How We Got Here, Part 2: PANIC

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This is part of a series “How We Got here.” Read Part 1 here.

2008 (THE CRASH)

Hey, you know how on a particularly bad day on the stock market, you’ll read news like “Dow PLUNGES 150 points!” or “The TSX DIVES 220 points!”

Yeah, that’s just adorable.

Photo By star5112 @ Flickr
Photo By star5112 @ Flickr

In the depths of the 2008 Financial Crisis, the Dow would regularly dive 500+ points, and I vividly remembered the TSX dropping over 1000 points in multiple trading sessions.

Here’s the tricky thing about investing: When stock markets are going up, it’s really easy to convince yourself you’re a genius. “Oh, I came up with this system and I picked these stocks and I’ve already made $10000!” people say. Well, that’s because everything’s going up and you just got pulled along for the ride. You have no idea if a particular investing strategy is any good until you’re see how it performs when everything’s on fire.

And in 2008, everything was on FIRE.

We had invested nearly all our assets on the eve of the worst financial crisis in modern history. Within a single trading session, we had given back all the gains we had made investing. And in the trading session after that, we were in the red. And in the trading session after that, we were DEEP in the red.

“So, how was your day?” Wanderer would say after returning home from work.

“ShitshitshitshitSHIT!” Was my reply as I hunched over our laptop watching our portfolio get pounded.

I understood, intellectually, the strategy of Index Investing, and how it was impossible for your portfolio to go to zero. But there was always the caveat that it was impossible for your portfolio to go to zero unless the world ended.

And on September 15, 2008, when Lehman Brothers filed for Chapter 11, the single biggest Chapter 11 filing in US history, causing the Dow Jones Industrial average to drop a cataclysmic 1000 points, it kinda sorta seemed like the world might actually end.

People were losing their homes left and right with entire neighbourhoods getting flooded with foreclosure signs. Newspapers were running stories about the impending collapse of the global financial system (with black-and-white pictures of 1929-style bread lines, just in case we weren’t already scared enough). People were hoarding gold and canned goods. Even Derek Foster, Investment guru and self professed “Youngest Retiree in Canada” (a title that I think belongs to me now) famously panicked and sold every stock he owned.

Losses to our portfolio kept building, and it just wouldn’t seem to stop.

By the time the end of the year rolled around, the stock markets had dropped almost 50%. Our personal losses were at 30%. The difference here is because we had 40% of our holdings in bonds, which didn’t drop (in fact, they went up), but that’s cold comfort when we logged into our brokerage account at the end of the year and the screen basically said “Hey, you know all that work you did, and all that money you saved? Well, almost a third of it is gone now. Oh, and it’s probably going to get worse. Merry Fucking Christmas.”


Category Cost / month Comments
Rent$800We move in together because of the “frying pan” incident documented in Part 1 and our rent halved."
Bus pass/utilities/misc$300
Vacation$583.33 $7000 in total for Cruise documented in Part 1
Savings $7033

Screen Shot 2016-07-13 at 2.55.17 PM

At the end of the year, this is what our balance sheet looked like.

Category Amount Comments
Combined income (after tax)$131,000
Total Spend$46,600
Savings Rate 64%
Total Net Worth$134,900



Our first foray into stock market investing was not going well. Within a few months, we were swimming in losses with no end in sight.

Now here’s the thing. A critical part of Index Investing is to create a portfolio that balances your holdings between stocks and bonds, and then to rebalance your holdings periodically back to your target allocation. If your target allocation is 50/50 stocks/bonds, and stocks do well to the point that it’s 60/40, you’re supposed to sell enough stocks and put that amount into bonds to restore your 50/50 target. If stocks do poorly and you’re now 40/60, you’re supposed to sell bonds and buy stocks. This causes you to buy low and sell high. (There will be a future article explaining why this works)

We knew that rebalancing was what we were supposed to do, intellectually. And in normal markets, selling off your winners to pick up more of your losers feels counter-intuitive. But in an end-of-the-world stock market crash, it feels downright insane.

In this situation, “rebalancing” meant not only selling off our bonds, also known as the only part of our portfolio that wasn’t currently on fire, it also meant taking every last dime of our paychecks that we could spare, and throw it into a stock market that was in free-fall, all while the media screamed “the sky is falling!” at us.

