A big reason why I started HYW was to show how ordinary people can “hack systems” in large and small ways – whether related to taxes, award travel, real estate, etc – to achieve financial independence and retire early…
…and to continue growing wealth even in retirement.
That’s probably why many of my readers are engineers; as an engineer, you likely know a thing or two about hacking and optimizing systems.
And, not coincidentally, that’s also probably why there are so many ex-engineers in the FIRE community: in fact, the biggest FIRE bloggers seem to be over-represented by engineers.
Today’s guests, who were engineers before early retiring, were one of the first folks in the FIRE community that I started following a few years ago. So it’s a real treat to bring them onto the podcast.
This week, I talk with Kristy Shen and Bryce Leung, millennial early retirees who quit well-paying engineering jobs to travel the world, initially, for one year…but decided – after analyzing their spend that year and realizing it cost less to travel than to live in their hometown – to do it for good. (Along the way, they also wrote a popular FIRE blog and best-selling book, linked below.)
Their story is about applying simple rules of thumb when it comes to saving and investing to build a 7-figure portfolio and retire early, then optimizing your investments efficiently to withdraw from your portfolio safely into perpetuity.
- What motivated them to leave well-paying engineering jobs in the first place
- How they came up with their FIRE number and what they invested in
- Why they rebelled against conventional wisdom to buy and own a home
- How they stayed focused as friends and colleagues upgraded their lifestyles…and how they eventually became the envy of peers back home
- Why their parents objected but eventually came around (and what convinced them)
- The moment they realized it was cheaper to travel than to stay at home
- How big their portfolio was on the day they retired and how big it is now (after deducting travel costs and living expenses over the years)
- How they use a “yield shield” to structure their withdrawals so they never have to sell in a down-market (and how long their cash buffer will last)
- How their mindset shifted from “traveling to consume” to “traveling to learn”
- How they deal with loneliness when traveling for long stretches at a time
- How they handle health insurance and healthcare costs after losing their universal coverage
- How getting older and potentially starting a family may change their travel lifestyle in the future
Would you travel long-term – potentially forever – in early retirement? Do you agree with Kristy’s and Bryce’s views on homeownership? What are your reactions to their safe withdrawal strategy (yield shield)? Let me know by leaving a comment!
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Links mentioned in this episode:
- Millennial Revolution
- FIRE explained in Mandarin
- Kristy’s and Bryce’s book: Quit Like a Millionaire
- HYW private Facebook community
Read this episode as a post:
Andrew Chen 01:22
My guests today are husband and wife couple Kristy Shen and Bryce Leung, who are early retirees and long term nomadic travelers.
They used to live and work as engineers in the tech industry in Toronto, which is one of the most expensive cities in Canada. And they decided against conventional advice about home ownership, which we’ll talk a little bit about in a moment, and instead, invested their savings, growing it into a seven-figure portfolio. This allowed them to retire in their early 30s to travel the world.
Their FIRE story has been featured in the New York Times, CNBC, and the UK Independent, among other publications. They now help other millennials with early retirement strategy by providing financial coaching and personal finance content on their website, millennial-revolution.com.
They’ve also written a bestselling book called “Quit Like a Millionaire,” which is, in their words, a step-by-step guide on how to invest safely to retire early and travel the world, published by Penguin Random House.
Kristy and Bryce, thanks so much for joining us today to share your story, advice, and tips about early retirement from an engineering career.
Bryce Leung 02:22
Thanks for having us.
Kristy Shen 02:23
Thanks for having us.
Andrew Chen 02:24
All right. I’ve been looking forward to this interview for a while because I’ve been a longtime follower of your FIRE journey and your blog. It was one of the earlier blogs that I ran into.
I’m really excited to chat with you guys. I’ve enjoyed reading a lot of the content you’ve put out.
But just to orient our audience who might not be as familiar with your story, in what year did you early retire, and how old were you?
Kristy Shen 02:48
June 2015. We both became financially independent when we were 31, and then we stayed a little bit longer, about six months, to help out with work. And then that’s when we officially quit in 2016, in June, at the ages of 32, to travel the world.
Andrew Chen 03:07
What was your career path before retiring? I know engineers, but a little bit more detail on what you were doing in your career.
Kristy Shen 03:17
I worked on software development, mostly web development.
Bryce Leung 03:24
We’re both computer engineers, and I worked in software. Are you familiar with FPGAs, field-programmable gate arrays?
Andrew Chen 03:35
Bryce Leung 03:37
It’s like a chip company. I wrote the software that helped design chips and that kind of stuff.
Andrew Chen 03:44
Bryce Leung 03:45
That company later got bought out by Intel, so it no longer exists.
Andrew Chen 03:48
Okay, got it. So you guys were basically software engineers, software developers for nearly a decade before you finally pulled the trigger?
Kristy Shen 03:58
Bryce Leung 03:59
Andrew Chen 04:00
Got it. I understand that when you hit a million dollars in savings, reading on your blog, you quit your jobs to travel the world initially for a year. But I’d love to understand, when did that decision shift to simply retiring early for good?
What was the thought process?
Kristy Shen 04:24
I didn’t think we were going to travel the world. I thought we were just going to leave for a year maybe, do a victory lap to go to some places we wanted to visit, and then come back and settle in Canada in a cheap place that is not Toronto.
What ended up happening was we continued traveling for the last five years because we found out it was actually less expensive to travel the world than actually come back to settle in Canada.
A lot of this actually wasn’t planned. Even quitting my job was scary because, even though we did the math over and over again, I had a mini-panic attack when I gave in my notice.
Because once you’ve been in the same industry for 10 years, that’s really a big part of your identity. It’s really hard to give it up and just say, “Okay, now I’m going to be traveling the world.”
So a lot of that came from just trial and experience. “What’s going to happen after we quit? Let’s try and see.”
“If we don’t like it, maybe we’ll go back to work and there will just be a gap here.”
And then we really liked it, and I can’t imagine ever going back to work again. I would be completely useless as an employee. How about you?
Bryce Leung 05:27
Yeah. How the math works out is that early retirement and financial independence, we use something called the 4% rule.
How that works is you take whatever portfolio that you are planning on retiring on, you multiply that by 4%, and that’s how much you can safely withdraw from your portfolio every year without depleting it. With a million-dollar portfolio, that supported our projected retirement budget of $40,000 a year.
We saved up a little more extra money and we said, “Okay, let’s just blow some more money and travel around the world.”
We were expecting to spend double that, $75,000-80,000. To our surprise, when we came back around and landed back in Canada, we added up all of the money that we had spent and it was around $40,000.
And I was just like, “We could just keep doing this forever.” And that’s when the light bulb moment clicked, and then we went and bought a ticket to Japan the next day.
Andrew Chen 06:20
Wow. That was a quick turnaround.
I’m curious, what was the life that you envisioned having in retirement after crossing over to the promised land?
I’d love to get two perspectives. One is the original version where you would take a gap year and then settle in a less expensive city in Canada, and then how that changed when you decided to travel. What was the life you envisioned?
Kristy Shen 06:49
I think I’m naturally a pessimist and you’re naturally an optimist.
Bryce Leung 06:53
Kristy Shen 06:54
So my vision was I was a little worried. “What’s going to happen?”
“Am I going to have anything to do? Am I going to watch all these other people get ahead in their careers and I’m just going to stagnate? Am I actually even going to like retirement?”
I didn’t really want to think about it too hard because I was pretty burnt out working in a high-stress environment for the last 10 years. So I just really wanted a break.
And I tried to keep my mind focused on the present and not to think too much into the future, but I think there was always that little voice in the back of my head that’s like, “What if this turns out to be horrible? What if I really hate retirement?”
“What if I’m really bored? What if I get depressed? What if all these other people get ahead of me and then I’m going to feel like I’m completely useless?”
In reality, it was actually way beyond my wildest dreams. Even if I had been an optimist, I couldn’t have predicted everything that would have happened.
