Frugality isn’t the only way to make FIRE possible.

I am beyond honored and grateful to have Caroline from Costa Rica FIRE share her story and her journey to FI with us. Here, she shares her story of how she and her husband are achieving FI even though they came to it “late.” She’s of Filipino descent like my sisters and I. I learned the concept of the self directed IRA and 401K from her and have also started learning more about real estate based on her book recommendation: The Millionaire Real Estate Investor.

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I was born, raised and still live in New York City. Both of my parents are Filipino immigrants who met in New York City. My parents divorced when I was an infant, and I was raised by my mom. I also have a sister, who is an academic, but she and I like to talk personal finance, so we’re “sisters for FI” too!

Like many Filipinos, I was raised to get good grades to get a good job (a professional one like business, medicine or law!). Anything alternative or atypical (e.g., FIRE) wasn’t on my radar till my 30’s. Even in my 30’s, my first foray into thinking differently was entrepreneurship. FIRE came into play only after hitting age 40 (maybe a mid-life crisis?).

Having changed careers multiple times, I refer to myself as an extreme career changer, and my passion work is to coach people on career change. My first vocation was classical piano – I trained at Juilliard and majored in music in college. I also majored in economics, and my second career was investment banking/management consulting. Then I worked in executive recruiting, acting, corporate HR and finally entrepreneurship, which involves elements of all of my previous careers. I’m still into the arts, performing stand-up comedy, and writing and producing independent films. I’m still into investing, though in real estate, not securities. I’m a consultant (again), with a focus on HR/career.

When I left a six-figure corporate job at a Fortune 500 media company and launched my business in 2008, I only made 15% of my previous salary in my first year in business. Within four years, however, I caught up and exceeded my corporate salary, and business was busy. Too busy, in fact, because I felt burned out. I needed to figure out how to make money in a way that allowed more free time.

I was always into personal finance, but just the strategies featured in mainstream media – maxing out the 401k, buy-and-hold investing, zero consumer debt. This gave me an excellent foundation, and I wholeheartedly recommend to everyone to build good financial habits early. That said, traditional financial strategies weren’t going to solve my burn-out problem. Launching a business started me down the path of thinking more creatively. Luckily, this creativity spilled over into how I approached my personal finances.

My first attempt at making money apart from my consulting time was to create online products. I made some money from my first product launches, but it was a Herculean effort and not much fun. My husband Scott is a techie and has taken over that pursuit. He actually enjoys this so it’s sustainable for him, and I can focus on what I like to do.

Products aren’t the only way to passive income (I only realized this after trying it and realizing that it wasn’t for me). If I parlayed my consulting earnings into real estate, the rentals could provide passive income and a way to scale outside my individual time. I have always been interested in real estate – certainly more than developing online products. Scott fortunately jumped with me onto the real estate bandwagon.
We were 42 when we went full-throttle into real estate. From 2013-2016, we funneled almost 100% of my earnings into real estate, turning my time-based money into an ongoing income stream. We also transferred some of our 401k assets into a self-directed retirement account to purchase even more real estate (three of our rentals are owned by our 401k).

We had dabbled in real estate earlier – we bought a weekend home in NJ years ago and a couple of rentals in Asheville, NC, which we thought about as a retirement plan for our 60’s onward. However, it wasn’t until 2013 when we started building out a portfolio, adding rentals in Jacksonville, FL, Indianapolis, IN, and Tamarindo, Costa Rica. At our peak we had 16 properties, though we currently have 11. We sold our entire Indianapolis portfolio.

Researching real estate and thinking more creatively about finance led me to read more finance blogs, which in turn led me to FIRE. FIRE appealed to me because it was about 100% time freedom – to live where you want, to do what you want (including working on what you love). Real estate has been the linchpin in getting us to FIRE.

We think of FIRE in three stages of increasing spending levels. Stage 1 of FIRE is the lowest lifestyle cost. It is using Costa Rica as a home base where you can live very comfortably on a few thousand dollars per month. Sure, we partly invested in Costa Rica to get international diversification in our real estate portfolio, but mainly it was to be our Stage 1 of FIRE -- a place where we could live, and lock in affordable, quality healthcare. We hit Stage 1 of FIRE when we bought our Costa Rica rentals in 2017. At that point, we could live in Costa Rica on our portfolio income alone and not have to work at all.

Stage 2 of FIRE would be to keep a base in the US, but a lower cost-of-living city than New York. We love the beach so taking over one of our rentals in Jacksonville, FL would fit that bill. Stage 2 of FIRE would require portfolio income, plus continuation of some work. We have hit this stage 2 of FIRE this year. We can afford stage 2 of FIRE with just the passion projects in our business (i.e., only doing the projects and clients that we absolutely love). In fact, we are in the process of moving our residency to Jacksonville, FL and will be living this stage 2 of FIRE, starting next year.

Stage 3 of FIRE, and what we’re still working towards, is keeping a base in New York City, supporting our two daughters (ages 24 and 18) as they establish their adult livelihoods, and traveling the world. Our ideal lifestyle would be spending parts of the year in four different continents – North America, Central America, Asia and Europe. To this end, we’re not selling our New York City apartment, assuming we’ll get to this highest level with continued business and real estate hustle. We are traveling now and not just waiting for some magic number -- we hit France this year and have booked a trip to the Philippines next February. Affording the lifestyle in Stage 3 of FIRE costs more than a 4% withdrawal rate of our current paper portfolio and more than our current rentals make, so we have not achieved Stage 3 of FIRE. We’re still working on it, albeit from our perch in Jacksonville, FL starting next year.

At age 48, tackling FIRE in stages has made the pursuit accessible but also kept the bigger, aspirational goal (stage 3!) in mind. As I mentioned, real estate was the linchpin for us, so I would say that scaling up the real estate over the last few years was the smartest financial move we made. Rental income got me out of the time-for-money treadmill and made me feel less burned out by my business. Real estate research led us to the concept of FIRE, which gave me a renewed purpose for my business. Costa Rica
real estate specifically lifted us into Stage 1 of FIRE – we can take risks in our business now (for example, Scott left his corporate job in 2017) because we have a fallback plan in Costa Rica. Having a condo by the beach as a Plan B in the land of Pura Vida is something both Scott and I can live with (and which we recently validated by spending the month of September in Costa Rica).

Sisters for FI asked me to give advice based on my FIRE journey, so here goes:
• The traditional personal finance you see in mainstream media won’t get you there – don’t be afraid to think creatively and non-traditionally.
• I don’t think my Filipino upbringing lent itself to non-traditional thinking, but you are more than your upbringing. I still came around to FIRE, and my mom thinks it’s cool
• Alternative personal finance doesn’t just have to be about FIRE. Consider entrepreneurship over employment. Look into a self-directed retirement account, not just the office 401k. Investing can be something other than the stock market – real estate or starting your own business might be a better, more lucrative fit than paper assets
• My favorite FIRE resource is the Ultimate Retirement Calculator by Financial Mentor. This versatile calculator allows you to model paper, real estate and business income, giving you a much clearer picture of your journey to FIRE
• Think of FIRE in stages to make it bite-size and more approachable (this was a mindset game changer for us)
• It’s never too late to start. We were 42 before even discovering FIRE and still hit stage 1 in 5 years
• You can achieve FIRE even in a high cost-of-living city, even when you have kids, even when you like to spend money. Frugality isn’t the only way to make FIRE possible.

Say Hello to Caroline at the following profiles. Visit Costa Rica FIRE for a free report on Four Strategies To Make FIRE Possible.

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