This was not fun, and I remember viscerally the feeling of putting $1000 into the stock market, only to have the stock market immediately plunge and my portfolio to go down $1000.

“Where the fuck did my money just go?!?” I would scream at the screen.

But we continued doing it, because we had faith in the underlying strategy. Buy the Index, and rebalance. No matter what.

Around mid-March 2009, the S & P 500 had found its bottom. From a pre-crisis high of 1550, it had crashed and burned all the way down to 683. But then it started climbing back up. And throughout it all, we continued to buy.

Here’s an interesting thing about this strategy. By buying into a storm, with the faith that the index would never collapse completely, as the price per unit dropped we were naturally picking up more units for the same amount of money. As a result, when the recovery happened we were able to participate in the upside more strongly than the downside. The actual value of the S & P 500 didn’t recover to its original number until 2013, but because we had picked up so many units when everyone was running the other way, we hit our break-even point, taking into account interest and dividends received along the way, by December of 2009.

So in December of 2009, we made the single biggest mistake of our investing career: we exited the stock market completely.

It wasn’t because we lost faith in the stock market, or in Index Investing as a strategy. Quite the opposite, actually. That year had given me a rock-solid faith in Index Investing that we carry to this day. While everyone was losing their shit and jumping off buildings, we, lowly unsophisticated retail investors, had managed to do something most Wall Street traders and even financial behemoths like Lehman Brothers couldn’t pull off.

We didn’t lose any money in the Great Financial Crisis of 2008.

So why did we sell? It’s actually quite simple. Talk of marriage and settling down had been happening more and more, and we figured we would probably need that money in cash for the inevitable house purchase (Spoiler: HA!). So in December 2009, we exited our positions and moved completely into cash. History would prove our move a mistake, as the index would rampage higher over the next 2 years, but as far as financial blunders go, I very much consider myself lucky that this was the biggest one.


Category Cost / month Comments
Bus pass/utilities/misc$300
Vacation$750$9000 for the year. Yes, we love our vacations.
Savings $7283

Screen Shot 2016-07-13 at 3.16.53 PM

At the end of the year, this is what our balance sheet looked like.

Category Amount Comments
Combined income (after tax)$136,000
Total Spend$48,600
Savings Rate 64%
Investment Gains/Loss+$58,000Holy Shit, Money. Welcome back. I took you for granted. Let’s never fight again.
Total Net Worth$280,300

To read the next post in the series, click here.

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73 thoughts on “How We Got Here, Part 2: PANIC”

  1. I’m millennial, married (+1), I rent and have 7 figure portfolio
    I still work and don’t plan to retire anytime soon

    I also criticized you in the original article on Greaterfool (in which you achieved 1 mil and retired)
    I was rebuked by Garth but my point was this:

    Why did you guys spent your time studying and working for 10-15 years of your life in something you didn’t really liked?
    Wouldn’t it be better to get a lower paying job that you liked doing and hit that 1 mil sometime later in life?

    Anyway good post. keep it up

    What’s up with the anti-boomer stuff?

    1. If you don’t mind me asking, how did Garth rebuked you ?

      And if i remember FIRECracker ROI was about 500% .. She was smart about it… Most people blow 60g for nothing or still struggle to find work

      Its okay, we can do what Trump does. Declare bankruptcies.. Because you know failure is acceptable these days, part of learning and success. .. Did I doublespeak myself or something ?

      1. Not hate your face, just question your choices

        Why not doing a job you like in the first place?
        It is as if you waited for something (1 mil) to actually start living …

        I specified my (similar) background to highlight that it is a genuine question, and not one out of jealousy/spite etc

        I do like this post and will be looking forward to continuation

        1. She explained it in previous posts.

          The pressure of social norms is to get a degree, ($C50000) a house ($C500000-$C1800000) or else be a loser and outlasted in society.

          Isolation in society is very dangerous.

          She also mention she worked hard and sacrifice her soul to break from prison. Her intention was never to work for a company but to write.

          grind, earn money, learn to how to use that money(Or pay a old man to do it), have passions and be free from corporate dictatorship of the proletariat

          This is remarkable, for years Lenin and Mao taught me the only to be free from bondage is by shooting up the owners, bankers and the bourgeoisie… which is a flawed ideology

          To beat the Bankers at their own game is priceless and true mastery.

