Stan:
How did you get JL Collins to post on your blog, like did you relentless email him or something?
FIRECracker:
Nope, he contacted us and told us he liked our blog. You can imagine our surprise. It was a little bit like Michael Jordan coming over and saying “Hey, you’re pretty good!”
jlcollinsnh:
Yep. Somehow I stumbled on her video manifesto and was captivated. Great content captures my attention.
This exchange appears in the comment section of this post on Millennial Revolution.
Even though I am one of those Baby Boomers she calls to account in the video above (refresh your screen if you don’t see it right away), I was laughing and saying: “Yes! This is someone who gets it!” I even posted it on Facebook and I almost never post on Facebook.
A wonderful manifesto for questioning everything and rethinking what works and what is possible. And work it does.
FireCracker and her partner Wanderer are already retired in their early 30s and are, well, wandering about the globe while engaged in non-profit work, novel writing and, of course, their blog. This ain’t our grandparents’ retirement.
From the video I began a bit of binge reading around their site and, still more impressed, reached out to them as described in the exchange above. We hung out on Skype (they were in Korea at the time), I wound up with a couple of new friends and, more to today’s point, a cool guest post that tips you off to their secret.
Here you go…
Buy Your Freedom; Rent the Rest
by FIRECracker
Beware the White Van
What’s the most dangerous thing on the road?
A drag racer?
A hummvee?
An 18-wheel tractor-trailer?
Nope, nope and nope. The real answer?
A white van.
Let me explain. You see, before we became financially independent and retired early to travel the world, we lived in a tiny, remote Canadian town called…”Toronto”.
And even though our car-owning co-workers, who spent freely and lavishly, told us “oh you can’t possibly NOT have a car in Toronto”, (and feel free to replace “Toronto” with most any major North American city) we knew better. In fact, we knew we could ride the subways and buses, walk to many of our favorite places for a tiny fraction of what it cost our friends to own a car.
So instead of owning, we joined a car-sharing service called Enterprise CarShare, which lets you sign out cars hourly. The car lot was conveniently located only a 5 minute walk from where we lived.
And that decision would prove it’s worth on a deceivingly beautiful day in April.
We were heading back to our rented flat (sensing a pattern here? ) after picking up our groceries. But just as we were about to turn into our driveway, a white van swerved and smashed into us.
It happened so fast I didn’t have time to blink.
Thankfully, no one was hurt, and when the cops arrived, they even joked “hey, at least the beer is okay!” gesturing to the 24s in our trunk.
Surveying the damage, the police quickly pieced together what had happened. The car that hit us was a delivery van, driven by a 60-year-old Greek dude, who got impatient, crossed over the median and tried to pass us on the WRONG SIDE OF THE ROAD.
Legal scholars may recognize this as a classic case of “Say whaaaaaat?”
But somehow, once the insurance companies got involved, the accident got ruled 50% our fault. Jackasses.
But because the car was a rental, the insurance that came with our car-share membership covered everything, and we didn’t even need to wait for the car to be fixed. We were up and running with a new car the very next day.
Had we owned, we would’ve had to pay $10,000 to get it fixed. The insurance would’ve covered it but our premiums would’ve gone up (especially since the accident was 50% at-fault)
By using a group-insurance plan through the car-share, our insurance stayed at a ridiculously affordable $45/year. And by using car sharing, we only paid a $125 one-time sign-up fee and $10.25/hour for the rental car. Since we used the car only a couple of times a month (2 hours every 2 weeks for groceries), that adds up to a minuscule $551/year (or $46/month) over 9 years. No extra cost for gas or maintenance, and no need to worry about depreciation. We can get a brand spanking new car every time, with no added stress or cost.
So the accident taught us three things that day:
- Don’t own a car
- Use car-sharing instead
- Never trust a white van
Now whenever we see a white van, Wanderer glares at it suspiciously while humming the theme from Jaws, and I immediately dive into the nearest bush.
What we’ve learned about car-sharing applies to housing as well. Because we rented and invested instead of owning a place in Toronto, we came out WAY ahead with a 7-figure portfolio and the option to retire early and travel the world. Had we bought an expensive house, most of our hard-earned cash would’ve been eaten away by housing costs.
And this is why we’re committed renters. Both with housing and cars. Renting lets you get ahead, because you don’t need to take the financial risk to maintain a physical asset. You are also less stressed and you have more flexibility because your costs are always predictable. No surprise roof repairs, no hurricanes threatening to destroy your life savings, no accidents totaling your car and skyrocketing your insurance premiums.
Stress free and predictable. That’s the key to freedom.
Now I can hear a lot of keys clamoring and angry people fighting to justify their own situation, saying that renting isn’t always better.
And you know what? I get it. If you live in a city with crappy public transportation, it’s a lot more challenging to get around without a car.
And in some cities with reasonable housing prices (aka NOT Toronto or Vancouver), it can be cheaper to own than rent.
But if you live in a city with a half-decent public transit system, ditch the car and use car-sharing instead. You will save a ton of money, decrease your stress, AND be super fit if you switch it up with walking/biking.
Similarly, if you live in a city with affordable housing (meaning the monthly rent is 1% or more of the cost of the house), buying might not be a horrible idea.
The problem is, most of the time people buy blindly under the wrong assumption of “renting is throwing your money away” and therefore “owning always beats renting.” Not true. And in fact, that belief is why most people can’t seem to get ahead.
The costs of owning are WAY higher than people think, and the worst part of these expenses are they are often unexpected. A car will slide into a snow-bank or a roof will spring a leak seemingly out of the blue and then BAM, you are out thousands and thousands of dollars. In fact, we keep hearing from our readers wondering why they keep getting hit with financial emergencies seemingly every month.
This is why.
When you rent and something breaks, it’s someone else’s problem to fix. But when you own, it’s yours. And so it becomes really easy for a string of “stuff going wrong” to bleed away your money until you wake up 10 years later and wonder why you haven’t gotten any further ahead.
Instead, rent. You will have a lot less stress, a lot more money, and WAY more freedom.
Oh and also…watch out for white vans.
****************************
There you go. If you are as captivated by their story and their voice as I, or just curious, here’s some more to check out:
- Would we be richer if we had bought a house?
- Leverage: Friend or Enemy?
- Million Dollar House or Million Dollar Prison?
- How we got here, Part I: God, we were spendy back then
On the housing issue, here are a couple of mine:
Here’s the Mad Fientist’s podcast interview with them that came out of the comments below:
*******************************
My Recent Guest Posts on…
Millennial Revolution:
An Interview with the Godfather…of FI
Physician on FIRE:
Christopher Guest Post – JL Collins
*******************************
