Episode 22: Financial Planning for Early Retirement: Are You Ready to Quit Your Job?

00:00:00:09 - 00:00:20:08
Jon Orr
You haven't really been talking about quitting our jobs to do a brand new job. We've been talking about adding to our existing incomes by investing in real estate thinking about using life insurance as a tool. Thinking about how do I build different pockets here that continually add to our financial future so that eventually it's a long game, right?

00:00:20:08 - 00:00:40:23
Jon Orr
It's a long game so that eventually we could be in a position to have options, which is the real freedom. So I think that's the logical side. What can I do here to add income versus just replace income?

00:00:45:04 - 00:00:50:23
Jon Orr
Welcome the Investor Teacher podcast with Cal Pierce, Matt Begley and John Talk.

00:00:50:23 - 00:01:05:01
Kyle Pearce
Get ready, my friends, to be taught as we share our successes. And we're not going to forget about those failures that are encountered during our real life. Learning lessons on how to build generational wealth from the ground up.

00:01:05:07 - 00:01:10:12
Matt Biggley
Welcome investor students to another episode of the Canadian Wealth Secrets podcast.

00:01:10:15 - 00:01:33:18
Jon Orr
All right, everybody. All right. We are into this week's episode, and you know what? We're going to answer a common question we've been getting lately. Many teachers who are listening to this podcasts or nurses or policemen or firefighters or people who have pre-defined pension plans, they've been a little bit coming out of the woodwork as we've been talking about building your financial future, thinking about in past episodes.

00:01:33:18 - 00:02:00:13
Jon Orr
We talked about planning for your child's education funds. We talked a lot about real estate investing and I think what's happening is folks are starting to think about, I'm getting close, maybe I'm in my forties and I'm getting close to this key time as teachers. We have a key time for our pension plans here in Ontario that we wanted to decide to take our commute at value at 50 or before 5049 point whatever.

00:02:00:20 - 00:02:13:23
Jon Orr
We could take that and go and do something else with it. We could put it in some registered accounts or we could use some of the cash that we wanted. But basically, if we don't do it by that date, then it's kind of locked in the pension plan and you're going to have to continue and use it there.

00:02:13:23 - 00:02:35:17
Jon Orr
So it's kind of like people are wondering, can I retire early? Can I change careers? What do I do with my commute value? Is there a way for me to leave my current salary job and take this and do something else or hey, maybe I'm just going to retire early and live off my commute value? And so people are asking us to think about like, what should we do?

00:02:35:21 - 00:02:44:12
Jon Orr
Should we do this? How do I structure this so that I could retire early, if at all possible? So we've been chatting a lot lately with some folks about that, right?

00:02:44:14 - 00:03:09:11
Kyle Pearce
Yeah, absolutely. And something to I want to also just articulate so those who are listening, maybe you're there and going like all these lucky people who have pensions. If you don't have a defined pension though, you probably have something going on. Again, if you're listening to this podcast, it's probably on your mind and you probably are either putting into RRSPs or maybe you're putting it into some other type of like match benefit plan or match pension plan through your company.

00:03:09:20 - 00:03:31:11
Kyle Pearce
So there's all kinds of people out there. But one thing that we do have is as you see these numbers growing and again, a defined pension typically will kind of estimate how much you would get per year or maybe per month, depending on what that plan looks like. And we're actually talking about a lot of these people are looking at this commuted value, this big chunk of change.

00:03:31:11 - 00:03:32:01
Kyle Pearce
And they're going like.

00:03:32:02 - 00:03:33:06
Jon Orr
What you what my pension is.

00:03:33:06 - 00:03:53:00
Kyle Pearce
Worth. Yeah, If I had access to that, I could bring it over here and I could do something else with it. So they're almost like these people who don't have, we'll say, as golden the handcuffs as some others do in terms of their pension plan. Basically what people are saying and the ones that have reached out to us are saying we actually want to be like you.

00:03:53:02 - 00:04:12:06
Kyle Pearce
We just want to look at this big chunk of money and we want to have more control over that money. And as much as I have been in that camp for a very long time, more recently, especially since being on a sabbatical from my current job in essentially being more like Daddy daycare here and getting to do some of these fun projects that we've been up to.

00:04:12:14 - 00:04:33:06
Kyle Pearce
I've been thinking a lot about this, and because I've done this and John, I feel like you're feeling similarly right now. Matt, you having recently left teaching in order to go into real estate full time, you're feeling this way. But I feel like before any of this, I was all for like, Give me that money. I could do a better job with it.

00:04:33:06 - 00:04:53:10
Kyle Pearce
And I guess my wonder is whether people are getting this. Maybe it's like an overconfidence when you see this big chunk of money and you think, If I could only make this percent or that percent, or if I could just get the right real estate deal, then everything is going to be so much better. And it might be true.

00:04:53:16 - 00:05:14:07
Kyle Pearce
But I'm telling you, my mindset is certainly started shifting a little bit towards this idea of safety. Like now that I've only temporarily removed the handcuffs, like I've literally just placed them over there, I wouldn't even say they're off. Like it's just like I loosened them a little bit just to give me a little bit of opportunity to do some other things right now and take care of my family.

