How Smart Saving Created Security Through Life’s Challenges

Achieving Coast Fire: Tom and Jill's Journey to Financial Independence

In this episode of the Retire Early Retire Now podcast, host Hunter Kelly, a certified financial planner, dives into a real-life case study featuring Tom and Jill, a couple who achieved their 'coast fire' number at age 51. Hunter details their journey of disciplined saving, low debt, and intentional financial planning. Tom's 20-year military career and subsequent police department role, combined with Jill's teaching career, allowed them to raise their two daughters while maintaining a modest lifestyle. Their story is a testament to the power of consistent saving and the impact of a well-structured financial plan. Despite facing unexpected challenges such as Jill's cancer diagnosis, their foresight in building an emergency fund and investing consistently ensured they remained financially secure. This episode underscores the significance of having financial flexibility and the peace of mind that comes with it, encouraging listeners to assess their own 'coast fire' status and take steps towards financial independence.

00:00 Introduction to Coast Fire
01:39 Meet Tom and Jill
02:51 The Power of Consistency
06:23 Overcoming Life's Curveballs
08:21 The Importance of a Brokerage Account
12:31 Lessons from Tom and Jill
15:30 Conclusion and Call to Action

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Transcript

0:00

And welcome back to the Retire Early Retire Now podcast. I'm your host, hunter Kelly, certified financial planner and owner of Palm Valley Wealth Management. And today I wanna share a real life case study about the idea of Coast Fire. So I wanna wrap up this idea of Coast Fire. with a case study about Tom and Jill, so we'll call them Tom and Jill just to protect their identity. but they're a couple I've been working with for about six or seven years at this point, and they just hit their coast fire number at age 51. And so their journey shows how steady saving, keeping debt low and making intentional choices can build financial independence. But more importantly, it shows how financial planning can provide peace of mind when life takes unexpected turns. So if you like this podcast, go ahead and leave a five star review on your favorite podcasting app and share this with a friend. it helps when they hear stories about how. people have reached their financial independence or reached their coast fire number. And so if you know someone that is interested in this topic, share this with a friend. And if you're unsure about your situation or you feel that you need some peace of mind, I would love to have a conversation with you. You can do that by going to my website, palm Valley wm.com, and scheduling a call you can look at. Process called the Palm Valley Pathway. It's the best way that I've found, to help, clients and potential clients meet their financial goals. it's a process that I've refined, over a number of years and it's the most efficient way to help work with clients to give them the custom, planning that they deserve. So let's jump right into it, Tom and Jill. Tom served 20 years in the military. Then transitioned to a role, at the County Police department. Jill has always worked, as a teacher, most recently, in their, local church and has dedicated much of her time to raising her two daughters as well. both Tom and Jill have, spent time. Raising their children, obviously. their lifestyle has been fairly modest. they've done a good job of keeping their debt low, and they are very good savers. they live intentionally with their money. they don't live flashy lifestyles. They don't over buy, given their income. they are very values driven. they have certain values that they want to abide by. and they've done a really good job of, being intentional about that, right? the current thing is helping their daughters get through college, with, their daughters have some scholarships, but also, there's extra expenses in that. And so one of their values is making sure that their kids get an education and they are, focused on doing that right now. The big takeaway here is that independence is built through consistency, not. Perfection. And so the key here is that, their financial life, in a sense, has been very, manila, very boring, if you will. They don't have flashy investments. they're not going out and starting businesses or investing in businesses or, buying these fancy investments that you see on TikTok and, and things of that nature. they did a really good job of not having a lot of debt. And when they did have debt, paying it down on time and consistently saving into their 4 0 1 Ks, 4 0 3 Bs, and most recently a brokerage account that I helped them start and understand why that was important for their specific situation, over the years. doing that and doing that consistently, time in and time out year after year, has allowed them to get to a place where they don't have to save another dime and they're going to be okay when they're ready to retire. And so that's the whole idea of coast fires. How do I get to that point where I don't have to aggressively save as much or at all? And I will be set when I'm in my sixties, seventies, eighties, and nineties, and I can cut back on work or I can, increase my lifestyle while keeping my income the same, whatever that may be for you. Right. like I said, I've been working with them for about six to seven years, right? And so they came to me to figure out where they stood for retirement. They felt like they had done a good job. They have gotten out of most of their debt. They were paying out and they