The first year we were traveling the world, we did some volunteering and making an app for a nonprofit. Almost at the end of the first year, we started the blog. So within the second year, we were doing a lot of blogging.
And then that ended up taking off. I totally did not imagine in a million years that that would happen.
And then that led to us writing the book. An editor from Penguin Random House came to us to ask us to write a book.
And then after that, we got asked to speak at a whole bunch of financial conferences. And just all these crazy things happened that I never would have expected.
I would have been like, “I’m just going to sit here and drink some piña coladas on the beach, and then maybe read a couple of books.” That’s as far as I could think. Never in a million years would I have imagined a book deal or any of these speaking gigs or anything like that.
Bryce Leung 08:34
And it keeps spiraling. Opportunities create more opportunities.
Right now, we’re locked down because of COVID. But at the beginning of the year, we had to pull out our old schedule for something else, and we were just like, “Wow, we had a lot of stuff going on.”
We were going to be flying into L.A. to be part of a documentary about women and entrepreneurship or something like that. After that, we were going to be in Austin, Texas for a Google talk that we were giving. And then after that, we were going to be speaking at a conference called Financial Freedom Summit.
It was all these different experiences that we were going to be doing. We were going to fly to L.A. and maybe make a TV show.
Everything got shut down. Right now, we’re in this weird state that we haven’t been since before retirement where we’re just like, “What are we doing today? Nothing.”
So that was not intentional.
Andrew Chen 09:27
Gotcha. So it sounds like there’s been a lot of organic opportunities that have materialized. Are these mostly inbound at this point because folks in the FIRE community obviously know who you are, or has there been a mix of inbound and outbound?
Bryce Leung 09:47
It’s mostly organic random people talking to us and saying, “Hey, do you want to do this? Do you want to do that?”
Because the blog and the book has now grown to the point where we are well-known enough that sometimes we get recognized on the street, which is still a little weird for us that people just come up to me, “Oh my god, I read your book and I love your blog.”
And we’re just like, “Really? Okay.”
So we’re not seeking out opportunities there. It’s mostly just coming to us.
But that wasn’t intentional. I thought that after I retired, I was going to make an app and try to make it as an entrepreneur, like one of those Silicon Valley app guys. That’s what I thought I was going to do because I did software development my entire life.
The desire to write a blog, where did that idea come from? It came from you yelling at your dad, right?
Kristy Shen 10:41
It was the frustration of two things. One, people in Toronto saying, “If you don’t buy a house, you’re going to be priced out forever. And everybody needs to buy a house.”
Meanwhile, the people who have bought houses are constantly complaining about how much they hate their house. Even if their money has doubled, they’re still complaining. They’re still not happy.
So I’m like, “Well, you’re not happy when you don’t buy it. You’re not happy when you buy it. So what is it that you’re supposed to do?”
So that was from a frustration of buying a house is not the only way to live your life.
And another one from my parents specifically because your parents are generally relatively supportive. My parents are more traditional.
My parents going, “Oh, you’re a millionaire? Well, you don’t have a house, so who cares?”
And even from that background, my parents are first generation immigrants. My dad cares so much about working hard and being dedicated to a company that he ran inside to his office during an earthquake, while everybody else was fleeing, because he needed to get work done. So that’s my dad.
When we went traveling the world and all this media attention came in, he was still like, “You need to get back to work.”
“Here is a list of companies I found that would be a good fit for you. Get your ass back to work now.”
So it was a little bit of that frustration of “Okay, come on. Parents, we love you, but you don’t always know what you’re talking about,” and buying a house is not the only way to live your life.
Bryce Leung 12:02
Yeah, because her dad, you know the Chinese parents archetype.
Andrew Chen 12:07
Oh, yeah. I know it well.
Bryce Leung 12:09
They didn’t know what to brag to their friends about what his daughter did. He didn’t know what to say, so he was just like, “They have to do something. Otherwise, I can’t tell my friends.”
Andrew Chen 12:20
Number one to retirement. Doesn’t that carry bragging rights?
Bryce Leung 12:24
The funny thing is it took a year or two for him to finally accept that this is something that’s actually a big deal. And the only reason why they did that is because we went all around the world, got all this media attention, appeared in all these newspapers, and then his friend started seeing it in the newspaper and then bringing it to him and saying, “Is this your daughter?”
And he’s like, “Yeah.” And he’s like, “Wow, that’s amazing. My kid just keeps asking me for money all the time.”
So via groupthink, because his friends started convincing him that what we did was actually a good thing, then he started coming around and saying, “Maybe she’s not an idiot after all.”
Kristy Shen 13:01
Yeah. Basically, in order for your Asian parents to finally accept that you’re not an idiot, all you need to do is become a millionaire, retire in your 30s, travel the world, be in all these media, and then finally, be published by one of the biggest publishing houses in the world. And then maybe they’ll think that you’re not an idiot.
Bryce Leung 13:19
Actually, the funny thing is even when the book got published and even after it became a bestseller, they were still skeptical.
They were like, “I don’t know. Does this have low standards?”
And then Japan bought the rights to the translation of the book, and then we published it in Japan. And only then were they convinced because they’re like, “Oh, the Japanese, they don’t do anything.”
Kristy Shen 13:40
“They have standards.”
Bryce Leung 13:41
“They have hugely high standards.” So it took another Asian country to validate what we did to them in a way that made sense.
Andrew Chen 13:48
Oh, dear. Oh my goodness. Wow.
Kristy Shen 13:52
And you wonder why I have anxiety issues.
Andrew Chen 13:56
I definitely want to probe more on this here in a moment. But first, I’d love to understand, how did you guys come up with your FIRE number? What considerations went into it?
How did you calculate the burn rate you would need to live on, factoring in some inherently unpredictable things, like travel, accommodation, food? They’re somewhat predictable, but there are unexpected expenses that you might want to prepare for as well, buffer that you might want to cushion in.
How did you guys come up with your FIRE number?
Bryce Leung 14:35
The short answer is using the 4% rule, by keeping meticulous tracking of our expenses. She is a huge spreadsheet nerd, and every transaction goes into it. She can slice and dice the data using pivot charts and stuff.
Using all these spending data, we were able to say, “We spend about $35,000-40,000 a year.” Taking the worst case number from that, which is $40,000, and then dividing it by 4%, which is the same as multiplying by 25, that becomes your base target number of a million dollars.
But it wasn’t just that. We wanted to have backup systems in place. We’re engineers, so we wanted to make sure that the system was stable and robust in case there was a market downturn that hit right after we retired.
So on top of that, we calculated what we call a cash cushion amount. The math, if your readers are interested, they can look in our book. We say exactly how we calculated that.
But we saved up a little bit more money and just keeping it in cash to be able to tide us over for an extended period of time in which the stock markets were going down, like right now.
Right now, we are very glad that stock markets are having a cow right now. We’re very glad that we have that cash cushion in place because the worst thing that you can do in retirement is, when stock markets are going down, selling at a loss in order to cover your living expenses.
Kristy Shen 15:58
One of the other things we do, we talk about something we call the three-bucket strategy. And we have all the charts and the diagrams in the book.
But basically, the high level explanation is that we have this forward-looking system where the money that we’re currently living on, we actually accumulated that from yield of our portfolio last year: things like the bond interest, things like dividends, things like the income from real estate investment trusts.
All of that was accumulated last year, so that this year, we don’t have to predict, “Do we need to sell now?”
“When is our dividend going to come in? Is it going to be delayed? What about bond interests?”
We already have that money from last year. So every single year, you’re future projecting so that the money we’re accumulating this year is for next year.
Then you don’t have to be rushing. And any unexpected things, you already took care of that last year.
Bryce Leung 16:45
We’re probably one of the most conservative, pessimistic people in the FIRE space because we’re both engineers, so we always want to have a backup plan B, C, D, E.
Andrew Chen 16:58
So it sounds like you have a cash cushion, each year you’re forecasting the next year’s expenses and adding it to that cash cushion, and then during the year, you spend it down.