00:05:14:13 - 00:05:46:00
Kyle Pearce
And I am feeling much more nervous or just anxious of the idea of losing that sort of protection that our Ontario teachers pension plan for provides. And having said that, guys, we've talked about this at nauseum where we have other investments too, and I'm still feeling this way. I don't know if it's just me, but I feel like we're getting lots of people reaching out to us that want to do exactly what we're kind of doing here.

00:05:46:09 - 00:05:50:15
Kyle Pearce
And it seems like there's no fear out there. What's your take on it there, Matt?

00:05:50:22 - 00:06:11:19
Matt Biggley
Not only is this the number one topic that the three of us have probably talked about for the last couple of years, it's been so interesting that so many of the inquiries from listeners have been around this very same topic. So clearly we've struck a current and this is something that all of us are thinking about. And I began a sabbatical two years ago now that I'm never going to return in teaching.

00:06:11:19 - 00:06:34:06
Matt Biggley
So I read this whole roller coaster and the roller coaster continues, even having formerly resigned from teaching now to pursue real estate. So it mentally it's been really interesting and I kind of see there is two things to explore here, too. Big ideas to explore. You've got this logical side where the teaching pension is so interesting because it provides this incredible safety net.

00:06:34:12 - 00:06:50:10
Matt Biggley
But I think it's also made us pretty lazy for many of us, if I can use that term, in having to think about investing, because we just think that it's going to be there. It's just going to be there. So I think it's made us lazy investors because we feel lucky, we feel fortunate, we feel safe and that it's there.

00:06:50:16 - 00:07:09:23
Matt Biggley
So there's this whole a logical side to you got to replace two things you've got to replace your current teaching income if you're going to retire early and then you've got to replace that safety net, that pension. And so that's one part of it. And then the second part of this argument, and this is what we've been hearing from a lot of the listeners who reached out, there's this emotional side.

00:07:10:04 - 00:07:36:10
Matt Biggley
And listen, we went through a global pandemic. We survived it. I think it took a toll on a lot of us, maybe lifestyle wise or we got to experience working from home, maybe mental health wise. And a lot of people there's almost like, I don't want to call it desperation because that's a strong word, but there is a real urge to be able to move on from these defined benefit pension plan jobs like teaching, nursing, etc. And so I think the emotional part has been huge for people.

00:07:36:15 - 00:07:56:01
Matt Biggley
And in those conversations we've almost tried to tie back in this logical part, the safety net. How are we going to build the safety net? The emotional part comes down to what do you want your lifestyle to look like and how can you achieve that sense of freedom? How does that job make you feel when you're there, Be it the students or the administration or what have you?

00:07:56:07 - 00:08:17:22
Matt Biggley
And are you giving up some of the best years of your life in terms of health and in terms of the ages of your kid and your ability to do those things? So those two things are intertwined, the logical, the emotional for people. And I think we're going to unpack kind of both of those today and maybe help people just get a better idea of the questions to ask themselves and the self-exploration to do on both of these fronts.

00:08:17:22 - 00:08:38:08
Jon Orr
Yeah, I think you've hit the nail on the head there, Matt, and thinking about the emotional side, not the logical side for a moment. We've got a lack of teachers and a lack of people who are in the same kind of lifestyle position, who are feeling pretty confident with their money situation, but they're not enjoying their job. I think that's where some of that emotional side is coming.

00:08:38:08 - 00:08:56:08
Jon Orr
It's like, I've been doing this for a long time and I'm feeling uneasy and I'm looking at the future. And this is part of the pension plan set up. It's like we know we talked about this before, too. We know the exact day you're going to retire because your pension is there going like on your retirement date. Boom, That's your date.

00:08:56:08 - 00:09:15:02
Jon Orr
That's the day you can say, this is where I get my full pension. That's in our minds. And so some teachers, I feel like and people we've been talking to, nurses, firefighters, other in that same position are seeing that date and going, I don't know if I can do this for that long. They're like, oh, my gosh, I'm feeling so anxious about going to work every day.

00:09:15:13 - 00:09:38:01
Jon Orr
And in that emotional side, it's like that elephant. It's taking over, going down this path. This is like I'm using a metaphor from Chip and Dan Heath on the book Switch on Changing Mindsets. But it's like you're changing your mindset because your emotional side, your elephant, goes where it wants to go and that elephant is going down this path and you're going with it because the elephant wants to go there, which is your emotions.

00:09:38:01 - 00:09:58:01
Jon Orr
Like, I can't do this. I got to find a way out. That elephant is overtaking the rider and the riders, the logical side. The riders like, Hey, we're supposed to go down this path, folks, because that's going to get us to the end goal that we need to or our jobs, our security, our family's security. But the elephant wants to go that way and the elephant gets to go where it wants to go.

00:09:58:09 - 00:10:19:01
Jon Orr
And so by following this elephant, we're wishing to go that route. And I think that's where everybody is right now. They're following that elephant, but not really thinking about the rider. And it's overconfidence because we've been financially secure for so long that we're like, Hey, I can do this, I can live on less. And they're not actually thinking real long term.

00:10:19:01 - 00:10:34:23
Jon Orr
Really what the pension is there for. And there's that overconfidence and maybe our ways to invest. Maybe you've had some success investing and now you're like, Hey, I can do this full time and there's might justification. You're trying to justify the logic because the elephant wants to go where it wants to go.

00:10:35:11 - 00:11:06:17
Kyle Pearce
Totally, totally. And just kind of right where you ended off there. It's like that overconfidence in what and how investments have maybe worked out over the past five, even ten years. Like we've been on the longest bull rally totally in the history of the S&P 500 and so on and so forth. And obviously real estate prices everywhere here in Canada, but also in the United States, there's been just a dramatic, dramatic increase in asset prices with inflation and all of those things.

00:11:06:17 - 00:11:29:14
Kyle Pearce
So there's so much to this. Plus, we were kind of locked up. And in certain places like here in Canada, there was a lot of people in these golden handcuffs jobs where they were either working from home or sometimes for periods of time weren't working at all, but still getting paid. So there's all of these things going on that may impact sort of our mindset in the big part.

00:11:29:14 - 00:11:50:22
Kyle Pearce
I guess that we keep coming back to is we've had over ten different calls where we've sort of documented that some of these characteristics have come up in the call, right? We're trying to figure out what's going on here, Why are there so many people trying to exit? And it just makes me kind of come back to the question about happiness and what that actually means for everyone individually.

00:11:50:22 - 00:12:13:04
Kyle Pearce
And it's a hard question. Matt talks about the personal beliefs from Don Campbell, and we've had this on our minds for since we started North Shore Properties, right? Matt It's been something we keep asking ourselves and I would like to think we're actually pretty generally happy people, but for many years we've been sort of trying to answer this question like, why are we doing it?

00:12:13:04 - 00:12:34:00
Kyle Pearce
What are we doing it for? I'm the type of person I like safety, so I'm kind of doing it just in case. It's almost like I just want to make sure I can provide that sort of, I think, something that's instilled in me. But I just wonder about some of the people that are coming out and saying like, I can't do my job for five more years or ten more years or whatever that number is.

00:12:34:11 - 00:13:00:05
Kyle Pearce
It sounds to me like maybe there's something the job itself isn't making you happy, but it makes me wonder begs the question we should at least ask ourselves, Is there anything else going on in my life that is actually making me not happy? Right. Because at the end of the day, as much as we hear the expressions and the quotes, like if you pick a job you love or you're passionate about, you'll never work a day in your life.

00:13:00:05 - 00:13:18:10
Kyle Pearce
And while that I feel was true for me in the classroom as a teacher and also as a math facilitator, I realized it's like if you're not happy, you're not able to feel happy in the work that you're doing. And I get that it's hard. It's been harder in the classroom for teachers. I'm sure it's harder in all sectors.

00:13:18:10 - 00:13:40:16
Kyle Pearce
Nurses are feeling it everywhere is feeling it. But I hope that people, before they make a decision on something that they're thinking about other aspects. Because imagine this. Imagine, Matt, that you went into real estate full time and then you left teaching. So you left that pension, you left that safety, all those things because you weren't enjoying it.

00:13:40:16 - 00:14:01:17
Kyle Pearce
And the crazy part is, Matt and you said this on Erwin Zero's podcast, you actually love teaching, right? You left it because it was almost like this. You wanted to do what you're doing now. You didn't actually leave teaching because you hated teaching. You didn't like kids that had nothing to do with your decision making and you were a happy person.

00:14:01:17 - 00:14:27:03
Kyle Pearce
So it just makes me, I guess, concerned that imagine if you left teaching because you thought teaching itself was making you not happy. It was restricting you from accessing happiness in your life. And then you went into real estate and you felt exactly the same way. And now you don't have the safety either. I couldn't imagine how that would make someone feel if that did happen, especially if, let's say, it wasn't going well.

00:14:27:04 - 00:14:54:15
Kyle Pearce
You went into it and it's not going well for you. So now it's like you're earning less money, you have less safety and you feel just as unhappy as you were before. These are just some of the things that kind of cross my mind when I hear people that are like, I can't do it for X number of years longer and maybe that's completely accurate, but I just wonder if maybe there's more to the story that we at least have to ask ourselves so that we can check that off the list or cross it off the list.

00:14:54:21 - 00:15:16:20
Matt Biggley
Yeah, that's a great deep dive into kind of the emotional realm of this decision. And that exploration might even come as a surprise to people who have sort of out almost looking for more of a logical numbers based solution. So I love that you really explore that is such a deep part of this. And yeah, my decision to leave teaching retired from teaching really came from a place of growth rather than from dissatisfaction.

00:15:16:20 - 00:15:33:00
Matt Biggley
So I think there is a couple of camps here of people. Yeah, there are parts about the culture of teaching that were challenging that I didn't like how it made me feel or administrative decisions, or just a lack of maybe a powerlessness in teaching that as an entrepreneur I have the freedom to decide what my idea looks like.

00:15:33:00 - 00:15:48:12
Matt Biggley
But interestingly, I think people get the concept of freedom wrong. I actually work a lot more than I ever did as a teacher in terms of my availability, the time I'm on the clock. But the free time actually comes from discipline, and I want to make it clear that if leaving, teaching and doing something else, it still works.

00:15:48:13 - 00:16:08:15
Matt Biggley
It is work and it is hard work. And arguably in some ways, after 17 years of teaching, I had a really well, I knew my job well. A lot of the parts of my job were very satisfying without necessarily having to push me out of my comfort zone, being an entrepreneur. And so I think for people doing that, self-exploration and deciding, is this about growth or is this about dissatisfaction?

00:16:08:15 - 00:16:34:00
Matt Biggley
It was an important realm. And I think that determining that first or maybe even exploring some other ideas, again, I took a sabbatical to start. I took a semester off, which led to another semester which led to another year, which led me to have to make the decision about leaving teaching or not. Maybe it's about finding a side hustle in a passion of yours and determining is that side hustle just a side hustle or a hobby, or can it become something that's going to generate some income?

00:16:34:00 - 00:17:02:13
Matt Biggley
Maybe it's about planning to retire at 50 instead of 56. So I think what I'd like to do now, since you guys are both so strong with the numbers and making this logical case, what if I was someone who determined I did want to leave teaching or retire early? What can that look like for me? And maybe walk us through some of those scenarios of people talking about commuting their pensions or talking about investing, because after all, this show is about investing and investing in real estate.

00:17:02:18 - 00:17:18:03
Matt Biggley
How can we use that as a vehicle or a tool to help us accelerate our decision or at least give us options? Because the best thing in the world is having options. That truly is the place of freedom. And this is about helping people invest to create those options for themselves.

00:17:18:08 - 00:17:35:13
Jon Orr
Yeah, I think you made a great point about that. Options are what creates real freedom. And I think when you think about that, you've articulated well the emotional side that we all have to figure out what is our why in that situation are we happy or are we not? If that's the case, we have to figure that part.

00:17:35:19 - 00:17:51:22
Jon Orr
Once you figure that part out in remember, the elephant's going to try to push you down that road and you've already figured that out. If the elephant is going down there, what you now need to do is steer back to the rider and go, okay, like if I know I have to go down this road, let's make the logical side work as well, right?

00:17:51:22 - 00:18:12:15
Jon Orr
Let's figure out the logical side because both sides have to work here. So think about a lot of times what people are saying they're going to do what you were thinking too, Matt, in that we were thinking is we're going to either take a sabbatical from our job, we're going to either quit her job. I think a lot of people are thinking we're going to quit our jobs or it's going to go down this other route and get a side hustle or another job or another kind of replacement of income.

00:18:12:15 - 00:18:37:15
Jon Orr
But we heard or we read recently from Grant Cardone, which is is a motivational speaker, an entrepreneur, talks a lot about changing careers and building ten times your value. He had a statement that really hit home for me on this idea that basically said like a poor people replace their income and rich people add to their income. So his philosophy is that we don't quit our job to just replace that job with another job.

00:18:37:15 - 00:19:06:23
Jon Orr
And that's, I think, what a lot of people want to trade for freedom because there's no option there. It's like, I'm going to quit this job because I want freedom, but then I still have to replace that income with some other income to keep living the lifestyle I want. And when you do that, you've not added to your income, you've just replaced your income and you're not probably going to be becoming this creating these options for yourself, this income level that you're probably thinking is you're like, I'm retiring early because I've made so much passive money that I don't have to work anymore.

00:19:06:23 - 00:19:25:19
Jon Orr
When we make that shift, a lot of times it's just replacement and not addition. And so we want to think about how can we add to our income levels and not just replace the income level. So thinking of going down that route, that's what we've been talking almost exclusively here on this podcast is you haven't really been talking about quitting our jobs to do a brand new job.

00:19:26:03 - 00:19:48:15
Jon Orr
We've been talking about adding to our existing incomes by investing in real estate, thinking about using life insurance as a tool, thinking about how do I build different pockets here that continually add to our financial future so that eventually it's a long game, right? It's a long game so that eventually we could be in a position to have options, which is the real freedom.

00:19:48:22 - 00:19:54:19
Jon Orr
So I think that's the logical side. What can I do here to add income versus just replace income?

00:19:55:03 - 00:20:12:13
Kyle Pearce
I love it. I love it because when you really think about it, the whole idea of a side hustle is just that It is on the side. It's something that you do with your own personal time. And I would argue that a side hustle that you are passionate about is going to be an easier one to do over the long term.

00:20:12:13 - 00:20:36:08
Kyle Pearce
So, John, you and I were chatting recently about this. John and I have you can call it a side hustle, but I don't even like that terminology for the work we do. We are passionate about math, education and we have been passionate for over a decade. I mean, obviously our entire career. But we started sharing our process online with other math educators just to share.

00:20:36:15 - 00:21:00:14
Kyle Pearce
We did that on our own time. We've committed together. John I would hate to even do the hours, but for sure, an additional 10000 hours each on our own time, not during our work day, on our own time in the nights and weekends, early mornings. And we have shared all of that and we shared it freely for over ten years online on social media, on our podcast.

00:21:00:14 - 00:21:33:06
Kyle Pearce
We continue to do those things and the later down the road we were asked to start speaking at events and we would get paid for some of those things. And then now we actually do a lot of consulting with different districts and we do a lot of these things. But again, as more of a side hustle or on the side or something to add to our income, and only recently have we kind of toyed with this idea that maybe at some point in our life that this could be the thing that we do with all of our time.

00:21:33:06 - 00:22:03:05
Kyle Pearce
But we're ultimately thinking about this as not just to replace our current job, we're doing it to put ourselves in a situation so that we are and our families are well taken care of and so that we don't have that stress or that anxiety. And I love the idea of thinking about a side hustle and not just replacing your job, because I'll be honest, you and I are both on sabbaticals now where we're taking care of our families In the evenings.

