Early FI – Find Your Beach

by FI Fighter on October 19, 2018

in Thoughts

When it comes to early FI, I think the end game for all of us is to find a way to maximize our time on this planet. As everyone well knows, time is finite and thus the ultimate currency in the Game of Life. Over the years, more and more folks are realizing this stark truth, and I think that’s why the concept of FIRE (Financial Independence Retire Early) continues to grow in popularity and more and more peeps are out there attempting it.

I’ve been blogging about my own FIRE journey since 2012, and well, I can honestly say that there’s definitely been a lot of ups and downs along the way… In short, I don’t think we ever really ever have all the answers and a lot of times, it’s kind of figuring out things as we move along…

With that said, of course I realize that a lot of the actions I’ve taken on my own early FI journey won’t appeal to everyone, and I guess not surprisingly, that isn’t ummm a surprise to me at all… Real life is NOT binary (black or white), and that’s why I think at the end of the day, we all need to figure out a way to filter out all the noise so that we can finally figure out just exactly it is that we want…

Most recently, I’ve been kind of away from blogging, but I did notice the following comment, below (which I appreciate because it makes me think about things and of course, I am NOT offended at all!)…

Thanks for the comment!

So, let’s begin…

I guess we can start with Geographic Arbitrage and I can better try and explain what it is exactly that I am trying to accomplish out here in Manila…

For readers who have been following along this blog for awhile now, you’re probably well aware that I own rental properties in the Bay Area, and with the benefit of hindsight, I can pretty much declare that they have been my best investments to date. In short, the property value and cash flow have gone up considerably, and well exceeded even my wildest imaginations… For sure, it’s no secret to anyone that the Bay Area isn’t cheap, and a lot of folks have even left the region, knowing that surviving there isn’t an easy task…

As for myself, even though I had some relative success investing in the Bay Area, I’m not gonna try and pretend that I have what it takes to survive there long-term…

I most certainly do not.

So, for awhile now, I’ve already conceded defeat and realized that in order for me to make early FI work, realistically, I’m just gonna have to settle somewhere else (much cheaper)… Granted, I still have family in the Bay Area, so I probably will still have many good reasons to visit/spend time there, but it’s still a pretty tough uphill battle out there trying to make ends meet… without a nice high six figure salary supporting you…

Also, my own preference is to spend time (especially the winter months) in warmer climate than Northern California, and places like Manila really fit the bill… The heat isn’t for everyone, no doubt, as I’ve even met local Filipinos who hate the weather here and said they would move to Canada in a heartbeat if they were accepted in…

 

Hey, different strokes for different folks…

 

With Geographic Arbitrage, what I really meant is that my rental units should (in theory, hopefully) experience annual rent increases (i.e. inflation) at a much more profound clip than my own personal Cost of Living (COL) inflation living in the Philippines (yes, even in the most expensive locations). If my cash flow from my Bay Area rental units continues to outpace my own spending, the idea is that my profit margin should only get fatter as the years go by (making early FI increasingly easier to sustain, long-term).

 

I mean even $100 goes quite a long ways here in Manila… Just saying…

 

That’s the plan, anyway…

 

Anyway, addressing the next bit about “maximizing every last dollar”, I completely agree that if my intent was to take full advantage of Geographic Arbitrage, it would indeed make the most sense for me to settle in a cheaper part of the Philippines (say Pampanga, Laguna, or even Cebu), and invest the rest of my funds into passive income/cash flow yielding instruments…

 

But as you all know, a personal residence is more a lifestyle decision than an investment one…

 

No question, if you asked me if my decision to choose and live in Bonifacio Global City (BGC) was a good way to stretch every last dollar and attempt Extreme Early FI, I would say “no way.”

Sure, I like to save money, pinch pennies, and be a total tightwad sometimes when it comes to things like food, clothes, entertainment, etc.  but if I’m being real here, I’m not gonna say that’s always the case… I mean, for instance, I very much enjoy flying business/first class, as often as I can…

I’m NOT an Extreme Early FI type of guy… at all…

If I previously gave off that impression, I’m sorry, but I’m not trying to pretend to be something that I’m not… Yes, at times I’ll post pics of cheap eats and stuff like that, but all I’m saying there is that even if we have relative/moderate success with our own investing careers, there’s nothing that says you need to upgrade to fine dine cuisine every meal… Or, that you have to give in to total reckless lifestyle inflation and all that jazz…

Again, life just isn’t black and white… For some things, sure, I don’t mind splurging and “living it up” some, whereas for other stuff, I’m not so keen on doing so…

All I’m really doing now is just trying to find my beach… the version of early FI that I enjoy the most and want to pursue.

And in regards to buying a property in BGC, yes, it’s true I like to speculate and I see huge growth potential in this region of the Philippines, but I mean, first and foremost my decision to want to buy here is because I really enjoy being here… BGC is: clean, safe, modern, shiny…

If that makes me an early FI “sell out” or “snob” then so be it… I’m not gonna bullshit you all here… BGC is pretty damn high-end/upscale/posh, and I like that…

Point blank — I enjoy living here!

