You may have grand plans for early retirement. But if your spouse isn’t on board, you’re going to face an uphill climb.
Oh, but you say: “why would anyone not be on board with early retirement?”
Lots of reasons…
One might be because of the SACRIFICE required. Lots of people want to live and enjoy life NOW, not put it off 10-15 years for early retirement.
Or: your spouse might be more financially conservative than you. They might not feel confident that y’all really have enough saved up.
Or maybe they’re worried about doomsday scenarios like catastrophic medical costs that could bankrupt you.
They might simply be happy with their job and don’t want to give it up.
Oh, but you think: “It’s OK, I can early retire but my spouse doesn’t have to.”
Nice try!
If you think you’re going to retire, kick back, and relax while your spouse works, get ready for an unpleasant surprise…
Retirement travel not only sucks, is no fun, and is physically harder when done solo vs. with your spouse…but on top of that, you’ll also find yourself growing apart, and even fighting often, as you start to live different lives.
Resentment may also build if your spouse feels you’re not contributing enough around the house.
Oh, but you worked hard to retire early, so you deserve to chill and not take on extra housework?
Uh huh…try telling that to a tired spouse who just put in a loooong day at the office.
Oh, your spouse just got home from work, and you want to go out to a nice dinner and night out on the town? Get ready for disappointment when all they want to do is shower, watch some TV, and fall asleep…
…Also, forget about moving somewhere nicer, cheaper, warmer, etc…at least, not before they quit working.
You’re getting the point, right?
This situation is more common than you might think.
So, how do you get your spouse on board with early retirement – and all it entails?
Because I can tell you, if you don’t have a plan to address this, your early retirement probably won’t be very enjoyable. In that case, what was it all for??
This week, I chat with Caroline Ceniza-Levine, a career coach now early retired, who herself faced this situation for many years before finally convincing her spouse to get on the FIRE train. We talk about tips and advice for how to convince your spouse about early retirement.
We discuss:
- Caroline’s own path to FIRE – from music, to strategy consulting, to corporate, to coaching, to FIRE
- Her spouse’s main concerns when it came to early retirement
- How she got her spouse on board, what she would have done differently, and her advice for others who are struggling to convince their partner about early retirement
- Plus: how Caroline handles healthcare / insurance as an early (pre-Medicare) retiree, her passive rental real estate portfolio breakdown and how she manages her rentals remotely
Have you ever been at odds with your spouse about early retirement? What were their main concerns? Were you able to change their mind – how? Let me know by leaving a comment.
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Links mentioned in this episode:
- Costa Rica FIRE
- Money issues in marriage: why spouses fight about money, how to fight with empathy, and how to convince your spouse to FIRE (HYW065)
- Schedule a private 1:1 consultation with me
- HYW private Facebook community
Read this episode as a post:
Andrew Chen 01:22
My guest today is Caroline Ceniza-Levine.
Along with her husband, Caroline is the creator of Costa Rica FIRE, a website about location independent early retirement.
Caroline spent the bulk of her career in New York City, where she worked and raised 2 kids, and FIRE’d at the age of 46. She now divides her time between New York, Florida, and Costa Rica, and she manages (I think) 10 rental properties and a consulting business at the same time.
But it wasn’t easy for her to get to this point, because as we’ll talk about in today’s episode, it took real convincing to get her husband on board with the idea of early retirement. So I invited Caroline onto the podcast today to talk about this experience and to share tips and advice for individuals interested in early retirement who may not be entirely aligned with their spouse on the idea.
Caroline, thanks so much for joining us today to share your experiences and wisdom about financial independence, and all the things related to getting one’s spouse on board with early retirement.
Caroline Ceniza-Levine 02:15
Well, thanks for having me on the show, Andrew.
Andrew Chen 02:18
I’d love to start just by learning a little bit about your career background, even though I know you’re not working a traditional corporate job anymore. I was looking at your LinkedIn, and I saw that you attended the Juilliard School Pre-College Program for piano performance.
And then you later did your undergraduate studies in the dual degree program at Columbia and the Manhattan School of Music, which is very impressive typically for students who I imagine are very serious about potentially pursuing a music career. Was that your goal at the time?
Caroline Ceniza-Levine 02:51
By the time I got to college, I realized I wasn’t going to be a performer, but I really enjoyed, honestly, doing a lot of different things. I have always really enjoyed the arts, and I wanted to be very involved in it, and doing the dual program enabled me to do that.
And that was really all that it was for me: just being involved in music and majoring in it, but then also majoring in economics. And then, as soon as I left college, I had a pretty traditional job. We actually have the same career early on: we were both management consultants.
