My guest is James Lowery from Rethink the Rat Race. In our one-hour discussion, James shares exactly how he and wife, Emily, achieved their financial independence number in just three years.
James found BiggerPockets when he began learning about passive income. That’s how he and I became acquainted—James messaged me after hearing my Bigger Pockets episode. He said that I reminded him of an older version of himself. I said that he was also like a young me, except I’d seen his Instagram account and I didn’t look anything like that when I was his age—dude is jacked!
James’s story is incredible. He grew up poor in rural Alabama, the third child of two deaf parents. After his parents’ divorced, he and siblings were raised on a single income from Mom’s nightshift work at Walmart.
Tough times made James stronger—not much bothers him today. He says being frugal [as an adult] is no different than being poor.
The true test of pursuing financial independence is how committed you are to living within your means. – James Lowery
James’s journey to financial independence started when he stumbled on the books: The 4-Hour Body and The 4-Hour Workweek by Tim Ferriss. I’m confident after hearing James’ inspirational story, you’ll want to accelerate your own path toward early retirement. He shares the math behind FIRE (financial independence retire early) Hint: You must accumulate 25x your annual spending or be able to live on 4% of your net worth per year. But those numbers won’t tell you how to get there in 3 years—for that, you’ll need to tune in!
Monologue:
- On the self-development quest, it’s important to surround yourself with good people
- You will attract what you become
- Reading one book a month is 36 books in 3 years; read the good ones twice
- Re-reading a book will help you to absorb its content
- Knowledge for its own sake is not useful, you must apply what you learn
- Our time on Earth is limited—get started with what you want to do in life
- Chase Lambin (Episode 4) said, “Your habits are who you are”—choose wisely
- Building a reading a habit is the easiest way to separate yourself
- Those in the top 10% of their field are always reading
High Achievers:
- Where did the idea for Rethink the Rat Race come from?
- Inspired by Andy Mineo’s “Rat Race” and “Rat Race Rejects” was already taken
- James is obsessed with physical fitness and began working out in his early teens
- His workouts start at 4:30am
- Common theme of high achievers is getting up early
- James is not a “big sleeper”
- Jon Gruden would sleep on the couch in his office and get three or four hours of sleep a night
- Similar to Jay Leno’s concept of “non-somnia,” James does not need a lot of sleep to function
- Approximately 1 in 1000 people can function well on less than 6 hours of sleep
Money & Investing:
- James hasn’t always been good with money
- In his words, he is good with frugality because “it’s the same thing as being poor”
- He remembers electricity being turned off and cars repossessed
- Growing up poor motivated and continues to motivate him
- James learned good money habits from Mr. Money Mustache
- Their investment strategies include: maxing out of Roth & 401k accounts
- Remaining funds are invested in real estate
- In one year, James & Emily went from 1 rental unit to 9 rental units
- Checking Zillow, MLS, Craigslist, and Facebook daily for investment deals
- When James hits a lull, he remembers his motivation: squeezing 30 years of work (and income) into 3 years.
- Making offers “sight-unseen” and only viewing properties once they’re under contract
- Most properties are rent-ready—prefers not to do extensive rehab work
- Their properties are in Huntsville, Alabama: $43k condo, $47k & $49k duplexes & a $115k single-family house
- They are remote investors (James is happy to help with information, so email him!)
- James & Emily prefer to hold-off on paying off their current properties
- He explains how he’s currently living for free—no rent or house payment
The Exit Plan:
- Plans to submit their 2-weeks’ notice to their employers
- Post-Rat Race plans: moving to small island in Mediterranean near Emily’s grandparents
- During his visit to FinCon in Washington D.C., James will visit the only Starbucks to take orders by sign language
- Moving to Cyprus aligns with their geo-arbitrage plans because healthcare costs are low (e.g., $4 to visit a primary care physician, $8 to visit a specialist ).
- Lady O had a house-call from a doctor in Oaxaca, Mexico, last month for $5.49 USD
- Typical annual income in Cyprus is $20k-25k
- James & Emily are planning to live on a little more than $20-25k in early retirement
- In many ways, James and Emily are living a life of “adaptive simplicity”—finding balance with what is “enough” and progress
- Adaptive simplicity is a phrase coined by The Geometry of Wealth author Brian Portnoy
On Writing:
- James started writing as a way to track the path to financial independence
- He writes early in the morning or late at night, listening to background music
- He writes about real estate or everyday observations
- His writing has been influenced in part by Cal Newport’s Deep Work
James’s favorite:
- Podcasts: ChooseFI, The FI Show, Coach Carson, What’s Up Next? and House of FI
- Apps: Libby and OverDrive (both are audio reading apps)
- Documentaries: The Bleeding Edge, “Somm,” and “Sour Grapes“
Connect with James:
Listen here:
“The future is never certain … We took a chance and created a life we wanted. And because of that, you can do the same thing.” – James Lowery, on what he hopes to tell grandkids someday
Books mentioned:
