Saving Up! The next time the s*** hits the fan, have money in the bank

  I wrote the below for the Your Money or Your Life community. I’m reposting it here because I think this virus can be a wake up call for everyone living paycheck to paycheck, spending like there’s no tomorrow, in contract or gig positions that may be the first to go, racking up unnecessary consumer debt and anything else that leaves us vulnerable to fragile systems. What if you had an emergency fund equal to 6 months of expenses? What if you owned rather than owed on what you depend on – house, car, etc.? I had two advantages. I was raised by a mother whose family lost everything in the Great Depression. I was partnered for 27 years with someone who grew up on welfare, functionally the head of household from single digit years. Seek out your favorite bloggers who teach how to save money – be it me or elsewhere – and use your quarantine muttering “never again” and learning tricks. Now for my letter to the financial independence community:


How are you responding to Covid-19? Where are you? What choices are you making? What difference does being financially independence make in your response? What about retiring early?

This post is to open the conversation. Responses across the board are influenced by people’s belief, financial and social structures. For example, there’s a significant difference between how Republicans and Democrats are responding. The former more inclined to downplay Covid-19 or even consider it a strategy to bring down the President. The latter more inclined to take it seriously.

Is there an FI way of seeing and responding to Covid-19?

I personally feel so blessed that I am both financially independent and retired. Financial independence to me means freedom of the mind, not as caught up as most other people in fads, fears and financial stresses. I’ve unhooked from job or income to define myself.  People who depend solely on jobs for income, who’ve leveraged their lifestyles with debt, who measure their status through profession or income are very very exposed in this very very fluid situation with the virus. Low wage service workers cannot stay home and survive. The CEO of Southwest just pledged to lower his income by 10%, perhaps in solidarity, perhaps to distribute the financial pain of the severe drop off in flights. Will other titans follow suit – they are certainly where a lot of money is sequestered. We don’t know.

However, none of that touches me materially. I own my home. I own my car. I had only one 2-month period of debt to buy a rental house – in my whole life. I have passive income as well as earned income. I can always shrink my lifestyle to the level of my passive income. I have multiple forms of wealth – friends, community, a garden, living on a rural island where the air is fresh and the soil good. In the 2018 Your Money or Your Life I called that the ABCs of wealth (abilities, belonging, community), and some passionate FIers, Laura Oldanie and Lynn Frair, are promoting the similar permaculture idea of the 8 Forms of Wealth. All of this puts me in a more secure place when deeper breakdowns come. I have a garden. I live in a wet region. I’ve put some survivalist strategies in place. Without reliable food and water, none of us will make it. Is it rational to see the virus as an early warning of further breakdowns? I think so.

I am also “fire-ed.” My time is wholly my own. My ability to choose is limited only by bio-physical realities and social norms/legal constraints of my human communities. And even here, I choose these constraints – I am certainly free to be an a-hole or break the law, but I don’t.

I have the freedom to self-quarantine, knowing that even if I don’t feel sick, I can be a carrier. I live just miles from Kirkland WA where Covid-19 landed in the US and took its first life. Can you sacrifice income or opportunity by staying home? Better than others because of FI?

Because of this, I wake up every morning asking, “What can I do for others to ease their material or psychological pain as Covid-19 upends our lives?” and “How can I use my leadership in communities of influence to increase vigilance where people are slack and calm where people are freaked?” The privilege of financial independence is the ability to serve.

How does FI or FIRE affect your response? What are you doing with your time-freedom to help loved ones, friends and communities adapt to containment efforts? Or does your money-freedom help you escape from hot spots and sequester where it is safer?

I think FIers train themselves to be clever in meeting needs. We trade many luxuries and comforts to shorten the distance to our retirement date. Once you’ve shared a house and lived on ramen, you are not afraid of lifestyle contraction. For me, this cleverness is really helpful now, both for myself and in helping others whose minds are clenched in fear.

FIers are also planners, and this is very helpful now. I’m sure many of you are making lists, and stocking up appropriately and have plans B and C if this gets worse. I wonder about those of you who’ve chosen geo-arbitrage as your lifestyle. Are you concerned about getting trapped somewhere if flights shut down? Getting home to loved ones? A vagabond lifestyle is a luxury, really. It depends on everything from markets to transportation humming predictably in the background. Does not having a home base increase or decrease security? Even before Covid-19 hit, I found myself wanting to stick closer to home. Some instinct kicked in, intuiting that uncertainty and instability can make people (and civilizations) crazy.

There’s a dark side to FI and FIRE when society gets rattled. We develop a learned selfishness in the hyper-saving years. Generosity that might come easier with a steady paycheck – donating to causes, helping out friends and family, patronizing local businesses – may be diminished or eliminated in service to the big goal. We also fail to see how much we actually depend on society to keep us FIRE-d. We use society rather than serve it. We all love tax loopholes and strategic planning to save money. It’s the smart thing to do. Does this have us regard the government as the enemy? As an impediment to our personal freedom? All of this is very logical, yet it can be a petri-dish for selfish genes that we don’t shed when we are financially free. How does FIRE affect your response? Free to distance and look out for yourself? Free to enact social distance and help others adapt? Other ways?

People in our community can be a bit gloat-y and snark-y watching other people stumble around, drunk on consumerism and victim-mentality. I’ve done that. What is our relationship with society? Really? How does social responsibility link to the kind of personal responsibility we are so good at?

Brother Pete and Uncle Jim assure us that the Index Fund strategy is safe and secure for the long haul. When markets tank, you can buy more and ride the escalator up. I’m sure some of you are nervous now. Perhaps most who’ve chosen the Index Fund strategy are sailing through this crisis of market contraction. Anything you want to say about that?

Over to you. This can be a fascinating discussion with lots of tentacles and by-ways.



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