I was a strategy consultant, pretty typical type A, long hours, volatile hours type of job. I did that for four years, and then moved into recruiting and HR. So, I had a pretty traditional corporate background up until I was in my mid-30s.
Andrew Chen 03:46
Is it fair to say, then, you knew pretty early on that you wanted to pursue more of a corporate career out of college?
Caroline Ceniza-Levine 03:53
Yeah, for sure. And I had that upbringing where it was “Go to college, get a good job, and save for your retirement, and retire at 60.”
So, FIRE was not on my radar, and doing a portfolio type of career, which is what I feel like I do now where I take on a lot of different projects that interest me, that was also not on my radar. So college was really where I felt like I could play and “This is going to be my last chance to do some of the fun stuff, like the arts, and some of the serious stuff, like go to school.”
Andrew Chen 04:31
Talk to us a little bit about your path to FIRE. If I understand correctly (and please correct if anything is incorrect here), you had two kids, you FIRE’d at 46. Did you early retire after your kids were out of the house?
Caroline Ceniza-Levine 04:47
Yeah, that’s how we planned it. My husband and I were lucky enough that we met in high school, which people can’t always say. So we built our lives together, truly.
We dated throughout college, and as soon as we graduated, lived together, got married, had our first kid. This is within two years of graduating college. So we lumped together a lot of the life stages early on.
He was also a consultant, so we both had jobs with good salaries and we were able to put money away, and had that mindset around “We’re going to do this for 40 years, and then we’re going to retire.”
It wasn’t until I was in my early 30s where I started to think about it, because at that point, we had two kids and they were both in school. And even though at the time, I was in HR at this point, which had a better schedule than management consulting, corporate jobs of any kind of importance really are not conducive to flexible work.
It was just so difficult. I thought, “There’s got to be a better way.” And that’s when I started just reading about what other people were doing, and came upon this concept of FIRE.
For me, it was less about “I’m going to just stop working entirely,” but I was really attracted to this notion of I’m going to untether my financial dependent needs with my job, so that I could actually choose work just based on the enjoyment factor. And it brought me really back to my college days where I was just taking things for the joy of taking them, and taking a music degree even though I was not going to be a performer.
Andrew Chen 06:48
At what age did you start actually crystallizing the notion that “I actually want to pursue this decoupling of income from job”? And what actions did you then take as a result?
Importantly, how many years before actually successfully decoupling those things from your corporate job did you start to make those lifestyle changes, if any?
Caroline Ceniza-Levine 07:15
It was really in my early 30s that FIRE got on my radar. Up until then, we were just establishing our careers, we had two small children, and I don’t even honestly remember anything else. So it was this big blur of just trying to juggle that in New York City, in which the New York minute is very real, a total 24/7 grind.
So I didn’t even start thinking about it until my early 30s. And the first move that we made was to buy a property that we were going to use as a weekend home that we thought of as “Hey, we could potentially retire here.” But also, because we didn’t even think of buying in Manhattan because it was just so crazy, we thought potentially it could be an income property or something.
So we started to at least think about “Can we start something that is separate from our jobs?” That really came on our radar because we started thinking about FIRE and this notion of you don’t need to have a job in order to have financial means.
That process started in 2002, so I was 31, and we started that in place. But even then, the idea was to just get started. I was not thinking that we would be able to do it because I just saw how expensive New York was.
I just did the math on two kids going to college. The numbers seemed so big at the time. For me, I was like, “Let me just get started and see where this goes.”
And then we bought two other rental properties five years after that, and then we were like, “Okay, this seems like it could potentially work.”
And this is where my husband and I diverged here because I was always the one that was like, “This is doable; let’s just get started. Let’s think about real estate. There’s got to be a better way to do this.”
And he was more of the “We have a really good thing here; I have a really great job. Things are really expensive. This is scary.”
We just temperamentally are different people, so that was really where you saw the divergence. Because in the beginning, when we were both working type A jobs, it was very easy to have a similar mindset about everything because we were both doing the same things, maxing out our 401(k), etc.
Andrew Chen 10:00
I want to delve deep into what some of those concerns were, and how you ultimately got alignment. When it comes down to brass tacks, what were the key objections or concerns that your husband had when it came to taking the full plunge and wanting to pursue FIRE? And if you could take us back to that time, how did those conversations start?
Caroline Ceniza-Levine 10:30
I will be honest with you that it wasn’t one of these dramatic filmed for Lifetime television where I said, “Let’s pursue FIRE,” and he said, “No, honey, let’s not.” It was never that overt.
When I talked about my interest in real estate, he was like, “Well, that seems like a good idea,” and then nothing happens because for him, it was like “Wow, that seems like it could be a good idea,” but out there for somebody else.” So it would be up to me to do things.