00:22:03:05 - 00:22:27:13
Kyle Pearce
When we used to do all this work, we were missing out on things that our children were doing. And you and I have really stepped up as the home caregiver will call it, because we've taken this time and we do some of these other things still in the early mornings and when kids are busy. And ultimately what I guess I want people to maybe think about is do you really want to leave safety?

00:22:27:13 - 00:22:54:09
Kyle Pearce
Do you really want to leave? Well, call it a guaranteed thing in order to bust your butt and try to figure out how you're going to make the ends meet. And that's something that everyone has to decide for themselves. But I would say, do what you need to do to be happy, but don't put yourself in that spot where let's say you replace the one job for the other, because I think a lot of people would get sort of a rude awakening when and if and when they were to do something like that.

00:22:55:06 - 00:23:20:20
Matt Biggley
I want to just maybe interject in and help maybe pivot our conversation here, because it's really got me thinking. The three of us have had entirely other jobs or income producing activities to not only replace our incomes but add to them. But I'm going to say almost all of the calls we've had, maybe save for one, those people haven't necessarily had other jobs or other entrepreneurial activities that we're going to replace that income.

00:23:20:20 - 00:23:41:07
Matt Biggley
So I also wonder if the listener right now would be intimidated thinking that not only do I need to replace my income, but I need to actually exceed or add to it. So let's take, if we can, the case study of sort of the maybe an average the typical person who has reached out looking for some assistance to talk about retiring early because as this conversation evolves, I love it.

00:23:41:16 - 00:24:04:05
Matt Biggley
It's almost like we're going down a couple of different paths here. One is is doing something else entirely different and another is and I think the message we've heard, the question we've heard from so many people is I just need to know if there's a pathway out of teaching early. It hasn't. I don't think we've necessarily in certainly interject here, but we haven't necessarily had people saying, I want to do this, I want to be a realtor.

00:24:04:05 - 00:24:27:23
Matt Biggley
Instead, I want to pursue my own math education business instead, or I want to do something else instead. And I think this is going to be a great activity for people to really wonder, do they want to do something else instead? Or are they literally just thinking about leaving, quote unquote, retiring early and then not doing something else on the side or in replacement of their teaching salary?

00:24:28:08 - 00:25:06:05
Kyle Pearce
Yeah. So this is a really important piece, and I think I'm happy you highlighted it because you're absolutely right. And I think maybe this is part of why we wanted to do this episode just to make sure that people are fully aware of what they may be considering and what they're trying to do. Moving forward. But if I was to look at someone who has let's say we don't want to have any specific numbers here, but let's say about a half a million dollars and say a commuted value of a pension, for example, and we look at that half a million dollars looks like such an amazing amount of money, $500,000.

00:25:06:05 - 00:25:28:08
Kyle Pearce
And you were to think, first of all, here's a concern that I've kind of heard on multiple calls of people who are saying they want to retire soon. Ish is that have we considered typically that pension that you're getting isn't a full replacement of your salary? Right. You're going from, say, it's 100,000 if it's a teacher in Ontario and now you're down to 60,000, Right.

00:25:28:14 - 00:25:52:03
Kyle Pearce
So, sure, your taxes are lower. There's less things being taken off your pension or off of your paycheck. But the reality is, could you live off of that amount of money now with your salary? Because when you talk about that side hustle thing, if you can't, then that's problematic right from the get go, Right? That's a problem If you're going, wait a second, I cannot live off of that $60,000.

00:25:52:03 - 00:26:14:18
Kyle Pearce
Now, you could almost create yourself a magical side hustle called reorganizing your budget. And all of a sudden this extra money came to be and now you can spend the next number of years taking that money and investing it into something and help yourself. But I think when people look at a number like 500,000, they think, wow, that's going to be pretty easy in order to live off of.

00:26:14:18 - 00:26:44:12
Kyle Pearce
But if we're being conservative here, if you're getting a guaranteed 3% a year, that's only $15,000, right? If it's 6%, you're looking at $30,000. You need 12% on $500,000 in order to get that pension starting today. And we've heard a lot of people talking about while you can do things like mortgages through this fund or you can put it into that retail or you can buy real estate.

00:26:44:19 - 00:27:12:16
Kyle Pearce
But the reality is, is that you really have to just consider the fact that if it always works out perfectly, if there was zero risk, then everyone would do it, right. So, for example, John, we can share our experience with our current flip that we referenced a few weeks back, like we eventually kicked a contractor off the job because they're just not doing the work and that person wanted private money from us and we would have to try to find this person.

00:27:12:16 - 00:27:29:17
Kyle Pearce
We would have got an amazing return, but we'd have to get this person, we'd have to sue this person. We'd have to essentially win in court, which we would. But then what do you do when someone you win a case in court but they actually don't have money to pay you, right? So we don't know if they have the money to pay or any of those things.

00:27:29:17 - 00:27:51:09
Kyle Pearce
So now John and I are sitting on a property that we didn't necessarily want to have, but at least we have that asset. These are considerations that people I wonder if they're actually taking when they look at that money that's there and they're thinking about doing something like, say, retiring early or leaving a profession because it's not working out so well for them.