But if there’s a down year, then your cash cushion can theoretically tide you over. Maybe you don’t even need to sell anything in a down year because you have that cash cushion. Am I putting the two pieces together correctly?
Bryce Leung 17:19
Correct. Our cash cushion that we have stored outside is able to sustain us for three straight years of down.
We arrived at that number because that was I think the longest period of stock markets going down in a row since the Great Depression or something like that, so we’re like, “Okay, that’s a pretty good guide.”
Andrew Chen 17:38
Gotcha. Makes sense.
How did you guys stay focused and keep your eye on the ball when I imagine, as you alluded to earlier, many of your engineering classmates were probably starting to upgrade their lifestyles, buy homes, cars, start families, etc. while you were saving up for this FIRE journey?
Kristy Shen 18:01
It was definitely not easy. We had a lot of coworkers and friends and family members tell us, “You can’t not buy a car. That’s crazy.”
“How do you just take public transportation all the time? That’s insane. You can’t live without a car.”
And then other people upgrading their houses, moving into condos, and selling the condo and moving into a house. And then constantly getting pressure from our parents to buy a house, especially since your mom used to be a real estate agent.
Bryce Leung 18:27
Kristy Shen 18:28
Try telling someone who used to be a real estate agent that you don’t want to buy a house. Good luck with that.
Bryce Leung 18:32
It’s Chinese parents who were also in real estate, so the pressure was quite high.
Kristy Shen 18:38
Enormous. I think part of it was also because of my upbringing.
I wasn’t actually born in the west. I was born in a rural village in China. So having that perspective on life and growing up with very little, you just realize you don’t really need a lot to be happy.
And then when I actually came to Canada afterwards, I was amazed by everything.
I’m not the kind of person that would be like, “This person has this house, but I don’t have a fancy condo. I need that.”
For me, it was just like, “Wow, there’s running water and you have four walls and there’s heating. What is this crazy wonderland of abundance?”
I tend to need very little to be happy. So for me, it was just basically like “Can we spend time together? Do we have enough money to travel and do the things that we like to do?”
Outside of that, I don’t need a car. I don’t need a fancy condo.
I’ll rent an older apartment that’s 30 minutes by subway from our work. No big deal.
Do I need new furniture? No. Just buy used furniture.
That’s totally fine for me. It just didn’t bother me at all. I never really thought about it that much.
Although to be fair, there was one period in which I almost got into the whole status thing by buying purses. That was my deepest shame with trying to buy Coach purses and upgrade to Louis Vuitton, that kind of thing.
Also, I thought that our apartment was really small at one point because I had accumulated all these things on sale because you can’t afford not to buy it when it’s on sale.
And then to his credit, he didn’t say, “Oh, no, we can’t upgrade our apartment. We can’t live in a bigger place. You need to get rid of all of your stuff.”
He basically just said, “Okay, let’s go and look at other apartments and then see if there’s anything you like, and then figure out the square footage, do a comparison.”
And because I’m obsessed with mathing shit up, we went around and I looked at all the different apartments, and I realized, “We are paying rent that is way below undervalued. We would have to upgrade our expenses by 50% in order to get something similar, just slightly bigger.”
And then I added the cost of all the things I would need to get rid of in order to make our current apartment livable, and it was way more. One month of extra rent would have paid for all those things all over again.
So I was like, “Okay, math doesn’t make sense. Let’s just stay here and then get rid of a lot of the stuff that we don’t need.”
And then at that point, I stopped accumulating and started to go more from the hoarder mindset to more of the minimalist mindset. So there was a lot of ups and downs along the way.
But I think the immigrant mindset plus the fact that I did the math, compared it to the other apartments that we could have moved into, and realized that it doesn’t make sense to keep all of these things and then pay for it in order to just get a bigger place to pay for it. I’m going to lose more money by doing that instead of just throwing it away.
Andrew Chen 21:28
Yeah, that definitely makes sense. You can buy a lot of stuff, but your stuff will own you as much as you own it. You’ve got to spend time maintaining, for sure.
It can be freeing to really internalize only a minimalist need. I definitely understand that.
When it comes to home ownership, I know from a bunch of other interviews you’ve done and you’ve alluded here earlier as well that you decided against this common advice, buying a home. If I understand correctly, it’s because you view it as this illiquid debt sinkhole with ongoing maintenance costs and taxes.
I’d love to understand, is your opposition to home ownership about buying a primary residence or also about investing in real estate?
Kristy Shen 22:18
I think mostly primary residence. We do own real estate investment trusts. That’s basically commercial real estate, right?
Bryce Leung 22:24
Kristy Shen 22:27
Basically, if you’re buying something to invest and you can actually turn it into an asset that pays you, then that’s an investment. It makes sense.
But most of the people that we’re surrounded with, they don’t really think in terms of investing in real estate. They think of buying the biggest house you could possibly afford.
How many times have we heard that advice from our bosses? “Buy as much house as you can afford.”
Or even stretch. It wasn’t even as much as you can afford. It was like stretch as much as possible and buy the biggest house you possibly can because that’s what everyone else is doing.
But in reality, your primary residence is something you should buy to live in. It’s not an investment.
It’s something that you’re buying for a lifestyle decision. It’s not an investment.
And I think for us, it’s also how expensive the housing market is when you live in a major metropolitan city. When you’re in Silicon Valley, you understand that the housing prices are insane and it doesn’t make sense to actually buy there.
Especially if you’re planning to become retired later on or you’re planning to become location-independent, why would you live in a crazy expensive city like that when everything is crowded? And now that we have COVID, it makes even less sense.
There’s more people around. You’re at higher risk of catching a disease in a really crowded city.
And you’re paying a premium to live there. It absolutely makes no sense.
Especially since as engineers, we are actually location-independent. We don’t need to live in an expensive city.
So I would not actually be against buying a smaller, more affordable house in a smaller city, a more family-friendly city that’s not super expensive. And if I do the math and it makes sense to own versus rent in a smaller city, I would totally buy it.
I don’t fall for that advice that everybody else is buying a house in Toronto and everything is going up, so you must do it.
Bryce Leung 24:12
Isn’t it also overpriced where you are in California?
Andrew Chen 24:17
Oh, yeah. It’s a zoo. It’s never not been a zoo.
Bryce Leung 24:26
You get it. It’s like everyone around you is doing a groupthink thing and everyone is just loaded up with debt. But as we’re seeing here, housing can go down.
My mom was a real estate agent back in the ‘80s. I don’t even remember why it was (something to do with interest rates), but there was a sustained downward trajectory for housings for a while.
People our generation have never seen a declining housing market. They just think it’s up and to the right: houses never lose money.
But for Mom, she was just like, “You haven’t really quite tested a marriage until you’re dealing with a foreclosed house that you then have to sell at a loss.” She used to do these things where people were just at each other’s throats because one of them talked the other person into buying too much housing inevitably.
So it can go down. As we’re seeing now with COVID, it can go down. And when it does, it’s very painful.
Andrew Chen 25:27
Yeah, definitely. When it comes to how you guys were accumulating your portfolio, in America, there’s these different accounts. There’s tax-deferred, tax-exempt, taxable accounts.
First of all, are there similar constructs in Canada in terms of how you invest in retirement?
Bryce Leung 25:45
Oh, yeah. We steal all of our ideas from you guys.
Andrew Chen 25:49
I’m sure we stole it from somebody. I’m curious, during your accumulation phase, what proportion of your savings were going into the different accounts, like tax-deferred, exempt, or taxable accounts?
And by the time you retired, what proportion was in each bucket?
Bryce Leung 26:09
Basically, the answer is we maxed out every account every year because it always makes sense to not pay taxes when you don’t have to.
I think right now, the proportion of our money that’s in retirement accounts is about 40% of our portfolio is there. But now that we’re retired, we’re withdrawing the money out and gradually de-registering it. And if we do it carefully, you can do it in a way that’s tax-free.
