Young Scrappy Money Podcast Ep. 038: A No-Deprivation Guide to the Financial Independence (FIRE) Movement with Doug Nordman

Doug “Nords” Nordman shares his journey from active serviceman in the Navy to full retirement at age 41, including how to hit a high savings rate without feeling deprived, how to know when you’re ready to walk away, and how to keep your life challenging and fulfilling.  If you’re at all interested in the Financial Independence / Retire Early (FIRE) movement, you’re gonna love this episode with one of the coolest dudes around!

Resources from this episode: 

• Young & Scrappy, home to Michelle’s work as a financial advisor and financial coach.
• The Military Guide, Doug Nordman’s home online.
• Doug’s first book, The Military Guide to Financial Independence and Retirement, and a blog post about his book coming out in spring 2020, Raising Your Money-Savvy Family For Next Generation Financial Independence.
• Jesse G, my editor. If you ever need audio/video editing work, give him all your love and money.

Full transcript:

INTRO: [00:00:00] Hello. And welcome to the Young Scrappy Money podcast. I’m your host, Michelle Waymire. And each week, I’ll be bringing you tips and tricks to help you take control of your finances as well as interviews with people who made big financial changes in their own lives. So join us. And we’ll help you get your financial s**t together. 

MICHELLE: Hello, everybody. And welcome, welcome to another episode of the Young Scrappy Money podcast. For those of you who have joined us today, it’s gonna be a good one. It’s gonna be a good day. It’s gonna be a good episode. 

And I’ve got those chill vibes happening. Like you know when you start a day, and you just feel good about stuff? I think part of it is because it’s a day. And it’s March. And it’s starting to feel a little bit more like springtime here in Atlanta. 

But also because I’ve got a really chill guy to interview. Yeah, Doug Nordman is like Mr. Chill. He exudes chill. He served for 20 years of active duty in the US Navy submarine force. And that doesn’t necessarily exude chill, but he retired in 2002 at the age of 41. 

So he and his spouse reached financial independence in 1999. They’ve lived in Hawaii for over 30 years, raised their daughter on Oahu. And now Doug is surfing, traveling, going to personal finance conferences, writing books, doing more surfing. And I’m so excited to interview him today about his journey to financial independence. Welcome, Doug.

DOUG: Thanks, Michelle. I enjoyed your other episode about Travis Hornsby, you know, the student loan planner. We’ve heard from him a lot.

MICHELLE: Yeah. He is the student loan guru for sure. And now you get to be my FI guru. And you get to tell everybody everything about what that means and how you got there. 

So I think to kick us off, like tell us a little bit more about your background. What led you to want to retire early? And how did you get into the FI movement? And before I get too ahead of myself, if you would also do us all a huge solid and define FI for us?

DOUG: We’ll start with FI, financial independence. And it means you have enough money to stop working for a paycheck, if that’s what you want to do. Financial independence means that you’ve got enough money to last for a minimum of 30 years, probably for the rest of your life. 

And you have choices. You can keep on working, if you like what you’re doing, if it’s challenging and fulfilling. If you don’t like your job, well, this is a great time to stop doing that, maybe find another career, maybe just totally retire and stop working altogether and follow your interests.

MICHELLE: Nice. So what— what led you to want to retire early? Like how did you get into this?

DOUG: Well, my wife and I started our Navy careers back in the 1980s. We were both active duty for the ’80s and ’90s. And we started our family in 1992. And when our daughter was born, up until that point, things had been really good. 

We’d really enjoyed what we were doing— again, challenging and fulfilling. And that’s not necessarily the same as fun. But it was challenging and fulfilling. When our daughter was born, though, I found myself wanting to spend more time at home with her, more time watching her grow up, and more time together as a family. And that was not always consistent with what the Navy wanted of us. 

So we, by that point, had been saving pretty well. It’s easy to live a frugal lifestyle in the Navy if you’re constantly underway or at work. And so we started looking at our savings and our investments and figured out that we could reach financial independence. And then, of course, back in the ’90s, that movement just started to come out and give everybody more information.

MICHELLE: Yeah. So you mentioned that it’s a lot easier to save when you are— I don’t remember the phrase you used. And I don’t want to get it wrong. Because I don’t want to diminish the work that the military does.

DOUG: Constantly deploying, underway, or working long hours.

MICHELLE: Yeah, there it is. So what— what were your steps to reaching financial independence? Like I guess how did you approach that savings process? And how did you know when you had enough money?

DOUG: Well, it turns out that the math and the probabilities work quite well with a spreadsheet. What we did back when we started pursuing financial independence is track our spending. That’s the very first step for everybody. You’ve got to know where this stuff is going, where your money is being spent, what’s happening to it. 

And I tell this to my readers all the time. I say, just track your spending. It’s not like a New Year’s resolution, where you’re gonna go to the gym for two hours a day, every day of the year. You’re not gonna put yourself on a frugal diet and stop spending money on the things you enjoy doing. 

