Bumhood: The fruits of financial freedom

For quite some time, I’ve been threatening to interview SDXB,* my friend who retired at the age of 47 into a glorious life of what he calls “Bumhood.” He’s not an especially affluent man, nor does he live like a pauper. He chooses to live frugally, and accordingly he chooses to live off the gerbil wheel. Here’s what he has to say for himself.

FaM: What is Bumhood?

SDXB: Bumhood is the state of idleness.

To arrive at Bumhood you must start to plan early in life. It’s not something you can achieve unless you have money in the bank, unless you own your own house, and unless you own your car. And you have no bills: I always pay everything thirty days cash. That is, I pay everything in full every month.

FaM: But you didn’t own your home 20 years ago, when we first got together.

SDXB: I’d just come out of a divorce. As you’ll recall, I was able to buy a house shortly.

Once you take on Bumhood, you realize that it doesn’t take as much money as you thought to stay there, provided that you don’t go into debt.

FaM: Why did you decide to become a Bum?

SDXB: It was during the 1987–88 recession. My public relations business evaporated overnight.

I represented a $9 billion bank and several other financial institutions. They all went belly-up during the collapse of the savings and loan industry. I found myself going to an office and sitting around with nothing to do. My biggest customer kept calling and asking me to do work, but they couldn’t pay.

One fine day a friend and I—he was a securities analyst—went camping in the mountains together. We started a bonfire and drank some whiskey, and somewhere in the drunken fog we decided to wrap up our businesses and become bums.

And we did. It took me three months; he took four. I just handed over all my PR accounts to the guy I was officing with, along with the key.

FaM: Then what happened?

SDXB: Our main concern was whether we could sustain Bumhood over time. Interestingly, over the years my friend and I discovered that, without consulting one another, we arrived at the same plateaus. We discovered that…

Money happens.

Bumhood takes less money than we thought. You don’t need as much as you think you’ll need to live in retirement.

We weren’t alone. There were other people who had become Bums. Because we were Bums, we weren’t limited to loafing and traveling on the weekends. We’d go places during the week, and there were the Bums! These were first-class Bums, mind you, not park-bench bums: people who had gotten themselves set up for Bumhood and were practicing it.

We could travel at will. I went to Europe—Portugal, Spain, France. We went to Hawai’i. I’ve bummed around Alaska, Canada, Mexico, all over the United States.

Meanwhile, I learned how to cook and how to take care of myself. To make Bumhood work, you have to be independent, to be able to take care of yourself as much as possible. You can’t be dependent on restaurants for your food and on dry cleaners for your clothes.

FaM: How does money happen?

SDXB: Money just happens.

For example, after I quit working, I was still close to my profession—journalism and public relations. People would call and ask me to do some writing for them, so I’d make some extra money that way.

And I was in the active Air Force Reserve. I’d get good money from that. I was assigned to Airman, the Air Force’s international magazine. I’d volunteer for assignments that would enable me to travel on the government dime—and get paid for it. I wrote for other magazines, too.

FaM: So it wasn’t really that you weren’t working…

SDXB: No. Money happens because you make money happen. But at all times I had work under control. I ran it. It didn’t run me.

Remember that none of this came about by accident. My earliest thought about preparing for retirement occurred to me in my late 20s. It wasn’t something that just happened to me when I was 47 years old. In addition to planning, there’s a certain amount of luck involved in arriving at Bumhood.

Are you one of those people that money happens to? Probably. Most people can make money on the side. You have to be willing to make money happen: to capitalize on skills and knowledge without signing on full-time.

And you need to make your savings grow.

FaM: How?

SDXB: I placed my money in low-risk securities, and I bought and continue to own stock that’s fairly low-risk. And I bought and traded Swiss francs through two Swiss banks.

FaM: That’s a pretty high-risk enterprise.

SDXB: Yes. It’s an example of where luck worked. I happened to have money in Swiss francs at a time when the dollar was weak and francs were valuable, so I sold them and made a lot of money.

I don’t recommend it. In my ignorance, I lucked out. But I almost took a bath—it was a losing proposition throughout the Carter Administration. Not until Reagan came in and the dollar strengthened was I able to make money.

“Money happening” means making money happen. One reason I wanted to keep my hand in journalism was so I could deduct equipment, some travel expenses, and a portion of my house as office space. The Air Force Reserve could be considered a part-time job, but writing cannot be considered steady work. The Air Force gig wasn’t hard work, and it was good pay because as a chief master sergeant I was a high-ranking noncom. Basically, working for the Air Force meant I got paid to travel.