Andrew Chen 26:37
What were you investing in? It sounds like right now you have a combination of fixed income, equities, and REITs.
Was that the plan from the beginning and has held true throughout?
Bryce Leung 26:51
We learned as we went. But the advice that we give people is, when you’re accumulating and when you’re still working, keep it simple and just buy the index.
The index, for you guys, it’s the S&P 500. For us, it’s the TSX as well as whatever international indexes that would give you global exposure.
But instead of betting on individual companies, you basically just buy all companies at the same time. And the reason why you do this is because, while individual companies can go bankrupt, the index cannot because the index is a combination of every company in the investable market.
While you are working, that’s the way to go. And you usually want to go a little bit more aggressive, like 80% or even 90% equity.
When you go to retirement, it’s important to start mixing other asset classes, like preferred shares, REITs, corporate bonds, that kind of stuff.
We write about that in the book as well as on the blog. So if your readers are interested in that, you can look at that for details.
Andrew Chen 27:52
Gotcha. In your personal portfolio situation, what was your allocation on the way toward FIRE, and how did that allocation shift?
If there are percentage numbers, you can give that. It would be super helpful. How did it shift once you were in retirement?
Bryce Leung 28:11
When I was just starting out, I was much more aggressive. It feels like 70-75% equity. At the point where we retired, we had reduced that to around 60% equity, 40% fixed income.
Now that we’ve been retired for five years, we’re trying to gradually shift in the opposite direction. I think right now, we’re 70% equity, 30% fixed income.
And as our retirement portfolio grows and grows, you can shift even more into equity because you don’t need as much fixed income. You don’t need as many bonds to keep the interest.
Andrew Chen 28:49
Got it. Did you introduce alternative assets only after FIRE?
Bryce Leung 28:59
The lead up into, a year or two before then, that’s when we put those in. It can be the point that you hit FIRE or even slightly afterwards, but we did it a little bit before because we wanted to make sure everything was doing what it was supposed to do.
Andrew Chen 29:11
Gotcha. Now that you’re in retirement, is your drawdown strategy to focus on the fixed income payments that are coming out of your fixed income side of the portfolio while leaving your equity holdings to just grow, or maybe you take dividends out of that?
And that’s why you can let the equity portion grow while keeping the fixed income portion relatively fixed because you already essentially know what your expenses are going to be from year to year?
Bryce Leung 29:53
The combination of interest from the fixed income part of the portfolio as well as dividends from preferred shares and common equity, just the index, that’s the yield of your portfolio. Right now, the yield on our portfolio total is paying 3%-3.5%.
On a year when it’s an up year, we harvest that yield, which will be about $35,000. And we might sell off a little bit of equity that’s gone up in value to make up for the additional $40,000.
In a year that’s a down year, like what this one is going to be, we will still harvest that yield because that’s money that your portfolio is paying you. And then we might take a year from the cash cushion to make up that $40,000. And then that’s our budget for the year going forward.
Andrew Chen 30:36
That makes a lot of sense. How much did you guys actually have saved up when you finally pulled the trigger?
Bryce Leung 30:45
We declared FIRE at $1 million. I think it was $1.1 million or something like that.
Because my boss had just had a kid and he was going on paternity leave, so if he left and then I left, the intern is now the boss. So I stayed behind to cover him while he was doing his paternity. And then when he came back, then I left.
But that also gave me another six months of just pure savings. And that’s when we decided, “Hey, we have this extra money that we weren’t budgeting, so let’s go travel.”
And then that’s when we discovered traveling is actually cheaper than staying in one place. And then that’s where our lifestyle came from.
Andrew Chen 31:26
Makes sense. Cool.
I’d love to shift to the FIRE portion of it. Past accumulation, now you’ve FIREd. How did you break the news to your parents, and what was their reaction?
Kristy Shen 31:43
You just told them and they said, “Great. So proud of you.”
And then my parents, I just procrastinated and procrastinated until it was two days before we were supposed to fly out and travel the world, and then I just told my dad, “By the way, I quit my job and I’m traveling the world and leaving forever.”
And then I was like, “Okay, bye.” And then we had a big fight, and it did not go well because my dad didn’t really understand what I was doing.
But then we already bought the ticket, so we left. And then as we were traveling around Europe, I kept getting emails from him every month saying, “You need to go back to work.”
“This is a terrible thing that you’re doing. Enough having fun. Time to get back to work.”
So it didn’t go well, and my mom was still hounding me to buy a house. It’s like “You need to liquidate your portfolio and buy a house.”
“I found all these houses for you. You need to buy one now.”
Basically after we started the blog and then we started getting media coverage, it wasn’t until almost three years after we retired that my dad was still hesitant but he started to see that other people thought that maybe I’m not an idiot, that because we’re not actually running back to work and we’re not actually destitute, that maybe it’s okay.
And then over time, every year we come back and he’s like, “Oh, you guys still haven’t run out of money. That’s interesting.”
And then he started reading the blog and he’s like, “Maybe this indexing thing you’re talking about actually makes sense.” And then the fourth year after we retired, he started to invest in index funds and using the investment workshop that we have on our blog.
So it was gradually getting him over to our side, gradually helping my parents see what we’re doing. And then now they finally get it.
Now they’re like, “You’re going to be fine.” They didn’t even freak out during this whole COVID thing.
I thought they were going to be like, “Oh my god. The stock market is crashing. What are you going to do?”
They were just like, “Okay, I trust that you know what you’re doing.”
Bryce Leung 33:36
I’m hearing a sense that you have an opinion on this because her theory is, even though we both came from Chinese backgrounds, her experience is much more traditional, is much more strict, because her parents were Mandarin-speaking.
Mine came from Hong Kong. They’re Cantonese-speaking. So they were much more willing to accept this more alternative lifestyle as long as the money was in place.
Do you think that there’s a big difference between those two cultures?
Andrew Chen 34:06
I have to confess, I don’t have an opinion about the difference between Mandarin versus Cantonese, if that has an influence. Hong Kong was historically more exposed to British ideas earlier.
Did that have an influence? I don’t know. It’s a sensible hypothesis.
I do think that ultimately your parents do want you to be happy, even if they have different ways of expressing it or even if they were raised at a time when the norms for happiness or the path to happiness was ingrained to be a specific way that doesn’t feel like it resonates with you.
Sometimes it just takes time to get them over to your side, like you said. And having their peers vouch for you and bring the news articles doesn’t hurt, for sure.
Kristy Shen 34:57
Yeah. One of the things that I noticed is the language barrier. Because the thing is I came to Canada when I was eight, so even though I can speak Mandarin, nobody ever taught me how to say ETF or index investing in Chinese.
How are you going to explain that to your parents? Because those concepts didn’t exist back then.
So I think just trying to explain it to them in their own language in a way that they would understand. It’s already a complicated concept to explain, but you have to explain it to them in their own language. That was a struggle.
If any of your listeners is having trouble trying to express it to their parents, I actually found this really great video that one of our readers made. He lives in Taiwan. I think he’s Vietnamese.
And he made this really good explanation for how FIRE works and what is index investing and how the 4% rule works. I can send you that link. You can share it.
Andrew Chen 35:47
I love it. I’d love to share it out with our readers, for sure. That would be super helpful.
Kristy Shen 35:50
Because I have so many Chinese friends saying, “How do I explain this to my parents?” I’m like, “I can’t explain it.”
Way beyond my language abilities. But he explained it really well.
Bryce Leung 36:02
Here’s how I was finally able to explain this whole yield stuff to her parents. I had to say it like “You know how every Chinese New Year, your uncle gives you a hongbao, a red packet?” And he goes, “Okay.”
“Now, imagine if that uncle owns a really big business and is giving you a hongbao as part of his profits.” He goes, “Okay, fine.”
“Now, imagine an ETF owns many different companies, and the size of the hongbao depends on how much of that ETF you own.” And he goes, “Okay.”