You’re gonna look at your spending. Just track where the money goes, no judging. And do that for a few months on whatever works. For some people, it’s gonna be a smartphone. For others, it’s gonna be a spreadsheet, maybe computer software, maybe even good old-fashioned pencil and paper. 

But after a couple of months, you’ll have an idea of where you’re spending your money and where it’s all going. And then you look back over that spending. And you try to decide if that’s valuable to you. Again, this exercise helps you figure out where you’re wasting your money right away. 

[00:05:05] You’ll look at something you spent your money on. If it’s valuable to you, you’re gonna keep doing it. And that’s good. If it’s not valuable to you, then you’re not willing to work the extra months or years of your life that you need to work to pay for that, whatever it is. And that’s your choice. 

You’re the person who’s trying to reach financial independence. And they’re your choices and your priorities. And after you’ve looked at that, you’ll just start cutting out the waste. And you’ll cut out the waste gradually. 

You’ll find things that you’re spending your money on. You’ll decide that’s not worth your time or your effort or your life energy. And you’ll start cutting these things out. And eventually, your savings rate starts to rise. 

And the math is pretty well understood these days. If you can maintain a savings rate of 40% of your gross income, you’ll reach financial independence in about 20 years. And some of that depends on how you invest. If you pursue financial independence, you’ll know you’re there when you reach the tripwire for what’s called the safe withdrawal rate. 

And the 4% safe withdrawal rate means that you have 25 times your annual spending. You’ve saved enough money. You’ve invested enough money to have 25 times the amount that you spend every year. 

And we’re very confident that that money will last for at least 30 years. The reality is it lasts longer than that, and it’ll survive the worst-case scenarios. Because the study doesn’t account for a bunch of human factors that you can also add to the situation.

MICHELLE: Yeah. So there’s a lot of good stuff in there.

DOUG: Yep.

MICHELLE: I want to— I want to draw our listeners’ attention to a couple of things. First, I love your emphasis on making sure that your budget is a tool to make sure that you’re buying more stuff that you like. It’s not about what you can and can’t spend your money on. 

DOUG: Right.

MICHELLE: I mean, we’re not trying to ask you to give up everything you love here. But if you go back over your credit card statements, and you see something from Amazon, or you see some shopping trip, and you’re like, what the hell was that?— right?— like that’s a pretty good sign maybe you didn’t need to spend that money on. And that’s— that’s a good sign that there’s an area in your life that you can cut back on without feeling the emotional pain of giving up something that really does legitimately bring you joy.

DOUG: Right. And if it’s frugal, then it’s challenging and fulfilling. But if you feel like you’re giving everything up— and, you know, the media makes it sound like— if you’re a frugal person for financial independence, it makes it sound like you’re recycling your toilet paper and dumpster diving for groceries. That’s not the way it’s supposed to work. You’re supposed to cut out the waste and live a fulfilling life while you’re saving for financial independence.

MICHELLE: Yeah. I also appreciate the specific numbers. So just to recap, it’s 40% savings rate. That’s kind of like the low-key goal to hit FI in 20 years. And then the litmus test for are you there yet, when you hit that safe withdrawal rate, it’s 25 times your current gross income. Do I have that right?

DOUG: Those are all the straightforward, simple numbers you’ll find on the internet right away. And then some of those numbers change. I know people who have incredibly high savings rates, not savings rates that I would personally try to achieve. But if you can save 70% to 80% of your money, then you’ll reach financial independence in about, mmm, six or seven years. 

On the other hand, if you feel like your life is challenging and fulfilling enough with a 25% savings rate, and you’re willing to work for about 30, 35 years, then you will reach financial independence in your 50s. And that works just fine. It’s all about living a life that you enjoy and also having security, financial security, when you reach that financial independence.

MICHELLE: Yeah. So one other question that I get a lot from folks in this space, a big part of making sure that you’re reaching financial independence in time is actually investing that money, right? 

DOUG: Yep.

MICHELLE: So if you’re just like— you’re putting aside 40%, that’s all well and good. But if it’s like hanging out in a checking account, it’s not actually doing anything for you. So how did you structure your investments leading up to financial independence?

DOUG: Well, we started doing this in the 1980s and 1990s. And we are living proof that a high savings rate and investing will overcome all kinds of stupid mistakes with the financial industry. What you’ll do is you’ll try to invest in passively managed index funds with low expense ratios. It can be just that simple. 

Now, you have to figure out your asset allocation. Maybe you feel like you’ve got a great job. And you know you’ve got continuity of employment. You know they’re gonna keep you going. That’s generally the military situation. You’re unlikely to get laid off. 

And in that case, you can probably have an asset allocation that is very high in equities in stocks. You’re probably gonna invest in a total stock market index fund. On the other hand, if you’re an entrepreneur, or you’re in a career where you typically have a short few years at a company before you have a period of unemployment, maybe you’re gonna dial that back a little bit. 