And I think that’s really just because he is very conservative in the sense of risk-averse. I consider myself risk-averse, but then when I stack it against my husband, he’s more risk-averse. I don’t consider myself a risk-taker, but certainly, compared to him, yes.
So I started thinking about real estate, whereas he would just look at the number, the price of real estate in Manhattan, which is where we were living, and say, “Well, that seems too high,” and then not go, “What if we don’t buy in Manhattan and perhaps do something else?”
So, that was always up to me. But I could see that real estate possibly could be a thing. That was one.
And then I started to think about “If we only did it through real estate, it would take a really long time, and we would just run out of hours in the day.” We still had two young kids. We still had these two big jobs.
So there was this notion of “We’re going to have to do something different.” So, really rather than me trying to convince him to do something different, I always just did the things that were different.
So, I left my corporate job and I started a consulting business, and I made the business replace my corporate income, and then exceed my corporate income. And then I could see for my own eyes that, yes, this is absolutely doable, and that we both happen to have a set of skills that lent itself to consulting, which is a very low-risk proposition because it’s not like you’re buying a factory and holding a lot of inventory. It really is something that you start without any capital.
Once I got him to say, “Don’t you want to leave your job now and potentially do what I’m doing?” so that he could untether his income from just one specific job and could really unlimit himself, but also so that we could flex our schedule a little bit more, potentially work on more real estate deals, etc.
But I left corporate by 36; he did not until he was 46. So you can see that this was 10 years that we’ve been talking about this, tweaking things, changing things. It wasn’t [inaudible] that he was jumping on me.
Andrew Chen 13:53
There’s a little bit of breakup, but I think I got all of the gist of that. Given that there was a decade gap, when you left the corporate world, were there difficult conversations that got forced in the open?
I know you started a consulting business and eventually replaced your salary. I’m assuming that didn’t happen on day one. How did that conversation go?
Caroline Ceniza-Levine 14:22
What I will say is that where we were on board with each other was that we, for each other, supported the other person’s decisions about their career.
He was not going to tell me, “No, you need to go back to your corporate job.” And I was not going to put my foot down and say, “You’re wasting away at a corporate job. You should go into entrepreneurship like me.”
So, we respected each other’s decisions. So it was really more of chipping away at the margins. It was convincing him to buy another property, to refinance a property to then invest in another property.
We now have (you’re correct) 10 rentals, and we did that over time, with the first one in 2005 and the most recent one in 2017 or 2018. Clearly, it was over a long period of time. We were buying and selling along the way, so it wasn’t something where, all of a sudden, we went from zero to 10.
And that’s what I encourage for everybody. You need to find a way to make it work so that you and your spouse both feel like you have agency and autonomy, and are respected in the decision process.
And I always felt like the onus was on me as the risk-taker to make an argument that the other person felt comfortable with, that I felt like “If I couldn’t convince him, then perhaps the opportunity wasn’t really that good, otherwise I would be able to make that sell.”
So I took that burden on myself to say, “It’s not because he needs to change somehow.” I started just getting creative about what my argument was.
Andrew Chen 16:17
That makes a lot of sense. Is it also fair to say that, all throughout, you had a shared philosophy on things like saving and investing and things like that? Maybe the early retirement part came later, but did you guys have shared financial values throughout?
Caroline Ceniza-Levine 16:35
We did. I think where we differed with that: I was an economics major, and I always had an interest in personal finance, so I was reading about it from day one. He did not.
So [inaudible] going to do his asset allocation or anything like that. And I [inaudible] your 401(k), and we’re going to do a 100% growth orientation at this point because we’re both young, and he was fine with that.
I will say that, in the beginning, he questioned a little bit, like [inaudible]. He was never a spendthrift. I was lucky that way in that we both have the same [inaudible] 401(k), and perhaps we should spend some of it.
I got over that hump by really asking him to keep the numbers. And because he was a computer person by background, and just liked tinkering with things, and liked measuring things, this gave him something to measure. So, over time, he could see how the savings were building up, and how the investments were compounding.
And then he convinced himself essentially. I didn’t have to talk him through it. He was seeing it with his own eyes.
Andrew Chen 18:12
In that decade between when you left your job and then he ultimately left his job, were there key moments when you could see that shift in mindset happening? And was there a day on which it was very clear that he had switched over?
Caroline Ceniza-Levine 18:36
I wouldn’t say that it was like a light switch over. I would say that it was still deal by deal in terms of “Let’s invest in real estate.” I think he could just see that my business was growing and was sustaining, so that it seemed just less of a risk.