“Now imagine if the hongbao amount was enough for you to live on every year.” And he went, “Oh, okay. I understand that.”
It was really tough to explain because I don’t even know what the Chinese word is for financial independence. I don’t know if that exists. So we had to go back to something that he understood in his own language, and it took about two years to explain.
Andrew Chen 37:08
Oh, wow. I’m curious, what were they putting their money in if not stock investments prior to learning this stuff from you guys?
Kristy Shen 37:19
Bryce Leung 37:23
Her dad had also worked for the federal government, so he had a big pension. It was basically just handled for him.
He could have taken that money and bought Bitcoin and he’d be totally fine because the pension was more than enough for him to live on.
So he didn’t need to learn any of this stuff. That’s why he never did.
Kristy Shen 37:37
But my mom doesn’t have a pension, so for her, it was like house, house, house. That’s the only thing you’ve got.
Andrew Chen 37:42
At some point, you’ve finished paying off the house, though, right?
Kristy Shen 37:49
And then what do you do with the money afterwards?
Andrew Chen 37:50
Kristy Shen 37:51
My mom would just put it into a savings account because she doesn’t understand that inflation erodes your money. She doesn’t understand that concept at all.
She’s just like, “What else is safer than a savings account? Just put it in a savings account and then do nothing with it.”
And then just watch it. That’s it. You’re done.
Bryce Leung 38:08
Or more likely, she would have gotten a bigger house or bought an apartment building.
Kristy Shen 38:13
True. She might have upgraded the house. Either put it into a savings account or upgraded the house, that’s the only concept they understand in terms of investing.
I actually see this a lot with immigrants especially that don’t really trust the government. They may have come from another country where there’s a totalitarian government, where they believe that if you put it into the stock market, the stock market is rigged. In China, it is.
So then the government could just take your money. So then the only way to actually preserve your money is to put it into a physical asset. If you can’t touch it and it’s not tangible, then they don’t trust it.
That seems to be ingrained in a lot of immigrant mindsets, especially people who came from places with totalitarian governments.
Andrew Chen 38:56
Yeah. I guess from their perspective, it does make sense. The fear is not totally irrational given their life experience, for sure.
For the better part of the last four or five years, you guys have been essentially nomadic full time travelers. What are the most memorable places you’ve traveled to since you FIREd, and what made them memorable?
Kristy Shen 39:18
I think my favorite place is definitely Chiang Mai, Thailand. It was also the most surprising place because we almost didn’t go there because we thought it would be too dangerous.
Bryce Leung 39:29
Yeah. It was right around that shrine bombing that happened in 2015.
Kristy Shen 39:40
Bryce Leung 39:41
Yeah, in Bangkok. And we’re just like, “Uh-oh, there’s ISIS militants operating in Thailand.”
We were in Malaysia at the time. We almost didn’t go. But I’m so glad we did.
Kristy Shen 39:49
I’m so glad we went.
Bryce Leung 39:50
Because our friend Jeremy from Go Curry Cracker, he happened to be in Chiang Mai. And we were fans of his, so we wanted to go up and meet him. And he was like, “Yeah, sure, come on up.”
So that made us go take a train from Malaysia, went up to Chiang Mai, and then we just fell in love with the city. We were just there at the beginning of this year too. Man, I wish I was there right now.
Andrew Chen 40:15
Were you guys in Thailand when COVID hit?
Bryce Leung 40:17
Kristy Shen 40:18
Bryce Leung 40:19
When COVID hit, there were actually people from Wuhan that were traveling into Chiang Mai. We still didn’t quite know what was going on at the time.
Kristy Shen 40:35
This was back in January.
Bryce Leung 40:36
This was back in January. We were hearing these stories of this thing that’s happening in Wuhan.
The Thai government was like, “Is it here? Is it not here? We’re not sure.”
But immediately when there were rumors that it’s starting to spread here, everybody wore masks, without an exception. Everybody was wearing a mask, including us.
If you didn’t wear a mask, people would tell you, “Hey, cut that out. Put that mask back on.”
And that’s the attitude that happened all over Southeast Asia, whether it was Taiwan or Singapore or Malaysia. Not so much Indonesia, but Vietnam definitely.
The minute anybody knew about this thing, everyone was wearing masks. That’s why the death rates have continued to be so low in Southeast Asia.
There’s 25 deaths in Thailand total. In Vietnam, they have zero. So seeing the difference of the response in Asia versus in the U.S. has been very frustrating.
Andrew Chen 41:38
When did you guys make the decision to repatriate versus stay? Because I’m sure at some point, you were like, “Do we stay or go?”
Kristy Shen 41:47
It was a tough decision because we wanted to just ride out the pandemic either in Thailand or Taiwan, because we knew that Taiwan’s response was really good at the time.
Our government did say that it was a good idea to come back. But I think at that point, even with that, we were thinking maybe we should stay in Asia. But we had a family emergency, so we actually had to come back.
Bryce Leung 42:07
We had to come back for an unrelated reason. And then now we’re waiting for everything to look back up again.
Andrew Chen 42:11
Gotcha. Pre-COVID and all this craziness, when you guys were traveling full time normally, do you always travel together, or do either of you travel solo without the other? How do you decide?
Bryce Leung 42:29
We’re always together. When we travel, it’s basically just the two of us with our backpacks, and that’s everything we own in the world.
In terms of location, for the first year or two years, it was just try to hit as many countries as possible. We spent three months in Europe because of that 90-day Shengen thing.
So we were bouncing around Europe. And then after our visa was up, we flew over to Asia and then we started exploring Southeast Asia there too, as well as Japan. A few years after that, we went down to South America and we spent three months in Mexico.
We were just sampling everywhere and just seeing what cities that we really liked. It turns out Thailand, specifically Chiang Mai, is really high up on that list. But also places we really enjoyed were Eastern Europe, Poland.
Kristy Shen 43:26
Oh, yeah. Lithuania, Latvia.
Bryce Leung 43:28
Kristy Shen 43:29
Estonia. That was very surprising because not a lot of people will go there. It’s very underrated.
Bryce Leung 43:33
And Portugal. I love Portugal. I think of Portugal, I think of those Portuguese egg tarts and I’m just like, “Oh, man.”
Kristy Shen 43:40
Pasteis de nata.
Bryce Leung 43:41
The pasteis de nata.
Andrew Chen 43:42
How do you decide where to go and how long to stay? And how does budget and the notion of safe withdrawal rate influence those decisions?
Kristy Shen 43:52
Initially, it was just put as many of our bucket list items on there as possible, like places that we could never get to when we were working because we only had two weeks of vacation a year.
And then as time went on, it became opportunities, like when we were invited to speak in the UK, for example. It’s like, “We’re going to the UK. Since we’re going to be there, where around the UK can we travel to?”
“Look, there’s a flight to Germany. Let’s go there.”
Now it’s actually turned more towards the social aspect of it, meeting our friends who live in different places all over the world. And we met them as a result of some of these conferences, one of them being Chautauqua.
We have friends in New Zealand. We were going to visit them before COVID hit. We have friends in Germany, UK, Ecuador.
People invite us to go visit them. It’s like the world became one city and we’re just visiting our friends in different neighborhoods. So I think over time, it’s less been about the travel and more about the people.
Andrew Chen 44:51
Yeah, that makes sense. That’s really great.
Did you travel continuously, or do you return to Canada for stretches at a time? And has that changed?
Bryce Leung 45:00
Yeah, we come back at least once a year every year to see family and catch up with our friends.
Kristy Shen 45:07
Yeah, during the summer when it’s livable.
Bryce Leung 45:09
Yeah. We can’t do snow anymore, and I don’t miss that at all.
This is the first year we’ve been back. We were forced to be back when there was snow on the ground, and it reminded me of how much I hated snow.
Kristy Shen 45:23
Yeah. And we sent messages to our friends in giant cap letters saying, “Why is it still snowing in May?”