[00:09:52] You could say, for example, 60%, 70% in the stock market and put the other 30% or 40% in something safe, like a total bond market index fund. But the whole point is to be relatively aggressive with equities or with real estate. The whole point is to develop an asset allocation that is likely to keep up with inflation. 

And the only asset classes I’m aware of that keep up with inflation or exceed it are stocks and investing in real estate. Hypothetically, you could also do this with TIPS or I-bonds, but they’re a little harder to buy. And it’s a little bit more challenging. You probably need a little more money because you’re not gonna stay ahead of inflation.

MICHELLE: Yeah. And just a reminder to listeners, if you’re like, oh, some investing words, we have a couple of great episodes on investing that you might want to go back and and take a look at. But also, just a friendly reminder, when we’re talking about asset allocation here, we’re talking about the mix of stocks, bonds, real estate, stuff that goes into an investment portfolio. So as an investor, you kind of have to make that decision of, how much stocks, you know, do I want to invest in? 

That’s a little bit more risky but also more aggressive, longer return potential over time. And bonds are more conservative investing friends, a slow, steady type of growth. So I think that’s a great point that your mix of stocks and bonds is both gonna depend on how long you’ve got and what your current work looks like. That’s a great point.

DOUG: And you’ve got to be able to sleep comfortably at night. If you are looking at the math, and you’ve decided you needed to be 82% in a total stock market index fund, and then you lay awake at night worrying about volatility or the next recession or a bear market, well, you probably should dial that back a little bit.

MICHELLE: Yeah. That’s a great point. Definitely some behavioral factors at play there, too. 

DOUG: Yep. 

MICHELLE: So how do you structure your finances now that you’re at financial independence? What changed for you there?

DOUG: Well, that’s the easy part. The personal finance system that we use now just keeps getting simpler every year. When I retired 17 years ago, I thought that I had a chance to discover my investing style and find out if I was a brilliant investor and all those good things. And so I experimented. 

And every year, I found that I was gravitating more and more toward simple index fund investing. I knew how to do active investing. And with some years of experience, I got pretty good at it. However, I also found out that the more active I was, the harder I was working. 

And it really just turned into a part-time job. And there was that sleep at night factor too, you know. If you go to bed wondering if those options you sold are gonna work out or if this other company’s announcement tomorrow is gonna crash their stock price, it may be you’re just not cut out for that kind of individual stock picking investment. 

And so gradually, we moved into what we’re in today. And that’s a total stock market index fund. It’s got a very low expense ratio. And I’ve also got my active duty military pension. So I know that I’ve got a very volatile investment fund. 

It’s based on whatever the volatility is in the stock market. But I also know that no matter how much the market goes down next month or how bad the recession is, I know I also got some money coming in next month for my pension. And that’ll give me the annuity income, the reliable income, that I know will get me through the tough times.

MICHELLE: Yeah. Um, maybe this is a little bit granular. 

DOUG: Mm-hmm? 

MICHELLE: But I’m also curious, as you were saving for retirement, and as you’re in retirement, what about the account types that you’ve chosen? So a lot of people have this question of like, is it an IRA? 

Is it— you know, some people might have access to a 401(k) through their work. Or is it like getting a taxable account? What are your thoughts on what types of accounts you would use to save for and like manage your money in retirement?

DOUG: I could talk everybody’s ears off about that. But my advice is, yes, if you have a 401(k) or a 403(b) or a 457, all those parts of the tax code that your employer offers you, if you get one of those, go ahead and invest in it. And it’s especially important to do that if that 401(k) has a match. 

That’s free money. That’s 100% return on your money the day after you put in your contribution. So start off with a 401(k) and invest as much as you can in there to at least get the match. And if the 401(k) has some reasonable expense ratios, maybe you wanna just try to maximize your contributions to that 401(k). 

And I’ll go further and say that you could invest in either a traditional 401(k) or a Roth 401(k), whichever your employer offers. I get these questions all the time in the military and from federal civil servants because of the federal Thrift Savings Plan. And everybody’s always asking whether it’s a good deal— yeah, it’s got very low expense ratios— and whether they should invest in a Roth TSP or a traditional TSP. And we talk through those issues. 

But if you’re getting that high savings rate, if you’re reaching for that 40% annual savings rate in investing, you’re gonna fill up that Thrift Savings Plan or that 401(k) fairly quickly. And then you go on to the next step. You start investing in your individual retirement arrangement, your IRA. 

[00:14:57] Again, the question is, should we save in a traditional IRA, a Roth IRA? And that depends a lot on your individual situation. But you should try to maximize the contributions to yours and, if you’re married, to your spouse’s IRA. So that’s a 401(k), Thrift Savings Plan, some kind of employer’s retirement account, and your personal IRA, and, if you’re married, your spouse’s IRA. 