Because at the point that he left, I was 10 years in business. And at the point that he was really starting to think about it, it was a good three years before he actually left his job that he was already starting to think about it.
And that’s the difference between my husband and myself: when I decide to do something, I’ll just do it a lot faster. And that’s always been the case with us. When he decided to buy a bike, it took him also three years to pick out the bike that he wanted to buy.
He’s just that way. I could see it in our discussions where we started to make plans around “We’re not going to live in New York full time.”
I knew that once he got his arms around we’re not living in New York full time, obviously, he’s not having this job because the job that he had was not a location-independent job. So I knew the fact that he was starting to dream about living in multiple locations, that he had bought into leaving his job.
And like I did with the 401(k) investing, I didn’t then just press him around “When are you leaving your job?” and “What are you going to be doing?” I just let him sit with it because I knew that when he gets an idea, it takes him a little bit of time to wrap his arms around it.
But I would say that he started thinking about the whole travel and living independently several years before he then actually made that break.
Andrew Chen 20:39
Were you guys travelling and even scouting out places where you would potentially slow travel and/or live seasonally in, that helped crystallize in a very tangible way? Was there anything like that that helped accelerate or nudge that along?
Caroline Ceniza-Levine 20:59
Yeah, absolutely, for sure. The first property that we bought in 2005 was in Asheville, North Carolina. Asheville, North Carolina was a place that I picked based on reading about it in personal finance articles about the top 10 places to retire.
And I had said to him, “Let’s buy something that eventually we can retire to, but for now, we could rent out.” And that was appealing to him. That was not so risky because we’re not going to be living there.
So, in order to do that, he did go to Asheville. He was the person that would scout things out. Again, it was like giving him something to do that he actually really liked doing.
He loves driving. He loves the whole travel. He loves the real estate scouting, so he did that, and he went to Asheville.
The next place that we bought was Jacksonville. He also scouted out Jacksonville. And there were some places in between that we went to.
So, yes, it’s true that when I left my job to when he left his job, in those 10 years, we probably scouted out anywhere from half a dozen to a dozen locations. Ultimately, we only ended up buying in four different locations, one of which we divested entirely. But we looked at more than that.
I think it was in going to these places. We treated them as vacations, but also a little bit of business. We would couple them with potentially business trips that I would make for my business.
So it was just planting seeds all along the way, and it just got him. Deal by deal, state by state, he was more comfortable with this notion of what we were going to do.
Andrew Chen 22:45
All the geographies where you were acquiring properties, now three, were they all places that you all envisioned could be potential places where you would live in or retire in parts of the year, or were some of them actually just for investment purposes?
Caroline Ceniza-Levine 23:08
No. We wanted them all to be places that we wanted to visit because the idea would be it would be the ultimate boondoggle, the “bleisure” trip (business plus leisure), where we would go to these places and we would love to be there, but it would also be a legitimate tax write-off because we would be doing business there.
There are just so many lovely places to be, and there are good investments, that Venn diagram of “I want to be there” and “It’s a good investment.” There were enough places.
It wasn’t like we were trying to buy 1000 units. We just have 10.
Andrew Chen 23:45
Is there anything that you, looking back, would have done differently if you had a do-over?
Caroline Ceniza-Levine 23:55
I think I could have pushed a little bit harder, honestly, in the beginning. Once my business had taken off, and there were a few years where I had some big years, where we were able to take that many and really make some real estate moves, I think that I might have pushed a little bit more to say, “Oh my gosh, look at this.”
And looked at the tax impact of it, too, because having a W-2 job, don’t even get me started on that. You should do a show, if you haven’t already, about the whole difference between being a small business owner, tax-wise, versus being a W-2 employee. But I do think I could have maybe pushed a little bit.
But part of it, too, was I understood where he was coming from temperamentally, and I really just felt like we could make it work and he could come to it on his own time. I do think we could have FIRE’d earlier. Not that much earlier, maybe 3-5 years earlier.
But all things being equal, we’re having such a fabulous time now that I’m always woe to say I would have changed something because who then knows what else would have changed?
Andrew Chen 25:18
That’s true. Was your philosophy always to just live on the rental income or business income, and not touch any principal, or the more traditional burn down 4%, give or take, a year?
Caroline Ceniza-Levine 25:33
I’m really afraid of that whole 4% rule thing. I feel like if you’re going to live off of a portfolio of assets, you really want to be a money manager. You really want to be minding that asset allocation and not be so cavalier about buy-and-hold.
I was not willing to be an active money manager. As much as I say that I’m interested in personal finance and I follow the markets, I don’t pick individual stocks. I don’t have any interest in doing that.
