Welcome to The MapleMoney Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.
As Canadians, do we need to buy a house, stick to the same career, and only travel during our few weeks of vacation? Or could we shun homeownership, invest the majority of our income to retire early, and travel the world? That’s exactly what my guests this week have done. Kristy Shen and Bryce Leung were able to quit their jobs and now live in countries where the cost of living is less than the dividends earned in their investment portfolio each year.
In my conversation with Kristy and Bryce, we cover a lot of ground. For starters, they explain how skyrocketing home prices in Toronto kick-started their decision to leave their 9-5 careers. In their attempt to enter the housing market, they began to realize just how expensive owning a home in an expensive city would be. According to Kristy and Bryce, Canadians love to invest in real estate, but too many don’t consider the hidden costs – things like legal fees, realtor fees, land transfer taxes, and household maintenance, eat away at any return on investment.
Instead, they continued renting while they put their savings into dividend paying ETFs and stocks. They even made it through the market crash of 2008 and lived to talk about it. Nowadays, they reside in South East Asia, where the quality of life is good, and the cost of living is a fraction of what it was in Toronto. And their years of stock market investing have paid off, as they can now live off of the income that their investment portfolio generates.
Have you checked out the new, responsive mobile app from Borrowell? The app includes Molly, Canada’s first AI-powered credit coach. Molly will give you tips on how to understand your credit score, as provide you with product recommendations. To sign up, head over to Borrowell today.
- What made Kristy and Bryce decide to leave their careers
- How much you save is more important than what you earn
- How geographic arbitrage can help you retire earlier
- The biggest financial mistake Canadians make is buying too much house
- Renting a home vs. buying
- When you buy a house, you’re committing to spend a lot of money on maintenance
- Harnessing the power of dividend investing during a downturn
- Options for educating children on the road
As Canadians do we need to buy a house, stick to the same career and only travel during our few weeks of vacation? Or can we shun homeownership while investing the majority of our income to retire early and travel the world? Kristy Shannon and Bryce Leong, from Millennial Revolution we’re able to quit their jobs and now live in countries where the cost of living is less than the dividends they earn from their portfolio. They join the show to help dispel the myths around this type of lifestyle.
Welcome to the Maple Money Show the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Have you checked our sponsor, Borrowell’s, mobile app. It makes checking your financial health even easier. The app includes Molly, Canada’s AI powered credit coach who will make it easy to understand your credit score and give you great tips and product recommendations. To sign up, go to maplemoney.com/borrowell today. Now let’s chat with Kristy and Bryce…
Tom: Hi Kristy and Bryce. Welcome to the Maple Money Show.
Kristy: Hi Tom. How’s it going?
Bryce: Hi. Thanks for having us.
Tom: Great. I’m glad to have you here. Can you tell me where you guys are right now?
Kristy: We are currently in Thailand.
Bryce: This is a very international blog that we’re recording right now. The image is being beamed literally halfway across the world. It’s a miracle of modern technology.
Tom: Hopefully the signal holds up. You guys were originally from Toronto. I want to go back early on into your story. But before I do that, I want to mention how we met. First of all, I saw you guys at FINCON but I didn’t go and talk to you. I was a little gun shy because at the Canadian Personal Finance Conference I thought I had met Kristy. I walked up to someone that looks exactly like you and was even wearing a red dress which especially on your site was kind of your look, right?
Kristy: That’s kind of my color. Awesome.
Tom: I was sure this was you. And I went up and I said, “Oh, you’re from Millennial Revolution right?” And she said, “No, I don’t know what you’re talking about.” And I said, “Aren’t you the firecracker?” because you were mostly anonymous at the time. And then she says, “Well, I can be your firecracker if you want.” This is not a blogging conference so I just kind of backed away.
Kristy: Oh, my!
Tom: But how strange I felt after that. Then when I saw you at FINCON I thought, “I can’t do this again. I can’t just walk up again and risk this.”
Kristy: That’s an awesome story. You should have opened with that I would’ve said, “That’s awesome!” We don’t all look alike, you know.
Tom: Now that’s a whole other thing too.
Bryce: I think that gal was trying to hit on you. You had an opening there.
Tom: Well, yeah, except I’m married with kids. But it was really strange. And when I saw you from a distance at FINCON and I was almost 95 percent sure it was you, I just couldn’t go through that a second time.
Kristy: Now, we’re kind of in question on whether that was me at FINCON.
Tom: You have a doppelganger.
Bryce: Next time we’re there, add us to WhatsApp and then we’ll text you and meet somewhere.
