Know Your Blogger Series

Costa Rica FIRE

We started Costa Rica FIRE in 2018, less than a year after we bought our first two properties in Tamarindo, Costa Rica. We knew that we wanted to have a presence for our vacation rentals, so that we could market them outside of the vacation rental platforms, like AirBNB and VRBO. But we also knew that investing in Costa Rica real estate was a big part of our FIRE plan, and we wanted to write about that, hence the FIRE part of the name.
There are other FIRE blogs and other real estate blogs, and we ourselves read and learn from other blogs. However, Costa Rica FIRE follows our personal journey and approach to FIRE.
Check out our Q&A with Costa Rica FIRE here.

Come learn about the couple pursuing FIRE through vacation rentals outside the United States.

Each week at Personal Finance Blogs, we publish interviews from amazing bloggers from the personal finance space. This week, we are featuring the blog, Costa Rica FIRE.
During these weekly features, we are hoping to provide a way for you to interact and learn more about different blogs in the personal finance space.
Below, you can read more about the story behind Costa Rica FIRE, learn about the author, and learn personal finance tips from Costa Rica FIRE to help you improve your financial situation.
A big thanks for Costa Rica FIRE for this interview! Now, we will turn it over to the author for this interview.

Tell us about Costa Rica FIRE

We started Costa Rica FIRE in 2018, less than year after we bought our first two properties in Tamarindo, Costa Rica. We knew that we wanted to have a presence for our vacation rentals, so that we could market them outside of the vacation rental platforms, like AirBNB and VRBO. But we also knew that investing in Costa Rica real estate was a big part of our FIRE plan, and we wanted to write about that, hence the FIRE part of the name.

What makes you and your blog unique?

There are other FIRE blogs and other real estate blogs, and we ourselves read and learn from other blogs. However, Costa Rica FIRE follows our personal journey and approach to FIRE. We are a married couple with two kids that came to FIRE relatively late (early 40’s) and in a HCOL (high cost of living) city, and yet we managed to achieve a level of FIRE by late 40’s. I think that story is relatively unique since many FIRE bloggers are young or single.

We also pursued FIRE using multiple strategies – not just a high-income job or extreme saving or geo-arbitrage. Real estate is a big contributor in our FIRE plans. Adapting our consulting business to focus on topics we’re passionate about is another strategy we use – we call it “work as play” or finding work you love so much that you never want to retire from it. We used a modified geo-arbitrage strategy, going from a HCOL city in the US to a cheaper city in the US and having even cheaper Costa Rica as a backup. Finally, we believe in multiple income streams, so we still invest in paper assets and pursue a range of consulting projects, not relying on any one thing.

What does “being good with your personal finances” mean to you?

Being good with your personal finances is built right into the term – it’s about finances, meaning how you earn, save, invest and spend your money; and it’s personal, meaning that you meet your obligations and can support your interests, values and priorities. We place a high priority on freedom – freedom to work outside the traditional office structure, flexibility to spend our time on projects and hobbies that interest us and flexibility to travel and live wherever we want.

We also place a high value on family. We stayed for 40+ years in a HCOL city to be close to extended family and to allow both of our kids to finish high school in the place they grew up and wanted to be. We manage our businesses and investments to, not just provide for us, but to leave something behind for the next generation.

What are some habits you practice to keep your personal finances in order?

We manage our money closely, but don’t spend too much time on investment decisions or accounting. We track what we spend, but just in Excel, not a special software. We don’t budget, but we categorize our spending data so we know whether it matches our priorities and values.

We spend more of our time focused on income generation – managing our real estate so that we maintain the properties and keep good tenants, growing our consulting business so that we monetize our skills and interests and give our investments time to grow.

What are your three articles people should read to get to know you and your message better on your site?

One Question That Saved Us Years On Our FIRE Journey (the mindshift change that propelled us forward)

Five Strategies We Have Used To Achieve FIRE – And What Has Changed (how we approached financial independence and how it has changed)

How To Pick Your First Real Estate Investment – A Decision Matrix (our advice on picking a first real estate investment – it’s about the decision process, not the decision)

For someone looking to improve their financial situation, what’s your best advice?

In the short term, whether it’s a money goal or other (e.g., weight loss, habit change, etc), I would go for a quick win. How can you get more money today? Could you sell unwanted things? Could you cancel a subscription or membership you no longer use? Could you renegotiate a big-ticket item, like your lease or cable bill? If you have several debts, list all of them, look for the highest interest rate, and pay additional money towards that – that isn’t money in your pocket but it increases your net worth faster than if you just treated all of your debts equally.

In the medium-term, I would focus on automating as much of your finances as you can – e.g., online bill pay, automatic savings contributions, auto retirement contributions, downloading credit card transactions into a tracking system. By automating, you are building good habits. You also get a snapshot of your money and can see how much your spending and how much you’re saving. This can help you identify where you need to focus.