So, for me, I wanted to create cash flows that were not dependent on the market. We are invested in the market, for sure. I do look at that as a legacy for our family, like something that I would leave to our kids or to charity, if our kids become financially independent.
But I don’t rely on it. And I wouldn’t consider myself FIRE’d if I was relying on a heap of money. I really look at it as I want to have income streams that are attached to businesses (and I include rentals as a business) that I understand, that I can touch, that I can tweak, that I can control, so that I know that the income is there.
Andrew Chen 26:53
That makes a lot of sense. When you meet other couples in the FIRE community, do you find that, more often than not, both spouses are usually aligned at the beginning, or do you find that often one has to convince the other?
Caroline Ceniza-Levine 27:08
I don’t always ask my FIRE friends who are couples if they were always aligned or if they came at it in different ways. My guess is that, because people are just different in terms of their risk appetite, and also in terms of their point of view around everything, from the stock market to real estate to running a business, or whatever you define your career income to be, I can’t imagine that spouses are 100% aligned every step of the way. I think that’s just unrealistic.
For Scott and myself, we look at FIRE as almost this Chinese menu: “Choose from Column A, choose from Column B,” so that we look at it as part of it is our paper portfolio, part of it is our real estate portfolio, part of it is our work portfolio, where work is defined as projects that we love and that we can make some money off of, because we both are lucky that we have skills that lend itself to doing that. So we can choose a lot of these things.
And then expense management is also there. You can’t necessarily save your way to FIRE, but you can certainly get there a lot quicker if you aren’t a spendthrift. So, we do also look at that.
Part of making Florida our primary residence was there’s a huge “geoarbitrage” play that we can make, and there’s a huge expense play here by picking Florida over, say, New York, and by picking Costa Rica as one of our real estate investments. So, all of that was deliberate and part of the FIRE plan.
Andrew Chen 28:59
That makes a lot of sense. I’d love to learn a little bit more about how you guys chose Costa Rica for non-U.S. But before even that, to the extent that you have had these conversations with any other FIRE couples, what are some of the common concerns that you’ve heard that skeptical spouses have raised, to the extent that these conversations have come up?
Caroline Ceniza-Levine 29:25
A lot of them are similar to what we faced, where the couples are just not aligned in terms of the career timeline, so they just have a different sense of what they want to be doing. Again, I feel like we could have FIRE’d faster if, let’s say, Scott had worked for himself and had untethered his income. That’s just the math of it, because you need to have some kind of unlimited upside in order to be able to amass your assets.
I do run into couples where one person likes the job that they have, but it might not be a job that has any upside. It might just be a salary job without any bonus, without any equity participation.
So, that couple has to work out: Is the other person going to be the one that swings for the fences? Are they in a position to be able to do that? Is that necessarily the fair distribution?
Every couple is going to come up with a different thing. But just because of the nature of living and growing up in New York and having our careers in New York, we run into a lot of dual-career couples, so a lot of the FIRE conflict is around career management and who’s going to be doing what.
It’s less around, I find, expense management just because New York is so expensive. You’re not going to be clipping coupons on your way to FIRE in a place like New York.
And in terms of investments, and this is probably just because I am not a stock picker or an active money manager in that way, I don’t typically talk to my friends or my couple friends or my FIRE friends about investment decisions because it’s usually around career decisions or business decisions as opposed to that stock or emerging markets or value versus growth.
Andrew Chen 31:31
What’s your best advice, at the end of the day, for people who are struggling with how to get their spouse on board with the idea of retiring early?
Caroline Ceniza-Levine 31:41
I’ll just share the things that worked for me. I worked on myself first, and I made sure that I maximize that if I said that I was committed to FIRE, I was doing the things that would get at least me to FIRE, so that I could lead by example, so that I wasn’t somehow using my spouse as an excuse to not do some of the things that I should be doing.
I think that if you take care of yourself, then you’ll be busy enough for a little bit. I think that if you enroll your spouse in the things that they’re actually interested in, you might not have to convince them.
For my spouse, it was running the numbers on the investments, so that he could see, in his own time and in his own way, how things compound, and learn about that, and get interested in that. Thinking about what he was interested in on the real estate side and giving him those things to do, so that he could get more interested.
And then the business stuff, it came with time. It came with seeing the things that were working on my side and just the lack of pressure. That being said, I think we could have FIRE’d a few years earlier maybe if I had pushed a little bit more. That might be something that you consider: to have more conversations than I did.
Maybe I was a little bit too passive. But I think 46, that’s okay with me. We’re super happy with how it turned out.
Andrew Chen 33:26
Most people, if you ask them, “Other things being equal, would you like to retire early?” that seems like a no-brainer. “Yeah, I would like to do that.”
