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How this couple saved $1 million and retired in their 30s

Forbes Forbes 28/05/2016 Lauren Gensler
<p>Since retiring in 2015, this young couple isn’t missing the daily grind. Or San Francisco real estate prices.</p> ©

Since retiring in 2015, this young couple isn’t missing the daily grind. Or San Francisco real estate prices.

If you were to catch Travis on a Saturday afternoon last year, chances are he would’ve been belly-up in the driveway, fiddling with his Toyota 4Runner. 

There was a lot of work to be done. The car, which he and his wife Amanda had recently purchased for $7,500, was 15 years old and was supposed to get them to their destination some 4,500 miles away.

It was, quite literally, their escape vehicle. The couple, in their early 30s, had hatched a plan to retire early and travel. They would drive from San Francisco to Costa Rica, stopping along the way.

Before they could drive off into the sunset, though, the car (affectionately nicknamed Bruno) needed some attention. Among the laundry list of repairs: New tires, a new radiator and new shocks and springs.

They were also outfitting the car so they could live out of it, which meant installing a fridge, a sleeping platform and a battery system to charge electronics. Some 50 hours and dozens of YouTube videos later, Bruno was ready to hit the road.

Travis and Amanda’s decision to quit their jobs and travel wasn’t exactly a lifelong dream. “Four years ago, we were leading normal lives,” says Travis. “We didn’t have any grand goals of becoming financially independent or retiring early.”

The couple is originally from Canada and had moved to San Francisco in 2008, where Travis was putting his information systems degree to use and Amanda was working as a chemical engineer at an oil refining company. They had less than $10,000 in student loans and together were making well over $100,000.

However, in 2012, Travis lost his job when his company was acquired and half the staff was laid off. While he was searching for a new job, he realised something. He liked being unemployed. He wanted to stay unemployed.

Travis and Amanda are basically the antithesis of spendthrifts (they thank their frugal parents for setting a good example) and had already socked away roughly $350,000 into savings. However, foregoing a paycheck just to avoid waking up to an alarm clock every morning wasn’t really an option for the long run. At least not yet.

That’s when they began to pull together their financial life, consolidating 401(k)s from old employers and piling all their accounts into free budgeting site Mint so they could assess their spending. They crunched some numbers and figured that if they could amass $1 million, and live on 3% to 4% of their portfolio a year, they wouldn’t have to work again. They assumed they would move somewhere with a lower cost of living and that their investments would grow at 7% per year.

<p>Their makeshift home away from home.</p> ©

Their makeshift home away from home.

With a target in mind, they began to ramp up their savings and felt like they had a new lease on life. “Instead of going to work and having a bummer attitude, I’m trying to be the best employee possible,” recalls Travis, who began angling for a raise.

Over three short years, the couple was able to bring their nest egg over the million dollar mark. They saved as much as 65% of their income by doubling down on spending, opting to ride bicycles instead of driving and hanging laundry outside instead of using the dryer, for instance.

However, it’s undeniable that the wind was at their backs, in regard to both the stock market and their earning power. From 2012 to 2015, the S&P 500 climbed a whopping 61%. They took full advantage of the bull run by stashing their cash in low-cost index funds offered by Vanguard, which Travis calls the “bee’s knees.”

They were also earning a combined $200,000 or more during these years. Travis switched jobs three times so he could leverage his experience and nab a larger raise, while Amanda remained with her company, where she continued to do well and pull in the big bucks.

As they got closer to the finish line, they began to quietly sell the belongings that filled their two-story, rent-controlled home in Oakland, which they rented for $2,200 a month. They started discussing where they should go and their itinerary began to take shape: Mexico, Guatemala, Belize, El Salvador, Honduras, Nicaragua and Costa Rica. They set up a blog, called, to document their journey.

“The idea to drive to Costa Rica seemed really ludicrous, high-risk and silly at first,” admits Travis. “I didn’t know anyone who had done that. But upon searching the internet, it turns out lots of people drive down.”

By having a car, they were able to sleep in it about a third of the time. Otherwise, they scouted out Airbnbs, enjoying the opportunity to give their backs a break and practice their Spanish with local hosts. Once they arrived in Costa Rica, they signed a five-month lease on a two-bedroom house to nab a monthly rent of $1,000 (equivalent to about $30 per day), which came with its own private pool.

<p>Not a bad place to call home in Costa Rica.</p> ©

Not a bad place to call home in Costa Rica.

They weren’t drawn to pricey tourist attractions during their travels and cooked the majority of their meals themselves. They spent their days surfing, riding bikes, watching troops of howler monkeys traverse the trees, exploring, practicing Spanish and reading.

Their monthly budget ranged from $2,400 to $3,200, fluctuating a bit since they resolved to spend no more than 4% of whatever their portfolio balance was. For instance, when the markets tumbled earlier this year as they were driving back from Costa Rica, they had to cut costs. They did so primarily by camping out in their car more often.

Gas wasn’t a negligible expense given all the driving and there were a handful of unexpected costs along the way, including a trip to a Guatemalan hospital where Travis was told he had E. Coli. That put a damper on their visit, but cost just $25 and before long Travis was singing “Highway to Health” to the tune of AC/DC hit song “ Highway to Hell.”

The couple planned ahead to minimise taxes and other fees . For instance, they avoided the  10% penalty on withdrawing funds from their traditional IRAs before age 59 and 1/2 by employing something called a Roth IRA conversion ladder. Essentially, they transferred a certain amount of funds from their traditional IRA into their Roth IRA every year.

When all was said and done, Travis and Amanda were on the road for about ten months. Now they’re living in Asheville, North Carolina, where they just bought a home for $270,000. The city, nestled at the foot of the Blue Ridge Mountains and known for its craft breweries and art scene, beat out other early retirement contenders like Nashville and Roanoke. They figure it’s a popular tourist spot and they’ll have no problem renting out the home during the summer to travel. They also plan to put the spacious basement living area on Airbnb.

The couple still has lots they want to see. They plan to start a family eventually and look forward to being around for their kids, but that wasn’t a major motivating factor in retiring early. ”It’s a bit more selfish right now,” says Travis.

While both have resumes that probably wouldn’t make it too difficult to go back to work, neither of them foresee having to. Travis is particularly reluctant when pressed about the idea. “It’s a chore for me,” he says. “If someone says ‘I love my job,’ I think they’ve hit the jackpot.”

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