had, I think one more auto loan that they were paying off. and they wanted to take this extra cash flow and maximize it, to meet. Their values, right? They had certain goals and desires, And so one of those goals was for Tom to retire at 55, and so they got into a place where they knew they needed to, to take that extra cash flow and start saving it somewhere, right? They didn't wanna waste their way through, monthly spending or, anything else of that nature. And so they came to me to ask for help, right? So again, they had just paid off some car loans. They had freed up cash flow. And instead of letting that money vanish into lifestyle creep, we funneled that money into a taxable brokerage account right alongside with, funding their Roth IRAs as well. It was kind of like finding a new gear in a car. They were already driving same energy, but more acceleration. Right. And so they did a really good job of that. We sat down, we, calculated how much they needed to save each month. and we came out with an exact dollar amount because their income is fairly consistent. It doesn't change, pay, period to pay period. It stays the same. So we said, all right, you need to save this dollar amount every month. And they have been very consistent about that over the last, six-ish years. Right? And again, not the most sexiest thing financially, right. But it is the thing that worked. It is the blocking and tackling of financial, freedom or working toward financial freedom. And they did a really good job of that, right? They kept contributing to their Roth kept contributing to this new brokerage account, and they have built it to such a place where now they don't do not need to, save another dime and they're gonna be, be able to retire, when they want to. Along this time, about three years ago, there was a curve ball, right? So Jill was diagnosed with cancer. Fortunately, it was caught early and it was a very treatable type of cancer. but she did have to take time off of work for treatment and recovery. And so this is where the planning. Really came into place, and really being intentional about their saving, really came to, to help them out. They had a fully funded emergency fund. They had the brokerage brokerage account that was growing in the background. with these, with this account in place with the emergency fund in, in place, they didn't really miss a beat. The bills were paid. They didn't have to change their lifestyle. They were still able to help their daughter or daughters, graduate from high school and, and start. Getting into the driving age and, and all those sorts of things. So daily life kept moving forward. Obviously, it's not easy, to deal with, a cancer diagnosis and not knowing what your future holds. But financially speaking, they were akay, right? And so most importantly, Jill was able to take a step back from work, focus on her health. get healthy, get the treatment she needed, without any financial stress. and I, I don't necessarily wanna take any credit of this. Yes, did I help, with some financial planning and things of that nature? Yes. But they did the heavy lifting. They saved the money. they just took my guidance. And then they, they did the steps that were necessary to get them to a place that when this curve ball came, they didn't miss a beat. Right? true wealth isn't about a number and an account. It's about the freedom and the moments that matter most, right? Uh, so, uh, again, it's not about just getting to a number. It's about having that flexibility, that freedom. For when negative things come your way or even positive things come your way, you're not restricted, you're not bottlenecked to buy, a number in your bank account, right? And so I want to want to talk a little bit more about the power of their brokerage account, right? I talk about this all the time. Some people call it the superhero account. I call it the large purchase account, whether that being purchasing retirement. Financial flexibility or, like a more traditional large purchase, like a card or vacation or whatever you may think of as a large purchase. But beyond the emergency, the brokerage account has grown significantly for two reasons. One, we have invested well, right? We have used equities, to help grow that account over the last, handful of years. Obviously we've had a bull market, which helps quite a bit. and, they have, better yet they have done a good job of putting money in there every single month no matter what. Right? And so now combined, with their retirement accounts, so with their, employer plans that they have, with, their, Roth IRAs that they have, they can stop contributing today and still reach financial independence, even before their sixties, right? they're, they're in such a place. But, the idea here is to, again, get to the spot where now these, the, the savings, the money that I'm putting toward these investments, they can, it can go back to somewhere else, right? Whether that's slowing down work, or just increasing your lifestyle. Whatever that may be. And so that bridge account has turned into their coast fire plan. And so in reality, this is what's gonna happen. So we had this conversation and said, Hey guys, you're on track to retire. You don't have to put another dime in these accounts. you can do. Kind of what you want with this extra cash flow. And so Jill has actually decided to stop teaching at her local church. she's going back to school, and she's going to get into a different career. And so this is a great example. Of what we've been talking about the last couple of weeks, right? She, she enjoys, teaching and working for the church. but she has another