In our case, we were naturally frugal, and we saved quite a bit in our retirement plans but didn’t really have a plan outside of that. Our retirement plans were good enough for when we hit 60+, but what if we wanted to retire sooner? This type of big financial question is what long-term planning is for. In our long-term, we needed to funnel income into cash flow-producing assets that we could tap pre-retirement age. This led us to real estate as our asset of choice (I trusted our skills to manage a real estate portfolio more than a paper asset portfolio). Then our long-term goal became acquiring 10 properties, which we felt was enough to provide cash flow to help us transition from full-time work to part-time, lifestyle-focused entrepreneurship.

For others, long-term might mean building a retirement portfolio or financing a trip around the world. It’s the big goal that inspires you enough to make bold choices.

In your opinion, what’s better? Renting a place or buying a house to live?

While the majority of our portfolio is in real estate, we are not of the mindset that everyone should own real estate. Renting is a viable option and can be the better option depending on the circumstances. For example, we rented for the first 20+ years of our adulthood. We lived in a HCOL city where the down payment for something comparable to what we were renting would cost well over 6-figures! That’s a lot of money to tie up into 1 property. Instead, we rented where we lived and bought rentals that paid us.

Owning a property has high transaction costs when you buy and when you sell. Real estate takes time to unwind – it’s essentially illiquid because you can’t count on selling it if you really have to. If you think you’re going to move in a few years, or want the flexibility to be able to move, renting could be the better choice.

In your opinion, what’s better? Focusing on increasing your income, or focusing on decreasing your expenses?

This depends on your situation. For us, we were already good savers – maxing out the employer retirement plan, going after discounts and on-sale items. Focusing more on minimizing expenses would have a minimal effect on our bottom line. At the same time, we were in high growth careers (we both started in management consulting) so paying attention to our career advancement – negotiating good job offers, developing our professional skills – would have a significantly higher payoff. There is a limit to how much you can cut expenses, but no limit to how much you can grow your income.

That said, if you already make a good income but still can’t make ends meet, you should take some time to figure out where your money is going because just making more money won’t help if it gets spent faster than it comes in. It’s like filling a leaky bucket – you’re better off fixing the bucket than finding more water.

What is your favorite investment class and why? (stocks, private business, bonds, real estate, crypto, precious metals, etc.)

We are majority real estate – about two thirds of our net worth is in real estate, with the rest in cash or paper assets. So in terms of a mostly hands-off investment, real estate is our favorite investment class. That said, we are actively focused on our consulting business and are the most bullish about private business as an investment because our special skills and expertise are here. If we were architects, engineers, interior designers or other experts in real estate-related spaces, we may be more active there. But we’re not, so we focus on what we know and what interests us. That means, our business is the priority, then real estate, then paper. Our paper is managed by a turnkey online system that offers recommendations based on tactical asset allocation, and this includes precious metals, bonds and stocks. We did a crypto investment for fun and to learn about the space but we’re not active there.

Do you have any financial mistakes you’d like to share, and how have you grown from these mistakes to improve your personal finances?

There are many financial mistakes first and foremost including not starting soon enough to diversify from paper into real estate, from traditional corporate work to entrepreneurship, from assuming that retirement was decades away to realizing FIRE was possible. Oh well – it’s the Chinese proverb about the best time to plant a tree was 20 years ago, and the next best time is today. We try to focus on today and what is the best move right now.

There are real estate properties we wished we bought – several over the years. There are some we sold too early. We were afraid of taking on too much leverage, and by the time we got comfortable, we were in our consulting business instead of traditional employees, and so we couldn’t get as much leverage as we wanted.

We grow from the different mistakes by looking at what we would have done differently and then trying to factor that knowledge into our analysis or that quality into our lives. For example, we’re more comfortable with leverage now, so stopped prepaying on the mortgages we do have and saved the cash for reserves – this was pre-pandemic and now we’re glad have those loans. Regarding the general mistake about not starting soon enough, we try and act on information we learn as soon as we have an idea of what to do and not deliberate so much. This helped us amass the 11 properties we have now, and also helped us exit an entire real estate market (Indianapolis) without second-guessing ourselves.

Why do you believe learning about money and caring about personal finance is important?

We grew up in comfortable, middle class families where there was enough money for the necessities and some extras. Money was very clearly a tool for supporting family, experiencing nice and important things like travel and pursuing passions (Caroline studied piano at Juilliard, while in high school, which was a significant investment for her single-parent household). In other words, money is opportunity to be, do and have things that are priorities for you. It is the ultimate freedom.

You may not be born into lots of money, but you can learn how to make the most of what you have, whether that’s advancing your career, saving more, investing better or starting a business (or several) to have multiple income streams working for you. The freedom and opportunity that money provides is why we spend the time to develop good money habits and share what we find out with others.

How You Can Contact Costa Rica FIRE for More Information

You can learn more about Costa Rica FIRE at https://costaricafire.com/, like them on Facebook at https://www.facebook.com/CostaRicaFIRE/, and follow them on Twitter at @CostaRicaFIRE.

Thank you for reading this interview, and thank you, Costa Rica FIRE, for providing us with some great personal finance tips!