In your husband’s case, there were actually things that you could task him with that he enjoyed: running the numbers, scoping out real estate. Those actions could help him have a vested stake and eventually see the benefits.
I’m curious what you would say to the husband and wife couple, let’s say both of them are in type A type of careers, but the one spouse who is more risk-averse and is interested in this also happens to be in a job that, in itself, has more of that equity or bonus upside. Basically, the entire profile of somebody who has both the upside and the desire is all concentrated in one spouse.
And the other spouse is working a perfectly fine W-2 job, pays well, and actually really doesn’t have so much interest. There’s not tasks that you could give them to help them have a vested stake. They are perfectly happy working that job until they retire at Social Security age, so it’s harder to engage them along the way.
What would you say to this type of couple?
Caroline Ceniza-Levine 35:08
Here’s the thing: I think that it’s very hard to convince someone not to do something. In your example, it’s not to work.
And I tell this to folks. My line of work is HR and career coaching, and I talk about the pull versus the push with my career coaching clients who are thinking about a career decision.
The push decision is “I don’t want this job. I want to quit. I’m undervalued; I’m underpaid; I’m overworked.”
Not, not, not. It’s the push. I’m pushed out of my job for a reason.
And the pull is “I want to work at that job; I want to work for that company; I want to be in that industry. This is the mission. I want to do this.”
It’s very difficult to get excited about a push scenario. When I talked about Scott really turning the corner and seeing FIRE and getting excited about FIRE, it actually wasn’t FIRE.
It was travel. It was location independence. It was the things that FIRE brings.
So, I think that’s really the message, regardless of whether it’s a risk-averse or a risk-taking spouse, if it’s a high-earning spouse or no upside spouse. Whatever it is, I think you need to find whatever the pull scenario is for them.
And frankly, if the person is happy at their job, financial independence means that you can stay at your job forever. It means that you could actually continue that job, and that’s okay.
But it just also means that whatever happens, if that job should go away and run… Lehman Brothers. There’s a lot of these examples.
Madoff and all of the companies that were built around Madoff’s investments. Your job could go away so quickly. Or the pandemic, for example.
Really, financial independence isn’t about whether or not you’re working at that job. It’s about all these other things. So, maybe that’s the conversation that I would have with that couple.
I would say, “Financial independence means what?” For the spouse that wants to work, sure, absolutely, you could work. But it just means that you don’t have to.
Andrew Chen 37:46
That’s a fair point. I’d love to understand also a little bit about your own FIRE journey, some really tactical things. How did you guys think about healthcare and health insurance?
Since really you’re too young for Medicare, what was your strategy on this?
Caroline Ceniza-Levine 38:05
We don’t have a strategy. We buy it. We buy it off of the exchange.
I did a lot of research around costing at different plans if I were a small business that had employees. What’s tricky with the Affordable Care Act is that a lot of insurers got out of insuring solopreneurs. It’s very hard to get medical insurance attached to your business, unless you have employees, so you really are beholden to the exchange.
So I just made sure that we were okay with buying on the exchange, and that we were willing to pay for it. It is something that is very expensive. We were paying over $3000 a month when we were in New York.
We are still paying over $1500 in Florida, and that’s just for the two of us. Florida is actually not that much cheaper than New York. And that still means that we have a ton of copays and things that we have to pay out of pocket.
Health insurance is just broken, honestly, for the entire U.S., so it is something that you have to take very seriously. I priced that into all of my calculations.
It is the single highest line item, higher than our housing payment, our car payment, everything. It is the highest line item by far.
Andrew Chen 39:25
I have talked to other couples where part of the strategy actually was realizing that you can get very good, affordable, quality health care even if you pay cash out of pocket in most other places outside the U.S. So, for a lot of routine things, people just go abroad. Was that ever part of your strategy?
Caroline Ceniza-Levine 39:42
I definitely have it in my back pocket. I have bookmarked some sites on medical tourism. We haven’t gone that route.
But having had a dental implant work done, which I did when I had dental insurance through a traditional corporate job (I know how much that costs), I would probably do it abroad if I had to do it again. There are certain things that I would probably go abroad for.
But for us, it was more about just going into it with eyes wide open. At this point, we’re turning 50 this year. I’m turning 50 this year; Scott is already 50.
We have 15 more years until Medicare, if there is indeed Medicare. So I know we have to pay x amount for the next 15 years, and I just made peace with that, because I’m not going to assume that the insurance system is going to be fixed.
I am not one of those health sharing ministries. I stay away from those things. I think they aren’t really insurance.
Even though, supposedly, you can get back onto the exchange, and there’s no preexisting condition piece of it, I’m just too worried that that might become a factor, so I never want to be off of medical insurance. I never want there to be a gap, so I’m just willing to pay.