And they’re like, “It’s Canada. What do you think? That’s why.”
Bryce Leung 45:32
You’re in California. Your weather is perfect all the time. You don’t have forest fires or whatever.
Andrew Chen 45:37
Oh, yeah. That’s true. I’m curious, in what ways does travel feel different to you as a long term traveler versus just a vacation traveler?
I imagine the slow travel, loneliness, homesickness. Were those ever issues? And how did you deal with them?
Bryce Leung 45:55
There’s a difference between a tourist and a traveler because tourists like to come into a city and absorb the culture, whereas when you’re a slow traveler, you want to integrate with it more.
You want to get to know the cities. You want to get to know the local area, not just the tourist traps and the castles and the kind of places where all of these Chinese bus tours are going to, but you’re actually living there and cooking and meeting friends and getting there to see how the people there live, and you actually participate in that.
It was in Spain that they introduced us to the joys of hamon.
Kristy Shen 46:39
The Spanish ham.
Bryce Leung 46:40
That Spanish ham thing. And I was like, “Oh, man. I didn’t know that this stuff would be so good.”
In Portugal, I learned how important port is and how awesome it is. Every night, we’d have, like, a glass of port with some cheese, and I was like, “These guys know how to live.”
And of course, in Chiang Mai, it’s all the Asian food everywhere, all the night markets. The thing that we love about the cities that you don’t get to see as a tourist is what the locals do for fun and to blow off steam and how they live. The Thai night markets are my favorite thing in the world to do.
Kristy Shen 47:14
Yeah, because when you’re going on vacation, you don’t have enough time. You have two weeks, three weeks maximum.
You don’t have time to absorb any of the culture. You don’t have time to go to the local places and eat the local food. You basically just have this checklist of big things, mostly overrated things that you want to check off so that you can go home and brag to your friends about all the places you’ve been to.
But when you actually have time to slow down and absorb the culture, you really do need at least a month to really get to know the place, because without meeting the locals and without them taking you to all the local hangouts and explaining the history of their food and the history of their culture, you don’t really understand a place. You’re just skimming the surface.
Over time and picking up the different languages, learning different words in those different languages, now the travel has become about learning and not just consuming.
I think vacation is about consuming versus long term travel is about learning and bettering yourself because it really does open up your mind to the different cultures. And it makes you quite humble because it makes you realize how insignificant you are in the grand scheme of things.
A lot of people in the States, when they go to other countries, they’re like, “What do people think about us?”
“What do other people think about the Americans? You guys must be talking about us all the time.”
Not really. Everybody is doing their own thing. They’re thinking about their own country.
They’re not really thinking about you at all. So you just realize you’re very insignificant in the grand scheme of things.
Andrew Chen 48:42
That’s a really interesting distinction between consuming versus learning. I hadn’t heard it framed that way before, but it definitely resonates.
Did you guys ever struggle with loneliness?
Kristy Shen 48:54
Bryce Leung 48:56
We had each other. We write about it on the blog, and everyone just goes, “Wow, it’s so glamorous.”
And it is. It is pretty awesome. But I have seen some travelers get burned out and they want to go back home.
Most of the time, it’s single people. It’s really tough to date when you are a long term traveler because everyone you meet is on the way out to somewhere else.
You meet each other in hostels. And one night stands might be fun for a while, but it’s really hard to get a long term relationship while you’re on the road.
I know only of one couple that was successfully able to do that. They had to meet each other in another city and then start changing their travel plans so they could travel together. But even that is pretty rare.
Kristy Shen 49:39
I think our loneliest experience was initially when we went to Mexico and we didn’t really speak Spanish. For Americans, you guys have an advantage.
We learn French in school. We don’t learn Spanish.
I didn’t know how to say anything, even the most basic Spanish. So it was really a fish out of water feeling, and I didn’t really know any of the locals.
Eventually, because we met up with people and our Airbnb host introduced us to some of their friends, and then picking up some Spanish words here and there, taking some private lessons in Oaxaca, that helped us get more used to the language and getting to know the people and things like that.
Even if you’re a couple traveling together, it can feel isolating if you’re in a country in which you don’t really know the language or the customs in the beginning when you’re trying to learn.
Andrew Chen 50:25
Do you guys take language classes in a lot of the places that you go to?
Kristy Shen 50:32
I was using Duolingo for a while. In the beginning, it was very difficult because we were moving in different countries every couple of days.
Maybe we stayed in a country at the longest for a week, so it was very hard to absorb any of that. Everything kept changing.
But now, as we’re recognizing where our community is and where our favorite spots are, we end up going and learning more of the languages, trying to take classes with local teachers and online classes and things like that. So it’s gotten a lot better.
Bryce Leung 51:01
Yeah. Initially, the first thing that we did when we went into a city is to find the local Chinatown.
Kristy Shen 51:08
Just ask them in Mandarin.
Bryce Leung 51:09
Because then you’ll be able to communicate with them instantly. And there’s Chinese people everywhere.
Andrew Chen 51:12
That’s funny. Then you get all the tips.
Bryce Leung 51:15
Yeah, exactly. And then you can start talking to them.
We were in Panama and then we found a Chinatown there, and they’re just like, “What are you guys doing in Panama?”
And then her family was, like, “railroads.” And I was like, “Why is it always railroads?”
Andrew Chen 51:28
Yeah. The Chinese diaspora is vast, so you can usually find some Chinatown or some Chinatown community in most places you go, which is one of the benefits.
Kristy Shen 51:39
Yeah. That’s our cheat code.
It’s interesting because after you have been to so many different countries (I think we’ve been to over 40 now in the last five years), you end up getting confused with the code-switching between languages between countries.
When we were in Germany, I think you said “hola” to the person there.
Bryce Leung 52:01
I forget which country I’m in. I start speaking Portuguese to the Germans, and then they’re like, “What?”
Kristy Shen 52:06
Or you’re like, “Obrigada” instead of “Danke schön” in Germany, and then people are like, “What?”
“Wait, hold on. Which country are we in again? Give me a second to figure out which words should I be saying.”
Andrew Chen 52:18
What is the community of long term nomadic travelers like as you’ve experienced it? The sense of camaraderie, if any.
Bryce Leung 52:28
The FIRE people who are also traveling, there’s not a lot of it. We’re basically it, as well as two or three people that we know of.
Because retiring early is really rare. Long term travel is really rare. So the combination of that is extremely rare.
The closest analog that I was able to find out there of a group of long term traveling community is called the digital nomads. These are the people who got fed up with their corporate job in America, and then they took their laptops and they decided to start traveling and then building a web-based business, like a blog or a podcast or Amazon FBA, which is really popular.
And these are the guys that go to co-working spaces and they all tap on their laptops and they know each other. There is no one that we know there from the FIRE community. That’s another community that we sometimes hook up with.
We just went to a digital nomad conference that was happening in Chiang Mai, so we met up with a bunch of them. It turns out some of them even knew who we were because they were doing this digital nomad stuff and then they stumbled across the FIRE blogs and then they went down the rabbit hole that way.
But the big difference is those guys still need to keep working because they’re not actually retired. They simply moved their job into the digital online sphere and are continuing to build their businesses and work while they’re traveling.
Andrew Chen 53:51
Interesting. Throughout all this time, the last four or five years that you guys have been traveling, have there been any large unexpected expenses that have come up that have put stress on your retirement finances?
Kristy Shen 54:06
Yep. There were two incidences. His grandparents passed away and then we had to cancel a lot of hotels and then book plane tickets last minute to fly back.
But luckily, because we bought World Nomad Insurance to cover all our medical expenses, and then trip cancellation was also part of that, they actually covered what would have been $3000-5000 of unexpected expenses very last minute.
Which is why we like to have all these backup plans because what’s the worst case that could happen? If we’re going to be out this much amount of money, we need to have insurance to cover it in case it’s some sort of medical bill that costs us hundreds or thousands of dollars, or we have to cancel our trip. What would we do in that case?
