There’s a common misconception out there that a person saving a ton of money (think 50% to 80% of net income each month) has to be living a very meager life. That is, unless a person joins in with the masses and also becomes a present-day hedonist, they will merely be surviving, but not truly living.
Give and Take
I would argue otherwise. Yes, it is true that a person who is striving to achieve early financial independence must save a lot more of their income than their peers. So, they will undoubtedly have less free cash to purchase material things. On the other hand, this same person also won’t have to deal with the following stresses that are known to be silent killers:
Let’s face it, a person who aims to retire at the more traditional age of 65 will have to depend on their employer for a much longer period of time than someone who plans to retire early. As a consequence, the traditional worker will likely encounter many periods of uncertainty in the workplace. They will most likely have to deal with the following scenarios at some point, or another: new (bad) bosses, company acquisitions/restructuring, relocation, reassignment, paycuts, and of course, the dreaded layoffs.
The above situations can create a lot of day-to-day stress for a person. This stress is compounded even further if a person also has to think about: supporting a family, paying a mortgage, repaying debt, etc. One might argue that the day-to-day stress is actually very minimal, and overall, tolerable. This might apply to a healthy, younger person, but the going only gets tougher as a person gets older. Over time, energy wanes, motivation dips, and the competition only gets more fierce.
It’s hard to feel completely secure in a job you know you probably aren’t qualified for anymore. Having to face this likely scenario in the later years can’t help but add more stress. This might sound cruel, but there’s a reason why companies like to focus their layoffs on their more senior employees. Usually lack of energy, focus, and dedication are the prime reasons why older workers are let go. It’s perfectly understandable, though, since these employees only become this way because they are burned out from doing the same thing year in, and year out. And yes, the salary gap between a senior employee and a fresh graduate is another good reason why companies elect to cut the cord.
In contrast, a person aiming to reach early FI doesn’t really need to concern themselves with worry about job security. To reach early FI requires a very little number of working years! Why should a person stress out so much over job security if they know they aren’t even going to be around for much longer?
Corporate politics can make life miserable for just about everyone. For those who are in it for the long haul, well, you better start getting used to it real quick, because it won’t be going away anytime soon!
If you are trying to reach early FI, well, luckily you won’t have to put up with any of this nonsense. For instance, I refuse to partake in the game of corporate politics. To me, it’s a complete waste of time, so I do the following instead:
-Disregard useless e-mails.
-Only respond to e-mails I deem are worthy of a response.
-Don’t CC everyone just so I can “make my voice heard”, or attempt to get noticed by the big shots.
-Enter and leave meetings ASAP.
-Ask the minimum number of questions needed to get my job done.
-Don’t partake is useless water cooler chatter.
-Come to work early and leave early (I’m not going to be the last one to leave. I won’t kill myself just to get a promotion).
-Won’t expend precious energy trying to climb a stupid ladder. The game is rigged anyway. I’m fine staying on the same rung from start to finish.
By doing the above, I am unburdening myself from a lot of wasted time.
Work is stressful. There are always a ton of things that need to get done, and never enough time! Worse, outside of maybe two or three weeks in a year, and a few select choice holidays, most people are expected to work year-round-the-clock. Thanks to technology, most everyone has a smartphone now, which means that the corporate e-mail account is always within arm’s reach. Since most corporations are also now global, this means that the work has infiltrated all time-zones, so e-mails are now sent non-stop throughout the day.
When I first started working, I was like a lot of other young professionals, very much into the whole nose-to-the-grindstone ordeal. Days flew by because I worked so many hours. After a few months, the days and weeks just started blurring together. I couldn’t even differentiate anymore, because everyday felt the same!
The problem, I soon learned, was that the working game isn’t a very short one. No, this game that we play goes on for a long, long time. 40+ years is typical, which is enough time to consume most of your life. Over time, this type of pace is just not sustainable. The stress will continue eating away at you, and sadly, it often time inflicts damage that is irreparable.
Work makes people sick. It even kills, in the extreme cases. I’ve witnessed a co-worker fainting, as he was overcome with fear and anxiety, which was purely induced by work. But sadly, most people will be willing to tolerate the workplace stress because they are too afraid of saying “NO” to the system. The more dependent you are on the paycheck, the harder it is to object.
My time horizon is short. I’m not a slave to the machine, since I don’t need much in return from it. Since I’m no longer focused on scaling the corporate pyramid, I know I don’t need to subject myself to any of the above abuse. What’s the point? I’m not trying to get promoted. I don’t want to be noticed. I can live with mediocre yearly reviews. In fact, all I really want is to be able to maintain the same job, at the same pay, doing the same work for just a few more years. Once the passive income stream is in place, I’ll be on the first flight out of this God-forsaken place.
Once I committed to early FI, I noticed that my mental outlook on life was changing. I’m more positive and upbeat. I have more energy and am just a happier person now. And for good reason! I can finally see the light at the end of the tunnel. Every workday serves a greater purpose, since I now know that it’s just a means to an end. A short end, at that. Thank goodness!
Life isn’t predicable, and a lot of things can pop up unexpectedly. Since most Americans have no savings (and a lot debt), this can be especially nerve-racking when an emergency event comes up.
However, this fear probably isn’t something that is shared by those seeking early FI. Those of us who save 50% to 80%+ of our net income each month have already taken care of the emergency fund situation. In fact, that’s probably the first thing we accomplished as we started our journey to early retirement.
Yes, it’s true that it takes a lot of time to build up a passive income stream. It’s also true that the individual battles won (monthly contributions to savings) also help to establish a strong financial foundation. Having a strong cash buffer is probably one of the best byproducts of creating a passive income stream. This will do wonders for your confidence! Nothing beats the feeling of financial security. It really does lift the weight of the world off of your shoulders.
For myself, even if an emergency situation does arise, and it depletes my entire emergency fund, well, I’ll still feel very much reassured, knowing that I’ll still be able to handle the situation. The dividend portfolio is supposed to always keep growing, but should that major need arise when I need to remove funds from it, it’s comforting to know that I do have that luxury.
I’m sure the average American would love to have an emergency fund, let alone a backup emergency fund. However, most aren’t willing put in the required effort needed to establish this.
The journey to early financial independence is making my life better. In all phases. Although I have to stash away a large portion of my income (50% to 80%), by no means am I just scraping by and just “barely living”. On the surface, I’m clearly living well below my means and look like a total tightwad. My peers see this and think that I’m making huge sacrifices in my quality of life. But, hey, I’d rather be “sacrificing” than suffering like the rest of these fools. 😉
By being so frugal, I actually feel more alive than ever before! It feels good to see the passive income stream snowballing and growing on a monthly basis. The progress makes me even more determined to improve and do better. Also, having an emergency fund, and backup emergency fund (dividend portfolio) does wonders for your peace of mind. And you can’t put a pricetag on that!
Further, I’m much more loose at work now. I don’t let the work stress bother me, like before, since I now know that my life and job can be decoupled. I will not let my job define my life. My job is not who I am! Now that I know all of this, I refuse to work long hours, I don’t partake in corporate politics, and I most definitely do not care about climbing up the corporate ladder.
Since I don’t over-commit myself to work, I get to keep my soul. 😉 Even my blood pressure is down, as my overall health is better than it has been in years. The journey to early FI is going great. It’s already paying dividends, and in more ways than I could have imagined!