00:27:51:09 - 00:28:13:03
Kyle Pearce
So to me, when I think about this rational side, I think if I personally am going to feel comfortable that my retirement is going to be okay, I want to use much more conservative numbers. Despite the fact that Matney, for example, our returns in real estate have been fantastic, but we don't use those past numbers to predict the future.

00:28:13:03 - 00:28:36:09
Kyle Pearce
We use appreciation of two or 3%. We use much more conservative numbers, and without those conservative numbers, you're really just kind of hoping that everything works out perfectly when in reality investment business, the real world is actually not perfect and I think we just have to make sure that we're aware when we're taking a certain amount of money.

00:28:36:12 - 00:28:58:18
Kyle Pearce
What if a deal goes bad? Imagine that $500,000 and you were to lend that out privately to someone because they want to buy a property, flip it, and then they're going to pay you 12%, 1% per year. Amazing. If it works out, if it doesn't work out, what happens next. Right. So I'm wondering about the stress and anxiety that someone might feel if that were to happen.

00:28:58:18 - 00:29:04:04
Kyle Pearce
So that's, I think, where we need to maybe pivot here with this rational conversation for sure.

00:29:04:05 - 00:29:24:10
Jon Orr
Part I just want to comment on that too, Kyle, is that I think some folks who have maybe listen to the podcast are thinking I could take that chunk of money and start investing in real estate because we've been talking so about some of the great aspects of building a portfolio of real estate investment property, those that can spit out cash flow, that can create the equity.

00:29:24:10 - 00:29:46:01
Jon Orr
I think we've got that mindset of, Hey, we could build this, but it's a long term play, right? It's not a, Hey, I'm going to be able to retire before I hit my 50 so I could take my computer value. Now I'm going to buy some real estate properties. Now, keep in mind all those kind of risks that you just mentioned, Kyle, But then say like, I'm now going to get some cash flow and that's going to be my income replacement.

00:29:46:01 - 00:30:11:00
Jon Orr
So it's probably not the case. You guys have been doing this for eight years and you're at a position right now that say, Hey, we've got some equity in some of these properties, We've got a little bit of cash flow because of the way that we've kind of managed these properties in a nice, organized, systematic way. And you have got that and you're still not in a position or you feel like you're still not in a position mindset wise to be like, Hey, we can't just quit our job and rely on all of this.

00:30:11:12 - 00:30:27:15
Jon Orr
It's a long term play in a sense that if you're going to say, I'm going to quit now, you might want to start building that portfolio. So that if you got to that point, you can start to go, Look, what is my passive income? I often reminded of the 4% rule, which is a kind of a general rule of thumb.

00:30:27:18 - 00:30:50:16
Jon Orr
We've talked about rule of thumb here before, but a 4% rule is basically saying, like, if you can comfortably live on 4% of your money, your assets, your net worth, then that can be a great target. So if you're making $1,000,000, 4% of a million, you're talking about $40,000. So if you're like, I'm going to withdraw $40,000 from my account every year and I can live on that, then all you need is a million bucks, right?

00:30:50:16 - 00:31:08:03
Jon Orr
That's all you need. So when you're using your 500,000, which is maybe what my pension might be worth when I hit 50 and it's like, well, when I hit 50, well, 4% of my 500,000 is I can't live on my 20,000 a year for the rest, you know, because I need to replace that so or I need to add to that.

00:31:08:03 - 00:31:22:03
Jon Orr
So there's different kind of rules of thumb. There's different considerations. These are all the rational sides, right? This is the writer kind of talking to us to go, Does it make sense to kind of retire Now we have to answer these questions for ourselves.

00:31:22:10 - 00:31:39:24
Kyle Pearce
And I want to just add one more thing there. With the 4% rule, some people might be listening and thinking like, well, no, I'm going to invest like this. Here's how I'm going to invest and I'm going to aim for something much bigger. So they might be thinking like I'm going to earn 8% on average is what I'm predicting.

00:31:39:24 - 00:32:04:02
Kyle Pearce
I'm going to earn 8% on average on that 500,000. So I'm doubling that amount that you just said. My one question would be the same as the side hustle scenario where it's like Alex or Moses says that you should. He says six months, you should be able to more than replace your salary for six months with your side hustle before you ever consider doing your side hustle full time, which I think is even short.

00:32:04:05 - 00:32:28:23
Kyle Pearce
I'm like, That would scare me personally, but hey, that's what Alex or Moses says. I would say. The same is true about investing though. So if you're saying that your plan is to make 8% or 12% or 10%, whatever the number is that you are projecting for yourself, if you haven't done that over the past 5 to 10 years, then my wonder might be is how do you know that that's actually going to happen?

00:32:28:23 - 00:32:53:04
Kyle Pearce
So if that's been repeatable for you, now consider this as well. We just had the best bull market ever. We've already talked about that. So if you haven't done those things, I think you also just need to think to yourself, Hey, that might be your sky's the limit goal. But in reality, until you do those things and do them repeatedly, it is, I would say, not rational, right?

00:32:53:04 - 00:33:21:02
Kyle Pearce
The writer would not agree with you that having something projected like an eight, ten, 12% return is necessarily going to happen for you. Right. So I think the main message here is just be cautious and again, don't get confused. I love, John, how you mentioned the long game of real estate. So a lot of people are in this moment thinking, well, if I have this computed value, I could take it by property and then I'm good to go.