And then you keep going. Because if you’re reaching for that 40% savings rate, and you’ve got a reasonably good salary, you may find that you’re gonna have more than those contributions. And so you open up a taxable account. And when I say a taxable account, I mean with one of the big brokerages. 

They’re fairly straightforward, like Fidelity or Schwab or Vanguard. Or you open one up with some other online broker that you enjoy looking at or enjoy thinking about, and it just appeals to you. But the whole point is to minimize the amount of expenses you pay at that brokerage. 

And whatever you have left over after putting into your retirement accounts, start putting into that taxable account. And for those who are a little concerned about employment or having a car break down on them, you should have an emergency fund. But, again, the size of that emergency fund varies a lot with what kind of employment you’re in and what your lifestyle is.

MICHELLE: Yeah. That’s great. And I think to one of the— the questions or concerns that I see people have is, you know, the good thing about a 401(k) or an IRA is that you get those sweet tax benefits. The downside is there are some constraints about when you can pull money out. 

DOUG: Yep.

MICHELLE: So if you’re retiring super early, the last thing you want is to get to retirement and then not really be able to touch any of that money. That would be a problem. And so I think that’s a great point, that you definitely want to max out those tax advantage vehicles if you can. 

But then also setting something aside in a taxable account will make sure that you have a little bit something that you can— you can reach at any point or really, you know, in an absolute pinch tap into for an emergency, though. 

DOUG: Oh, you bet. And there are ways— 

MICHELLE: No substitute for a cash emergency fund.

DOUG: No. Cash works very well when it’s an emergency. Because that’s where you get your discount. That’s where you have your liquidity. And I’ll point out too that if you have a Roth IRA, you’re able to withdraw contributions at any time for any reason. There’s no penalty. There’s no taxes on withdrawing your contributions from your Roth IRA. 

I know some people who enjoy living life on the edge and will use that as their emergency fund. That’s not necessarily a recommendation for everybody. There are ways to tap those retirement accounts. They’re penalty free. 

You might have to pay some income taxes, but there are ways to tap that before 59 and a half. That’s the age at which you can start making withdrawals. And I’ll point out that even if you retire early, even if you reach financial independence in your 30s and 40s, that 59 and a half, that comes off a lot faster than you’d expect.

MICHELLE: Yeah. So we’ve talked a little bit about how you structure your investments now. But I’m curious about how you structure like your day-to-day cash flow. So how do you budget? How do you think about spending money in retirement? What does that look like for you?

DOUG: Well, we kept up the budgeting after I retired. We projected our budget from day to day when we were working and figured out how we would spend that in retirement. And some things, you’re gonna say, well, I’m not commuting to work anymore. So I’m gonna spend less money on bicycle tires or gasoline. And you say, well, I’m not wearing work clothing anymore, so I can cut back on that. 

But, you know, you’ve still gotta buy surfboards. You’ve still gotta buy surf wax. You’ve still gotta buy plane tickets for travel and do whatever you wanna do in retirement. So you do the best you can at projecting your retirement budget. 

And if you get it within 10% or 20% for that first year of retirement, that’s actually pretty good. Because you’re developing a new lifestyle. And once you put together that budget, then you can figure out how much money you want to keep in your checking account to make you feel comfortable. 

Some people will put one month of expenses in a checking account and have another year or two of expenses in a high-yield savings account. One thing we did that I don’t read much about— and I’ll bring it up now. When you’ve saved up for financial independence, and you’ve embarked on that life without a paycheck, and you’re withdrawing your assets, you’re drawing down your investments to make your monthly payments and your bills, there is a possibility that the stock market’s gonna go into a nasty recession the very first day that you start your financial independence. 

And now you’re making withdrawals from a portfolio. And the stock market’s down 20% or 30% or 40%. That’s a— that’s a very scary way to live your financial independence. 

And so what we did for the first 10 years is we kept two years of expenses in a money market account and in certificates of deposit, just three-year CDs. And what that meant was we could live off that cash for two years. And if there was a recession or a bear market, then we wouldn’t have to tap into our stock funds to pay our living expenses. 

And that’s a type of risk known as sequence of returns risk. And we did that just for about the first 10 years. After that, we gradually drew down that cash stash. And today, we have about six or seven months of living expenses in a checking account and a money market account. 

[00:20:00] And as we need more money, we just go ahead and cash in some shares or wait for the next dividend check from the small dividends that our stock market fund gives off. And it’s mainly for things that come up. For example, we get a really great trip. And we plan to take that trip. And we rack up some bills while we’re traveling. And now, we have to pay the credit card off. 

Or one of our cars ages badly and suddenly dies on us. Well, now we have to spend, you know, 10 or $15,000 to find a new— a new-to-us, a new used car. And those are the kinds of things that come up throughout your financial independence, just like daily life. And that’s how we handle it is by having that little bit of money in a checking account and the money market account to pay the bills and then sell shares once or twice a year as necessary.