          Safe journeys comrades


          1. OK, so good reading! Why not work at something you like instead. I thought I liked the educational field until I earned a PhD as a baby boomer and got into the field, just to find out that Florida does not pay anything and “At will” employment law is scary. So many rules and laws! No Child Left Behind; Why Johnny Cannot Read; Why Jane has to take Ritalin to keep calm in class; the list goes on. Oh I love children; it’s the constant changing rules that are the issues.

            However, you cannot live on – liking or even loving a job! This may require uprooting from friend and family or familiar environment to go somewhere else for a better paying job.

            As a boomer, who wants that shit! I love that my dream came true of earning an educational degree – even at this stage in life. But ALL knowledge is NOT power if you cannot sustain yourself and near retirement.

            I need to learn about investing – a site to go to or tips to read on companies; 401K vs. stock and bond, etc.


        2. My choices were a) do something fun, but pays peanuts and struggling financially for the rest of my life, or b) tough it out for 10 years and live the life of my dreams forever. I chose the latter and it worked out for me.

          And thanks for the positive feedback. I really appreciate it.

          1. I have a child starting Engineering in 2 weeks, how did your parents support you? Mine never supported me, I did it all the hard way.

            What advice can y0u give me to influence my children to achieve something similar to what you have done.


            1. As a suggestion, I can tell you what my parents did for me that really helped me get off the ground really well.

              1) My Dad setup an investment account for me at a broker, and gave me $2000 to start out with. He then helped me invest my savings in ETFs. Got me started early in investing and helped me see the value in it.

              2) I lived with my folks while I studied – best decision ever! My parents fixed up the basement so I could have a place to myself instead of a small room. It was a great step to becoming independent and a huge money saver to pay them rent instead of a landlord!

              3) Best way to influence your children is to be good with money yourself. I saw my Dad reading investment books, blogs and working on his savings aggressively. I saw how frugal he was with his money, and I could see how much he had achieved with his life. Basically show them what to do, not tell them what to do 🙂

              4) My parents were always very supportive of me, if I had a bad day/year I knew they would back me up and give me some good advice. You should let your child know that studying engineering will be hard at first, but it’ll get easier over time. Just chip away at the content every day – it’s very much worth it!

              And if their engineering degree doesn’t work out, don’t be afraid to suggest a technical, hands-on based course instead, or switch to something like a programming course which would help them into software development but without needing a 4 year intense degree 🙂 I’m not sure what they call them in the US, but in New Zealand it’s a “Polytech” institute, eg.

    2. Where I am from, the average family income is around $65K. Liking your job is a great goal, but you have to be real about it. I think if you like your job, you will be good at it, and that will make you worth more. But if the field you like does not pay, its going to be a rough road. I know a lot of people out of high school taking stupid courses at school and getting paid barely above minimum wage.

      One of the reasons they are so successful is that they both had jobs that paid well, and were smart enough to get into a good program at Waterloo. I went to high school with a few people that took computer science there. One works at Google, and the other works at SpaceX and helped program the rocket landing on the pad.

      Me and my GF don’t make the same coin as they do, so our road is going to take longer (Not to mentioned I didn’t start to figure things out until my late twenties), but all the advice still applies. Save as much as you can and keep building it. I think of it as my fuck you fund. Its a lot easier to like your job when you know you can tell your boss to fuck off anytime you like and not be financially ruined by it.

      1. So darn true Steve-o “Its a lot easier to like your job when you know you can tell your boss to fuck off anytime you like and not be financially ruined by it.”


    3. Most people dislike their jobs. Most. That’s why it’s called “work”. In addition, most people who “like” their jobs eventually don’t as circumstances change. As anyone who’s worked for 15 years. The longer you work, the more your career wears on you. This is especially true for highly paid professionals. Most people in their 50s are counting down the years to retirement. That’s just how it is. Ask anyone in their 50s…

      It’s important to accumulate as much $ as possible, as early as possible in life so that the exponential effect of compounding can work it’s magic. One of the reasons Warren Buffett is a billionaire is because he became a millionaire in his 20s – very early.

