Meet the ERN family!

Well, the day has come! I have finally announced at work that I will be retiring! We have talked to family and friends about our plans. No turning back now! One way I ensured that I’m not going to get cold feet was to do the ChooseFI podcast that I knew will broadcast on March 12. Since I spilled the beans there I might as well do so here on the blog as well!

Who is the ERN family?

I hope I don’t disappoint anyone by revealing that my real name isn’t Ern. But I am a big guy, at 6’6″ (just under 2 meters), which explains why the name “Big Ern” stuck! My real name is Karsten. I am originally from Germany but came to the U.S. in 1995. Initially as an exchange student at Purdue University and then for my Master’s and Ph.D. in economics at the University of Minnesota. After graduating, I got my first “real” job at the Federal Reserve Bank of Atlanta and I also did a number of side gigs/hustles: teaching both undergraduate and Ph.D.-level economics at Emory University in Atlanta.

The ERN family: Karsten, Kristal and Kati during our 2018 ski vacation at Lake Tahoe.

In 2008, I moved to San Francisco to join the research department of a large investment manager. I prefer to not mention my employer’s name out of an abundance of caution; nothing I write here is endorsed by them and blogging is purely a hobby of mine! But if you really want to know where I work, you’ll find everything you always wanted to know on Google.

I am married to my beautiful wife Kristal who is also an immigrant. She’s from the Philippines originally, and just like me, she’s become a U.S. citizen after spending many years in this country by now. Our four-year-old daughter Kati is the sunshine of our lives and definitely one big motivator for us to retire early and spend more time with each other. So, my wife has also just quit her job as a nurse and she will join me on this journey.

Why the secrecy?

Quite amazingly, I was able to keep my identity a secret for almost two years now. Nobody ever recognized my voice on the ChooseFI podcast. And nobody in my personal and professional network ever noticed that my views on index investing, options trading, safe withdrawal rates, etc. sound a heck-of-a-lot like Big Ern’s. Of course, a better explanation is that they never heard of Big Ern! In any case, I preferred to keep our identities a secret until now because that’s the reality of working in Corporate America; companies don’t like employees who are not in it for the long-run. In the finance industry, in particular, we’re talking about bonuses and other perks that might have been a bit less generous had everybody known what I was planning. Why mess with the gravy train? But with the calendar year 2017 bonus in the bank on February 28, we can finally come out of the closet!

Quitting the gravy train

GravyTrainWithBisquitWheels copy

Leaving my job isn’t easy! To use a quote from the other Big Ern McCracken (Bill Murray) in the movie Kingpin, I have been “on a gravy train with biscuit wheels” for the last ten years! Nice salary, great benefits, a window office on the 39th floor overlooking San Francisco. One promotion away from a corner office! High enough in the corporate hierarchy that nobody would mess with me. But also low enough that I still wouldn’t have to deal with some of the boring corporate B.S. Add to that very smart and hard-working colleagues and bosses! So, I have actually thoroughly enjoyed my career at my current firm!

But, of course, I’m not married to my job. It all boils down to opportunity cost. When I was young, opportunity cost fit the economics textbook definition: Fun activities have the additional cost of lost wage income. Now, money is more abundant and time is becoming scarce. Opportunity cost now works the other way around; the corporate rat race has the steep price of time away from my wife and daughter, time away from other loved ones. Makes me think of the Dietrich Bonhoeffer quote Time is the most precious gift in our possession, for it is the most irrevocable. This is what makes it so disturbing to look back upon the time which we have lost. Time lost is time when we have not lived a full human life, time unenriched by experience, creative endeavor, enjoyment, and suffering. Time lost is time not filled, time left empty.

Kati (back in 2014): “Don’t go to work today, Daddy” – there is a huge opportunity cost of going to the office!

How did the talk with management go?