MICHELLE: Yeah. So what is your budget style? Like do you use a spreadsheet, pen and paper? Is there an app you like?

DOUG: Uh, I’m a financial nerd. We have over 150,000 transactions in 27 years of Quicken. And it gets kind of creaky over the years that way. But that’s how we set up our budgets. That’s how we track our spending. 

I will point out, though, that I’ve been financially independent and retired for 17 years. And we have fallen into a lifestyle that we are fairly comfortable with. And we know what our expenses are gonna be fairly routinely. 

So my spouse and I no longer budget. We don’t look at our budget. We don’t project our budget. We don’t put ourselves on a budget. 

We know what we spend when we go and travel, and we don’t worry about it. And we know what we spend when we’re at home. We definitely don’t have to worry about our expenses at home. 

Now, if we were gonna go out and do something incredibly expensive, like buy another car, maybe that’d be a discussion for the budget. But the assets we have over the last 17 years have grown faster than inflation. When you look at the 4% safe withdrawal rate that people use for this portfolio management while you’re in financial independence, it says that you have a high— a high probability, greater than 80% probability, of ending up with far more money than you need. 

And that’s what’s happened to us, after 17 years of retirement, is we have more money than we need. We don’t have any white knuckles on the budget wheels anymore. And we just keep an eye on the big expenses.

MICHELLE: Yeah. That makes perfect sense. You know, I think with anything, you start out, and you have to give it a lot of attention. And you have to give it a lot of love, especially as you’re building new habits and kind of getting that spending together. 

DOUG: Yep.

MICHELLE: And then, yeah, I think that that’s a great point. After you’ve done it for a full decade, you don’t really need to get in there and track every single penny anymore.

DOUG: And the habits that you have that get you to financial independence, you’re not gonna abandon those habits the day after you become financially independent. You’re gonna continue the kind of frugality that you enjoy. Because it’s challenging and fulfilling. And you’re not gonna start burning money like Fourth of July sparklers just because you’re financially independent.

MICHELLE: Yeah, totally. And I think too if you are at a place where you’re getting close to financial independence, and all you can think about is spending a ton of money, that’s probably a good sign that like your lifestyle is maybe a little bit too pared back. If it’s making you want to like dive off the deep end with extra spending, you know, it might not be a good fit for you in the front.

DOUG: Exactly. Well, we talk all the time about crossing that line between frugality into deprivation and how to know when you need to change things and improve your lifestyle a little bit.

MICHELLE: Yeah.

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MICHELLE: So we talked about how you structure your finances. How do you structure your lifestyle? Like tell us about your hobbies. And tell me— I’m curious like, how did you get into surfing?

DOUG: Well, it was a joke. Out here on Oahu, of course, in Hawaii, surfing is kind of a big deal. And as I was approaching retirement out here in Hawaii, I had told people that my wife and I were financially independent. And we weren’t looking to have a job. We weren’t gonna give anybody a resume. We weren’t looking to start another commuting paycheck lifestyle. 

And all the typical urban legends and myths of financial independence started popping up. And one of them was, you’ll be so bored. What are you gonna do? Surf all day? And it occurred to me that I’d been living in Hawaii by that point for over a decade, and I’d never learned to surf. 

And it became kind of a joke that we were gonna learn to surf when we were financially independent and when I retired. And so the day I retired from the Navy, the whole family, we all went down to White Plains Beach here on Oahu. And we took surfing lessons from the lifeguard and found out that, yeah, you can surf all day, every day. 

We were hooked. My daughter and my— my daughter and myself especially were hooked. And, you know, my wife can take it or leave it. But she enjoys going out there in the ocean and having fun too. And so that’s become a big part of our lifestyle. 

And now I get it. In fact, I’m kind of glad that I didn’t learn to surf while I was on active duty. I’m not sure I could have driven by the beach and made the right choice to go to work. So being retired made it a lot easier to go surfing as much as I want. 

[00:25:02] So it sounds like a joke. But our daily routine, when I get up in the morning or before I go to bed the night before, I look at the surf forecast for the next day. And I decide what I’m doing that next morning. 

And even today, 17 years after retiring, I still go out surfing two, three times a week. If friends are in town, we might go out every day for a week or two if I can keep up that pace. But surfing is a big part of our life, just going out in the water and having fun.

MICHELLE: I love it. And I feel like you hit the sweet spot, right? Because you— you retired late enough that you got your life business done that you needed to do, and saved your money, and like went to your job like a responsible human. But because you retired so early, it’s not like you were out there with, you know, 70 years old trying to surf, which I’m sure there are still people who do that. 

DOUG: Well, I got— 

MICHELLE: But from a learning standpoint, it’s probably easier to start a little bit younger.

DOUG: Yes, it is. I got two comments on that. A responsible human is something that my friends would never accuse me of looking like. And— and you’re absolutely right. Surfing is something you can do for the rest of your life. 