      It’s better to have the option of retiring early from a career you dislike than determining you dislike your job later in life & not have the option.

  2. Finally the marriage, I need to learn this part.

    I’m also very interested in the re-balancing of your portfolio and your asset ratio. Before i met my fiancee i didn’t track my food expense but wow you guys are eating some one’s monthly paycheque and yet saved over 50%

    You could have made a great power lifter.. *disappointment*

    1. We’ll be talking about re-balancing in depth in the next Investment post.

      And yes, the point we’re trying to show here, is that even with our generous spending (vacations, food), it wasn’t hard to get a 50% savings rate. The reason why the avg savings rate is 5% is because of housing.

      1. Generous, that cause me to chuckle a bit.

        I think it’s relative here. If i had your food budget would consume and burn nearly 80% of my monthly on it. I tired looking back and at most i would spent 800 on myself, but on average 300 because of weight gain and strength commitments. Now the story is different since i am engaged but our food consumption is 300 with 2 adults.
        Food expense can controlled, moderated and adjusted. It also helps when you are on a weight lost and omit useless food.
        However you truly pay when you bulk.

        Anyway my point is the food budget on your report is inflated because of the restaurants and such. It sticks out like a pimple I want to pop.

  3. FIRECracker/TheWanderer,

    You’re Canadian based, no?
    Would you not agree that the 2008 financial crisis did not hit Canadians nearly as hard as our US neighbours?
    I don’t think Canadians witnessed the depression / job losses that the US had to endure (though I think we can look forward to learning all about that in the next few years).

    Perhaps your financial tale would be a bit different if one or both of you had lost your jobs at the same time your portfolio was cratering (or at least you might not have pursued your re-balancing strategy as wholeheartedly). Or if governments around the world hadn’t funneled an unprecedented amount of stimulus funds into economies / markets across the world, causing them to bounce back so quickly after they crashed in 2008.

    Anywhoo, I’m just of the mind that the next time the system implodes, there won’t be anything left for our much-vaunted Central Banks and governments of the world to do to keep people from incurring real loses in their investments / assets by re-inflating the unsustainable debt bubble that has burst.


    1. Good point. this is why I disagree with Garth on having emergency saving account

      If you have a 1 mil portfolio and 2008 hits

      you probably have ~5% cash allocation (50K) and the portfolio still throws 20K-30K your way just in dividends. so you can manage without a job, and not drawing heavily on your discounted equity

      If you have 50K portfolio that went down to 30K and you lost your income (and credit became tight to get), you are forced to sell at a loss, just to pay your bills

      1. Thats why you have a line of credit for emergencies. Most people don’t have emergencies where they need to instantly have 30K in the bank, and if you do, you have made some other bad choices.

        1. Steve-0,

          I think you’re missing the point that myself, and I think D_B, were trying to make in terms of 2008. When credit contracts, banks will call in their lines of credit as they will not have the capital to back all the loans they have made.

          If you are relying on a line of credit, it might not be there when you need it.
          Even your money in the bank is just a set of electronic numbers promised to you by an institution that may not be there in the future if things get particularly chaotic.


          1. So if you cant rely on a line of credit, and your money in the bank is just electronic numbers promised to you by the bank, what do you see as the solution? I acknowledge what you describe is a remote possibility (very remote I think). So remote that I don’t see it worth substantially planning for it at the expense of possible gains.

            All of that is beside the point, In my opinion FIREcrackers success story isn’t really about investing (although I agree with her investment strategy). Its about saving money. If they were still working, the increase to their portfolio would probably still be 50% or more from the money they were saving, and they have a 7 figure portfolio.

          2. Solution – diversify your holdings.
            Truly diversify, not diversification in the manner Garth would typically suggest (i.e. multiple different stocks / ETFs / financial assets / etc.).

            To be fair to Garth, he does say real estate is okay as long as it’s not making up the bulk of your portfolio and I agree. If you can afford a property, and it’s one that can provide you the necessities of life (water, growing food, wood as a renewable fuel source), then it is a very good / productive asset. Sadly in Canada, most people cannot afford a property that provides those benefits anywhere close to a major city where their employment is likely located.