While recording the podcast in late February I hadn’t given notice. In fact, as I mentioned above, doing the podcast and revealing my identity and my picture there was my way to “handcuff” me to the idea of early retirement and cure any last minute episode of “cold-foot-itis,” otherwise known as One-More-Year-Syndrome. So, in late February I broke the news to the bosses. I had the suspicion that leaving will be more complicated than just giving notice, using left-over vacation days and walking out of the office that same day. So, in the end, my employer and I agreed to do a more gradual transition. I am still involved with some projects that I like to finish before I leave and I also prefer to do a proper and thorough transition of my duties. So I can enjoy retirement knowing that people from the office won’t keep bugging me about some Matlab code I wrote ten years ago while I’m retired and trying to relax at a beach somewhere! But there’s no turning back now – I will be out in mid-June, for sure! Around the same time as Fritz from The Retirement Manifesto. We might even use the same countdown clock as Fritz! How cool is that?!

How did people react?

Not one single person so far has questioned the decision. Family, friends and colleagues all responded pretty much the same: “That’s awesome, we’re happy for you, good luck!” There were no haters, no doubters, no trolls. Is that good news or bad? Sometimes it’s almost considered a rite of passage to write a blog post about dealing with the doubters. Clearly, in the finance industry, it’s much more common for folks to retire early, which may explain that everybody got over their initial surprise pretty quickly.

Where to now?

It’s hard to beat the quality of life in San Francisco! Beautiful scenery close by; think Redwood Trees, Highway One, the Sierra Nevada mountains in general and Lake Tahoe and Yosemite in particular! Nice climate, never too hot, never too cold. People are so friendly and laid-back! But we still like to leave the Bay Area and live in a place with lower cost of living to put our retirement finances on a better footing! Geographic Arbitrage!

We just finished packing our belongings and moved them to a storage room. During the next few weeks, we will fit in some more late-season skiing in Tahoe. We will also visit relatives on the East Coast and combine that with the North Atlantic CampFI in Virginia in April. In between, some couch-surfing with friends and relatives in the Bay Area as homeless millionaire-vagabonds while I head to work for another week here and there! Between April and June, I am still going to the office every day, so we will likely do a short-term rental.

Heavenly Ski Resort, top of the Olympic Lift: Getting some well-deserved R&R after a hectic week of packing and moving. Under the fog in the background is Lake Tahoe!

Between June and December, we will have a pretty ambitious travel schedule: A family cruise in the Caribbean with Kristal’s parents and siblings and their families, then spend about two months in Europe, go back to Florida to attend the FinCon in September. After the FinCon in Orlando, we’ll visit Asia, Australia, New Zealand and the South Pacific. We should land in San Francisco again in late December. 20 countries in a little over six months! Stay tuned for more details on our travel plans!


And then? The outrageously expensive Bay Area is out of the question as a long-term home base but we won’t move that far away. Very high on our list is the area around Reno and Carson City in Northern Nevada. Proximity to the mountains around Lake Tahoe, no state taxes and relatively low cost of living all sound really attractive. But California isn’t completely out of the race either. Our Next Life recently made a good case for staying in California: Relatively affordable health insurance and some other advantages could make it worthwhile paying a little bit in state income taxes. If one stays away from the overpriced coastal areas then California can be a very affordable (early) retirement destination! In one of the safe withdrawal rate case studies, I confirmed that when you keep your taxable income low enough, California’s tax burden isn’t even that bad. The really high marginal tax rates only kick in for the six-figure incomes for couples filing jointly. In any case, we’ll have plenty of time to decide! Stay tuned for updates on where we’ll finally settle down!

California or Nevada? Make up your mind, Mr. and Mrs. Ern!

So much for today! We hope you enjoyed today’s post! Looking forward to everybody’s comments below!

161 thoughts on “Meet the ERN family!