Kristy: Just to be sure.
Tom: Yes, exactly. To make sure I’ve got the right person. I don’t even know who this person was because I kind of backed off pretty quickly. I was like, “Nope, not you. I’m good to go”
Kristy: Nice. Nicely done. Nice.
Tom: That’s my strange story. Let’s get back into your very different story as well. Let’s go back right to the beginning. What made you decide that you wanted to leave a career and do something different?
Kristy: Originally, I was actually just going along that normal path, working until you’re 65, buy a house… All those milestones that you’ve got to check off when you’re on your way to adulthood. If you miss any of them you’re a giant failure. My first barrier to that path was housing in Toronto. At the time I was actually desperately trying to buy a house while having a very stressful job and I kept hearing my co-workers saying, “You’ve got to get into the housing market. Interest rates are going to go up.” My boss even said, “You’ve got to get in. Interest rates are going to go up. If you don’t you’re going to miss out.” All that FOMO, I got it everywhere from every direction. My parents were pushing me. Everybody was pushing me. We didn’t really clue in how much of frenzy the housing market was until we started going to open houses. Then it was bidding wars up the waazoo. There were real estate agents that would watch us walk into the house because we looked so young. She would just look at us and say, “Are you supposed to be here?” And I’d say, “It’s an open house. Why would I not be here?” Then she asked if we could afford the place. Seriously? At that point, the jig is up. I don’t know if I want to do this. This doesn’t make any sense. If we’re going down that path, yeah. And then seeing houses that were completely dilapidated get picked up by developer for $400,000 even though it’s falling apart, flipping it in a matter of months and then sell it for $800,000. That got me terrified. That got me really scared. I was if I really wanted to do that. That was my first obstacle. Then work started getting not so stable. They started outsourcing. There were people worried about their jobs. My co-workers were getting really stressed out to the point where one day one of my co-workers actually collapsed at his desk and almost died from stress. I’m not kidding. This actually happened. The doctors said that if he had been rushed to the hospital half an hour later there was a good chance he would have died. It was that bad. And it was so bad that he actually was gone on short-term disability for only and week. Then after that he came back to work. At that point I said, “You know what? I don’t get this path. I don’t get this path that we have to buy a house and we have to do all these things we have to retire at 65. I may not even make it until I’m 65.” If I’m going down this path and I’m going to have a heart attack at my desk paying off this million dollar mortgage, I’m not even going to make it to 65. So we started looking into what we could do instead of buying a house. Is there an alternative way? How can we get out of this? We started looking into learning how to invest. That’s when we discovered Mr. Money Mustache. That’s when we discovered J.L. Collins on how to invest, how to use index investing and figure out the 4 percent rule and how to get out of this rat race so we don’t end up like my unfortunate co-worker. We had saved up $500,000 to actually buy a house. We kept saving a ridiculous amount of money because we knew we’d need as much money as much money as possible with all these bidding wars. It was at the point where we decided we really didn’t want to get into buying a house. What else can we do with it? Once we put the money into the stock market instead and learned how to invest, it only took us around three years from the time that we decided that we’re going to go down the financial independence route instead of the housing route, that we amassed a million dollar portfolio. Then we actually quit our jobs and retired at the ages of 31 and 32 to travel the world. And we’ve been doing that ever since for the last four years.
Tom: I know with any story like this, one of the first thing people say is that they can’t do it on such and such salaries. It doesn’t seem to matter what they’re making. Nobody can do this. You guys had a decent salary, right?
Kristy: Yes, we’re computer engineers. We worked for nine years before we actually retired. During that time we got multiple raises and promotions. At the high point of our career we were earning around $160,000 after taxes between the two of us, which is actually not that abnormal for engineers. Engineers tend to earn a higher salary. What I have noticed is that a lot of people have written to us in the blog because we actually share all our numbers. We share exactly how we get there and exactly how we amass the portfolio. So, one of the things we do on our blog based on people writing in with their numbers, is analyze the math to see whether people can actually retire early. We do a lot of “finer reader” cases in which we break down their numbers and look at whether it’s possible for them to retire. One example of one of our readers that was able to become financially independent even though he had a low salary, actually used to be a car salesman in Canada. He was earning a very low salary, barely minimum wage. He got really fed up because he thought if he was going to do this for the rest of his life, he knew he would never get ahead. Then he asked, “What else can I do?” He actually moved to South Korea to teach English. And even though his salary wasn’t even that high in South Korea, he was still making $30,000 a year. Because the taxes in South Korea are only 3 percent and they actually covered a lot of his rent and travel expenses he managed to save 67 percent of his salary. If you actually look at the graph that we illustrate on our blog, a lot of it is actually based on your savings rate. Obviously, it’s easier to get a higher savings rate if you have a higher salary. But in his case, because he “life-hacked” this and went to a country with very low taxes and a lot of his expenses were covered, he’s actually only 15 years from retirement. That’s an example of someone who actually ended up getting a life that they loved where they could actually teach and still travel in Asia while moving towards the retirement target a lot faster than if they had stayed back home.
