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May 12, 2022

FIRE with Tyson Koska from OnTrajectory.com *Transcript*

*Transcript*

You're listening to Operation veteran finance, where veterans receive unbiased and expert advice to help them achieve their money mission. Here's your host, Army Veteran, and CERTIFIED FINANCIAL PLANNER professional. Garrett Sorensen.

 

Hello, and welcome. I'm your host, Garrett Sorensen. Thank you for listening to this week's episode of Operation veteran finance. This week is a little bit different. So what happens with the episode here that you're about to listen to, we have an awesome guest, Tyson Koska. He has been incredibly patient waiting for this episode to be released. He and I actually recorded this episode a few months ago now, where we were right in the beginning of the rebranding and the changes that you guys have already seen to the operation veteran finance podcast. And we're fortunate enough that we had him on here, I didn't want to wait too much longer before releasing this episode, because it is a really cool topic. He's got a really cool product that he likes to talk about in here. And I think this is just a really beneficial topic for us to kind of review. So that's where we're coming in now, where you are, where you guys are actually going to pick up we are right just after the beginning, I'm about to introduce Tyson. And then we are going to go into the topic of financial independence retiring early, otherwise known as fire. So once again, we want to thank you guys for listening to Operation veteran finance, be sure to get more information from our website, www.operationveteranfinance.org You'll be able to get the show notes, see a transcription of this episode, be able to get in contact with me or Tyson. And again, we'll go over that again at the end of this episode as well. Thank you so much.

 

Awesome guests that I'm going to introduce here in a minute and a really cool topic that some of our listeners may know they may not have heard about it. But today we are talking about fire. So what is fire and it's not just a phrase I use as a section chief to make the howitzer, go boom, right? It's an actual acronym that stands for financially independent, retiring early. And so to help me talk about this today, my guest Tyson Casca. And Tyson is an Army veteran serving four years as an 09-W helicopter pilot. He joined the army right after high school, you doing the high school to flight school program. He served in Korea, Germany, and Desert Storm after leaving the Army. And after an extensive career in IT, he identified a need for better financial tools for regular people. And now he is the founder and CEO of on trajectory. Tyson. Thanks for being on the show.

 

Garrett, really happy to be here. Thanks. And thanks for the excellent intro.

 

Yeah, absolutely. Absolutely. So I want to jump right in and start talking about our topic today. Because I think it's one that some people may have heard of, others may not have, and they might be a little bit interested in it. And so I really want to get right into fire this financial independence retiring early, what it means how it might play into the military, how it might kind of play into some people's financial plans. So Tyson, can you tell us a little bit about what is fire?

 

Sure. Well, the first thing I'll say is what it's not. A lot of people when they first hear about financial independence or retire early, what springs to mind is you're not allowed to spend anything on anything, right, you have to get to live this dire life of abstinence, frugality, and extreme saving measures. Now, there are people that do that, to be sure. But that's not really what the movement is about. And, and if you check out any fire, blogs, or podcasts or whatever, you're going to hear people talk much more about financial independence than you'll need, you'll hear retire early. In fact, fire even though the word retirement is in there, that word means lots of different things to lots of different people. Not many people think about working as being part of retirement. But in the fire community, it's generally a big part of it, because what you're looking for is you're looking to become financially independent enough that you get to pick the job you want to do. So even if you have to take a lower salary, that you can still be happy because you know, where you're headed financially, you're secure and you feel good about that. And so I can do something that maybe gives back a little bit more to the community or is more fulfilling for myself, so it's reaching that point in life and that freedom, that independence, that's really what the movement is all about.

 

And it's, it's cool, because, you know, in preparation for this, I just, I go down these YouTube rabbit holes where I'm watching the videos and there's a lot of great information out there and then there are a lot of people that drink this fire Kool-Aid and they are they I mean, they're, they're, you know, stopping on the side of the road to pick up pennies to save him. That's how serious they are about it. But just like you mentioned, it's not it's not about this exchange. Dream lifestyle so that you can, you know, go and retire. It's not all living in a van, down by the river type stuff. There's different versions of fire as well, too. So can you talk a little bit about that?

 

Yeah, there's, there's probably, I mean, there's lots and ended distinctions become somewhat obscure. But basically, if you think about what use what we, what we traditionally in our, you know, in our society, think about retirement is, you know, never going to work again, spending every day on the golf course, eating out every night and traveling wherever I want to travel, right, that's sort of fantasy, sort of retirement. That's called fat fire.

 

So I got everything I need. And, and I can be fat fire, then there's lean fire, which lean fires is kind of like, what we were what you were mentioning about people that save every single penny, just to get to a point where they can continue to not have to work now. But even in that lean fire, there's different there's different aspects. And this is an important concept, I think, for fire.