  1. Ha! Well I live in my coastal city – San Diego – and pulled off early retirement, but maybe that was me you were referring to who was keeping my taxable income low enough to not stress too much. I think in some of the coastal cities, the cost of produce is quite inexpensive so it cuts down on the cost of living especially if besides housing, food is the highest piece of your budget (it’s ours). Plus, I save so much money not having to use much AC or heating… barely used heat all winter long. And because we have such good weather, I can walk or bike most places. Plus, the easy access to outdoors makes so many activities free – I bought a used surfboard 18 years ago and still use the same one – my wetsuit has another 5 good years. You save money in all those areas so I believe it balances out some of the higher cost of living stuff. Congrats buddy! Enjoy your time with family! Thanks again for doing my case study and making me feel more comfortable with my decision.

    1. Thanks, Mrs. Surf!!! I tried to write your case study without revealing that I’m a CA resident myself, hehe! The Carson Valley may not have SoCal climate but it’s still pretty nice: lots of sunny days, dry summers and four seasons with relatively mild winters.

      1. Yes…. you are probably right about the Carson Valley being nice, but access to the Pacific ocean has always been a dream of mine and somehow it worked out that I get to live my dream. Sure I could pocket another $500,000-$600,000 in my stash and my risk of failure would be slim to none but I get maximum happiness by seeing the ocean on a daily basis. You did a great job of hiding your location – I thought you were a New York City guy. San Francisco crossed my mind but it’s like you purposely threw me off your track.

  2. I love the obscure Kingpin reference! And to top it off, you too are a Golden Gopher. You, though, are Big Gopher (PhD Econ) while I am a lowly little one (Bachelors Econ).
    Congrats to you and your beautiful family, and welcome to the other side!

  3. Karsten and Kristel- congratulations!!! I hope you enjoy your time with each other and your beautiful daughter. Corp life has its perks but it does wear on you over time, so I’m thinking you’ll quickly adjust to calling your own shots. It will be interesting to see what you all do next and good luck! Keep writing – I love your posts!

  4. Congratulations Big ERN!
    My husband just gave his work his retirement notice today too and his last day is April 20th. They were supportive as was your work. Although they were quite shocked that he wants to retire “so young.” And my husband is older than you at 53! He hopes he inspired a few of the younger staff that it is possible to be free long before 65.

  5. Congratulations Karsten and I don’t feel I need to wish you any luck (the numbers don’t lie and you are beyond assured of success).

    Your blog is incredible. I just love math and you present it beautifully. The series on safe withdrawal rates added wonderfully organized and much needed PF content for the prospective early retiree. This blog has helped me a great deal recently in finding the motivation to continue on in my mostly enjoyable corporate grind for a few more years. Although I still sometimes hear the siren song of the 4% rule at the end of less good days.

    I look forward to many more updates on your adventures and good old math.

    Thanks for everything!

  6. Congrats! Always thought you were an NYC guy though… I’ve considered State line NV as a (future) retirement destination myself.


    1. Thanks! Yes, I kept the SF location a secret. Asset Management industry in SF is so small, it would have been difficult to stay anonymous for 2 years. 🙂
      Stateline, NV is awesome! Great place for vacations. Not so nice for raising kids, though. Reno/Carson City have more of a neighborhood and community feel.

  7. Congratulations Big ERN and family! I work in Finance too (though in HR) so I always had a sneaking suspicion your math whizziness in the FI space had a home in your day job too! Your SWR series and contrarian among contrarian thinking is great to read and listen to.

    I too have struck out from my place of birth (UK) and live and work in Singapore. Look me up if you pass through here on your Asian travels – either for a beer and satay and / or a free crash pad at my (newly downsized in the name of adding to the savings rate!) apartment if I am off on one of my regular jaunts!

    1. Wow, that’s awesome! Thanks for the offer! Singapore must be nice. My wife has visited but I haven’t. Should be on our travel schedule in 2019 for a real visit. This year, we only connect through the airport there on our trip from Auckland to Manila. 🙂
      Best of luck!

