Financial independence on a teacher’s salary

Financial independence on a teacher’s salary

To many, financial independence (FI) seems reserved for just high-income earners. There is no way FI can be achieved on a teacher’s salary – or can it?

While the recipe for financial independence is absolutely enabled by earning more money and saving a bundle, this formula is not guaranteed.

One must fight their investing behaviour gaps to achieve financial independence (FI), with any salary.

You must also avoid lifestyle inflation including this slick ride below:

New car

In some respects, the proverbial “middle class” might just have the best chance at realizing FI because that’s exactly the income level they need and where their current needs are.

Financial independence steps for the middle-class

As a follow-up to my six phases of financial independence (that got thousands of pageviews on my site BTW), I thought it would be interesting to talk to someone who has realized their financial dreams – and much more – from the middle-class.

In fact, this individual has done so well for himself, it’s hard to believe they’ve accomplished so much from a teacher’s salary.

Millionaire Teacher

Andrew Hallam is no stranger to frugality, personal finance and investing, and geo-arbitrage.  He is a best-selling author, sought-after speaker, and thankfully for me – a fan of My Own Advisor.

You can check out Andrew’s previous articles on my site, including some stellar answers to my interview questions in these posts here.

Catching up with a Millionaire Teacher.

Here are Andrew’s nine rules of investing you should have learned in school – to reach millionaire status.

Since Andrew has long since conquered any enemy in the investing mirror, to achieve FI, I thought it would be great to check in with “where is Andrew now”, his thoughts on the #FIRE movement, and how any modest-income earner let alone folks earning $100k+ can realize financial independence.

Andrew, great to chat again.  It’s been a few years!

Always a pleasure to connect Mark.  Glad your site is doing so well.

Thanks Andrew!  More pageviews over time, approaching 4,000 email subscribers soon, which is great.  Before the FIRE-side chat about other financial independence stuff, what have you been up to?  I try to follow along your progress via your site as much as I can – but you seem very busy!

I am busy Mark, but I love it.

My wife and I have been travelling a lot, coupling a lifestyle of adventure with financial education.  For example, we’ve lived most of the past two years in a 21 foot-long Winnebago Travato.  We decided to drive from British Columbia to Argentina in it.  Yet, we found ourselves taking much longer than we expected.  The U.S. National Parks are incredible.  And we especially loved Mexico.  We spent 10 months driving around Mexico, exploring as many regions as we could.  Then we dipped into Belize, Guatemala, Honduras and El Salvador.  But when we arrived at the border with Nicaragua, some civil skirmishes had broken out.  We considered a Cannonball Run through the country, after contacting a French couple online that did it.  But in the end, we decided it wasn’t worth the risk.  

We went into a holding pattern instead.  Several times, during our journey, we flew to other countries to give financial talks.  This seemed a bit hairy at first.  We paid $85,000 for our van (not including some expensive upgrades) and we were leaving it at storage facilities in Mexico and Central America while we left the country to give talks.  Some of the storage facilities looked great.  Others were really dodgy!  It was a pretty regular pattern. 

Andrew Hallam Van Life

(Andrew Hallam, the man with a plan living in a van!)

We would travel in the van for about 8 weeks, then we flew away for at least a month for a series of financial talks.  We followed that up with another two months or so in the van, and then another month or so giving talks.  It was a fun, varied process of, Rinse and Repeat.  Each time we got back to the van, I always thanked the Mayan gods that the van was still there, and in one piece.  

And the talks weren’t “all work.”  We plan plenty of fun times around them.  I’m writing this while relaxing in Bali, for example, after giving a series of talks in Singapore.  

In 2018, we decided to dial back the talks a bit.  In 2017, for example, I foolishly said yes to every talk.  I ended up giving 90 talks in 15 different countries:  the U.S., the UAE, Kuwait, Bahrain, Egypt, Jordan, Qatar, Kenya, Tanzania, Ethiopia, Switzerland, Hong Kong, mainland China, Thailand, and Singapore.  In 2018, I think we gave just 46 talks.  We stopped saying yes to every request.  But it was still a lot.  

Ironically, in 2019, I gave my first financial talk in Canada.  I still find that so hard to believe, considering that I’m Canadian. I put 100% of the proceeds towards Youth Soccer, in Victoria.  After that talk in February, we traveled to several places for more talks:  Germany, Turkey, Malta, Dubai, Abu Dhabi and Singapore. 

Wow.  I don’t know what else to say.  Andrew, I’ll sure you’ve heard of the FIRE movement, but I’ll ask the question anyhow…what do you make of this movement amongst 20- ,30-, and some 40-somethings who aspire to leave their corporate world behind?

Well Mark, my wife, Pele and I are living examples of the FIRE movement.  We love it! 