            Other diversification ideas – gold and silver, though only a tiny, tiny amount… the people on Zerohedge and other metals pumpers would suggest you stack gold/silver till the Apocalypse hits which is ridiculous. But having a small holding of it as a hedge / insurance policy against a “very remote” possibility isn’t crazy.

            Also keeping 1-6 months of expenses OUT of the banking system (i.e. cash or cash-equivalents) is probably advisable to everyone in the case of a banking holiday / banking collapse, as banks may not be open to give you the money you need to get through day-to-day living and ATMs will quickly run out of cash as seen in places such as Greece and Cyprus during their financial problems over the last few years.

            Investing in food is also a smart idea, as everyone needs to eat. Having a well-stocked pantry, including dehydrated or freeze dried foods which can last as long as 30 years, can be done without going over board to taking up too much room in your home and will provide a source of security (and help you avoid fighting the crowds at supermarkets should there ever be a food crisis).

            Having a reliable source of water is also an investment I’m sure nobody would ever regret. People living in high-rise apartments should be aware that in a blackout / energy crisis, water likely cannot be pumped up past the 2nd or 3rd floor of the building. Also, in severely chaotic times, water sources may become contaminated and thus having a reliable water filter and/or a means of boiling your water (e.g. small butane stoves and a couple cans of butane can be bought from Canadian Tire for under $100) could be worth its weight in gold.

            Hard goods that can help you in uncertain times – basically tools, particularly those that don’t rely on power or external energy sources – are also a good investment. Of course, having the knowledge and skills how to use said tools would also be of value.

            And finally, investing in your physical health and investing in your community or into your friends / family network (i.e. Social Capital) are two sources of ‘wealth’ that people often forget. It doesn’t always take a lot of money to be wealthy in a physical and social sense, but it does take time and effort.

            Hope you agree with some of these ideas, or at the very least they get you thinking about what you can do to truly diversify beyond financial assets.


            1. Yes..totally on point..
              I think having a bugout bag will be important. Living in the centre of huge cities is not really wise. If all order comes apart so will the crowd. Prepare to go and go quickly.
              Follow intuition carefully.

      2. i like this guy, such an antagonist

        Without Federal reserve or BoC printing more money, cash would be king.. means your assets would be worthless, such as your house.

        That’s why it is good to have cash in hand, in case other opportunities arise.

        Or did i miss your point completely?

        When a crash comes again(2017-2020), i am sure they will be fine, since FIREcracker and Wanderer earn $C20000 or $C10000 to keep withdrawal rate as low as possible annually

        These folks learned to survive without the need for credit. They are not settlers, they travel and can live in a much more affordable lands. Although to best to careful.. These lands they travel are dangerous, but that part of the adventure

        Please keep the opposition, enemies make you smart.. friends get you high..

        Safe journeys comrades


        1. Point is

          It is not that many people sold because market went down 50%
          It is that the market went down 50% because many people were selling

          What Garth forgets to mention often is personal risk tolerance
          And in US circa 2009 some people were forced to relocate to a different state for work and liquidate their portfolios
          It is not always because they were afraid of more losses. They just needed the money

          You want to be in a situation in which you don’t have to ever sell under all circumstances

          1. D_B,

            Agree on all your points.
            I wish the gold pushers on websites like Zerohedge would clue into this argument.

            It’s not that I’m against gold & silver (holding a little bit as an ‘insurance policy’ or hedge is not a bad idea), but those who think stacking it until the Apocalypse hits are going to be in for a very unhappy surprise if they find themselves in need of cash when nobody is offering anything close to today’s prices for their precious metals.


    2. Index investing and rebalancing helped us survive 2008. This is a once in a generation “Black Swan” event and will likely not happen again. But if it does, we know how to get out of it.

      1. FIRECracker,

        If it is a once in a generation “black swan” event, could you please explain why you think it happened and why nobody could see it coming? I’m not trying to be a “tin foil hat” guy or antagonistic, but I think you’re being overly dismissive of a very real systemic risk to global finance as we know it today.

        Also, I don’t really think you addressed the point that you and Wanderer maintained your employment during 2008 – something several American “investors” could not claim. Would your claim that you know how to “get out of” another 2008 involve maintaining your employment, or would it depend on the $1.4 million you’ve already earned through previous investments? Either way, I don’t think it’s a claim many of the Millennials you’re trying to help can make.