Bryce: What actually matters the most is how much you save, not how much you earn. If you earn a million dollars a year but you spend a million dollars a year, you’re never going to save anything. The trick is, most of the people that are complaining about life being really expensive tend to live in two cities basically; Vancouver or Toronto. And to a certain extent, Calgary as well. The thing is, in order to justify living in those cities and the ones in the US like New York and LA, you need to be working in a high earning field. If you’re not and you insist on staying in a high cost city and buying a house anyway, that’s when you really start to run into trouble because the cost of living is very high but your earnings low relative to how much it costs. Then you add mortgage debt on top of that and they start feeling like they can’t get ahead. But there’s nothing that says you have to actually live there. For people that are living in a place like New York, it’s really hard for them to retire in New York. It’s easy for them to earn a lot of money and save a lot of money but we found that if they live in New York, work in New York and then retire in South Carolina, all of a sudden it becomes really easy for them. They can earn in one location and retire in another. That’s another option of using what we call geographic arbitrage to make it work even if you don’t earn a six-figure salary.
Tom: It sounds like it sort of depends on what people are actually willing to do. If you live in Toronto then that’s a problem. I can’t imagine because real estate is still probably twice what it is here in Calgary.
Bryce: Yeah, everybody is just obsessed with real estate. I didn’t even realize this until I traveled outside of it. The Americans have been burned by this. They have more of an even temper. They look at it like, “Yeah, maybe. Maybe that makes sense.” In Canada everyone is nuts about real estate because we haven’t had that housing crash yet. Everyone is just thinking they’ve got to get in or get a never. We’re making the exact same mistakes that the Americans made 10 years ago. I don’t know when something bad is going to happen but even if it never does, they’re getting into so much debt that that opens this massive, massive hole. The guy that we were talking about that collapsed and almost died at his desk, had to go back in a week to work because he couldn’t afford to stop working even for a short period time because he had a mortgage to pay. And the mortgage was insane. When you do that you always feel like you’re paddling and trying to keep your head above water. And it becomes really hard. But the biggest mistake that Canadians make in their finances is buying too much house. I think the biggest mistake that Americans make based on all the people that write into us is getting into too much student debt. That’s toxic for them. For us, our Achilles’ heel is housing. I keep seeing it over and over and over again because we are just obsessed with housing.
Tom: You’re right. It’s kind of the Canadian dream. You buy a house—it’s step one. Again, going back to then, how did you find renting to be better? Was it strictly cheaper or was it cheaper because you were in a small apartment or something like that compared to a house? Was it comparable? If someone were to rent a house compared to buying a house is there actually savings there in renting?
Kristy: If you go out and buy, you’re not going to buy exactly how much space you need. Generally, you end up buying a house that you grow into because you think, “Oh, what if I have a child, I might need an extra bedroom.” What if I buy a house that’s at least three bedrooms because that makes it easier to sell later on? A lot of the advice we’re getting from our bosses was to buy as much house as you can afford. We kept doing that and then later on we find out that managers have this nudge-nudge, wink-wink thing between each other that they can kind of see which employees have the most amount of debt, the biggest house and kids in private school. There are all these factors they check off because the more things you can check off, the more you can get them on projects that nobody else wants to go on. They can push them around. They stay there because they have no choice. After talking to managers that are our friends, we know that there’s kind of this secret thing that they use to track the employees based on what kind of assets people have and how much debt they have. That’s why I was wondering why they kept telling us to buy the biggest house. That didn’t seem like very good advice to me. But I think a lot of the trap that comes with home ownership versus renting is when you rent you just rent exactly how much space you need. I’m not going to rent a three-bedroom apartment without kids. I will just move out into a bigger apartment when we have kids. But if I were to buy a house, there’s no way I’m just going to buy a one-bedroom condo. That doesn’t make any sense. How am I going to sell it afterwards? And if I have kids, that’s going to be annoying to move. I think a lot of it was being able to rent and then not actually be suckered into the, “I need more space. I’m going to grow into it,” and buy the biggest house you can afford. And having less space actually prevented us from filling it up with crap. So that’s another thing. When you buy a house people think you’re just buying a house when you’re actually spending a lot of money on maintenance. You have to mow the lawn now. You have to spend money on shoveling the snow. We were so busy at our jobs there was no way we could do any of that maintenance so we would have had to outsource it. And then you’re actually thinking, “Hmm, I’ve got three bedrooms now. I can’t just leave one empty. I have to buy all these things to fill it up.” We know from friends and family that we go visit that there’s never an empty room. But now that we’ve been traveling for so long, we have this habit of whenever we go back to visit family—just because their houses are so big, when we get to the room we have to designate like a small area for us so that our stuff doesn’t disappear into the background of the house. Otherwise, I can never find anything because I was spending so much time looking for my cell phone whenever I put it down. It would just disappear into the house. We’re just used to this minimalist attitude where we need to find ways to make our lives easier and just have exactly what we need instead buying stuff just to fill up a house.
