In this edition of Author Talks, McKinsey Global Publishing’s Molly Liebergall chats with Julien and Kiersten Saunders, creators of the multimedia blog rich & REGULAR, about their new book, Cashing Out: Win the Wealth Game by Walking Away (Portfolio, June 2022). By saving most of their income, establishing multiple revenue streams, and embracing other hallmarks of the Financial Independence, Retire Early (FIRE) movement, the Saunders’ paid off their debts and are now preparing for an early retirement—just in time to enjoy their 40s. An edited version of the conversation follows.
Why did you write this book?
Kiersten Saunders: Our new book, Cashing Out, is about how to win the wealth game by walking away.
Julien Saunders: There are several reasons why we wanted to write the book, but one of the bigger reasons was we stumbled upon a set of data that basically predicted that median Black wealth would be zero by 2053. That was alarming to us because it validated some of the things we knew to be true. People with whom we worked, people in our families—despite outward appearances, despite graduating from college, or even driving a nice car and having a nice home—most people we knew were unfortunately still struggling to get ahead and, in some cases, were going backward.
At the same time, we had one foot in and had kept our eye on this movement called the Financial Independence, Retire Early movement. The people who were part of that [movement] and were embracing those principles were getting drastically different results than a lot of the other people we knew. They were zeroing in on their spending; they were taking it upon themselves to be more active investors and were investing at far greater rates than most standard rules of thumb, which typically dictate around 10 to 15 percent. As a result, the impact to their net worth was booming.
As we were seeing these two things happening at the same time, we wanted to use our time and our talents to see if we could take some of the principles we were seeing in the FIRE movement and apply them to our community, which needed that information.
What does it mean to cash out, and why does it carry a social stigma?
Kiersten Saunders: Cashing out is about redefining what it means to win in a career context. I think for a long time, a lot of us have dictated winning as getting the big job, a hypervisible role, or a huge responsibility, but winning in this day and age is really just being able to walk away on your own terms. That’s the new ambition.
Regarding a social stigma, it depends on which demographic you ask. In some demographics, say, if you are a White male who has aspirations to be in tech, cashing out is actually celebrated and encouraged. You’re conditioned to know to cash out from the time you’re school-aged, and it informs all of your decisions. In those communities, there are examples of people who have done this successfully.
Cashing out is about redefining what it means to win in a career context. I think for a long time, a lot of us have dictated winning as getting the big job, a hypervisible role, or a huge responsibility, but winning in this day and age is really just being able to walk away on your own terms. That’s the new ambition.Kiersten Saunders
But in marginalized communities—in communities of color—we don’t have nearly as many role models who have successfully completed this task. What we have instead are a bunch of people who tried, but came up against structural barriers, structural challenges, and then failed. What we get instead are cautionary tales; we get risk-averse behaviors simply because we haven’t seen cashing out done as successfully in our communities.
Why is it important for income to have a purpose beyond just making money?
Julien Saunders: There are two big reasons why you need to give your income a purpose: the first one, and this is applicable to every working American, is that you will get tired. There will come a time for any set of reasons—whether you’re just getting older, you have children, or you’ve just been working multiple jobs—there will come a point when you will get tired. You need to look at the high-earning periods of your life when you had the ability to make smarter long-term decisions about your money and your income and start saving and investing so you can create income for the future tired, or even lazier, version of you.
The second reason why income should have a purpose is that it’s becoming more and more difficult for people to save, not just because of this moment we’re living through—a high inflation period—but because marketers and brands have become good at enticing us to want things we actually don’t need.
The second reason why income should have a purpose is that it’s becoming more and more difficult for people to save, not just because of this moment we’re living through—a high inflation period—but because marketers and brands have become good at enticing us to want things we actually don’t need.Julien Saunders
On average, most people are exposed to around 6,000 to 10,000 advertisements a day. You’re always going to be bombarded by enticing messages that seem as if they’re designed just for you, that come at the right moment, and that derail you from some other way of spending your money. It’s important to have a clear purpose for your income as a defense mechanism against all of the other interruptions you’re experiencing on a daily basis.
What is lifestyle inflation, and how much is American media and marketing to blame for this phenomenon?
Julien Saunders: Lifestyle inflation is the tendency for the amount of money that people spend or their cost of living to increase as their income increases. The more money we have, the more we tend to use that money to buy nicer things or to buy more conveniences, instead of using it to save and invest for the long term. This is something that impacts everyone, and media plays a huge role in this. Every single day, we’re shown that there’s a new, bigger, better, sexier, or faster version of some of the products or experiences that we want.
The more money we have, the more we tend to use that money to buy nicer things or to buy more conveniences, instead of using it to save and invest for the long term. This is something that impacts everyone, and media plays a huge role in this. Every single day, we’re shown that there’s a new, bigger, better, sexier, or faster version of some of the products or experiences that we want.Julien Saunders
It makes you feel like what you have just isn’t enough or isn’t meeting this new need. As a result, people get stuck in this cycle of consumerism and constantly trying to find happiness through buying something to solve a problem, only to realize that the goal post changes next year when the new version of that thing suddenly becomes available and is more expensive.
You need to be fighting against the media and marketing machine that is enticing people to make decisions that actually work against their long-term interests.
What are the failures of the American dream?
Kiersten Saunders: This is a difficult question to answer because I don’t want to suggest that the American dream is impossible; there are lots of examples of people we hear from on a regular basis who attribute their success to the American dream. But I do think the American dream as we know it is incomplete.