Sometimes it’s $36,000 a year, sometimes $20,000. It’s a big number.
Andrew Chen 41:13
That’s a very responsible philosophy, I think.
At this point, you still have different income streams. Obviously, you have 10 properties. Are you still very actively running your consulting business at this point, or have you dialed back at all?
Caroline Ceniza-Levine 41:27
Yeah, we dialed back in 2019 when our youngest went to college and we did some travel. And then 2020 came around, and it was the pandemic, and we cancelled half a dozen trips and basically hunkered down. So I then worked.
That’s the thing. I actually love what I do, so I just dialed that back up. Now that it looks like some travel is opening up, I’m going to dial that back down.
But honestly, the pandemic has really thrown a curveball into it. I work what I consider not New York fulltime hours, but probably, for Florida, fulltime hours.
I would probably say, if I added up everything that I do, it’s a 30- to 40-hour week. I would like that to be less if there were places to go.
But travel was our thing. That was going to be our thing that we were going to do. And now that that has taken a backseat, I’m not making sourdough bread with my free time, so I’m just doing projects.
Andrew Chen 42:41
For your rental real estate, how many do you treat as long-term rental versus Airbnb transient rental? And how do you think about the differences between those?
Caroline Ceniza-Levine 42:52
We are buy-and-hold, long-term rental people. It’s just a more manageable cash flow.
We did buy in Costa Rica. Those are Airbnb rentals. We have three properties there.
And Costa Rica solved a lot of issues for us. We wanted some international diversification. It fit in with our “buy some place where you’d love to be.”
We love to visit there for vacation. It’s also, honestly, was what I called the nuclear option in terms of healthcare for us. They have universal healthcare, and they have good healthcare.
I felt like if something ever happened and, all of a sudden, it went from $36,000 to $72,000, if there was hyperinflation on the healthcare premium, Costa Rica was always there. So it solved a lot of issues for us. And it made more sense to do these as vacation rentals, so that’s what we did.
But vacation rentals have a much lower ROI, and they’re much more labor-intensive, so for me, personally, I’m not as interested in them. I wouldn’t build up a vacation rental portfolio.
I think people who enjoy that kind of stuff more, they might feel differently. But for us, the passive income, for sure, is more long-term real estate.
Andrew Chen 44:17
I was actually curious. I was going to ask: How do you manage Airbnbs remotely? Because they are more labor-intensive.
Do you have a well-honed process now? And how did you create that?
Caroline Ceniza-Levine 44:28
We have property managers for all of our properties. And you pay for that, for sure. That’s factored into the business model.
But real estate is only a passive gain if you have people working on it, otherwise you’re working on it. My consulting income, I don’t consider passive income. I call it “work is play” in the sense that I love my projects, but I’m working, for sure.
Andrew Chen 45:00
But I guess the big thing is that one is location-independent.
Caroline Ceniza-Levine 45:03
Right. So I can flex it, and it works for me.
But it is work. It’s active income. There’s nothing passive about it.
The only passive income that’s related to my consulting business are things like royalties from my books or ad income from our websites. Those things are truly passive.
So, for real estate, it’s passive in the sense that we have property managers. We are still managing the managers, so there is still active income. We’re still scouting out different properties.
If we were to buy additional properties, that’s the kind of stuff that we would be doing. So, there’s part of it that’s still active.
Andrew Chen 45:48
And for your property managers, I assume you pay them a monthly fee or a percentage, but they take care of all of the screening, the cleaning, the key handoffs, and all that stuff for you?
Caroline Ceniza-Levine 45:59
Absolutely. Even for the long-term rentals, we have property managers who are in charge of the tenant turnover, the releasing, and then any repairs or coordinating that, although we’ll get involved in potentially looking at what the different bids are for any work that needs to be done, and then, of course, staying on top of the property managers and things like that.
Andrew Chen 46:23
And then, lastly, for the Airbnb property managers, these folks who were part of property management companies, did they already have a specialty in Airbnb or did you have to train them on how to do Airbnb?
Caroline Ceniza-Levine 46:38
No, they were experienced property managers. Because we’re not experienced vacation rental managers, we’re not experienced in Costa Rica, we don’t speak Spanish, so you can see that we would not be great at telling them what to do.
So, part also of buying where we bought was that we could have a team in place. When we were scouting, we met people that we were confident, like “Okay, I would put an investment in their hands.”
We considered some other countries, and we just didn’t have a team on the ground, or there were other reasons. Costa Rica ticked off a lot of boxes for us, and one of them was that we would have a team.