And I surf out there in the morning with other people who are, you know, traditionally retired in their 60s or 70s. There’s a few guys out there in their 80s. Now, you know, they’re not popping up like Kelly Slater. But they’re surfing. And they’re my role models.

MICHELLE: Oh, that’s so awesome. I can only hope to be that cool at any point in my entire life. And I’m curious. This is, uh, maybe a personal question. You have a sweet ponytail in your profile picture on Skype. Does the— does the ponytail persist?

DOUG: Oh, yes. And this is one of those lifestyle choices you make where you have to be careful. You have to think about what could happen in the long term. I grew that ponytail because when I retired from the Navy at 41 years of age, I realized that for my entire life everyone else around me had been telling me how long my hair could be. If it wasn’t the Navy, it was my parents. 

So at age 41, I did that teenage rebellion thing and grew a ponytail. And, you know, after five or six years, you’ve proved your point. Maybe you wanna get wash-and-wear hair and cut it and have a little shorter hairstyle. But my, uh— my spouse said, you know, that looks kind of nice. I kind of like that ponytail. So it’s been almost 18 years since my last haircut.

MICHELLE: I love it. That, uh— that is a big factor of those cool vibes that I mentioned at the beginning of this episode. And also I can imagine that going 18 years without a haircut also fits really neatly into some disciplined frugality.

DOUG: It’s actually more like laziness. I just don’t wanna be bothered. And it’s a nice hairstyle. And it’s comfortable. And I like the look. And when I go to financial conferences, and we talk about lifestyles, people say, oh, nice brand, Nords.

MICHELLE: I love it. That’s so good. So you also mentioned in your bio that slow travel is another one of your interests. And I’m curious about this because, I’ll admit, I’ve never heard this phrase in particular. I am no stranger to travel. But tell me more about slow travel. What does this mean?

DOUG: All it— all it means is that you’re traveling without worrying about the traditional two-week vacation. Everybody’s familiar with going out and being a resort lifestyle where you check into a hotel. And you’re doing things in your destination town. And you’re paying full retail for everything. And you’re living like a millionaire for two weeks and then back to work. 

When you reach financial independence, you’ve got all those choices now. And slow travel lets you travel for an indefinite period of time. You leave your apartment or your house. You go somewhere. And you don’t have to hit 20 countries in 10 days. 

You simply go somewhere and find a place to live. Maybe you’re gonna live in a hotel. Maybe you’re gonna rent an Airbnb for a couple of weeks. Maybe you’re even gonna talk with your Airbnb host about a monthly rental. Or you’re gonna housesit or stay with friends. 

However you do it, you’re gonna stay in that area for at least a couple of weeks and live like a local. You’re gonna walk around the town and get to know the businesses in the town. You’re gonna shop at the grocery stores and enjoy meals at the restaurants. 

Maybe you have to find somewhere to get your laundry done. Maybe you’re walking around looking at all the local attractions in that town. And you’re enjoying living there like you’re a local resident instead of just dropping in, and running around, and seeing the top 10 out of the tour guide, and then racing off to the next place. 

So when we leave Oahu and go traveling, it’s 2,500 miles to the nearest continent. And so we try to avoid having to make that trip more than a few times a year. And we’ll leave with an itinerary that’s at least a couple of weeks. More often, it’s a couple of months. 

Last year, we made two trips, each about two months. We covered thousands of miles just because it was a long distance to get from Oahu to Europe. But once we got to the places we wanted to be in Europe, we settled in, rented an Airbnb for a week or two, and just lived local life. 

And I really enjoy that. Because you get to know your neighbors a little bit. You get to know the block you’re living on pretty well. You get to see the things that you might not necessarily see if you were on an organized tour. 

[00:29:58] And frankly, as you get older, slow travel works really well. Because, again, you’re not ready to race around. And you don’t recover from jet lag as fast. And in your 50s and 60s when you’re traveling like that, maybe every fourth or fifth day, you just need a down day to hang around the apartment, get caught up on email and laundry, and rest.

MICHELLE: Yeah. See, you are speaking my language right now. There was definitely a time in my life where I was ready to drink all night, catch a train in the morning, stay in a hostel, get buck wild on it. And now, I’m just like, oh, what if we took today, and we walked around the block, and we played cards, and— ?

DOUG: Exactly.

MICHELLE: That— that sounds wonderful. You’re selling it.

DOUG: I do know plenty of people that travel in their 20s and 30s that way. They’re digital nomads. They’re freelancers. They’re location independent. Those are all good words for slow travel.

MICHELLE: Yeah. What’s the— what’s your favorite place that you’ve been on this type of trip?

DOUG: Well, as Navy veterans, we’ve been stationed all around the world. But one of the places that my wife was stationed and that I visited frequently, it was in Rota, Spain. And when our daughter graduated and went to college, she had an ROTC scholarship. And then she joined the Navy. 