With BGC, this isn’t an investment decision I’m making here at all, it’s simply a lifestyle one… and I’m choosing to live damn well!

If I can afford it, why not?

But of course, even with something like a personal residence, I want to consider all factors, and with all things being equal, sure, I don’t see anything wrong with pursuing an area you really like living in that is also showing strong signs of future rent/price appreciation potential…

 

If it happens, wonderful…

If not, oh well… I still need a place to live!

 

Further, even though I’ve been a strong proponent of investing in mining stocks over the last 2-3 years or so, I’ve been calling them “ticking time bombs” and Buy and Hold Rentals for the longest time now… I’ve got no agenda, and I do my best to just try and tell it like it is… I’m not being a hater, but my own viewpoint is that mining stocks are just a stepping stone to help you achieve your goals and dreams… For me, it’s a pretty dope possibility and realization that I might be able to take some of the profits from yesteryear and re-deploy it into purchasing my “dream home” straight cash homey.

 

I don’t see the big deal with that at all…

 

Ideally, doesn’t everyone want to own their own personal residence free and clear without a loan?

 

That’s what I’m attempting to do here with profits that I earned from mining stocks by “buying low and selling high.”

 

Nothing fancy at all going on here…

 

Using mining stocks as a tool to facilitate purchasing a “dream house” free and clear… I like the sound of that, even if many people think that strategy/technique is stupid and crazy…

 

Anyway, for myself, yes, BGC is my version of early FI utopia… For some people, it’s absolutely some other destination. To each their own… I mean, I have friends back home in the Bay Area who have made millions of dollars in price appreciation on their own personal residence/investments, but they will never leave… In their minds, they don’t want to live anywhere else in the world besides the Bay Area…

 

Again, to each their own…

 

I’m not gonna be a hater, everybody has different goals, desires, gameplans…

 

But to be clear, BGC for sure isn’t the “cheapest” route for me to pursue… By choosing to live here and purchase an apartment, absolutely I am forgoing investment returns and passive income/cash flow opportunities… It is what it is… But I don’t think what I am doing is remotely all that crazy at all… My buddy and I joke about fresh college graduates who are dropping it like it’s hot, signing up for 30 year loans of over $1 million to purchase Bay Area property… Now that’s a rather bold move, in my own humble opinion!

 

Alas, nobody gives these young kids any shit for what they’re doing with their own money…

 

But for whatever reason, if I tell anyone back in the Yay Area that I want to move to the Philippines and buy an apartment unit ALL CASH, they look at me like I’m this total weirdo/psycho…

 

In any case, it’s all good… I’m just trying to find my own beach, just like everyone else…

 

Fight On!

{ 12 comments… read them below or add one }

1 JoeNo Gravatar October 19, 2018 at 8:46 am

Hi Jay, great that you found a place you want to stay longer term. You said you are funding the home purchase with profits from yesteryear. I thought you made a lot of those profits tax-free in retirement accounts, so am curious about the mechanics of how you get that money out. Also I’m curious about how easy it is for you to set up a bank account over there and transfer money over.

Reply

2 FI FighterNo Gravatar October 19, 2018 at 11:05 am

Joe,

Yes, I made the bulk of my investment gains in retirement accounts but I also made profits in taxable accounts as well. So, I’m pulling capital from there and not touching the retirement stuff.

In terms of opening a bank account, I know you need an ACR card (need to be in country 60 plus days to get one) for starters… I’m working on this bit now and can update more about it as it progresses.

But to move money around, nothing beats Bitcoin in terms of fees…

Cheers!

Reply

3 Josey WalesNo Gravatar October 19, 2018 at 4:22 pm

I am loving all of the geographic arbitrage discussion. The large majority of people who would question such ideas are those who have either traveled very little, don’t truly understand the international value of the US Dollar, are chained to some job/bills in the US, or just so sold that the US material dream is the only path worth pursuing that they don’t even want to entertain any other discussion.

My biggest question for you is why not rent an awesome place out there for a year, really get a great feel for the area, continue the search and idea of purchasing a place. Its not like global real estate is in the bargain bin. Sure, BGC is much cheaper in comparison with US mega city real estate, but if there is a global recession in the next few years then BGC could become much cheaper. I am just looking at the macro. We both know that buying a personal residence should never be looked at as an investment, but instead a “want” that people desire at a certain point in there life (usually raising a family) when they want to settle (live in the same place for at least 5 years).

I just think that globally, right now is an excellent time to be a renter. You could get an awesome place right in your dream area, stay really liquid and mobile, keep traveling, being young. Great deals in luxury condo developments in the developing world aren’t going to disappear anytime soon.

Just my 2 cents, loving the direction your headed though!

Reply

4 FI FighterNo Gravatar November 8, 2018 at 8:07 pm

Josey,

Thanks for the comment. Yes, I did stay in BGC last year/earlier this year, have a good feel for the area and know without a doubt that this is where I want to be long-term.