Bryce: Here’s how dangerous housing is; A reader challenged me saying, “If you had put your money in the stock market during that period time it would have been just the same as if you had bought a house and sold it at the end of that period because housing always goes up anyway. Okay, let’s try that. At the time, real estate was appreciating at about 7 percent year over year between 2015 and 2018, I believe. And the stock market was also going up at that time. We figured this should be similar to investing or renting versus buying a house. But then the nasty thing about housing is everyone just wonders what the mortgage will be. That’s all they care about. When we actually broke into the math we knew we had the mortgage payment. That’s fine, but you have to remember that it costs 5 percent of your housing costs on the transaction for real estate commissions. And then there is the land transfer tax. Then you have to pay a lawyer and property taxes every year.
Kristy: And you have insurance—
Bryce: Yeah, insurance, utilities and ongoing maintenance and so forth. When we added up all the costs that were associated with owning the home we found that even if the house appreciated at the same rate as the stock market, the extra costs that it cost to own that house took up something like 90 percent of the gains. So even though the house made money, the owner did not make any money whatsoever. All of those extra gains went towards the real estate agent, Home Hardware, the federal government, the municipal government. It was just eye-opening because it made realize that’s why everybody who owns a home always seems to be struggling—their house is going up but they’re not making any money. Maybe it’s true that housing always goes up and it’s possible to make money with housing, just not for you, the homeowner. Everyone else is making money except you.
Tom: That makes perfect sense because I’ve heard this whole idea of rent, don’t buy. As a homeowner already I’d look up the rental price of a very similar house and see that the numbers don’t work out. But, because it feels more permanent you’re kind of buying bigger than you need. I love that. That makes much more sense than I’ve ever heard before with the renting you mentioned.
Kristy: To that permanence argument too, we get a lot of readers say, “Yes, I’m going to buy this house but this is my forever home. I’m going to keep it for 15 to 30 years. I’m going to keep it forever.” The thing is, the job market for Millennials means we basically change jobs every five years. It’s not that stable anymore and we have to keep our skills updated. So the idea that you could be like our parents and just get a job and then get a golden pension at the end of 30 years is just unrealistic. We’ve had readers write in that said, “My house is going up. I bought three houses in the last six years and I should be making money. Where’s the money going?” And when you look at it, it’s all a real estate agent fees. And I say, “I think your real estate agent must really love you because you just put their kids through university. That’s where your money is. Go ask your real estate agent.”
Bryce: There was a couple—I think they were from Alberta actually who did exactly that and I calculated how much money they had paid to the real estate agent (unwittingly) and it was something like $150,000 over something like three years. They were actually putting the real estate agents kids through college. Housing is one of these strange things where everybody thinks they know that it’s simple. Everyone thinks they know and understand how to make money in housing but they actually don’t. And the stock market… people feel it’s complicated so they don’t want to do it. But in actuality, the stock market is a lot simpler than you think it is.
Tom: We covered the two biggest objections; how much money do you make and what do you do about where you live. I want to dive quite a bit into how you guys saved up to $500,000 almost accidentally. I know you were saving for a house but then you decided to invest that. How did you structure this portfolio to be able to lead to this point of quitting your job?
