The Terhorst Interview

[Billy]

Ever wonder what they are up to now? How their lives may have changed?

The authors of the groundbreaking book Cashing In on the American Dream, How to Retire at 35, Paul and Vicki Terhorst, who turned 58 this year, have decades of Early Retirement behind them. Read our exclusive interview with them at: Paul Vicki Terhorst Interview

Be well,

Akaisha
Author, The Adventurer's Guide to Early Retirement

[chinaco]

Great interview. I read the Terhorst's book. I found the Terhorst's story intriguing. PT is a bit unconventional, but very reasonable way to approach life for a awhile. By the way, up till the time they bought a permanent home... I considered them to be PT (strictly speaking). Now I consider them to be extended travelers (my interpretation)... maybe my definition is off?

It is all about taking a managed risk.


I have been following the Ackerman's ER story as well. We are considering more of an extended traveling approach to ER rather than PT. Of course, I suppose we could do a short-term PT (about a year or two) them repurchase a home.

Anyway, great job on the interview. Hope you are having fun at the beach.

[Sam]

Akaisha,

Thanks for doing the interview. Paul's view about the USA's health care cost and tort system resonates well with me.

I have a question for you (and Billy) and the Terhorsts: If I'm reading (between the lines) correctly, your own personal inflation rate in the past 2 decades has been much lower than that of the USA. I estimate that it's at most 1% for you guys, as opposed around 3% for the US.

1) Am I wrong?

2) If I'm right, was it because
- consumption decreases as you age or
- consumption remains the same, but costs less because you gain more experience in purchasing/bargaining.

Thanks,

PS: I was a little surprised when Paul said he doesn't track expenses !!??

[kcowan]

The way I interpret their experience is that they moved to Argentina into a condo. The lower costs there enabled them to be more aggressive with their portfolio (it had been in laddered CDs). The excellent equity portfolio returns enabled them to do more traveling. And finally, the nest egg grew enough that they could build their dream home without risking their SWR.

They are in Chang Mai with Billy and Akeisha at present.

[Arif]

I have a question for you (and Billy) and the Terhorsts: If I'm reading (between the lines) correctly, your own personal inflation rate in the past 2 decades has been much lower than that of the USA. I estimate that it's at most 1% for you guys, as opposed around 3% for the US.

I've had the same question about the personal inflation rate. We live in Panama and everytime I return to the US it seems prices have gone up quite a bit on different items. I don't have any real hard data but for instance, I went to Applebees in March and was amazed that the rib platter costs about $13. I remember it was $10 back in 2005 before I left. I also noticed that grapes were $3/lb where it's less than $1/lb in Panama.
So on the surface it feels like the inflation rate in stable countries are quite a bit lower than the US. but again no hard proof.

[CuppaJoe]

I sent an e-mail to them recently kidding them that supervising the building of a house is a full-time job. Got a delightful reply from Vicki.

Thanks for posting the article, Billy. Hey, isn’t "vintner" a job title? Not! Because it’s fun? And you can drink up the profits.

Chinaco, I think travel is a state-of-mind, can be done in the few blocks near home, maybe it’s just a matter of trying to see your surroundings with fresh eyes. Sometimes I think a path near me is like a country path anywhere in the world; and almost believe it until I notice the pesky view of Alcatraz.

[TromboneAl]

Nice interview and fun pictures.

You wrote in your book that you retired on a budget of 50 Dollars per day or about $18,000 USD per year. Excluding your new home expenses, how much has that changed over the last two decades?

Our budget was $18,000 for daily expenses, plus taxes and airfares totaling $22,000 to 24,000. We believe we can easily live on that today,

I'm wondering how inflation fits in here. $24,000 in 1988 corresponds to about $42,000 today, with US inflation. Do you think they are saying that they could live on less today??

[Sam]

Al,

I had no idea you created a BRAND SPANKY NEW forum! I just browsed through it. Clean, streamlined, and fast too! Great job! I can't help but wondering if there's a hidden message in the creation of your new forum. May be, may be not. But I really like it.

Sorry all, for getting off topic.

[unclemick]

Originally Posted by TromboneAl

Nice interview and fun pictures.



I'm wondering how inflation fits in here. $24,000 in 1988 corresponds to about $42,000 today, with US inflation. Do you think they are saying that they could live on less today??
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The cheap bastard in my heart throbs with the thought. However the retirement calculators I use (single, no heirs) say party up to 90 to 95% (Firecalc). ORP also has higher numbers - even living to 100.

The first 10 years of er ah frugal, the 90's Mr Market, and the old fashioned 'time in the market' did their thing.

At least double 24k now (cause I can) in the midwest. The thought of how 'cheap' I could get on the core is intriguing.

heh heh heh - cheap (er thrify) is cool. .

[Sam]

Originally Posted by unclemick

At least double 24k now (cause I can) in the midwest. The thought of how 'cheap' I could get on the core is intriguing.

UncleMick, I think 24K in Thailand or Argentina gives you the purchasing of at least 48K in the midwest, if not more. From that point of view, I don't think it's "cheap".

[Lancelot]

Great interview!

[Billy]

chinaco

By the way, up till the time they bought a permanent home... I considered them to be PT (strictly speaking). Now I consider them to be extended travelers (my interpretation)... maybe my definition is off?

Well, that's the thing with definitions... People and things don't always fit.

To ask Vicki, she considers the world her first home, and Argentina their second. They are on the road most time in any 12 month period... and I think PT is simply a 'sort of' definition. Kind of a description, but not necessarily something to be confined to... Just my opinion...

I have been following the Ackerman's ER story as well.

Don't they own 2 homes now? Did they ever sell their home in Florida?