Once people reach financial independence, they can choose to work…or not work.  They can take massive chunks of time off.  Or they can volunteer if they want.  Life is like a dark hourglass.  It gets tipped at birth. And nobody can see how much sand they have left.  That’s why I think the FIRE movement is so important.  It encourages people to embrace a different way of thinking.  I know several couples who embraced the FIRE movement decades before it had a name.  

Several people follow bloggers in their 30s who have achieved “FIRE”.

To them, I say, “cool.” 

But I don’t consider them total financial experts.  They definitely have useful tips to share.  But if they haven’t been retired for a few decades, they aren’t exactly models of experience.  Will some of them HAVE TO work in their 40s or 50s?  I think so.  Some of them will. 

However, there are genuine experts. This couple is my favourite:  Billy and Akaisha Kaderli.  I’ve met them several times in Mexico.  They’ve become good friends.  And I think they know more about FIRE than anyone. They retired in their 30s, 28 years ago.

You and others can check out their site here.

Good story about the Kaderli’s for sure. So, back to the thesis of this post Andrew.  Ultimately you encourage others to “spend like you want to grow rich”… but a lot of folks seem to believe you need a high income coupled with a high savings rate to achieve financial independence.  What about realizing FI on a middle-class teacher’s salary?

I’ve met a few expats in Dubai who retired in their early 30s.  But they had massive incomes.  I never could have retired at age 32…not on a teacher’s salary.  And I began investing at 19.  I also lived an early life of frugality that would have made some dumpster diver’s cringe. 

But FIRE is achievable on a middle-class income, as long as we ignore Mr. and Mrs. Jones.

Here are some examples of what I mean.

Most people borrow money to buy cars.  They buy expensive houses as a primary residence.  These are huge wastes of financial potential. 

Happiness, after all, comes from our experiences:  spending time with people we love and seeing and learning about new things. Happiness doesn’t come from material acquisitions.  Science backs that up.  So…if we can put our money to work, buying cash-flow positive real estate and / or investing in a portfolio of low-cost index funds, we can buy financial independence and the choices that will follow.  

You know better than most that behaviours trump everything when it comes to reaching for a goal. What are some of the ways, behaviours that is, we could all benefit from regardless of any salary to save more money to achieve FI?

People need to track every penny they spend.  Use an app if you need to.

My wife and I have been doing that for years.  I don’t think people are reaching their full financial potential unless they’re doing that.  Budgets are like diets.  They’re boring.  They often don’t work.  But Weight Watchers did a study to see what isolated variable helped people lose the most weight.  It wasn’t diet.  It wasn’t exercise.  It was tracking what they ate. 

The same applies for spending and income too.  If you track it, you can manage it.  We become accountable when we track what comes in and what goes out.  That allows us to save more money for our future…and waste a lot less.  

Tracking your spending is a universal behaviour anyone can do on any salary, and I can’t emphasize how beneficial this can be enough!

Do you believe in any form of retire early/early retirement yourself?  (Given you are FI and continue to work).  Why do you believe folks that are FI continue to work?  

For the simple reason that work provides purpose….but it provides more purpose when it’s on our own terms. 

You wrote about FIWOOT.  That’s perfect Mark!

I love teaching people about this stuff.  But I have the luxury of saying yes or no….to continue to live the life that we want to live. 

Very inspiring stuff for me Andrew.  So, lastly, what’s next?  More books or updated versions of books? 

Pele and I are taking another run at Argentina, starting in January.  We’ll continue to periodically park and store the van along the way (so I can give talks) but we know we can get through Nicaragua this time, then eventually to Panama, before shipping to Colombia (around the Darien Gap) before continuing to head south. We’ve met so many amazing people during our journey, those who travel on shoestrings.  It’s so impressive and humbling to see. 

And we learn a lot from them:  about life, time and priorities.  In fact, we learn much more from global travelers than they could ever learn from us.  

Carving your own path – financial independence or otherwise

Certainly, one of the great things I always take away from Andrew’s answers is the enthusiasm and joy he has from following his passions and living his best life – today. 

Financial independence has brought him (and Pele) a world of opportunities that he continues to seize.  While my journey has been and continues to be very different, I must say I continue to gain a great deal of inspiration from his experiences – helping me carve out my own unique path to financial independence.

I look forward to sharing more updates from Andrew, and of course myself, related to the subject of FI.

You can follow Andrew Hallam like I do on the Twitter machine @aphallam.

You can find Andrew’s articles on his site here.

For those striving for FI – what takeaways do you have from this latest interview with a Millionaire Teacher?  For those already near or at FI – what experiences can you share with others?

My name is Mark Seed and I'm the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, we're inching closer to our ultimate goal - owning a 7-figure investment portfolio for semi-retirement. We're almost there! Subscribe and join the journey. Learn how I'm getting there and how you can get there too!