Bryce: Well, it was a pretty simple portfolio. It was structured using index funds which is rather than buying individual stocks you buy an ETF (Exchange Traded Fund) that buys every company in the index. So instead of buying TD you buy the TSX. Then you do the same thing for the S&P 500 for the Americans EFA index which covers all of Europe and Australia and the Far East. Our portfolio is a relatively simple 60, 40 portfolio. It’s 60 equity and is split evenly between the TSX the S&P 500 and the index. It really wasn’t all that complicated. Now it’s got a little bit more complicated because we’ve retired and we’re living off of it and that adds a little bit more complexity. We talk about the details of it exactly on the blog but it really wasn’t anything that fancy. We actually run what we call an investment workshop on our blog. If you go into it you’ll see I wrote an article a week about how to build exactly the portfolio that we’ve built over a year. It’s was a yearlong experiment that we ran figuring out the risk tolerance and how to figure out what the equity allocation should be, how to figure out which ETFs to buy. How to figure out which brokerage account you should own. How to visualize it, how to rebalance it and all that kind of stuff. We teach people for free on our site exactly how to build the exact portfolio we did. It’s like our way of giving back, because again, investing is not that hard. It just feels hard.
Kristy: I think for me specifically coming from—I wasn’t actually born in Canada. I was actually born in a rural village in China. So for me, going into the stock market was terrifying. It wasn’t just saying, “Oh, we’ll just figure it out and put our money in the stock market and it’s all great.” No, I was terrified. And then we had to go through 2008 and that was not fun. You put in a $1,000 and boom $1,0000 disappears. This is from a person whose family (at one point) lived on 44 cents a day in China. So losing $1,000 was like taking my life. It was ridiculous. I think what really helped was just learning as we go. I think 2008 actually taught us a lot because we were buying into it as it was falling. When we actually recovered, we recovered faster than most other people so that gave me the confidence that even in the worst of times, as long as you stay calm and you don’t just panic and sell everything, and you have actual balanced portfolio—the bonds that work in the opposite direction as the equities, then it’s really not as scary as you think it is. It’s not tactile. It’s not like an actual physical property that people can see. That’s why they’re so scared of the stock market because it seems like it’s kind of up in the air. But it’s something that we’ve definitely had to learn through trial by fire in 2008. And that’s why we’re not afraid now in retirement because we’ve already been through the worst.
Tom: Investing in 2008 must have helped out a lot too though. To stick with that, I mean. I know a lot of people just wanted to stay out and they missed all those gains like the dividends that you got buying bank stocks. Well, I guess they were doing ETFs but still, in general, the dividends were huge if you bought in 2009.
Kristy: That’s why Warren Buffett’s advice really applies in this case. You have to be greedy when other people are fearful. And that’s very difficult to do. But once you’ve mastered that that’s how you come out ahead.
Bryce: That’s why now, when there’s a trade war going on or like a few months ago when there was a government shutdown and then everyone panicked and it went down. We were so used to it while others thought the world was ending. And after the fourth or fifth stock market crashes (caused by one of the Trump temper tantrums) I’m just surprised that people keep falling for it. It’s going to be fine. It’s like this is not the first time something like this has happened. That’s the thing about the index. Individual companies can crash to zero. The only way for an index to crash to zero is for all companies to go bankrupt which is practically impossible unless we get invaded by aliens. And at that point it doesn’t matter what your portfolio is like.
Tom: Yeah, you certainly wouldn’t be concerned returns with that going on.
Bryce: Yes, whoever has the most baked beans and shotgun shells when at that point wins.
Tom: When it comes to buying during the bad markets, I’ve always just liked the idea that it’s a sale. Anything I buy normally—I’m a big sale shopper, I don’t like paying regular price for anything. So that mindset has helped me a lot to help with investing. It’s like, “Oh, I can get that for cheaper than I could a week ago. So I’m going to buy it now.”
Bryce: That’s a good mindset to have. And it’s going to always work out because the index always recovers.
Tom: Yes, you’ve got to trust in that long-term. You can look at any chart over almost any time period and it’s going to work out in the long run, especially with ETFs.
Bryce: Yeah, absolutely.
Tom: I really like your 40 percent in bonds. I’ve heard other people in the FIRE movement are a lot more stock-heavy still. What’s the point of the 40 percent? Is it just to get through these bear markets?