Bryce Leung 54:51
Yeah, that was the biggest one. You think it would be medical, but medical is actually quite affordable outside the U.S. You know this.
Andrew Chen 54:59
Oh, yeah. It’s very topsy-turvy here.
Bryce Leung 55:03
When we go into a doctor in Portugal or Poland, the bills will come back to be $50.
Kristy Shen 55:10
Yeah. Getting our teeth cleaned in Poland was $30-40 per person.
And then when we were in Malta, he had this really bad rash on his side and we went to see a doctor. They didn’t know what to do with us because they were like, “You don’t have European passports.”
And then we just showed them our Canadian passports. They’re like, “Okay.” They just sent us in to see the doctor.
I’m like, “I’ll just pay with cash afterwards.” And then afterwards, I was like, “It’s going to be a couple hundred dollars. I don’t know how much this is going to be.”
And then they’re just like, “It’s fine. Don’t worry about it.”
They’re like, “I don’t know what to do to charge you. You’re not European citizens. Don’t worry about it.”
And then we took the prescription they gave us to buy the cream, and it was two euros.
Bryce Leung 55:53
Because she’s being paid by the government, so she gets paid no matter what.
Kristy Shen 55:56
It doesn’t matter. She doesn’t really care.
Bryce Leung 55:57
So she’s like, “I can’t figure out how to make the computer system take your money.”
Kristy Shen 56:02
Even coming back to Canada, we always buy expat insurance. Initially, we bought travel insurance, but after the first two years, we lost our Canadian medical insurance while traveling, so now we have to buy expat insurance.
So we’re similar to your situation as American where we don’t have Canadian health insurance when we are traveling around, so you have to buy expat insurance that covers any kind of medical needs.
And then when we come back in the summer, we have to pay out of pocket when we come back to Canada. And even then, when we went to see the doctor, it was $40. So even then, it was not crazy expensive.
Andrew Chen 56:34
Oh, wow. This is super interesting because I thought healthcare is universal in Canada, but it sounds like you can lose it. How do you lose it?
Bryce Leung 56:43
If you’re outside of the country for more than seven months…
Kristy Shen 56:50
Out of a year.
Bryce Leung 56:51
…then you need your coverage. And then we just became uninsured, so we had to buy private insurance just like you guys.
And we even use similar companies that U.S. are used to, like Aetna, Cigna. These companies offer expat insurance.
But because the cost of healthcare is so much cheaper outside of the U.S., because we were not actually physically present in the U.S., the price of the plan was almost nothing. It was like $100 a month for the two of us.
Andrew Chen 57:20
Kristy Shen 57:21
For half a million dollars of expenses.
Bryce Leung 57:24
And that covered us everywhere except the U.S. If we had set foot inside the U.S., we’d have to buy additional supplementary insurance which cost three or four times more.
Andrew Chen 57:32
Bryce Leung 57:34
To some of the readers or some of the people that ask us about “What do I do about health insurance?” get out of the U.S., honestly.
Because as soon as you get out of the U.S., you don’t have to worry about it anymore. Even if you have to pay for it out of pocket, it doesn’t cost that much.
Andrew Chen 57:48
Can you guys reinstate your Canadian insurance, or is it lost for good?
Bryce Leung 57:53
No. Once you settle back in Canada and you stay there for more than 90 days, then your insurance comes back.
Kristy Shen 58:00
Yeah, but there’s a holding period. When you come back, you have to get additional insurance.
Because let’s say you come back to Canada and the first month you find out you have cancer or something. You have to wait at least two more months before you actually have any coverage. So we just cover any gap that we have with additional insurance.
Andrew Chen 58:17
I see. Even during that gap period, you don’t get excluded because of a preexisting condition or anything like that?
Kristy Shen 58:25
Andrew Chen 58:26
That’s a very American concept.
Kristy Shen 58:28
Very American. Yeah.
Andrew Chen 58:30
I see. Interesting.
How does it work for expatriate Canadians who are just working abroad? Do they lose their insurance too?
Bryce Leung 58:43
Yes. They would lose their Canadian health insurance.
And for expat Canadians, they would get a work visa. They would then move to the new country. And then that new country, whether it’s Portugal or whatever, they would then fall under their system.
Jeremy from Go Curry Cracker, because his wife is Taiwanese, he moved to Taiwan. And after staying there for a certain amount of time, he became eligible for Taiwanese health insurance. So he’s covered under the Taiwanese health system.
Andrew Chen 59:10
Bryce Leung 59:11
We’re a little weird in that we move around between countries using tourist visas so often that we never actually become resident in any other country. We’ll stay in a country long enough to become covered under their health insurance system, so we have to buy supplementary insurance.
It’s called expat insurance. It’s just your own insurance companies. They’re American insurance companies.
Andrew Chen 59:38
So it sounds like when you’re traveling, that’s how you do health insurance, through these expat insurance schemes?
Bryce Leung 59:42
Andrew Chen 59:43
Since you guys mentioned it, what country do you file taxes under?
Bryce Leung 59:51
We continue to file taxes under the Canadian taxes. If I were to stay for six months plus a day, 183 days (it’s like a magical number), that’s when you become tax resident of a new country. In which case, you become non-resident of your old country and become tax resident of your new country.
But because I never stay in any place long enough to become tax resident in a new country, I retain my old country’s tax residence. So I still continue to pay community taxes and file tax returns back in Canada as if I live there but I don’t.
Andrew Chen 1:00:23
Bryce Leung 1:00:28
You guys have a citizen-based taxation system, so no matter where you live, you have to keep filing American taxes. But there’s something called the…
Andrew Chen 1:00:38
Foreign earned income exclusion. It’s another one of these quirks about America that Americans are taxed on a worldwide basis.
By breathing, you’re taxed anywhere in the world. The only place you’re exempt is on an intergalactic scale outside of the earth.
But Uncle Sam is definitely going to be after you. But you get some credit back if you’re taxed by local authorities as well, up to a limit.
Bryce Leung 1:01:05
Yeah. The American tax system is amazingly complicated. Jeremy’s site, Go Curry Cracker, he spends all of his day figuring out how to stack all the different systems together so that you end up not paying any taxes.
Andrew Chen 1:01:21
Bryce Leung 1:01:24
I’m reading some of his stuff and it’s incredibly dense. I was like, “Oh, man. This seems like a lot of work.”
Andrew Chen 1:01:28
Yeah. He’s definitely an optimizer. But if you don’t have to deal with that because you don’t owe U.S. taxes, then you can sidestep all that stuff for sure.
Bryce Leung 1:01:37
Sure. It’s because he earns money from his blog that he has to report. If he were just purely retired and not earning anything, then he wouldn’t pay taxes.
Andrew Chen 1:01:45
Yeah. After all this time (you guys have been free for five years), what does your portfolio look like now five years later?
Bryce Leung 1:01:53
We have earned some money from our book. We’ve earned money from our blog. But we keep it separately in another account because we’re still living off of the initial amount that we’ve saved up because we want to keep the experiment as pure as possible.
But I think at the beginning of the year, we were sitting on $1.3-1.4 million. It’s gone up during the past five years.
And we’ve kept our spending at $40,000. We haven’t really even needed to adjust for inflation.
But the stock markets have been rampaging. And then, of course, COVID hit. So now it’s somewhere between that and $1.2 million.
Kristy Shen 1:02:33
I think it has recovered a lot, though. We’re still only down about 2-4%.
Bryce Leung 1:02:40
Kristy Shen 1:02:40
And this year, our cost of living has actually plummeted, shockingly.
Because I was like, “We’re going to come back to Toronto. Everything is going to be expensive. It’s going to be super annoying.”
And somehow it’s not. And I’m projected to spend about $35,000-36,000 this year because COVID has made it so you can’t spend any money even if you want to. Nothing is open.