00:33:21:02 - 00:33:43:08
Kyle Pearce
But as we have mentioned many times before, that long play, the cash flow isn't massive, especially if you're leveraging. So if you have a mortgage on it now, if you take that commuter value and you buy straight out, you might have more cash flow. But the reality is it's probably still not that much, right? Plus, you have to consider repairs and maintenance and all of those other things as well.

00:33:43:08 - 00:34:06:12
Kyle Pearce
So just again, make sure that you're doing that proper planning so that you know what it is that you're doing. And then also set yourself with realistic expectations on what you can expect or what you should anticipate because well off into the future, of course that is a complete extrapolation and we don't know what the future holds. But if you beat it, amazing.

00:34:06:12 - 00:34:15:16
Kyle Pearce
But don't set yourself up with a massive goal that might change your lifestyle. If, say, you don't are unable to hit that goal.

00:34:16:06 - 00:34:35:18
Matt Biggley
I think that our listeners can maybe really sense just how conservative the three of us are in our thinking. And this is probably a scary episode rather than is like in the episode titled Be like, I can't wait to dig in and find out how I can leave my job to retire early. Yeah, and I think we've been incredibly cautionary, but this offers you some insight.

00:34:35:18 - 00:35:02:16
Matt Biggley
I mean, we're three guys who have set ourselves up to leave our jobs, retire early, and yet we are still incredibly careful. So I love the messaging here that we are optimistic for sure, but also very, very realistic. And that's how we approach real estate investing. We are not cowboys. We are not dramatic risk takers. We are incredibly analytical and we ear to the side of caution because that leaves us with the most potential upside.

00:35:02:23 - 00:35:25:11
Matt Biggley
So even though that the three of us have put ourselves in the position to leave and to retire early, you can hear this whole conversation has struck a very cautious tone. But I almost think this sounds intimidating for people like maybe some people have said, okay, there's no hope in hell. I'm not retiring, really. I just need to like, change my mindset, go change something about the way I'm seeing teaching.

00:35:25:17 - 00:35:40:11
Matt Biggley
I want to maybe again, pivot this to talk about where can we find the optimism here? What are the next steps for people who, despite our cautionary tale here, want to explore this or don't want to lose hope, like want to be able to cling to some optimism that there's a chance, I.

00:35:40:11 - 00:36:06:24
Jon Orr
Immediately I think what we want to do is if you've already kind of convinced yourself of the emotional side, like I want to go down, that I feel like I need to do something different and I have to change this because of the emotional side, then I think what actually this really helped me kind of get a sense of my logical side and therefore my numbers side can actually happen with my current state and what are my steps that are going to be so that I can work towards that.

00:36:06:24 - 00:36:15:12
Jon Orr
We haven't done that already. I think what helped me was the conversation with you guys, and Kyle's a big fan of spreadsheets. If you haven't put together so big figured this out. Ready?

00:36:15:12 - 00:36:18:13
Kyle Pearce
But I didn't know if it was appropriate today, So I'll hold back. I'll hold back.

00:36:18:13 - 00:36:42:04
Jon Orr
But what helped me was thinking about or listing. I think it was us listing kind of our current assets, our current methods of income and writing it all out and then extrapolating over time. And so for a year, year to year. So now you have like imagine a spreadsheet where the columns are our different assets that produce income, or maybe they have potential to produce income.

00:36:42:09 - 00:37:01:17
Jon Orr
And then your rows were my age starting today and next year and next year and next year. And so then when I saw that laid out, when I saw here's my salary, here's where my commuter value is, and could I grow this at a consistent rate, here's another asset that I have that I could is some cash flow coming in from one of our real estate properties.

00:37:01:17 - 00:37:19:14
Jon Orr
When you list them all across like that and you tabulate what your net worth is, and then when you tabulate what your income is and you do that over the course of the time to time to time, year to year to year, let's say you delete one of them, right? You delete your income, look at the rest. Can the rest support us?

00:37:19:14 - 00:37:37:08
Jon Orr
Because now it's like I'm not replacing my income. I've added to it. And this adding this passive part over here maybe is enough for me to make that decision. But you have to do that. I think that's the big message here is like, Matt, you brought up two pieces, right? You said the emotional side got to be true with the logical side, but you've got to convince yourself of both.

00:37:37:17 - 00:37:53:14
Jon Orr
And I think what a lot of folks are doing is saying, like, I've already convinced myself of the emotional side and I'm almost like that emotional side. Remember the elephants like pushing the rider to go down their path without really convincing the rider the logical side that the money is going to make it work.

00:37:54:02 - 00:38:11:20
Kyle Pearce
I love it. I love it. And in summary, what I heard you say, it's like taking the words out of my is that, you know what? Don't lose hope. Matt, You were saying we are optimistic. But I think the key is it's this isn't a hope and pray approach, right? Everything we're talking about on this show is not hope and pray.

00:38:11:20 - 00:38:32:13
Kyle Pearce
And we're not going to tell you something that is just, oh, just do this thing over here and then everything's going to be okay. There is work involved. And I think the main message here is that if your elephants kind of pushing you to that emotion is sort of taking over. If you truly want what you think you want, then you need to do the work right.

00:38:32:13 - 00:39:00:10
Kyle Pearce
And doing the work might mean you yourself doing what Jon just articulated. I'm telling you right now, and you guys know this about me every weekend, pretty much I am revisiting and reanalyzing how things are looking like I'm not talking about recalculating every single number and every single value and all of these things. I'm looking at different scenarios of, okay, well, if we did this, what would happen if we did that?