Bryce: It is. And I’m sure you’ve noticed a lot of people in the FIRE movement are very, very aggressive. I would say that they’re probably some of the most optimistic people I know. That sounds like a good thing except to go 100 percent stocks and feel like everything’s going to be fine? Whoa! We’re one of the most pessimistic people that you will ever meet and most conservative in terms of risk when it comes to this kind of stuff so we need there to be a Plan B, C, D, E, F for what happens if there is a stock market crash and we need to withdraw and this kind of stuff. What the fixed income part of it does it does is it lowers volatility and increases yield. We talk about this as well on the blog, that after retirement what we’ve done is we’ve shifted our portfolio over into some more higher-yielding assets; some more esoteric things like preferred shares, REITs which are real estate investment trusts, corporate bonds, higher dividend paying stocks and that kind of stuff. The point of that is to be able to get your portfolio yield up. If you just go regular index, the TSX will yield about 2 percent. Maybe 2.5 percent. And your portfolio will yield about 2.5 percent. But by shifting to high-yielding assets you can get your yield up. For us is was something like 3.5 percent. What that does is give you income from the portfolio that you can live off of without selling anything. And that happens regardless of whether there’s a stock market crash. If there is a stock market crash and you manage to buy all your assets yielding 3.5 percent of say a million dollar portfolio, even if the stock market crashes and your portfolio goes down, you’re still being paid $35,000 which is 3.5 percent of a million dollars. Then you can use that to live off of. We do things like combining that with some cash we keep outside. We call that a cash-cushion as well as what we are doing right now which is moving around and living in lower-cost areas like Thailand. There all kinds of mechanisms we use in order to make sure that if there is a bear market that comes we can still live off the portfolio without selling anything because as we saw in 2008, you only lose money if you sell something. If you take the cash out and spend it that’s okay. But if you sell you get screwed because you don’t have as many units to rebound when the inevitable rally happens.
Kristy: The way I see it, when people go to a 90, 10 allocation when it’s 90 percent equities or 100 percent equities, there could be two reasons they’re doing that. Number one could be that they haven’t actually lived through 2008. A lot of times people think that they’re not going to be able to sell and panic but actually have to live through it to be able to know what kind of emotional state you’re going to be in. And number two, if you have another source of income like some people who make money from their blog or a side income. Retire police would say that’s not really being retired. But, whatever! If you want to do that in retirement and you are doing something you’re passionate about and it’s earning a little bit of money then, yeah, maybe they have that buffer and don’t really need to worry about the 90, 10 that way. But we are in it because we know and we’ve lived through 2008 and it’s not fun. You don’t know what kind of mental state you’re going to be in so don’t want to panic and sell during that time. We want to have at least a three-pronged plan. We’d have the cash-cushion, have the yield and be able to actually travel (which reduces our costs) so we never have to sneak out and sell anything.
Tom: One thing I remember in 2008, 2009 is even though the value of a stock might be half of what it used to be, it takes a lot for a company to really change their dividends. You’re getting that same dollar portion. Your percent is still actually going up. I found that having lived through 2008, 2009 as well. You could buy a stock or an ETF and it’s still pretty much going to be the same dividends. I know with some companies if you change the dividends you actually just hurt your stock price even more.
Kristy: They’re more likely to actually fire people and lay-off staff than actually reduce their dividend.
Bryce: And that’s because the CEOs own a lot of stock and get a lot of compensation dividends so they’re not going to screw themselves over. They’re going to screw over all the employees. As Canadians, actually, we were in uniquely a good position to weather that kind of thing because the TSX got dragged down with the world equity markets just like everybody else. But none of our banks fell over. Preferred shares never cut dividends even during the oil crisis that happened in 2016. None of the banks ever fell over. We have a pretty stable banking system which is nice. But even though our equity markets went down, the yields never got cut. We were actually in a really, really good position to weather that storm because you could pick stuff up at a discount but the dividends never got cut.
Tom: Now that you guys are living off the dividends the total value of your portfolio doesn’t matter much. If your portfolio was suddenly half as long as those companies are still paying out the same dividends—
Kristy: Exactly. And because we’re so conservative even if dividends get cut then we’re going to go into the cash cushion. And if we run into trouble there then we’re going to travel so there are multiple stages. That’s like a very engineering type of thing that we like to do. For every single scenario we have a backup plan. Even if I don’t need that backup plan, I’d rather have it there than have to worry about it later.
Bryce: We realized when we started traveling, especially in Southeast Asia; the cost of living is a fraction of what we would be expecting in Canada.
Kristy: And that was really shocking because we lived in Toronto and thought everything would be really expensive in Thailand.
Bryce: In terms of cost, we’re living in a one bedroom condo. There is a pool, a gym and it cost $700 Canadian a month.
Kristy: And that’s including utilities and everything. We don’t we don’t cook at all. I haven’t touched the kitchen since we got here. We just go out to eat everyday because meals are something like $2 to $5 which is really cheap. And we get massages that only cost $10.