23 Responses to "Financial independence on a teacher’s salary"

  1. Not exactly how he achieved his success, but good for him.
    My sister was a teacher and retired after 25 years of service. She is single and other than taking care of our parents she did not live an extravagant lifestyle and managed to save a considerable sum. After retiring her school pension meet her needs and when she collected cpp/oas, she has never been able to spend all her income, so she invested with her bank. Guess in what? Mutuals and GICs. I tried for years to get her into DG stocks, but she wanted to play it safe and felt the bank was providing good service. That was until the financial crisis and after a few years she saw her investment drop like a rock and the GICs were paying about 1%. Long story short, she finally made the change and only after two years, said “I wish I had done this years ago”.

    Reply
  2. I love the emphasis on tracking everything you save and spend. I used to think budgets were meant to be rigid and set in stone. Once you made a budget you should do everything to meet it every month. Then after numerous conversations with my husband he has convinced me otherwise. Our “budget” now it more of a guideline and the more important thing is tracking our spending.

    As a teacher on the path to FI I find Andrew’s story especially relevant. Thanks for continually sharing it Mark.

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    1. Thanks Maria. I think instead of focusing on what teachers make or do not make, there are some great lessons from Andrew here.

      Tracking your spending just like tracked your diet or exercise can be a HUGE enabler to change. I have to get better at that myself!

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  3. With all due respect, Canadian teachers are in the top 5 in the world for pay (Toronto Star: https://www.thestar.com/yourtoronto/education/2015/11/25/canadian-teachers-among-top-paid-worldwide-study-finds.html). If you want to factor in their roughly 9 months per year of work (9-10 weeks off in the summer, 2-3 weeks at Christmas and another 1 week for spring break), their extrapolated per annum would be well over $100k.

    The average Canadian salary is $55,806 (http://blog.careerbeacon.com/stats-can-the-highest-and-lowest-paying-jobs-in-canada-for-2018/) while the average Ontario teacher, for example, is paid north of $94k after 10 years of service (2017 Statscan numbers so even higher now) (https://www150.statcan.gc.ca/n1/pub/81-604-x/2017001/t/tbld2.1-eng.htm)

    If you really want to appeal to a majority of readers, I suggest you find someone without a generous pension (most Canadians) and someone who earns a salary in line with what the average person makes. Thanks.

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    1. @ Alison – I completely agree with your comments – I have several teacher friends and they always seem to be crying the ‘woe is me’ blues except for the (early) retired ones (age plus service number) who seem to clicking their heels in glee – so between greater than average incomes and gold plated pensions FI is not a big stretch. That said a teaching, at least in the public sector, is not a job I would aspire to – the old adage ” Those who can do, Those that can’t teach” applies – I am (was? since I’m FI) in the ‘doer’ camp.

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      1. Absolutely agree! If you want to appeal to true middle class workers, pick a salary that makes like $50,000 a year. I have several friends who are teachers and they don’t struggle and have great pensions! In their younger years they would even work another job or do summer school in the summer for extra income. Once teacher I know retired at 55. So hard to see how they can be compared to middle income people who probably do not have a defined benefit pension.

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        1. Those teachers pensions are GOLD 🙂

          Teachers are for the most part financially independent if they worked >25 years and contributed to their pension for all those years. No guarantees in life.

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      2. I certainly don’t cry for any long-term teacher with a fat pension, but if you have read Andrew’s book, you’ll see this is not what he is referring to. That said, I can appreciate the headline makes for an easy target!

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      3. fbgcai and Alison,

        I think we can learn from everyone…even a teacher with a golden pension in the works. 🙂

        That said, I didn’t work for a public school system for very long, so my pension will likely be about $100 a month. Maybe less. 🙂

        Hmmm…that old adage: Those who can do, do, and those who can’t do, teach.

        I totally understand. I’ve said things to people online before, without remembering that there’s a real person behind the story…someone who might be hurt by what I say. We’ve all been there. I think it’s important to say, online, what we would say to someone’s face.

        I’ve been fortunate enough to work with and meet some really talented teachers. And I might not be the world’s greatest teacher. But I always did my best, and I think I did a decent job as a high school personal finance and English teacher. I was able to apply my crafts in real life, and I think I was able teach them reasonably well. It’s a profession I might even, one day, go back to…just because I loved it.

        Some teachers might cry the blues. But my teacher-friends don’t. I’m inspired by a group of fabulous educational lifters. I believe there are positive and negative people in every profession.

        I also think online comments often bring out a darker, more critical side in all of us. When we see that, it’s a good reminder for us all.