And her first duty station was Rota, Spain— 30 years later. So we visited her a lot while she was stationed in Rota. And we would go there and hang out with her when she was home. Or we’d take care of her place, and help it get organized, and get all the pictures hung up and all the boxes unpacked, or take care of it while she was deployed. 

So we really enjoy that area of Spain, that Andalusia area around Rota and Cádiz. There’s even some good surf spots there, although the Atlantic is kind of cold compared to Hawaii. But, hey, it was surfing. And so we’ve spent a lot of time in Europe. 

Now, my daughter and our son-in-law are stationed on the West Coast. And so our attention has shifted more toward traveling in Asia and Australia and Japan, those kind of areas. When my wife was in the Reserves, we traveled several times to Bangkok. 

And I still enjoy going back to Thailand and seeing, you know, Bangkok and Chiang Mai, that area. Those are the top three areas on our list. And there’s a lot of countries in the world. But also, there’s a lot of places that we enjoy going back to. And so it’s tough to decide whether you wanna go to someplace totally new or whether you wanna go back to one of your top three favorites.

MICHELLE: That’s a good problem to have. 

DOUG: Oh, yeah. 

MICHELLE: So one of your other passions is being an angel investor. So can you define that for us and then talk a little bit about how you engage in the startup community?

DOUG: Well, the first criteria that you have to meet for being an angel investor is something called accredited investor. And what that means from the Securities and Exchange Commission— the SEC rule is you gotta have at least a million dollars to invest. Or you gotta have at least $200,000 a year of income. Or you and your spouse together have to have at least $300,000 a year of income.

And the whole idea— the only reason that these rules are out there is because this is investing for grownups. You’re gonna find very risky startups. You’re gonna find very scary situations where they’re probably gonna lose all your money. 

And that’s part of the idea of angel investing is that you’ll invest in 20 companies, and maybe only one or two of those companies will actually prosper and either get acquired or have an initial public offering and go public. And the other 18 are just gonna flame out and die. And so the SEC wants to make sure you’re aware that you’re gonna lose a lot of money on angel investing before you hopefully earn it back and maybe even make a profit. 

And the best way to get started in angel investing is to join a group in your area, someplace where you can get together with people regularly face to face, sit down, maybe a meal or a meeting, and learn from each other. When you’re looking at a startup, and it’s a group of you talking together, talking to the startup founders and figuring out whether you want to invest, you’re gonna do your due diligence on the company. And you’re gonna ask a lot of questions. 

And if you’re in a group, then somebody’s gonna ask a question that you hadn’t really thought about. And that’s gonna lead to a better quality of due diligence than if you’re just sitting down with your screen and the internet trying to figure out if this company makes sense. There are plenty of other resources on the internet these days. 

And another approach to a type of angel investing is crowdfunding. At its simplest, crowdfunding is when you get together with other people and spend maybe 5,000 or 10,000 bucks apiece to invest in a startup. And they will agree to work with you on that because they are gonna raise a little bit of money. 

Another example of crowdfunding is just Kickstarter. I mean, there’s plenty of stuff going on on Kickstarter that could turn into a real company with real revenues and real profits. But they just got a cool product or a cool service that you want to experience. The whole point in all those things is that you’re building an asset allocation. 

You started out with passively managed total stock market index fund. But maybe you wanna find out if you’re a brilliant investor. And maybe you wanna invest in some other things besides the stock market and besides investment rental properties. And so I tell people, if you’re gonna go out there and invest in precious metals or commodities or forests or cryptocurrencies, to limit that asset allocation to 10% of your total asset allocation. 

[00:35:11] You know, go do whatever you want with that 10% of your asset allocation, even if your idea of an investment is Powerball lottery tickets. But the whole point is that if you do turn out to be a brilliant investor, that 10% asset allocation, that’s big enough to move the needle if you really are succeeding at what you’re doing. The other advantage of that 10% asset allocation is that if you turn out to be not such a brilliant investor, as we all thought, well, 10% is small enough to limit the damage when all that goes to zero.

MICHELLE: Yeah. One of the rules that I give— way, way less concrete than 10%— is, don’t invest anything in something risky like that if you can’t afford to lose it.

DOUG: Oh, I’m living proof of that. I’ve invested in 11 startups over the last 11 years. I’ve been doing this since 2008— oh, wow, 12 years now. And the whole idea is to learn how to do due diligence and to learn how to control your emotions. Because startup founders, they’re very evangelical. They’re not all intense, like Elon Musk evangelical. 

But they’re very good at pointing out that here’s an awesome opportunity to invest. Here’s a great company, and we’ve got wonderful plans. And so you at first are tempted to run around like a four-year-old in a candy store. And you’ll— you’ll buy everything in sight, and it’ll make you sick. 

But the whole point of angel investing is to learn how to do the cautious assessment of their opportunity and how well that could work out. One of my friends has a great filter. He looks at a company. And he says, well, for this company to succeed, everything has to go right. And he won’t invest in that. Because everything has to go right, and it never does. 