Anyway, great job on the interview.

Thanks!! Glad you enjoyed it.

Sam:

your own personal inflation rate in the past 2 decades has been much lower than that of the USA. I estimate that it's at most 1% for you guys, as opposed around 3% for the US.

1) Am I wrong?

2) If I'm right, was it because
- consumption decreases as you age or
- consumption remains the same, but costs less because you gain more experience in purchasing/bargaining.

I asked Billy what he would say and his first response was that we get better at purchasing and seeking out value for money spent. We were never big consumers to begin with, and we really don't 'need' much now. We do buy good digital equipment for instance and we eat excellently...

PS: I was a little surprised when Paul said he doesn't track expenses !!??

I know, we are surprised too. However, remember he was a CPA, and so at year's end he knows exactly what it is they have spent and where their money is and has gone. They simply don't do it in categories and daily, say, like we do. It's a different style.

Kcowan:

The way I interpret their experience is that they moved to Argentina into a condo. The lower costs there enabled them to be more aggressive with their portfolio (it had been in laddered CDs). The excellent equity portfolio returns enabled them to do more traveling. And finally, the nest egg grew enough that they could build their dream home without risking their SWR.

Paul said that when they lived in Argentina when he was employed, they were receiving American wages, living in a 3rd world country. That was the single most important factor in being able to save enough $$ to retire. And yes, the nest egg grew enough so that they could build a country home decades later and still do the traveling they want to do. They got a deal on the land and on wages and supplies to do the building. Vicki supervised the whole thing, bless her heart!


Cuppajoe

Hey, isn’t "vintner" a job title? Not! Because it’s fun? And you can drink up the profits.

haha... Paul is quite proud of his winemaking. We are invited to drink a 'vertical' of his wines in September or so, 2008!

Trombone Al

I'm wondering how inflation fits in here. $24,000 in 1988 corresponds to about $42,000 today, with US inflation. Do you think they are saying that they could live on less today??

Absolutely. They live on $24K+/- now, same as we do.


Be well,

Akaisha
Author, The Adventurer's Guide to Early Retirement

[Nords]

Originally Posted by Sam

UncleMick, I think 24K in Thailand or Argentina gives you the purchasing of at least 48K in the midwest, if not more. From that point of view, I don't think it's "cheap".

UncleMick, I think you'd be a hot property in Bangkok's Soi Cowboy wearing your, uhm, Dickies... you'd be amazed at what $24K could do to for you...

[Sam]

Originally Posted by Billy

I asked Billy what he would say and his first response was that we get better at purchasing and seeking out value for money spent.

Thank you Akaisha/Billy for confirming my educated guess. It made a big difference.

I went back and made one minor adjustment to my spreadsheet, decreasing the expenses' inflation rate by 1% (2% instead of 3%). The result is eye opening, to say the least.

Enjoy Phuket.

[unclemick]

Originally Posted by Nords

UncleMick, I think you'd be a hot property in Bangkok's Soi Cowboy wearing your, uhm, Dickies... you'd be amazed at what $24K could do to for you...

I have no idea what you said - but it sounds wicked and fun.

heh heh heh - 92 in the shade right now - decided to give the lawn a break and let it grow another day - iced tea, front porch chair, Tractor Supply generic bib overalls - the PT lifestyle sounds almost like too much activity - at this moment. BTY love both websites! Thailand or Argentina - heck I'm still wondering where to look for Dorothy and Toto in MJ's Kansas picture.

[ForeignExchange]

Originally Posted by Sam

UncleMick, I think 24K in Thailand or Argentina gives you the purchasing of at least 48K in the midwest, if not more. From that point of view, I don't think it's "cheap".

The Terhorst's daily average in Chiang Mai, Thailand, as of 2003, was less than $25.

Article from Kiplinger's

[ForeignExchange]

Originally Posted by kcowan

The way I interpret their experience is that they moved to Argentina into a condo. The lower costs there enabled them to be more aggressive with their portfolio (it had been in laddered CDs). The excellent equity portfolio returns enabled them to do more traveling. And finally, the nest egg grew enough that they could build their dream home without risking their SWR.

They are in Chang Mai with Billy and Akeisha at present.

Well, the costs in Argentina were very low when the Terhorst's originally bought their condo. Here's why they got rid of it.

Escapeartist

"During those early retirement years, we kept a small apartment in Buenos Aires. We returned every summer after six to nine months of travel. We kept our stuff there and used the apartment as our home address. In 1991, however, we decided to get rid of the apartment.
For one thing, Argentina revalued the peso. Our apartment expenses quadrupled, and Buenos Aires came to cost more than San Francisco or Rome. But the main reason we wanted to get rid of the apartment and become PTs was because we were tired of returning to the same place every year. When you have a home base, you have to check in at home now and again. We didn't want to do that. We wanted to be free to stay or go, anytime, anywhere."

[chinaco]

Originally Posted by Billy

chinaco

Well, that's the thing with definitions... People and things don't always fit.

To ask Vicki, she considers the world her first home, and Argentina their second. They are on the road most time in any 12 month period... and I think PT is simply a 'sort of' definition. Kind of a description, but not necessarily something to be confined to... Just my opinion...

You are probably correct. PT is associated with Perpetual Traveler, Permanent Tourist, Prior Taxpayer. All of which do not reside in one country but constantly travel... perhaps for slightly different motivations.

Interestingly enough, I got my basic perceptions about PT (and what it means) from Paul... Which is where I got the idea about home ownership. My comment was not intended to be interpreted as "hey they sold out".

Deliberately homeless: What it means to be a full-time PT


Bottom line: People's priorities, needs, and wants change over time. Nothin' wrong with that!