  8. Awesome reveal ERN! Unfortunately for me some close friends of mine discovered my anonymous blog on the internet but it’s fine as it’s opened up a whole new conversation on saving money and frugality that we just didn’t have before. nevertheless it is much awkward for me now to post net worth updates but I do my best. you have a beautiful family. Enjoy your freedom from the working world. (although considering your credentials it would be a huge loss to it)


  9. Congratulations Big ERN! Nice to hear that you are still considering Commie-fornia. As you know the cost of living here is pretty good–outside of housing costs. Even then you could head to just the places you mentioned in my case study–take couple of hours outside of SF and find great deals on housing. Reno is a very attractive alternative. But you know all of this. Congrats again!

    1. Thanks, Mr. CR! Great point! The suburbs of Sacramento would be nice: Half-way between the mountains and the Bay Area, where we still have a lot of friends and relatives. We will see where we land next year!
      Best of luck with your own FIRE plans!!!

      1. Congratulations Karsten. I have been lurking/following for a long time and found you to be the closest to a like mind that I’ve found. It’s awesome that you are now free.

        There is a dearth of actual advice out there in the FIRE community for the people who are on the FatFIRE end of the spectrum that I hope you might be willing to tackle.

        For example, now that you are done, how do you plan to invest your own substantial lump sum from selling your apartment in the city? CAPE is very high; DCA or lump investment? Anyone who bought in California prior to 2009 is now sitting on a very large lump sum that they will need to invest when they reach their “target.”

        How about portfolio makeup? How are you tracking portfolio balance and how do you rebalance since I assume a lot of your assets are in taxable accounts. Are you rebalancing your portfolio towards an equity glidepath now since it was very heavy on equities?

        Likewise, you commented on ChooseFI at one point that you had started looking into more exotic investments due to the expected poorer returns. What are they and how should one think of them?

        So many opportunities for new posts/topics now that you have the free time! 🙂

        1. Thanks!
          All great questions! We used the large lump sum from the home sale and put most of it into the options trading strategy ( A smaller portion, about a year’s worth of living expenses, into bonds. It’s still a very equity-heavy portfolio though, so I’m not really following my own advice from SWR-series Parts 19-20 to do a 60/40->100/0 glidepath. 🙂

  10. Congrats, Karsten! Listened to your recent “coming out” 🙂 episode on ChooseFI and it was great! Your contrarian way of thinking really appeals to me and it’s always great to see rebels amongst the rebels.

    You mentioned you might be doing some travelling in Asia. We’re in Europe at the moment (got our 1 year Visa to stay in your motherland, Germany. YAY!) but planning to go Asia end of this year or next year. If you do, hit me up and we’ll meet up for a coffee! Would love to meet you and your beautiful family!

    1. Thanks for your kind words! I saw your posts on the hassles (or absence of) of getting an EU visa! Glad it worked out with the Germans! 🙂
      We’ll be in Europe from late June to September 1, then FinCon, then Asia/Australia/NZ from October 11 to December 27. Inspired by your travel adventures! Let’s compare notes and see if our plans overlap! Would love to grab a coffee sometime and chat!

  11. Congratulations!!
    I am long time reader & bay area resident. We are thinking about domestic arbitrage to reach FI early.
    May be you can do case study out of my situation…

  12. Congrats Big Ern (or shall I say Karsten)! I’ve been a big fan of your blogging approach: questioning the status quo and running simulations to show alternative perspectives. After months of following you, you inspired me to start my own blog last month. After this post, you inspired me to post my first FIRE blog comment! It’s great to see that safe withdrawal rate research come to fruition for you and your family. Enjoy the travel opportunity you’ve earned. Looking forward to seeing more posts with recommendations on money and life after FI!