        Cheers,
        Andrew

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        1. Andrew, I just read this column of Mark’s tonight, after finishing giving out the candy. I love seeing all the kiddies in costumes!
          By chance, an hour ago I was looking for a certain book and instead came across your Millionaire Teacher book. I had given it to my son, about 7 years ago. He read it all quickly and absorbed it all, even though the book still looks brand new. As a mathematician he liked your logic. He since went on to grad school and has just finished his PhD, so soon will have a high salary. Unfortunately it will be in the USA. I should get him to review the book again.

          I heartily disagree with the teachers comment. Many teach because they love doing it and inspiring the young and passing on their skills. And you have to be good at your field in order to teach. OK, with 3 kids I did see a number of lousy teachers in the public school system, but these aren’t the only places people are teaching. And even in the schools it only takes one to really inspire a child. My PhD son did want to be an academic and enjoyed teaching, but has since changed his mind. The university/academic life has deteriorated enormously in the last 25 years.

          I also love Mexico and spend a lot of time travelling around. I especially love the central interior.

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        2. Thanks for your comment Andrew. I would also add it’s very easy to assume and not so easy to understand there is often “more to the story” than what can be written in any one blogpost about any personal story to financial independence or otherwise.

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  4. Here’s something cool.

    If someone had $1000 in 1992, and if they invested an additional $600 a month in the S&P 500 index, today, that person would have almost $1.1 million. I started to invested in 1989, when I was 19. It was less than $600 a month back then, but I soon ramped up the savings to significantly exceed $600 a month. Time and frugality can build wealth. If you’re curious to back-test this, portfoliovisualizer’s calculator is really cool. https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults

    No matter what somebody’s salary is, the premise remains. People can do financially better than they otherwise would, if they live frugally, with purpose, and if they invest intelligently. I think that’s the important takeaway that Mark is trying to make.

    Cheers,
    Andrew

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    1. Good to see your comment Andrew. Fully agree with your comment and certainly trying to do that here: live within my means, save, invest and let time in the market and my stocks do their thing. 🙂

      Mark

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  5. Hey Mark – I was happy to see this interview with Andrew. A colleague gave me his book a few years ago, and (dramatic drum roll)… it changed my life. I immediately used his ETF suggestions and moved everything I had from mutual funds ( bank held) to ETFs. I have since expanded to REITs, and personal picks, etc.
    Full disclosure- I am a fat cat teacher- actually was one…after much research, many lifestyle changes, ample considerations, a big chunk of moxie and a final roll of the dice, I resigned from teaching and took out that fat cat pension in the form of commuted value (17 years worth). Without the timely reading of Andrew’s book and a few practice years with a smaller amount, I could never have done what I did.
    I can appreciate the public’s often negative perception of teachers’ compensation/pension; in my case, I never would have made it to a full pension, because of the extreme stress/toll on my health. Enough said about that.

    So Andrew, a sincere thank you for helping me gain control of my life and health. I now work part-time (and after reclaiming my health can continue this for many years), continue to manage my own portfolio, and look after 2 revenue properties with my husband. When we travel, we do so as house/pet sitters to keep costs low. Working myself into an early grave was not worth it. Taking responsibility and ownership for my life and choices, (knowing some will work out better than others), well, that’s proving to be priceless.
    Best regards, karen.

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    1. Wow, that’s great Karen. I know Andrew reads my site and checks out comments now and then. I’ll be sure to send him your kind comments.

      Well done Karen. 🙂

      Mark

      Reply
  6. The earliest retirees I can recall were Paul and Vicki Terhorst who retired in 1984 at the age of 35. I had already read Paul’s book “Cashing In On The American Dream” and back in the late 90’s when my wife and I were visiting Thailand I fired off an e-mail to Paul to see if we could meet up. He kindly said yes. We met him and his wife in Chiang Mai and while there he also invited Billy & Akaisha Kaderli who were unknown to me at the time. Both lovely couples by the way, and we all had a great chat about investing and finances.

    For myself, very early retirement was just a dream in order to escape a job and working environment I absolutely detested. Even though I had done DIY investing since the early 80’s I just wasn’t very good at it at that time. My investment results started to improve starting in 2003 when I invested in individual Canadian dividend growth stocks in the non-resgistered account. This portfolio did quite well through the 2008 – early 2009 financial crisis. The RRSP’s which were invested in global dividend ETF’s, not so well. I’ve since switched the RRSP accounts and the TFSA’s to global index funds.

    My wife and I are long since retired and now happy and free.

    My most important mentors past and present in investing are Benjamin Graham, Jack Bogle, Tom Connolly, David Stanley, Edmund Faltermayer, Henry Mah, and Andrew Hallam. I thank them all.

    Reply
    1. Absolutely love reading these stories Taggart – well done. I assume all TFSAs and RRSPs are maxed out of contribution room now?

      What are your plans for the future to live off the portfolio?

      All the best, and thanks for following my journey as well.
      Mark

      Reply

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