        1. Please remind me, as I seem to already experience old-age memory loss: how many times did 1929 repeat itself?
          Never in a hundred years? That’s what I was thinking.

          1. Never in a hundred years? I said generation, not a hundred years. 1929 to 2008, that’s 79 years. By then I’ll be well over 100, and the life expectancy for women is 83.3 years.

            Besides, a portion of our portfolio is held in cash, enough for us to live off of while we rebalance during the storm.

          2. Go away, troll & FIRECracker,

            Please consider that 2008 could have been the 1929 of our generation, but that the world’s central bankers and governments took unprecedented steps to ‘re-inflate’ the global financial system with massive amounts of debt and historically low interest rates.

            We are still uncertain of the long term outcome of these choices, and I believe many intelligent / academic / sensible minds in this world are of the believe that the actions taken in 2008 – 2009 to combat the Global Financial Crisis (GFC) did not address the underlying problems and only delayed our day of reckoning.

            “Everybody, soon or late, sits down to a banquet of consequences.”
            ~ Robert Louis Stevenson


        2. “Would your claim that you know how to “get out of” another 2008 involve maintaining your employment..”

          No, it doesn’t. A certain part of our investment is held in cash, and that cash is enough to cover 3 years of living expenses. This will allow us to continue rebalancing during the storm, without needing to sell assets.

          1. Hi FIRECracker,

            Kudos on having a 3 years of living expenses in cash – most “investment gurus” or bank know-nothings would point out how much yield you’re missing out on by not being completely invested (i.e. no cash, just line of credit for emergencies). Of course, those same people likely have little understanding (or at least appreciation) of risk management and “black swan” events.

            I think most people couldn’t claim to have 3 years of cash saved up – that includes myself, a prepper / doomer by some (most?) people’s standards. I suspect that has something to do with your and The Wander’s success in the markets, and while I certainly wouldn’t begrudge you for your success in the markets as they rebounded from the 2008 Global Financial Crisis (GFC) I would hope that you recognize that most people (particularly Millennials) will likely not be able to set aside that kind of wealth.

            Hopefully some of that cash you’re keeping is held outside the banking system, and hopefully you are aware of CDIC insurance limits and the risk of bank bail-ins, which I know Garth currently suggests is unlikely (“will never happen”), but could be a very real scenario in a future of financial, economic, political and/or energy crisis.

            Thanks for taking the time to reply.

            1. The cash is outside the portfolio and within the CDIC insurance limits. Your responses have given us an idea to write a post about “How to Plan for Black Swan Events”, so thank you for that!

  4. Where possible, buy PUT options to absolutely cap your downside. PUT options are dirt cheap insurance for your portfolio value.

    1. Sure, puts protect your downside, but if the index rampages higher and you keep rolling your puts over, you’ll bleed money and underperform the index. Index investing works because it’s simple to understand. If it’s esoteric, it’s easy to shoot yourself in the foot.

      1. Buy PUTs 6 mths out, 10% below market, do again in 6 mths. Instant protection, better than rebalancing. Collect your divs in peace.

        Don’t overpay for “professional advice”

        Not esoteric right?

  5. I am curious about your monthly expense of $300 for bus pass, misc, utilities, etc. That number seems quite low. Where I live a monthly bus pass for one person is almost $100. Did you forgo things like cable tv, Internet, cell phones, movies, etc?

    1. We were able to get discounted monthly passes from work, and this number includes internet, (cable was included in the rent), cell phones, and movies (also discounted passes from work).

  6. GBV are you waiting for the apocalypse? I lol’d when you said to store freeze dried foods and water…your place must be like a safe-house bunker. lighten up dude it’s only life.

    1. Cool,

      Not waiting for the apocalypse, but certainly another 2008 event – though this time of greater magnitude, and perhaps without the government & central bank responses of increasing debt levels and lowering interest rates even further (unless you are of the mind that Negative Interest Rate Policy – NIRP – is a success?).