Everybody has some talent they can use to make money happen, whether it’s handyman work, professional consulting, military reserve work, substitute teaching, selling things on E-bay, yard saling.

FaM: So what were you doing before you became a bum?

SDXB: I served my time in journalism: I was broadcast editor in Utah and Idaho for the Associated Press. For about eight years I was an investigative reporter for the Arizona Repubic, and later for the Phoenix New Times. After that I was editor of Phoenix Business Journal, then a Scripps-Howard newspaper.

My first taste of Bumhood came when I quit PBJ. I told the company I was leaving and gave them four weeks notice. Two weeks later I called and asked if they had a replacement for me. No, they didn’t. With one week to go, they still said no, they didn’t have anyone to take my place. They apparently didn’t believe I was really quitting.

On the day I said I was leaving, they still had no replacement. The next day I left for Europe. I bummed around Europe for two months with a lady friend. She was a hotel executive. We visited England, Ireland, Scotland, France.

When I came back, I did a little freelance writing. So I was sitting in my home office and calculating what would be my maximum income if I worked six days a week as a freelance, when the phone rang. It was one of the largest advertising companies in Arizona. They represented the largest savings and loan in Arizona. Could I handle the PR for First Federal Savings?

I said, “Sure!”

He said, “What’s your rate?”

I had no idea what PR people charged. At this time, I was a pure journalist. “I’ll cost it out,” I said. “I’ll get right back to you.”

I immediately called an old friend who was an old-line Arizona PR guy and asked him the going rate: $90 an hour. Remember, this is in ’88 or ’89—that was a lot of money then.

I said, “My god, Charley! That’s stealing!”

He said, “Don’t ask for any anything less, because if you do you’ll be undercutting everyone else.”

I call the ad guy back and say $90 an hour.

He says, “Can you start tomorrow?”

I learned they’d just fired their vice-president of public relations and needed someone to start immediately. When I hung up I thought, “I don’t know squat about PR!”

So I went down to the main library and checked out books written by top New York City PR people, and that night I started reading. Next day, I met with the bank executives and told them what I could do for them. I was reciting stuff I’d just read. In the ensuing months, I kept coming up with ideas based on what the New York City PR guys wrote. In those days, that kind of stuff was unheard-of in the Arizona market. I kept the bank executives out of trouble and ushered in a name change. In the process, I made a lot of money.

I never knew why they called me or who recommended me. I was probably the top journalist in the community at the time. I’d won the first Don Bolles Investigative Reporting Award, the Virg Hill Award. And I won the Arizona Press Club’s First-Place Investigative Reporting Award four consecutive years.

FaM: How long have you been a Bum?

SDXB: I retired at the age of 47. [SDXB is now 69.] I bummed around in the Air Force part-time. Freelanced for magazines off and on. In 2000, I retired from the Air Force Reserve, providing myself with a nice pension. I continued to freelance off and on for another six years. In 2006 or so, I just quit writing altogether.

FaM: What did you do about health insurance?

SDXB: Well, I was in good health and I took a chance that I’d stay that way. At age 60, I got military health care, and now I have Medicare. But before that, the only time I was covered was when I was on active Air Force duty. Fortunately, I never had any serious health problems.

Luck is part of Bumhood.

FaM: You live pretty well, for a person with no visible means of support.

SDXB: As a Bum, you learn to keep your costs under control by living within your means. Bums always buy vehicles outright, in cash, and we keep them until they’re ready to fall apart. You don’t buy anything on time. And buy your house outright. The monthly payment you might have been making is your return on investment. So if you would have been paying $1,000 or $1,200 a month on a mortgage, paying it off means you have that much virtual income in your pocket. When you own the roof over your head, you’re paying the amount of the mortgage payment to yourself, not to the bank.

One reason I moved to a retirement community is that it’s much cheaper to live here. Sun City has no municipal school taxes, and insurance is lower. After I moved here from mid-town Phoenix, I estimated I saved $1,500 a year on insurance and tax alone.

FaM: I know people have wondered if you didn’t get bored, having quit working at the height of your career.

SDXB: I’m a pretty organized person. I took that organization into retirement. I maintain a daily to-do list that keeps me moving forward.

And I sat down and made a list of everything I could think of that was recreational—there must be a hundred items on it, from shooting pool to going to museums (on bum’s night, of course, when admission is free). I hike every day to get exercise. I ride bicycles. I got into ballroom dancing and ice skating. I entertain friends with gourmet dinners.

There’s a lot to do in Bumhood.

*SDXB: Semi-demi-exboyfriend

This interview led to a series on ways to achieve financial freedom:

• An Overview
• Education
• Work
• Debt
• The health insurance hurdle
The roof over your head