressing to think that you saved your money simply to escape.
Instead, plan ahead. Retire to something. Retire to be able to write your newsletter (in my case). Retire to be able to travel. Think carefully about what you believe is worth your life energy.
Lesson Four - Money making hobbies can be fun.
You've likely spent your entire career focused on making money. Now that you may have enough to not need to work (that's up to your specific situation), some people are reluctant to consider money making hobbies.
I know I had no intention to make money in retirement. I had a mental stigma against working. I think I associated it with stress, deadlines, social pressure, and other aspects of the corporate workplace.
However, I started writing a newsletter, and found that I was having a blast. Soon enough I made a paid newsletter, and the rest is history. I originally thought it'd be fun to make $10k, so I could buy us a family vacation or something. I didn't realize how much opportunity is out there for people who have a lot of time on their hands.
Being FIRE and an entrepreneur? I can't imagine a better feeling in the world. You have all those possibilities in your head from when you were at a FAANG, but you don't have the boss telling you what to do, your co-workers saying they disagree with your plan, or someone breathing down your neck to launch right now.
I still love the feeling of doing whatever I want with my business. I can look at my logo and say to myself, "Hey, today I'm going to make a new logo!" and that's what I'll do. I think someone who has been successful in a corporate workplace may find a surprising amount of joy by innovating in their own business, without the pressure of needing to make money, and with the freedom to do what you want.
Lesson Five - My investing philosophy.
As a FAANG FIRE person, I don't think there's any need for risky investments. The general point of taking a risky investment is to increase your ROI so that you can retire earlier. If you were saving from age 21 to age 66, you have 45 years for your money to grow. Juicing your return rates *might* make sense.
If you're saving for less time, your money growth is less important to you than to traditional retirees. You're making FAANG money, which means that you don't need to beat the market, you simply want to keep risk low. If you get *market* returns, you're set for life.
While working, you could compensate for a failed risky bet (e.g., that NFT investment) with new investments. Did you lose $50k in an NFT? Oh well, you're working for $50k more months (depends on your earning rate). Don't play games with your money when you have a limited pool of money.
I don't recommend exact investments. I'm simply a fan of the index fund strategy. I, personally, follow a Boglehead 3-fund Portfolio strategy for the vast majority of our investments, rebalanced semi-annually. Incredibly simple.
Lesson Six - Don't look at your money.
While saving for FIRE, many of us have a hobby of retirement savings. As I mentioned, I created spreadsheets and projections. Some people (FAANG FIRE) create newsletters on the topic.
Once retired, you don't need to save, you simply need to maintain your nest egg. You want it to follow market returns to ensure that inflation doesn't eat it up over the years.
What's your biggest risk at this point? You selling your investments. You are the biggest risk to your savings.
There are dozens of examples of people on the FIRE message boards saying that they're selling everything after the 2000 crash, or the 2008 crash. "I'm getting out, and will get back in the market later when things are good". Disastrously bad idea. It's horribly hard to know when the bottom of the market is. As long as you don't believe the end of capitalism is nigh, studies show that the best course of action is to leave your money alone.
This means that your best investment behavior is to create an investment plan (e.g., I'll invest in X, Y, and Z funds at W percentages), and then only check in on your investments occasionally.
Don't check the market daily. Don't look at that net worth graph. Find another hobby.
Lesson Seven - Nitty gritty money details.
A few quick details on how I do things, for what it's worth.
We keep 9 months of expenses in VMRXX. The 9 months of expenses is easily 12+ months if there was a real emergency (we'd just cut down on some optional spending). This is just the level where I feel comfortable that if something comes up, we have enough cash to deal with it, without needing to immediately sell funds.
The rest is a mix of VTSAX, VTIAX, and VBTLX, rebalanced occasionally.
While saving, you'd rebalance things using your income. For example, VBTLX is not keeping up with VTSAX growth, so I would invest all new savings into VBTLX.
Now that I don't have a big FAANG income, rebalancing is a bit harder. I no longer reinvest dividends, but let them collect in our VMRXX account. Between occasional withdrawals, newsletter income, and dividends, I do my best to rebalance our accounts over time. A couple of times I have sold one of our investments when it grew a bit too far away from our allocation ratio, but I try not to do that (because of the tax implications).
Lesson Eight - Volunteering is surprisingly rewarding.
I say that as a selfish person who didn't volunteer much while working. As a high earner, I always felt that volunteering was a bit of a waste of time. Wouldn't they rather have me give them cash, rather than me sitting there helping?
It turns out that cash doesn't solve all problems (this is obvious, but it needs to be said). For example, the local high school needs adults to teach high school kids how to interview. That's not something you can replace with cash.
I'm a smart professional with time on my hands, and flexibility in my schedule. Most volunteers are parents who are juggling kids and work. You'll be a gem to any organization if you can show up at a moment's notice, and reliably solve problems for them. And it feels great when you realize that your newfound freedom can benefit others as well.
-Dave
Thank you for sharing that with us Dave!
You can read more from Dave over at his newsletter Scarlet Ink, and to continue the theme of this post I highly recommend reading his personal story “My Path to Writing a Newsletter, Finances, and Motivation”.
I’m on the lookout for more FAANG FIRE stories like Dave’s. If you've navigated the transition from FAANG to FIRE and have insights, experiences, or lessons you’re willing to share, I’d love to hear from you. Please reach out if you’re interested in sharing your story with the FAANG FIRE community.
Great collaboration Andre and Dave!