  13. Congratulations Karsten! Bielefeld, eh? I heard that place doesn’t even exist…;-)
    Thanks for all your contributions to the community! My wife is German as well, from Baden Württemberg area and we’re heading over there in a couple weeks to wrap up personal business as she’s converted to a local US contract. We’ll visit Cologne as well to see something new.
    If you don’t mind me asking, did you keep dual citizenship? She’d like to but as you probably know you apparently need a reason they accept. Just curious for our future plans.
    Enjoy your trips, it all sounds wonderful!

    1. Haha, you even heard about the Bielefeld Conspiracy ( Very impressive!
      I occasionally visit Konstanz in Baden Wuerttemberg, too. Very nice area! Have fun!

      I kept my German citizenship, which is not automatic. Your wife would have to apply for a “Beibehaltungsgenehmigung” to not lose her German citizenship when she applies for U.S. citizenship. One has to make the case that one still has ties to Germany, but also needs the U.S. citizenship, for example, because of better job opportunities here (e.g., show job postings that require U.S. citizenship). It’s easy to prove but may take a few months! 🙂

      1. It seems that the process time is currently 3-4 months.(Probably due to current political events…)
        Finding job postings requiring citizenship is the best way to go, or anything you are not able to accomplish without it. (some Homeowner associations are set up like that; Medicare eligibility in your area, etc.)
        Good luck!

  14. Congratulations, Karsten! I couldn’t be happier for you and your lovely family. What a tremendous achievement. I’ve been a lurker here for several months since I discovered your blog, and have learned a great deal from it. You have a real talent for teaching that goes beyond your obvious prowess in economics, simulation, and analysis. I hope you will keep on blogging. Unlike yourself, I am not in a position to retire early, but even for a normal retiree there is a wealth of information and insight here, and I have greatly enjoyed the site. Best of luck to you and your family as you move into this exciting and well-deserved chapter in your lives!

  15. Congratulations to the beautiful and happy family! Reading your posts has always been the inspiration. Wondering if you could share what kind/name of the bond that you would buy or currently hold for this kind of investment environment? Thank you and enjoy your life!

    1. Thanks!
      I hold a bunch of closed-end funds from Nuveen (tickers NAC, NAD, NEA, NKX) and preferred shares (Ishares: PFF, GlobalX: PFFD). But that’s only to hold the margin cash for the option trading. Otherwise I’m mostly 100% stocks. 🙂

  16. Hi Karsten! I am early retired and in the Bay Area as well, raising a 5 year old. I own a rental property out in Reno, I think one negative there is the school districts aren’t very good. Don’t know if you looked into that yet, or if you have weighed private vs public schooling.
    My family has stayed in the Bay Area (I’m retired 10 years already) because I grew up around here.

    1. You know, that issue with the NV school quality crossed our mind, too. We may have to budget more for a house in Reno to get into the best possible school district, consider a private school or even change the location. We will likely visit some alternate locations in a different state later in the spring! Stay tuned!

      1. Sounds great, will stay tuned…

        Congrats on your retirement!! Sounds like an awesome 2018 you have planned!

  17. Consider Las Vegas. Great weather, entertainment, and a booming community. large Filipino community as well. Plus we need some great leaders for our local FI community.

  18. We’re originally from the Sacramento area and when it comes time to FIRE we’d love to move back there. I was surprised that “CA and its horrible taxes” would have us paying less for the same income bracket as Arizona where we’re living now. Our goal in the next 5 years is to settle down within a 2 hour radius of Sac (excluding the Bay Area) which includes going out of state to Reno/Sparks. Once you’re settled I might pick your brain on some CA-centric tax and living expense issues.

    1. Thanks! We will now likely relocate to SW Washington (Vancouver/Camas). Agree: if you can keep taxable income low, CA isn’t a bad retirement location. Lower tax burden than in some of the “low-cost” locations. 🙂

  19. Hope you’re enjoying Vancouver if that’s where you ended up. I’m a life-long Bay Area resident and we chose Spokane. We love it so far…and it’s beyond affordable. Lots of nature. Now we’ll see if we survive the winter! 🙂

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