Bryce: Yeah. So it’s possible to live like a king in Southeast Asia for $20,000 Canadian dollars. And if you remember, we started our portfolio yielding $35,000 a year regardless of whether the stock market went down or not. Even if stock market went down and we just decided to spend a year travelling in Southeast Asia, we would actually make money because the dividends are actually coming in higher than what we would actually spend. We’d actually be cash-flow positive during the downturn simply by living and scaling. There’s a saying that we have on our site which is, “If it hits the fan, we’re going to Thailand,” because that’s really our backup plans that we can always use to make sure we never have to sell anything. And if you play your cards right you could actually make money in a recession by living in a different country. There are lots of really cool things that you can do once you realize how many knobs you have to turn. But when you are just living in one city because of your job and you’re trapped with a house, you feel like there’s not a lot of options. But when you open up your mind and realize you could be anywhere in the world…
Kristy: You start to think, “How do I hack this? How do I make?” Let’s say I make money online. I can work remotely in Toronto or maybe I’ll move to Waterloo where the cost of living is cheaper. And once I get to partial FI maybe I’ll move to Mexico. Maybe I’ll travel around and go to Eastern Europe. There are a lot of different options. People just don’t use those options. We’ve got a lot of people saying Millennials really can’t get ahead because they don’t have the jobs and the job security that baby boomers have. And houses are so expensive which is true. However, we have the Internet and the ability to travel so cheaply which is not something that our parents had. So, why don’t we take advantage of that? We have so many advantages to start online businesses, to do all these side-hustles. Why don’t we just do that? Work online and live in a really inexpensive place like our reader who went to South Korea to teach English. You’re winning at life by hacking it.
Bryce: I’ll give you another example. Someone we met at a Chautauqua which is one of these retreats we do every year. And she was living in California in Silicon Valley. And she was struggling, trying to figure out what to do. It’s a high-cost city and she was a marketer. She worked at a startup. We started talking about the nature of the work and realized it was completely a virtual office. There was no physical building that they actually went to work in. Everybody was all over the place in California. They would use Zoom or other teleconferencing tools to do the work because it was a virtual office. And we wondered why the heck she was living in California. I said, “You realize you don’t have to be in the same time zone. Anywhere on that time zone and it becomes exactly the same. You don’t even have to ask for permission. They don’t even have to know that you’re not there. You could move back to Wahaca and rent a place for $400 a month, make the same salary you make in California, pay for that in pesos in Wahaca and all of a sudden your savings rate goes from 10 percent to 70 percent. And she did that. That was two years ago. Now she’s saved so much money she’s retired already. You can do all these sorts of crazy things when you’re a little bit creative about it.
Kristy: It’s kind of like combining investing and Tim Ferris’ 4-hour-work-week which is where you’re earning a high currency and living in a low currency place. You’re actually using investing so you don’t have to rely on an online business which may not be that stable. This gives you the ability to actually stabilize with the investing and you can actually make money a lot faster because you’re hacking your life by earning a lot of money online and then living in a cheaper place.
Tom: There’s one more thing I could see people bringing up because it’s certainly something I thought. With all this ability to travel, how does that change when you have kids? Certainly, we already covered how a career in a house can kind of keep you stuck where you are but what about with kids? If you guys would have kids how do you haul them around when they’re in junior-high and high school?
Kristy: That’s a very good question. One of the things we were wondering about if we were to have kids is we’d have to obviously stop having this lifestyle. Because what else could we do? And actually, while we were in Mexico, we met this woman who was actually traveling with her 10-year-old son. This was in April or something. It wasn’t the summer. I asked her how she was able to take her son out of school for months at a time. Wasn’t that going to be a problem this school? And she said, “No. I’m part of a community called World Schoolers.” And I said, “What? Is that a thing?” I wouldn’t let her leave the airbnb. I just peppered her with a ridiculous number of questions trying to find out what this is. There’s actually a community of over 40,000 people online that actually travel with their kids around the world, and they have different ways of world schooling. There are curriculums that they can download online and you actually have teachers that teach the kids remotely via Zoom and Skype sessions. Some of them actually send their kids to international schools. Some want their kids to be multi-lingual so they send them to international schools in China or Mexico. They can learn Spanish. Periodically, they actually meet up with other world traveling schooling families. They have an online forum in where people can meet up if they’re in the same place and have play dates and things like that. That’s something that we’re really interested in. If we have a kid we would use this world schooling method of teaching the kid, because one of the things that ends up happening with world schooling, is that a lot of the kids end up being very entrepreneurial. We met a 16-year-old girl who started her own virtual assistant firm online. She is basically making money to pay off her own tuition. And it’s actually easy to go back into the traditional school system because she went to Queen’s University after being world schooled for most of her life. So she can basically get the degree and then also have our own business online she can use to support herself. I think this method of teaching, teaches your kids to think beyond the school system, beyond that systematic way of life. I feel like this is like a new way of getting the kids interested in learning. It’s like, “What do you want to learn today? If you want to learn that, we’re going to learn that.” It’s not like following a certain curriculum. “We’re going to teach you about finances and not soil erosion if that’s not what you’re interested in. If you want to learn about the Vietnamese War, let’s go to Vietnam and find out what happened.” I find that very fascinating, this new way of actually educating your kids and using the world as your classroom.
Bryce: And it’s regulated under the same legislation that a home-school curriculum would be regulated. You just have to file the right papers with the right registries and make sure you document their work, grade it and also keep all that stuff. But at the end of day, world schooling is just homeschooling on a plane, basically. It’s easy for them to re-enter the traditional schooling system at any point as well as to apply for university. If you wanted to you could just do the homeschooling or the world schooling up until grade 11 and enroll them back in grade 12 then go to university, doing the normal flow. There are all these really cool things we learned when you travel outside the bubble about people that are living these kinds of weird non-standard lives. We touch on that in the book as well. We interviewed a lot of the leaders in this community and try to get them to introduce our readers to how all this works.
Tom: The schooling thing sounds great. Homeschooling was what I thought was the only answer and I don’t know all the new math and everything so I figured teachers are needed. This is great. You kind of solved all the usual questions that seem to pop up.
Can you let everybody know where they can find you online and tell them about the book?
Kristy: You can find us at www.millennial-revolution.com. Feel free to send us an email or go on Facebook. We’re also on Twitter. We also have a book coming out with Penguin Random House on July 9th. It’s called, Quit Like a Millionaire. In the book we actually interview experts from the world schooling community on the different education methods they use to educate their kids on the road. A lot of criticism that we get in the FIRE community is whether this is only for privileged people. Is it only for people who grew up privileged? I was actually not born in Canada. I was born in China. My parents basically taught me a lot of this type of thinking; you don’t get control over whether you’re born rich or poor but you can control your way of thinking. The scarcity mindset they taught me was that I was able to turn a negative into a positive. So the ability to actually think about things like, “I’m going to use these constraints to make me more creative,” instead of whenever I had a problem it wasn’t just to throw money at the problem. I thought, “How can I creatively solve this problem?” One of the things I did—because we couldn’t really afford cable was go to the library a lot. There were free books there and that kind of instilled my love of writing. As a result, this actually ended up becoming my passion. And now we actually are published authors with Penguin. It’s the idea that you don’t get to choose how you’re born, whether you’re rich or poor, but you get to choose how you react to it.
Bryce: And because her story is really fascinating in terms of world income, she went from the bottom one percent of the world living on 44 cents a day at one point (which is what her family live on back in China) and making it all the way to a millionaire status within 31 years. What the book does is it chronicles that journey and talks about what lesson she learned at each point to get from poor to middle class and then eventually to rich, and how she actually did that. So no matter where anybody is in their finance journey, they should be able to find where their starting point is and match up to somewhere where she is. Then just kind of copy all of her moves. You can’t help but wind up a millionaire at the end of that journey if you copy all of her moves. So that’s the book that we wrote, Quit Like a Millionaire.
Tom: Sounds great. Thanks for being on the show.
Kristy: Thank you so much for having us.
Thanks Kristie and Bryce for sharing how you made your lifestyle happen. Make sure you check out the new book, Quit Like a Millionaire, which you can find in our show notes. You can find the show notes for this episode at maplemoney.com/kristybryce. And you can find it and all the past episodes at maplemoney.com/show. Are you on Instagram? Then look for the newly created (an awkwardly named) Maple Money Com. If you think you’re already following me, it might be my Tom Drake Canada account. I’m looking to give you the option if you’d rather get personal finance insights or pics of me on vacation. But both these things will likely cross over in each account. So first I’d love to have you follow me on both profiles too. So the new one is Maple Money Com. The previous account was Tom Drake Canada. Hope to see you there. And I hope you’ll join us next week as we’ll have Robinson Smith on the show to discuss how to make your mortgage tax deductible with the Smith maneuver. See you then.