calling, right? she wants to go back. She needs to go back to school for that. and so that's going to, allow her to, to kind of dive into this new career, right? whatever your coast fire number is. Whatever your goals or your values are, having this flexibility, being able to contribute to a brokerage account, give yourself this flexibility and then hitting this coast fire number, will give you the ultimate peace of mind, the ultimate. flexibility so that you can, do things like change your career or slow down or continue to save and retire early, what, whatever you want to do, right? And so ums. It's really cool to see them and see this plan come into, reality, right? So when we met six, seven years ago, right? you have these conversations with clients. You tell them, Hey, this is what needs to happen. And sometimes, life gets in the way or, it gets boring and people chase shiny objects and like other investments and things that kind of off the normal path or the proven path of becoming financially independent. and Tom and Jill did exactly what they were supposed to do. and so they are reaping the benefits and it's really cool to see them relax and have that peace of mind of m. Financially I am. Okay. pretty much no matter what. Right? I just, I just think it's super cool and this is why I do what I do and I'm hoping these podcasts help, other people like Tom and Jill, get to that same number, whether they work with a financial advisor or not. because that's ultimately, I think, a big problem. in America is you start, you have this culture of credit card debt and auto loans and low interest rates and this and that. and so, I wanna combat that with, Hey, let's just save a little bit more, right? Let's keep our debt low and reap the benefits of this delayed gratification. And Tom and Jill are a great example of that. And so lessons from Tom and Jill keep debt low. this creates, flexibility gives you more cash flow. If you're not paying off auto loans and student loan debt and credit card debts and personal loans and high mortgage, you're gonna be much better off. It's a great determiner of how wealthy and how financially independent you are gonna be in the future. redirect, freed up cash flow to what matters most, right? So if you've paid off some debt or you've gotten, an increase in income unexpectedly, whatever that may be. use that to fuel the things that you want to do based off your, your values and your goals. And so that might be investing, that might be other things, but, be intentional about how you're spending that extra free up cash flow if for some reason you come into it. Right? Always have that emergency fund. So in this case, Jill, Got to a point where she had to take off time for work because of a cancer diagnosis. and I would say that emergency funds are not optional, right? If you don't have the emergency fund, you're just asking yourself to get back into debt. if you're lucky enough or intentional enough to pay off that debt, and you get to a spot where you don't have cash on hand to cover an emergency where you're just getting right back into it, and this just starts a loop, right? Just starts a loop, right? Make sure that you have an emergency fund, and then once you start building these other accounts, these Roth IRAs, these employer plans, this brokerage account, right? Your flexibility starts to increase more and more every time you contribute to these accounts, and you do it for. 3, 4, 5, 6, 7 years, and you pick your head up, you look at these accounts, you're like, wow, I really have done well. I have flexibility. we can go on these extra vacations, or I can switch my career, or I can increase my lifestyle a little bit, whatever that may be. Right? And, And money isn't always going to buy happiness, but it can give you, a quite a bit of peace of mind knowing that there is financial freedom, that can let you focus on your health or your family, your faith whenever, it matters most or whatever matters most to you. Right? And, so I just wanted. Wanted to share this case study, uh,'cause Tom and Jill are killing it. they're a great client of mine. I, I appreciate them. And, and again, they did the heavy lifting. I just came in to help with a little bit of, Financial planning and, tax help and, and things of that nature. but if you put your head down and you do the basics of saving and investing and keeping that debt low, you two can reach coast fire and have a lot more flexibility financially speaking. Time and Jill's journey shows how Coast Fire isn't about retiring as fast as possible. It is about knowing you're on the right track and having that flexibility along the way. Their emergency fund and brokerage account gave them the freedom in the middle of a health crisis And that's the real win, right? if you want to understand your coast fire number, what do I need to get to that spot that Tom and Jill are at? Or build a safety net to handle Life's curve balls. That's exactly what I do to help clients. With the Palm Valley pathway, that is my process to work with clients. So go to my website, palm Valley wm.com, look at the Palm Valley pathway. if you like what you see, schedule a call. I would love to talk to you, and see if there's a way that I can help, in your financial journey. But, if you're not already subscribed, follow my podcast. Leave a five star review on your favorite podcasting app, and we will see you in the next one. This podcast is for educational purposes only. It is not meant to be financial or investment advice. Please do not make decisions solely based on this podcast alone. Please seek professional help when considering your own situation.