The other kind of company he looks at with his filter is he says, well, for this company to fail, everything has to go wrong. And those are the companies he prefers to invest in, where they’ve got a great model. And it looks like it’s gonna work. And about the only thing that could take them out is, you know, a change in the federal law, or a meteor strike, or some other extinction event that would put that company out of business. 

So those are the kinds of things you learn to do for angel investing to do it— to do a good job of it without wasting your money. And ironically, even though I haven’t had an exit from my angel investments yet, it’s made me a much better investment. It’s led to many thoughtful discussions about asset allocation in our family. And it’s taught me a lot.

MICHELLE: Awesome. Well, it sounds fun.

DOUG: It is. I’m drawing it down now. I mean, you can do this for your entire life. It’s more of a vocation than— or a hobby than it is a way to get rich, I think personally, especially that first few years where you’re doing angel philanthropy. You’re just buying shares of companies. And maybe they succeed, and maybe they don’t. 

In some cases, you’re saving lives. If somebody’s inviting— inventing a medical device, and it works, well, that’s great. You’re gonna help out a lot of humans. In other cases, you’re making things work better or cheaper. And that’s— that’s gratifying, especially when you help invent some kind of new technology. 

In other cases, maybe it doesn’t pan out. But you’ve still given somebody a chance to try out their idea and run with it and hire a bunch of people. You’ve jumpstarted the economy. And maybe it was philanthropy. But it’s going to people who really have ambition and motivation. And they’re working very hard for the money.

MICHELLE: Yeah. So between all the surfing and the slow travel and the angel investing, what else are you working on nowadays?

DOUG: Well, I discovered once I retired, and I could do whatever I wanted, that I really did enjoy writing. You know, instead of having to write for the military, and I could write for my own entertainment. I really enjoy that. And so I’ve published a book that’s been out now for about 10 years. 

But we eventually started thinking about another book. And my daughter and I have written a book together. Raising Your Money-Savvy Family For Next Generation Financial Independence is the subject. 

And it was a thrill to just sit down with my daughter and talk through those old stories. You know, we talked about, well, how do you raise your kids for financial independence so they can do that on their own? And our daughter had all kinds of opinions on what worked in our family and what didn’t work so well. 

And so I really enjoyed writing that with her. That’ll probably come out in three or four months. And I’ve always got another book idea behind that. So I’m gonna be writing— you know, either a book or a blog post or just something on a Facebook group, I’m probably gonna be writing for the rest of my life. 

And I still enjoy reading. I spend a couple hours a day reading on the internet or reading something on my Kindle. And, again, I really enjoy just going out and engaging with people, you know, meetups, for example, personal finance conferences, or financial independence meetups in the local community. Those are always fun. 

You know, people worry that, when they retire early or reach financial independence, that they’re gonna lose all their friends and be so lonely. And I’ll tell you, as an introvert some days, you actually need the downtime. You can find plenty of socializing out there.

MICHELLE: Awesome. So with this sweet book coming out, how can people find you online and sort of follow that work?

[00:40:00] DOUG: Well, searching for my name is the easiest part, Doug Nordman. We’ve been doing this for 11 years. And so we’re all over the search engines. The name of the website that we have for the first book is themilitaryguide.com. And again, just search for those words, The Military Guide. It’ll come right up. 

And on there, I blog about personal finance for military families and veterans. But a lot of those topics are also applicable to everybody who’s not in the military. Or maybe nowadays, I’m starting to get questions from people who are related to folks in the military. So there’s plenty there for everybody. 

And when the book comes out, you’ll see that social media. And it won’t be very subtle. But you’ll see a bunch of talk about A Money-Savvy Family. And that’ll start ranking high in the search engines. It’s already starting to come up there. And the book will follow in about three months.

MICHELLE: Awesome. Well, thank you so much. Listeners, I’ll be sure to link out to all of those website things that we mentioned. All the resources that you found in this podcast, all of those are on our website at youngandscrappy.com/blog. 

So you’ll be able to find all of our podcast episodes, all of the transcripts, all of the good stuff there. And I’ll make sure that you get an easy way to find what Doug is doing. I feel like I should call you— Nords is your— is your nickname, right?

DOUG: That’s— that’s the family friendly nickname my XO used to call me by on one of my first submarines. So yeah, Nords.

MICHELLE: Nords, I love it. I feel like a cool guy needs a cool nickname. And like that totally— that totally clocks. So anyway, Nords, thanks so much. Hope you get some sweet surfing in your future. Listeners, thank you for listening. It’s been an absolute pleasure.

DOUG: Thanks, Michelle. Talk to you later. 

END CREDITS: I hope you enjoyed this episode of the Young Scrappy Money podcast. If you want to read about my work as a financial advisor and financial coach, you can do so at www.youngandscrappy.com. That’s www.youngandscrappy.com. Thanks again for listening. 

Made with love by Jesse in Atlanta. [SMOOCHING SOUND]