Andrew Chen 47:25
I was actually curious how you guys eventually coalesced around Costa Rica of all countries in the world. And it sounds like you don’t speak Spanish anyway. So, what made you decide on Costa Rica over other places?
Caroline Ceniza-Levine 47:39
I have a thing where I look at the best places to retire. That’s just a starting point for me because it’s one of these things where I feel like retirement destinations are good live/work destinations, and they’re good leisure/travel destinations.
And the population is just getting older. I’m really thinking about the 10,000 people turning age 60 every single day, and the fact that, in a few years, 20% of the U.S. population is going to be over 65.
So, I’m always looking at these retirement destination lists, and that’s actually how I started looking at international destinations that FIRE is the least of the worries of the U.S. retirement population.
There are people who cannot afford to retire at any age. Healthcare is a big part of it, and savings is a big part of it. So I started thinking geoarbitrage of retiring abroad is going to be a thing out of necessity.
So we started just thinking about “Where would people go?” Costa Rica has been on the radar for years at this point.
And one could argue that the easy money to be made in Costa Rica has already been made. We bought when it was already on people’s radars.
But that’s how we like to buy. We don’t need to make a killing. We like to buy when it’s already proven to be a destination.
Asheville was already proven to be a good destination, Jacksonville, and Costa Rica. That’s how we picked it.
Andrew Chen 49:13
So it sounds like rental property potential was actually one of the explicit criteria on your mental checklist of places you were evaluating.
Caroline Ceniza-Levine 49:24
For sure, because we needed the place to carry itself. We were not willing to invest in a property in the hopes that maybe one day it would return money for us. We need to buy into something where there would absolutely be positive cash flow, so that our holding time could be infinite.
We would never have to make a decision under duress, because real estate is too difficult for that. It’s illiquid.
Andrew Chen 49:55
I guess I get that for why you would choose a place like Costa Rica to invest. It sounds like being there yourself as part of spending your retirement, in itself, it was a desirable location. What were some of the other factors that were important to you?
Caroline Ceniza-Levine 50:18
I check them all off. I wrote a whole blog about it on Costa Rica FIRE.
But I’m looking at things like government stability, I’m looking at currency risk, I’m looking at their standalone economy, because I’m looking at the international destination as a standalone piece.
For our first purchase, I was also looking for that nuclear option for healthcare. That was definitely a piece of it. If we had to leave, where could we go that we would be okay living, that we could have the healthcare, that we would feel safe, etc.?
Again, Costa Rica checked off a lot of these boxes. We thought about Panama, Portugal, the Philippines. There are a lot of places I feel like can check off boxes, but Costa Rica had them all.
For us, we loved going to the Philippines. We went there three times. I’m Filipino, born here but Filipino by ancestry, so we’re very comfortable there.
But when you compare and you look at the investment potential, currency risk really high, economy not very stable, government not very stable, healthcare situation not very good. The Philippines was a place that we just loved, but it wasn’t an investment. So I’ll visit there, and then I’ll invest in Costa Rica.
Andrew Chen 51:53
Makes sense. When you go there, do you just stay in your own properties or do you rent elsewhere?
Caroline Ceniza-Levine 52:00
We bought a property free and clear, so that we could stay there, then rent it out when we’re not there. But the other two properties, we bought through our retirement account, so we can’t use those personally.
Andrew Chen 52:14
Well, that’s pretty much all I had. I really enjoyed chatting with you, Caroline. This was a little bit different than the normal episodes that I do, but I think it’s a really important topic when thinking about how you come to grips with going all in on location independence or financial independence, early retirement with your spouse.
Where can listeners find out more about you and what you’re up to?
Caroline Ceniza-Levine 52:39
Costa Rica FIRE is our site. I think that’s the best place to find out about why Costa Rica for us, what other countries we looked at, that checklist that I mentioned of what we look at when deciding on investing in a property.
And I really write about the financial issues that come to the forefront for us: things that we’re thinking about now that the pandemic has happened, alternative investments that we are considering, business ideas that we’re considering.
We write about things that we look at and ultimately decide not to do, not because we’re recommending that someone make the same decision, but just so that people can see: these are the things that we wait, and this is how it all worked out for us.
And we even have a course on that site called “Making FIRE Possible,” which talks about a lot of the things that I mentioned: the expense management issue, the “work is play” issue, paper portfolio, real estate, geoarbitrage. Because I think there are just so many different ways to FIRE.
Andrew Chen 53:44
All right. We’ll definitely link to that in the show notes. Thank you so much for taking the time to chat with me again, and maybe I’ll see you on the road one of these days.
Caroline Ceniza-Levine 53:54
For sure.
Andrew Chen 53:55
Cheers. Take care.
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