00:39:00:13 - 00:39:21:04
Kyle Pearce
Totally, totally. The rider in control. And the reason I do that personally is to help me convince my elephant, which my elephant's the opposite of what I feel like a lot of people are doing, the elephants making people run down this path to freedom. I'm the opposite. My elephant's like, Do not go down there, Kyle. That is scary.

00:39:21:04 - 00:39:55:08
Kyle Pearce
That is off limits. Don't do something silly. And I am trying to get my rider to understand exactly what's going to happen at Base Case. I want worst case scenario. I don't want I know best case scenario sky's the limit. And that's amazing. And I'm hopeful that that will happen. But I'm always looking at worst case, like, what if nothing works out as I'm anticipating, I want to make sure that I can still feel like I took a chance or I did this or I did that in life and I'm okay and I don't have any sort of regret, right?

00:39:55:14 - 00:40:25:12
Kyle Pearce
I don't want to regret that I missed something, because in every deal that we do, there's always something you miss. Sometimes it adds up to nothing, but sometimes it can add up to something pretty significant. Right? And we just want to make sure that for you friends who are listening, that not only are we encouraging you to do this work, but ultimately we just want to make sure that you don't come back to us five or ten years later and say, I followed some ideas that you shared with us and this is what happened because you got blindsided by something right?

00:40:25:12 - 00:40:47:10
Kyle Pearce
There's always something going on in the background that maybe you're not aware of that you need to uncover along the way. So if that is scary for you, we're here for you. So reach out to us on Canadian Wealth Secrets dot com. We have all kinds of opportunities. We've been really enjoying these conversations with people out there. We're not asking for people who just want career advice on whether you should do this or that.

00:40:47:17 - 00:41:11:17
Kyle Pearce
But ultimately, if you're interested in going like, you know what, here's where I'm at, and maybe that work, that writer work, you're talking about, maybe that's a little bit tougher, challenging for you. Well, we can chat about a plan and maybe down the road there's a joint venture opportunity that might make sense for you if you're that type of person that sort of been sitting in the bushes, you know, you want to do something about it, but you're just not exactly sure what to do.

00:41:11:23 - 00:41:30:15
Kyle Pearce
Head over to Canadian Wealth Secrets dot com and we have our forward slash J.V. page so investment teacher dot com forward slash JV and you can input just a couple of details about yourself and we'll hop on a call and see where you're at and if there's opportunities that might make sense for you and the investor teacher team.

00:41:31:03 - 00:41:51:03
Matt Biggley
It's great. I think you've gone to great lengths to, really help listeners understand that there's this emotional side that we all need to explore and some questioning we need to do and some self-discovery and some unpacking of that. And then there's this logical side. There's this plan. We need it to be articulated. And I think the logical plan, once we see that spreadsheet, we see it on paper.

00:41:51:06 - 00:42:11:20
Matt Biggley
That's what we can ultimately provide you with that emotional need for that sense of safety. The three of us have explored this over the past couple of years. I needed my accountant to tell me I needed you guys to tell me I needed my real estate, which tell me that it made logical sense in order for me to feel emotionally safe to take that leap of leaving teaching.

00:42:11:20 - 00:42:35:16
Matt Biggley
So these two aspects are innately intertwined. And I think we've done a real honest and transparent exploration and sharing here of our three journeys through this in hopes that truly ask questions that we have heard from our listeners who have reached out to us, that we can provide some insight into how you can do this in a way that's responsible and in a way that will ultimately get you to your end goal of either leaving or retiring early.

00:42:35:16 - 00:42:43:15
Matt Biggley
So we look forward to those further conversations as people reach out, as you've described, how they can do. And I just want to thank you both for a really great discussion today.

00:42:43:23 - 00:43:01:14
Jon Orr
Totally. Matt, thanks for that. And if you found some value here today with some of these ideas hit home for you, we encourage you to share this podcasts, share a link to it, talk to your friends, your family about what you've learned here, and let them in on the secrets of what we talk about here on this podcast.

00:43:01:14 - 00:43:17:08
Jon Orr
So please subscribe all of those things that you're used to hearing on different podcasts. And we're also on all social media at Canadian Wealth Secrets Reach out to us, keep that sharing because by sharing we're going to start to change the financial futures of all listeners.

00:43:17:17 - 00:43:44:22
Kyle Pearce
Love it, Love it all links, resources and transcripts from this episode, and all the other episodes can be found over on in teacher dot com and find those episodes by going forward slash episode. In this case, 20:02 a.m. best teacher dot com forward slash episode to two and hopefully you'll be able to find some great nuggets just like the book that we had shared here today called Switch by Dan and Chip Heath.

00:43:45:05 - 00:43:56:00
Kyle Pearce
That rider and elephant situation, we use that analogy all the time and hey, it can help you too. And this decision as well as some other aspects of life. So head over to invest in intercom.

00:43:56:10 - 00:44:13:11
Matt Biggley
Or invest the students. Class dismissed.

00:44:13:11 - 00:44:25:23
Jon Orr
As a reminder, the content you heard here today is for informational purposes only, you should not construe any such information or other materials legal tax, investment, financial or other advice.