If you were to ask anyone what the American dream is, they’re going to give you a checklist of items. They’re going to say you work hard, you go to school, you get a good job, you get a home, and that’s the end of the story. Unfortunately, that’s too short, and that’s not exactly how it works.
It’s not that you just have to work hard; it’s that you have to work hard, earn a living wage, invest that money, and then eventually you get the gift of retirement or some other financial benefit. But for now, we continue repeating this short story of the American dream, and it hasn’t evolved to include a more nuanced narrative.
Why is Black buying power a ‘mythic’ statistic?
Julien Saunders: We felt it was important to include some point of view on Black buying power because a lot of what we’re talking about in the book isn’t just money or your career; it’s all of those things through the lens of race.
Whenever there is a hot-button item in the media or something that’s impacting society with respect to Black people, more often than not, someone’s going to throw out the idea of Black buying power. It’s almost like Thor’s hammer: it’s a thing that we can use, this magical power, to help shatter all of these oppressive institutions. But very similar to the American dream, it’s an incomplete statement. It’s valid, in some cases, more specifically when it comes to marketing share.
From an everyday standpoint, just focusing or talking about Black buying power isn’t going to do much to drive progress for a couple of reasons: one, you can’t just talk about Black buying power by itself; you need to talk about it relative to other groups. When you do that, you see that while $1.4 trillion—which is the number for Black buying power—is a lot, it’s relatively small compared to White buying power, which is $13.2 trillion.
Secondly, we have two opposing metrics here: we have the might of Black buying power, while at the same time understanding that Black net worth—which I think is a more relevant financial metric—is declining and slated to be zero by 2053. This estimate, by the way, does not include any of the impact that the pandemic may have had on the typical Black family or on Black businesses.
It’s safe to assume that while you’ve got this big number over here, $1.4 trillion, and while it sounds meaningful, the more important metric is net worth, and that number is actually going down. Black buying power is very much a vanity metric.
How might corporate America be affected if more Black people embrace cashing out?
Kiersten Saunders: If our experience is an indicator, corporate America actually benefits by having more financially independent employees. The reason for this is the dismal stats around employee engagement, which we’ve all read.
We’ve all been participants of the forced-fun, after-work activities, and the attempts to make us all unite under these lofty corporate visions and ambitions. When you have people who are employed for reasons other than needing the money, what you get is an environment where people feel more comfortable having candid conversations.
When you have people who are employed for reasons other than needing the money, what you get is an environment where people feel more comfortable having candid conversations.Kiersten Saunders
People feel more comfortable being honest about the challenges we’re up against, you get financial projections that are actually reflective of the environment we’re in, and everyone is just more honest. We think that any employer that’s encouraging employees to become financially independent actually benefits, because you then have the ingredients to build the culture that you say you want.
How can people benefit from America’s systems without endorsing its flaws?
Julien Saunders: This is another difficult question to answer. One of our good friends has told us repeatedly that we’re all compromised under capitalism. To some extent, it’s difficult to separate some desired outcomes from undesirable outcomes. I think what’s important, though, is to focus on the positive—focus on what you actually can do.
Unfortunately, if you’re investing in certain companies and you’re getting ideal returns, you benefit from those incomes. In some cases, we all know that not every company does good or does a good job of upholding some of the values that they should, and they end up having negative outcomes in society. On the positive side, there’s a lot that you can do with those returns. There are a lot of problems that you can solve in your own family or community. There are businesses you can start that can then focus on solving some of the issues that are specifically more important to you.
It’s important for people to acknowledge that those things happen—that there is a bit of a downside, if you will, to investing—but there are other options you can undertake that allow you to minimize some of those negative impacts. At the end of the day, with those returns, you have the power to create some good in the world. It’s ultimately up to you, and it puts you in a position of control.
What advice do you have for maintaining relationships while cashing out?
Kiersten Saunders: This was a topic near and dear to me. I’m relationship oriented; my friends and family are a key part of my lifestyle. We called the second half of the book “The Daily Struggle” because we wanted people to understand what it’s like when you start to implement these ideas—once you start to do things that are countercultural.
The advice I have for people is, one, not to take it personally. You have discovered something that a lot of people aren’t ready for. At some point in their lives or in a season of their life, they might be more open to the idea of cashing out, but if they are not ready for it, you don’t have to take it personally.
The second thing to know is that there is a community of people who are like-minded and who do agree with you. Your mission and your goal becomes to find that community. It can be heartbreaking to admit that your friends and family won’t be your community in this endeavor. Everyone wants to believe that we get this kind of undying support and cheerleading from our friends and family, but that’s just not the case.
We teach you in the book to use the tools of the internet, of hashtags, and of organizing principles to find your like-minded community. That’s who you’re going to look to for advice and for encouragement when times get tough.
Was there anything that surprised you in the research and writing process?
Kiersten Saunders: When we started writing this book in pre-2020—back when the world was very different—a lot of the ideas that we were suggesting were radical. Race certainly was not talked about at work the way it is today, and money certainly was not talked about at work the way it is today. Both of those topics were taboo.
Then, after 2020, after the racial uprisings of the summer, after the Great Resignation, after a lot of people experienced sudden layoffs and furloughs, there was a new opening in the universe for these types of conversations. One of the biggest surprises in the writing process has been how open workplaces are to having these conversations within their walls, how business leaders now see it as their duty to create a culture and an environment where their employees can have candid conversations, where they can bring in facilitators like us to talk through these situations and practice conflict resolution in real time.
We’re just so excited to be able to contribute to the body of work surrounding the FIRE movement, along with a lot of other brilliant researchers and leaders in the space, to help facilitate these conversations and make actual progress—not just progress on paper.