      Regarding freeze-dried food, I have a few friends that have actually replaced some of their regular purchases from the grocery store with freeze-dried foods – particularly some diced veggie options (peppers, carrots, etc.) and meat options (bacon crumble, chicken chunks, etc.) that are great for soups, stir-fries and other carb-heavy (i.e. pasta/rice) meals. For the slightly higher price you pay for them, it’s definitely a deal for their 30-year shelf life. For salads and other fresh meals, I’d still go to a grocery store however.

      Perhaps a well-stocked pantry is too crazy for you to contemplate (or perhaps I’m just lucky to have a house that has a cold-storage pantry?), but please check with your local municipal / regional government and I’m sure you’ll find that they recommend at least a 72-hour kit for you and every member of your family. As a person with some experience in government-level emergency response management, I suggest you follow the government’s advice to that level at a minimum, because as you said, it’s only your life (and the lives of your family & loved ones).


  7. I was in college during the first crash so I really enjoyed reading your account about what it was like to have a portfolio during that time. I’m also super jealous of your rent! It’s 2500/month for my fiance and I to have a one-bedroom out here in the Bay.

    1. Yeah, we lucked out on the rent because our landlord is 70 years old and doesn’t are about aesthetics. As a result, we got a place relatively close to work and has everything we need for a steal.

      $2500/month is pretty insane, but I guess that’s to be expected in San Fran. Hopefully companies there are paying high enough salaries to compensate?

          1. Heee heee! Laugh at my little $2800 after taxes and deductibles monthly.
            I am grateful to be working but I need to RADICALLY change and start thinking outside the box – if I intent to have anything (not get rich).

  8. MR, just wanted to drop you a note that as a 50 year old who recently pulled the plug on work and retired, I am inspired , envious and agree with all decisions you have made. I have a son in third year uni and strongly suggesting to him to not follow our corporate working career, think outside of the box, what is society missing, what inspires you and do it, not follow blindly the 9-5 rat race.
    Wife and I heading to Spain next month to walk the 800 km camino and tour around Portugal and Morocco following….
    Looking forward to the next chapter…

  9. Your case is an extraordinary case. Please do NOT pretend that every millennial can duplicate this!!!

    First off, you were “lucky” that you guys managed to DOUBLE (going for $66K combined income after tax to $125K) your salary within the first two years of your career.

    Second, and that’s the big one, you were actually quite lucky that the market crashed in 2008, just a couple of years after you started investing. And then, after 2008, in incredible run of the stock market with low rates acting as its steroid. Now, the market has pretty much peaked. So you had good timing.

    1. NO, we didn’t double our salary in the 2nd year. If you look at my note, I mention that 66K for the first year is because we were working for HALF the year. Sure, we had high engineering salaries, but it’s not unheard of for tech in Toronto. Besides, lots of people have high salaries but no money saved up, and some make much less and still manage to save more that 50%. It’s not how much you make, it’s how much you keep.

      And we actually made the HUGE mistake of getting in 2009 so we actually MISSED out on the market run up. We didn’t get back into the market until 2012.

      And finally, the point is not for every millennial to duplicate this, the point is for them to realize that buying a house is not the ONLY option. Becoming Financially Independent worked for us, but people are free to find their own path. We’re just showing that alternative paths exist.

      1. Thanks for clarifying about the salary. But the point stands: making near six-figures gross each does help a lot. This is really more than many many couples so I stand by my initial assessment: it cannot be applied to most people (if they believe they can “retire” by spending frugally and not buying a house).

        The market bull run lasted 8 years. Stock market and bonds market have been on fire due to history low rates. So getting back in only in 2012 still helped a lot in reaching the $1M. By contrast, it’s now much harder for individual investors to get those yields you’ve got back then.

        So all in all, roughly every year, you saved close to $200K net thanks mostly to six-figures salaries and nice ROI from market bull.

        But if the main point was to not buy that house in an inflated market, then I absolutely agree. The impression I got from all the media coverage, videos and comments is that this was recipe to reach retirement quickly. So I thought that was misleading.

        1. I will write a future post about how you can do it on a lower salary. You actually don’t need a mill to retire early.

          And yes, I agree the article was a bit misleading. However, all our numbers are broken down on this blog so anyone can come and read it.