Bryce Leung 1:02:58
What we didn’t realize is that in the years since we’ve left Toronto, and I’m assuming a lot of big cities in the U.S., Airbnbs have just sprung up everywhere. People have started buying 15 units of condo units and then running them as hotels.
And this was having the effect of making the housing market even more expensive because now you have 15 units that you can’t give to the residents of the country, and it’s just making everything worse.
And then once COVID hit, tourism dried up overnight. All of these Airbnbs, they couldn’t list at all.
We were downtown, right in the middle of the city when we first came back, and we were self-isolating at the time because we had just returned back to Canada. A unit that was right next to the CN Tower where it normally would have cost something like 100-200 U.S. dollars a night.
Kristy Shen 1:02:58
It was 115 U.S. dollars up per night, and then it plummeted down to 39 U.S. dollars a night.
Andrew Chen 1:04:03
Kristy Shen 1:04:04
This is a bedroom on the 33rd floor overlooking the CN Tower.
Bryce Leung 1:04:08
Because nobody could rent to anybody, so they had to drop the prices down significantly. So all these units that were now empty Airbnb units, the owners are now panicking because they’re cash flow negative. They’re now being forced to put them onto the rental market, and it’s actually causing rents to drop because there’s all these units coming onboard.
In a strange way, we’ve actually been able to save money by going back to Toronto, living in the highest cost area of Toronto.
Kristy Shen 1:04:36
It’s crazy. I was looking at our April expenses, and in April, we spent less money living in Toronto, the most expensive city in Canada. We spent less living here than we did in Thailand in January.
Andrew Chen 1:04:50
That’s insane, guys.
Kristy Shen 1:04:52
It’s crazy. I couldn’t believe it.
Bryce Leung 1:04:53
Because restaurants are closed down too.
Kristy Shen 1:04:55
We had to learn how to cook.
Andrew Chen 1:04:58
I’m sure after great Thai food for cheap, that’s hard to give up.
Kristy Shen 1:05:04
I was like, “What is this? We went from always eating out and getting massages every day to cooking every single meal.”
I was like, “What? We’re not going to be able to do this.” But we picked up some skills inadvertently as a result of this.
Andrew Chen 1:05:18
So you guys are basically living at hostel rates but in a condo high rise. Are Airbnb owners starting to liquidate their homes and actually sell them? And is that having an impact, as far as you can tell, on sale prices?
Bryce Leung 1:05:32
Yeah, it’s starting to come up. Back in March when COVID officially hit the U.S. and Canada, a lot of banks allowed more people to defer their mortgages for six months or so. That helped and prevented people from needing to panic still, but those six months are going to be up in September.
There’s this thing that housing analysts are talking about called the deferral cliff where if the jobs are not back by September, their mortgage is going to restart again, and then they’ll be either forced to sell or just lose money.
So it will be interesting to see what happens when September rolls around. And this is going to be for you guys as well as us, where it might actually cause a housing crash because everyone is going to be selling at the same time.
Andrew Chen 1:06:19
Yeah. If you have cash to invest, it could be a good opportunity to buy stuff.
Kristy Shen 1:06:25
We’re thinking about it.
Bryce Leung 1:06:26
We’re thinking about it, but we’ll see what happens.
Andrew Chen 1:06:32
When you guys think about the career and life paths of classmates and peers, one thing I’m curious about. You guys sound really grounded, very healthy in terms of where your mindset is. How do you not let what your old friends and peers are doing get to your head?
Whatever success they may be having, whatever pretty Instagram lives they may be living, is that something you ever grapple with?
Bryce Leung 1:06:59
No, we’re living the pretty Instagram lives. We’re the people that make them feel bad.
Kristy Shen 1:07:04
Actually, we went back to visit his coworkers. The first year, they were making jokes and saying, “In two years from now, you guys will be crawling back. What kind of pillows would you like for your knees so that you don’t scrape them?”
And then we came back last year because we were doing our book promotion. And after telling them about our trip, because a lot of people were asking us, “Where did you travel to? What’s it been like being retired?”
About half an hour of this later, his ex-boss was like, “You know what, guys? I think it’s time to go.”
Bryce Leung 1:07:33
We had to get out of the office because I was making it seem too glamorous.
Kristy Shen 1:07:36
I’m like, “This is what happens when you let in the riffraff. So that’s on you.”
Andrew Chen 1:07:40
That’s so funny. As you’ve gotten older, I’m curious, has your perspective changed at all in terms of whether this current nomadic long term travel path you’re on is something you would like to continue forever?
Do you ever have any tugs to settle down or start a family? If so, how do you wrestle with these thoughts?
Kristy Shen 1:08:03
I think it would just look different. We’re always going to be traveling in some capacity. If we end up having kids, we maybe won’t be flying back and forth between here and Thailand, but maybe we’ll get an RV and then drive around Canada or go to Australia and drive around Australia.
So I think it’s going to change. And then maybe we’ll try to do world schooling because I’ve always found that community really interesting.
But I don’t think we’re ever going to just settle down in one area. I just don’t think it fits our personality. We like meeting new people and we like learning too much.
I feel like the challenge of having to change locations, even in Toronto right now, we’re changing Airbnbs and trying out different parts of the city. And I find that interesting because it challenges my brain to have to problem solve. If I just stay in one place for 10 years, it gets too boring and everyday ends up being the same and it’s not challenge enough.
But that’s my perspective. What’s your perspective?
Bryce Leung 1:09:03
I think that travel is a permanent part of our lifestyle, but it will likely slow down. When we have kids, it won’t be like change your Airbnb every three days or something like that.
It would be like we’re going to spend our winter in Portugal. And then after that, we’re going to go here. And then we’re going to come back for five months.
So it will slow down, but I think it would always be like that. I caught you the other day looking at flights to Portugal, because she’s starting to get…
Kristy Shen 1:09:31
Bryce Leung 1:09:32
“Are they open yet? Are they opening the borders?”
Kristy Shen 1:09:34
Bryce Leung 1:09:35
So I don’t think that we’ll ever become just a suburban family.
Andrew Chen 1:09:42
When all the COVID stuff finally comes to an end, hopefully sooner rather than later, what adventures from your bucket list are coming up that we should keep an eye out for in terms of future Kristy and Bryce sightings?
Kristy Shen 1:09:58
I think we’d like to meet our friends somewhere between here and the UK. One of the things we’re talking about is going to the Azores.
It’s actually relatively underrated. Hopefully, it stays that way. I don’t know for how much longer.
But it’s only about a five-hour flight away. And then we have friends in Europe where it would make sense for us to meet in the middle.
Bryce Leung 1:10:17
We also have Chautauqua coming up.
Kristy Shen 1:10:20
Bryce Leung 1:10:20
This year, Chautauqua got creamed for obvious reasons. But next year, we’re looking into Croatia as an interesting place to be.
It’s where Game of Thrones was filmed. We’ll likely be there next year after that. And then who knows?
Kristy Shen 1:10:40
Maybe writing another book.
Bryce Leung 1:10:41
Yeah, we’re planning on another book. I’m not sure what it’s going to be yet, but we’re working on another book. That’s also fun.
Andrew Chen 1:10:52
Got it. Kristy and Bryce, this has been super enjoyable, insightful. I’ve loved our conversation, and I think there’s a lot of nuggets of insight packed for our listeners.
Where can our listeners find out more about you, what you’re up to, all the good stuff you’ve got going on?
Kristy Shen 1:11:12
You can contact us on our blog at millennial-revolution.com. All our social media contacts are on there. I don’t use social media that often, so it’s probably better to send us an email.
And then you can find our book, “Quit Like a Millionaire” in any bookstore near you. It’s sold in all bookstores. Looking forward to hearing from you.
Andrew Chen 1:11:37
Cool. We look forward to sharing this with our audience, and we’ll share all those links in the show notes.
Thank you so much again for taking the time to chat. All best wishes on getting through COVID in Toronto and all your travels beyond.
Kristy Shen 1:11:53
Andrew Chen 1:11:54
Cheers. Take care.