In your journey, people feel empowered, like they have walked out of a dark room into the daylight.
There is an empowerment to having savings. My early experiences included learning how to grow food, raise animals and butcher them for my winter’s meat, build, work on cars and basically re-do college, the first one Brown University, the second one the School of Life. I loved learning my way through problems rather than buying my way out of them. I also learned to live on the cast-offs of hyper-consumers. Learn the day that people put large items – furniture, appliances – out on the curb for pick up – and furnish your homes for free. The join a Facebook Buy Nothing group or Freecycle.
In a consumer society which promotes waste, it’s so easy to just harvest the fruits of other people’s excess.
Freedom in our personal lives is a feeling of expansiveness after a time of constraint, but it has nothing to do with financial independence.
Independence is when we can distance ourselves from the constraints of financial need. It is the ability to get away from a material constraint imposed by a material circumstance. Some people are financially independent from birth because of the material circumstances of their family or society. In the FIRE community your “number” is predicted to be when you feel free, but sometimes it doesn’t feel like anything.
My friend felt freest when he’s saved what before seemed an impossibly massive amount of money – enough to cover a whole year of life. It wasn’t just a number. It was the transformation of the despair of always being behind the eight ball financially – and an identity of a loser. His million was just a number, a sort of basic promise of lifelong security but not a doorway into anything different.
Understanding this difference between independence and freedom can be very helpful on your FI path.
If you celebrate your breakthroughs all along the way you can feel free during the whole journey. If you are so busy on money making and saving and investing that you dare not stop to “smell the roses”, you may be disappointed at feeling nothing when you reach your goal.
In Your Money or Your Life we suggest a ladder of financial independence.
- The first rung: freeing your mind from the grip of the consumer culture. Realizing you are being manipulated by culture, personal history, marketing, fashion to spend money on so much that never brings out anything but clutter. The capacity to say no to false desires and feel smarter and freer rather than deprived, you’ve liberated your mind. Your mind is free from the siren call of the consumer culture. It is questioning your assumptions about money, success, status, etc. and shedding ideas that don’t fit. It is having that freedom of “enough”, of stopping the incessant drive for more.
- The next rung is flattening your debt. Part of that process is saying no to behaviors that sent you into debt in the first place and quitting the debt habit. The other process is systematically getting rid of it. The fire in the belly of debt reduction gets you there. Teachers like Dave Ramsey are masters at getting people across that line. In Your Money or Your Life, people focus more on the core steps of tracking, categorizing and evaluating spending in light of values and happiness. Debt reduction tends to be a by-product, but when people start to see their debt melt they really do focus on flattening it. It’s amazing what people can do once they put their mind to it.
- The next rung building a financial cushion, readily accessible, equal to approximately 6 months of expenses. This becomes the foundation of building a nest egg that can grow as well as yield a passive income. This cushion can help you weather a period of unemployment. Your cushion allows you to bridge between jobs as well as cover for emergencies and illnesses. If you spend it, you build it back up. Wow, what a sense of freedom that is!
- The next rung is, of course, building a nest egg, the income from which will meet your needs now and in the future. This number is generated by doing the process suggested in Your Money or Your Life so you find your “enough point.”
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The final rung is building your other forms of wealth: your skills, your networks, your close friendships, your service to community. I am so blessed to live in a semi-rural community with lots of good people. We watch one another’s pets, help one another out through sicknesses, dance together, entertain one another and help one another with errands or chores. You earn your place in such a community by showing up and giving service and getting to know and care about people. One dynamic of the consumer culture is that it breaks bonds between people and then sells everyone products to fill those holes. Reweaving the web of community is independence from the money economy while being interdependence in the relational economy.
Over time, those who are steadfast build up enough savings, invested in ways to produce passive income, to not have to work for money.
None of this is about retiring, though people confuse retirement with financial independence. It’s about having choices, and being able to deepen your self-knowledge while aligning how you spend your time with what you care about most. It feels amazing to live life this way.
I have not worked for a paycheck in 50 years, though some of what I’ve felt called to do has produced an income. My frugality has bought me so many freedoms – time, space, thought, curiosity, creativity and risk.
I am not retired in that I love to work, to use my intuition, instincts and intelligence to continually know myself and the world better and to do projects that feel like my calling. I believe work is our birthright. Work is applying ourselves to tasks that have meaning and matter to others – and it’s our joy to do this. Of course many of us have utterly lost any connection to this definition of work. Work for far too many of us is a job… is a paycheck… is a sacrifice the hours of our lives to activities that may harm us body and soul.
FINANCIAL INDEPENDENCE ISN’T A CONDITION, IT’S A DIRECTION
It’s a day by day, transaction by transaction, declaration that your life is yours, that you want to use it for something you think is important and in ways that make you happy. It’s buying back your freedom by paying attention to how money comes into and goes out of your life.