          1. I am not sure what point the responder is trying to make but a couple of corrections will be good to note here: your stated charts showed combined incomes at $137k Canadian and up to I believe $150K plus. Those are hardly six figure salaries each. I think the salient point here is that you all saved like crazy and found ways to minimize cost of living a pretty regular and even exciting travel life, with the airline miles and other coupons or institutionally generated discounts like with the bus passes and movies.

            A frugal lifestyle is one way to achieve financial independence early. If you keep more of what you make, you can both invest more and build up more reserves.

    1. We never owned a car and don’t have student debt because our school had a co-op program which enabled us to work while getting our degree. That was (just barely) enough to pay for our tuition and living expenses. In university, I did have to live in a basement to save money, but it was worth it to not have any student debt when we graduated.

      And no consumer debt because I hate giving money to banks to buy shit I don’t want or need.

  10. Hi I would like your opinion on my financial situation. I am 25 trying to get a degree so I can get a higher paying job. Our yearly expenses are $50k ( including rent and eating out) and our income is about $80k combined. I save on my 401k and have managed to save $20k so far. I am not sure how to choose the best 401k option and I also not sure about rent vs buying since my monthly rent is $2k and paying a mortgage would be about $500-$700 more ( I Live in Washington DC). Thank you for providing us readers with detailed information about how you managed to save so much. I would love to get in the Tech Industry but I am not sure I am good at coding and I HATE math. Thank you

  11. FIRECracker: This particular post, above all others, helps keep me invested and throwing money into my account. Today I panic over the time it takes for my bi-weekly savings to show up in my Questrade account; my fear is that prices will stop falling! Having said that, I won’t be borrowing money to invest.

    I think there is real value in this post (or a revamped version) going out now. I really think some readers will be suffering; remember how you felt?

  12. What happen! The shit got stuck! We have all been there. Sitting, Waiting and nothing is happening. The pain of the unknown. When will the shit happen. Wait no more. Give it some motivation. Pickup the phone. Call that number. Help is on the way

  13. Hi,

    first of all congratulations on reaching FI and for this blog and sharing your really inspiring story.

    I’ve followed your workshop and I can see how you re-balance the portfolio as you invest your savings as it comes using DCA.

    I was wondering how often did you re-balance the portfolio in time of crisis (GFC 2008) as you mentioned you had to throw your savings into it as well as reinvesting the dividends and swapping some of your cash units for equity.
    I’m assuming this was still done on a fortnightly/monthly basis depending no your pay frequency at the time ?
    Also how would you go about re-balancing in a crash situation once you are retired (ie not earning regular income) ?

  14. What made me realize that this article is satire or fantasy is the $800 per month for a reasonably large, pleasant residence for two in a large city in Canada. In even a mid-sized city in the United States, $800 per month would afford you a seven foot by seven foot by seven foot room with broken heating and water systems, a partially, barely, functioning electric system which is a threat to burn the building down at any moment, cockroaches and worse crawling everywhere, crack and methamphetamine and heroin addict handymen who every two or three years come in and steal everything you own which they can sell or trade for one cigarette or more, neighbors fighting, slamming doors, talking loudly in the hallways,and blasting their televisions and music players loudly enough for sixteen hours per day that you can hear theirs almost as clearly as your own in your own residence even with your doors and windows closed, etc. You didn’t even mention your student loan debt payments which are as much per month as all your other listed expenses combined. A funny article, though. But obviously just an attempt at satire or comedy.

  15. I have to say, I really enjoyed this article. I am on the FIRE train (about six months now) and plan to FI in 15-20 years from now. Yes savings and being frugal is the core foundations but as Benjamin Graham said “an intelligent investor is not the smartest or the most intelligent. Its how they can handle their emotions”.

    You guys put all your money in just before a major recession and came out even better for it and probably expediated your goal to FI.

    No one knows how they will feel when their stocks crash and will really test their emotions and mental resolve. I commend you for keeping your shit together and buying more when the market crashed.

    I hope I have the same nerves of steel when that happens.


  16. Hello and great article. I would like to ask you, if during the accumulating phase (in the middle of the GFC) you were suppose to buy equities ETF’s to rebalance your portfolio, why were you selling your bonds ETF’s to buy those equities ETF’s? Shouldn’t you use only cash to buy those equities ETF’s while holding the bonds ETF’s?

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