 

It's not a, and I'm sure you've heard this before, it's not about what you make, it's about what you spend. And if you can get yourself into a psychological mode, where you're, you're the level of expenses in your life is significantly less than maybe it was before you, if you learn to cook, so you eat out less, or you get really into hiking, so you don't have to pay for a gym membership, or you. You take you get a hobby that is maybe craft related, and then you give gifts, you know, with this hobby, but or you have potlucks instead of going out to expensive restaurants. And you can still be with all your friends and you can still drink beer, but it's like 1/5 of the price, right? So if you put yourself in that mindset, where you're not calling that stuff being cheap, you're calling that having a certain value or a certain mindset, or a certain sense of fulfillment from community and relationships, rather than material goods. If you can get yourself into that mindset, then all of a sudden, you need a lot less money, and you can actually retire or become financially independent much earlier, without changing how much you work at all.

 

So it's you know, it's really interesting anyway, so lean fires got heavily looks at that, that aspect of your life, it's about getting you into a place where you're not being quite so material, then there's things that are called barista, fire or Coast fire, or there's these different flavors of mixing and matching. Either a couple of small part-time jobs or a full-time job that, again, is more fulfilling, but it's about getting to a place where those sorts of things are sufficient for you to continue living a normal life without having to do a corporate nine to five, or we're, depending on I don't want the military to sound like people are miserable because I certainly wasn't miserable when I was in, but sometimes make people make career choices based on what they think they have to do to fulfill a money obligation versus what they want to do.

 

Yeah, people, people basically trying to follow the money, and then they realize that they're just miserable in life. I mean, there's an unlimited amount of stories about that for sure. The one thing that interests me is this idea of like the Lean fire and what I what I've noticed with clients and just talking to people, a lot of the times when you tell somebody like hey, you know, we might need to cut back spending in retirement, their first thought is like, Oh, no Garrett, like, we've gotten to this place where we're comfortable. And we don't want to necessarily cut back or spend less or do any of that. And what happens is the ones that do actually realize that it's still a really great life, right? I've talked to a couple people where and I've had clients where they had this big home and their costs were very expensive and everything like that, they decided to sell the home they moved into a small little place for it was just the two of them. And then they bought an RV and now they're just traveling around the world are traveling around the country inside of this RV and it's they're spending a third of what they were spending living in the big home, and they're happy, they're more happy than traveling than they were sitting inside that big mansion essentially. And so a lot of people don't realize that you can spend less and you can continue to be happy.

 

You don't have to have that big six-figure paycheck to really achieve that happiness. Money doesn't buy happiness. That's something that we definitely all know. The one thing that I find really interesting you talk about with the idea of like barista fire, or kind of continuing to work after you've kind of hit that financial independence when we've looked up People that retire from the military, so many of them, that's really what they're doing. They say to themselves, I've been doing this for 20 to 30 years, plus whatever it might be. And now I've got, I've got that pension, I've got a good savings in the TSP, hopefully, I've been doing the right things over the past couple of years.

 

And I remember when I was going to get my MBA, I was talking to other veterans, they're like, I'm just here because I have the GI Bill, I might as well just get a four-year degree, they had no intentions of using it, but they're just like, I make money from the GI Bill right there their stipend for bah. And then the rest of the time, they're just like, it's just a fun thing to do. And then like after this, I might go work for, I don't know, some nonprofit locally, or there's I always talked to one guy, and he always made the joke. He's like, I'm gonna be the door greeter at Walmart. And he's like, I'm just gonna stand there, say hi, welcome to Walmart. And that's just the, you know, he was looking forward to it. But that's just what he wanted to do because he wanted to talk to people.

 

And so it's so interesting when you see that the military and fire almost do go hand in hand. Because if you're doing the right thing in the military,

and you retire, of course, right, you receive that pension, you are basically in a good place to be financially independent. As long as you didn't take out exorbitant amounts of debt and retired in a good place. You're basically financially independent at a very young age.

 

That's right. That's right. And, and especially if you look at it as being financially independent, and not necessarily expecting, oh, because I use the R-word, the retirement word, I get to do whatever I want to do for the rest of my life. I mean, that's just not true, as you mentioned, of people in the military. So get your mind wrapped around that now. But look at what it is giving you is giving you a sense of freedom and independence that so many people just don't have in life, right?

