Third Generation FI

I have been thinking and talking a lot lately about financial modeling behavior for the next generation and financial independence legacies. So it hit me like a brick to realize that I am not only second generation FI, but third generation FI also. Long before the young whippersnappers like Mr. Money Mustache or Vicki Robin, my step-grandfather was retired and living the good life.

Incidentally, he employed many of the same techniques that we now boast on our blogs and in our forums. He was way before his time. A forerunner of the FIRE community, he retired in his late 40’s back in the 1960’s and lived well into his 90’s.

Not a bad run.

But how did he do it?

Front Loading The Sacrifice

I know. I know. If you have read this blog before you have heard me talk about front loading. This is not just a third generation FI superpower. My step-grandfather did this in spades. He started his career as a dentist, but he had no fondness for the profession. So he worked hard and saved. He saved for years as the sole income earner in the family.

And for him, I do think it was a sacrifice. He is no longer alive to tell us, but I think he had no love for dentistry. In fact, I can’t remember him ever regaling in his memories of his professional career. His stories always centered around traveling the world or volunteering for hospice.

He usually talked about life, not work.

Geoarbitrage

How did he afford to retire at the tender age of 49 and live the next four decades without making any money? He left his high cost of living neighborhood in suburban New Jersey, and moved to Santa Fé, New Mexico. Sparsely populated at the time, land was cheap. Taxes were cheap. Utilities were cheap. Restaurants were cheap.

We third generation FI peeps throw the term geoarbitrage around as if we created the concept. But people have been utilizing this financial independence strategy for decades. They just didn’t have a snappy term for it.

Frugality

You aren’t going to live four decades on savings without being at least a little frugal. And to the great amusement of the rest of the family, my step-grandfather lived up to this notion to the tee. You couldn’t expect to visit him in the desert and not take at least one cold shower. He didn’t like to use the water heater. He waged the thermostat wars relentlessly.

I’m sure there were countless other ways in which he optimized his household. Years later, the habits our family often jokes about are what is now coming up on frugality blogs as original tips and tricks.

As third generation FI, I’ve heard it all before.

Speculation

Although I can look to my step-grandfather as a true third generation FI inspiration, there was one area in particular in which we diverge. He was a rampant speculator. He was a stock picker, gambler, and a horse race junky.

In fact, family lore says that 6 months after retiring, he lost ninety percent of his wealth in the stock market. Slowly, remarkably, he continued to stock pick and bounced back to levels way above his original bank account.

When he died in his early nineties, he had over a million dollars left in his name.

Final Thoughts

I am not only second generation FI, but also third generation FI. My step-grandfather utilized our modern techniques of front loading, geoarbitrage, and frugality to live over half of his life job free. Although he was a speculator, he somehow managed to make ends meet.

Not a bad legacy.

Not a bad legacy at all.