Agreed, it is a great time to be a renter, but in my own case, I feel like this is the prudent move for me to make. I want some more stability with my living situation and long-term, I have strong conviction this will be the right move.

Cheers!

Reply

5 theFIREstarterNo Gravatar October 22, 2018 at 3:35 pm

Haha, I do love comments like that, they’ve read between the lines and projected a totally different story from the one you’ve actually been telling us (or just haven’t read much of the blog apart from that one post maybe!)

It’s clear that you aren’t a “live like a hermit to achieve ERE” kind of guy and it’s obvious you have more than just the $300,000 to invest/live off of as well so I don’t really know they were fixated on that.

Good to make you think I guess but just keep doing what you are doing, as you definitely know what you are doing IMO!

Cheers!

Reply

6 FI FighterNo Gravatar November 8, 2018 at 8:08 pm

theFIREstarter,

Thanks for the support mate! Yeah $300k is no small amount of pocket change, and it is a drastic move on my part…

Yup, for sure I don’t live like a hermit, but I also don’t spend too recklessly either, I guess outside of “splurging on high-end condos”… It’s tough to classify, and I’m just trying not to stress too much about it.

I’m just being me.

All the best!

Reply

7 alNo Gravatar October 23, 2018 at 7:44 am

” Again, life just isn’t black and white… For some things, sure, I don’t mind splurging and “living it up” some, whereas for other stuff, I’m not so keen on doing so… All I’m really doing now is just trying to find my beach… the version of early FI that I enjoy the most and want to pursue. ”

Indeed. To each his own. You became a USD multi-millionaire by doing mostly the right stuff at the right time and doing it big time all-in, and you now are in a position to be living your kind of life, at 35 years of age. Big city life ain’t for me, too noisy and crowded and polluted.

That being said, one of the commenters here up stated the obvious : interest rates are climbing back up, and this will have repercussions down the road, globally. Emerging market ETF’s are all going down already since some time. You might be entering this Vanilla high class real estate market right at the peak. I don’t know the future. Ask tough questions to the smart rich locals you are in contact with, they might know a bit more than you think.

I would add that the Chinese government (if I can believe what is written on the internet) also has issued new laws in 2017 forbidding the wiring over of cash from mainland China to overseas territories, if it isn’t declared to the Chinese government first and approved, to close down a mammoth cash drain out of China. Getting approval for private investors for such wiring over is almost zero, if I can believe the electronic press articles. It also has forced the termination of a lot of condo projects south of Malaysia, built right next to Singapore, due to sudden dry up of funding coming from China. This might also diminish real estate demand in Vanilla down the road, or end ongoing projects, given the Philippines location near the next center of the world. Who knows? So be careful.

For the rest it is your life, and I still remember you writing about renting a room at a friend’s condo in the Bay Area for $500 a month, cooking on a single electric plate, and not being allowed to use his kitchen, while you were making around $100 000 per month with your mining stocks speculations.

And now splurging on a $300 000 condo in Vanilla to settle down.

How things change, after a while . . .

Reply

8 FI FighterNo Gravatar November 8, 2018 at 8:09 pm

Al,

I still try and be frugal… With a personal residence, I just know where I want to live, I like the deals that are available and I think it’s the right move for my own personal situation.

I can of course understand and appreciate how such a move seems extreme and “overkill” though…

Best wishes!

Reply

9 DanNo Gravatar October 24, 2018 at 5:27 am

I think it’s just hard for readers to follow. It’s clear some commentators see you as a multimillionaire making 100k a month while others see you spiraling into a depression over a relatively small loss in Chicago (small as to the perceived portfolio value and your risk levels). I also noticed you removed the portfolio links from the blog. Did you write a post about when and why you have done that?

Reply

10 FI FighterNo Gravatar November 8, 2018 at 8:11 pm

Dan,

Chicago was a tough loss, but certainly I’m not spiraling into a depression… Frustrating yes, but life goes on…

With the portfolio, I made mention in an earlier post and newsletter that I would be stopping with the updates… I cashed out a bulk of my holdings in early January this year, so that mining stocks journey sort of reached an endpoint… I still have some holdings, but I scaled back significantly early in the year.

Cheers!

Reply

11 BbNo Gravatar November 5, 2018 at 10:31 am

I think what you mean is that the Manila condo is your new A class property and it’s worth investing. Question for you do you miss home miss friend and family in the Bay Area if you live there? Flying between Bay Area and Philippine is not very cheap I think, how often do you fly between? How do you keep the cost down when you have to buy flight tickets all the time?

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12 FI FighterNo Gravatar November 8, 2018 at 8:12 pm

Bb,

Absolutely, BGC is my Class A World Class Tier 1 asset play, and I have full conviction in this new direction.

Yes, flying back and forth is not cheap, so I’m going to try and limit my travels to 1x per year… For now, I’m using travel hacking and reward points to block flights…

Cheers!

Reply

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