 

Yeah, I always tell the story. I had a client and he was a retired colonel. And he left and he used his GI Bill to go get a mechanic's license. And it's just it's funny to me because he was talking about his GI Bill to go get a mechanic's license. And it's just it's funny to me because he was talking about right, you know, he had, and he just like working on cars, but he'd never been licensed or just kind of doing it on his own. And he got this license, and he was talking to all the there was other veterans there. And they would serve a couple of years, whatever, maybe some privates or, or some sergeants that got out. And they had no idea, just this, there with them, you know, just because he enjoys to do it. And that's, and that's what he's doing now in retirement. He's if he wants to work, he works outside of that he's buying and fixing cars. And it's just, I mean, you think, you know, you joined right out of high school, I didn't join right out of high school, I actually waited and I was about I was 21 when I joined. And, you know, I mean to be even retire when I hit that 41. With that guaranteed paycheck, and I can just go do whatever I want. That's huge. That's huge. And that

financial independence is really the important part to it. Yep. So let's talk about what are some of the key numbers if people are hearing this, like, Oh, this is great, like, I want to do fire, what are some of the numbers that people need to think about or keep in mind, just if this is something they're interested in?

 

Sure, well, so as you know, your as a financial planner, you know, people usually are urged to save like 10 to 15%, right kind of thing. And the thing is, if you save that, it takes you nine years to save up for one year of living expenses, if you increase that to 25%, it's three years, if it somehow, you can put yourself into a position where you're saving 50%. That means every year you work, you get a free year off.

 

And then I mean, there anyway, that's some of the basic numbers. But the rule of thumb in fire is, and I don't know if you want to add to my description of this, but there's something pretty famous in planning circles called the 4% rule. And that rule comes from a study called the Trinity study. And actually, there's different flavors of it, even now, it's changed the way it's talked about. But basically, it's when you get to a point, that 4% of whatever your assets are when you get to a point where 4% of your assets would cover your spending for a particular year. That's the point at which you can pull the trigger. And so it works out mathematically. That whatever your expenses

are for the year, once you've saved 25 times those expenses, then in theory, 4% of that number is going to be enough to carry you forward. So it's very simple math, it's not real complicated. Some of the numbers might be daunting, depending on where you are in your life. But the reason that 4% It's and it's been backtested. And the reason it's 4% Is that markets fluctuate. Depending on when you pull the trigger. If we're in a if you've just taken a hit in your portfolio, that hit at the beginning has a much bigger impact than if you had taken a hit later. So this 4% is a way to kind of buffer the fluctuations of the market and create a safe spending rate. Now I would not take what I just said his financial advice. But those are the general ideas.

 

Yeah. And you know, we've talked, we've talked before about what is the safe withdrawal rate when you're in retirement? You know, one thing, you never want to let the tail wag the dog in this scenario. And so you know, if you've, if you've done the right things, if you've saved diligently, you really do need to go look at the financial plan and say, What have I been able to accomplish? The easiest thing to do, and this is something that I, the first time I talked to anybody, one of the very first questions I asked them is, what does retirement look like for you? And most of the time, people have not really thought about what retirement is going to look like, are they going to buy a new fishing boat and be on the lake every single day? Are they going to start serving their church more? Are they going to be doing more nonprofit work? Are they going to find another job, a passion career, whatever it might be? Most of them haven't thought about it by the time I asked them.

 

And if you can answer what you want retirement to look like, then you can create that budget of what you would need in order to accomplish that. And then from there, look at what you need to save in order to get to a place where you can live off that. And then whether it's 4% 5%, whatever that withdrawal rate is, it's going to be really important.

 

This is why we say financial planning is key at basically at every stage.

You know, I mean, we could have all retired at 40. Essentially, if we had started when we were 16. Maybe, maybe put it and made the right investment choices. But even then you have to look at what about your risk tolerance, you know, how are you going to take the market movement based on the investments that you're in? And can you receive a certain level of return based on your ability to accept risk? And so can be really hard for a lot of people to say, well, you know, if I want to retire in

10 years, but I don't want to take a lot of risks, that might mean that you have to save more of the dollars that you earn compared to those people that are saying, You know what, I'll risk it all. They're the guys on the riverboat gambling trips that are putting it all on black, they might be able to get a little bit of a higher level of return based on that risk-adjusted asset allocation. And so there's things like that, that you're always getting to play into with your financial plan.

 

But I think that with the military with you know, even even if they don't retire, just having the opportunity to save into a tsp very early, have that steady paycheck, do the right things early on, they can get to a place where they are financially independent, and then go and do the things they want to do. If that's fishing every day, go fishing every day. If it started a new career, you can start a whole new career. So I think that's really awesome.

 

So, Tyson, thank you so much again, for coming on the show today

and sharing your expertise about fire. Again, Tyson. He's the CEO of ontrajectory.com If you guys want to get in touch with him, you can head to their website, they have a support page where you'd be able to reach out to him or you go to our website, www.operationveteranfinance.org

that's www.operationveteranfinance.org And we can put you directly in contact with Tyson that way, Tyson thank you so much again.

 

Thanks, Garrett. And I love what you're doing. Really keep up the great work.

 

I appreciate that. Thank you.

 

Thank you for tuning in to this episode of Operation veteran finance. You can listen to this episode or all other episodes by visiting the website www.operationveteranfinance.org or wherever you get your podcasts