Financial Independence: A Decision You Will Never Regret

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I have been on the journey to early financial independence for 2 years now. I hope to cross the finish line sometime in 2015 when I will be 30 years old. Regardless of whether or not I get there on schedule, I am fully convinced, now more than ever, that embarking on this path has been the single best decision I have ever made in my life.

The Right Path

Attaining early financial independence is something that you will never regret doing. Ever. Financial freedom only serves to enhance your life in every aspect, and causes no detriment to it. Further, you will never come across anyone and hear them say, “I really wish I hadn’t become financially independent at such an early age in life. I greatly regret making that decision! Why did I have to go and become such a good money manager? Boy, what in the world was I thinking?

Most things in life are not black and white. They are debatable, and there are two sides to the coin… two sides to every story. When it comes to financial freedom, though, it really is that black and white!

However, you don’t necessarily need to arrive at the final destination to reap all the benefits. Just being in the game puts you well ahead of most people in this world. So, if you are just starting out, or are in the middle of the journey, just know that you are absolutely making the best possible decision for yourself and your family. Your actions today will help create a much better, and brighter future.

Break the Reliance

Just how does financial independence help better your life? For starters, it helps decouple your reliance on an employer to make ends meet. When you are financially dependent, you have no choice but to work for a living. The moment you stop putting in the long, hard hours is the moment the paychecks stop coming in.

If you don’t do the labor, you don’t eat. It’s as simple as that. Sure, when you are young and just starting out in your new career, you’ll have all the energy and enthusiasm needed to get through the tough days. The initial stresses and strains of the job probably won’t even faze you. However, given enough time, the wear and tear of hard work will eventually eat away at you. Good health does not last forever (especially when you are under prolonged stress), and energy levels do level off rapidly with advancing age. Do you really want to be that person still having to work hard when you are in your 60’s?

If you take care of today, you won’t have to worry about tomorrow. You can of course CHOOSE to work later if you’d like, but you won’t HAVE to. Do your future self a huge favor and get started with investing today!

Slowly…

You don’t need to be fully 100% financially independent to start enjoying the benefits. Everyone who starts out on the journey (and didn’t receive a hefty inheritance) starts out with $0/month in passive income.

Start slow. Figure out how to invest in stocks, or rental property. Work on building up that passive income from $0/month to something tangible. One of my initial goals was to receive $100/month in dividends and $200 for a SINGLE month of the year. I took baby steps and didn’t try to bite off more than I could chew.

And I gotta say, even the little results started making a huge difference in my life. When you first start seeing that passive income rolling in, it changes your life. Immensely. You become more confident, more assertive, and even more motivated to keep building up that income stream. Passive income accumulation is empowering… extremely addicting stuff.

Don’t be surprised if you start walking into work with a renewed sense of self-worth and swagger. 😉

For myself, it didn’t even take much passive income to come in before I started disregarding corporate politics entirely. Within a year, just being on the journey to early FI was already making my life infinitely better.

In Time…

As you progress on the journey, things will only start to get easier. Compounding will kick in and your passive income will start to multiply. Before long, you’ll have sufficient cash flow coming in to basically cover all your monthly expenses.

Living rent-free, and bills-free is the natural next target. This can take a few years, or many, depending on your own situation. If you get lucky like me and buy assets in a super depressed market, it can happen sooner than you expect. For 2014, I anticipate having enough cash flow coming in to pay for all my monthly expenses (baring any unforeseen setbacks with the rental properties).

If that’s the case, I’m going to take it and run with it! By allowing my cash flow to pay for all my monthly expenses, I get to bank 100% of my paychecks coming in each month. This is further enhanced with any bonuses received through: ESPP, RSU’s, stock options, etc.

Pretty cool, indeed. And just what do I intend to do with all the money coming in? You guessed it — re-invest all of it of course! I’m going to continue to stand firm and reject lifestyle inflation. If anything, I will even work harder to reduce my expenses further. There’s always more creative ways to help you save money (e.g. travel hacking).

So, how does all this progress make me feel? I feel quite liberated, to be honest. I stopped worrying about corporate politics a long, long time ago… I don’t get caught up in trying to get promoted, and I simply do my job without asking too many questions. I’m no longer a dedicated company man… I care much more about my own individual well-being than I do in helping the company increase EPS by $0.01 each quarter. So, no more slaving away at the office for me from dusk until dawn. Coming in on weekends? Forget about it! Even better, I don’t need to waste my time trying to become best buddies with anyone (managers, directors, VP’s) I don’t like. I get to keep things REAL. Most importantly, I get to kill the stress and keep my health. 🙂

And if I get terminated tomorrow? It wouldn’t be ideal, but I’d find a way to survive. I definitely wouldn’t panic, and might even walk out of the building with a huge smile on my face. Thanks to Sam over at Financial Samurai, I do indeed think about things like engineering my own layoff. For certain, it wouldn’t shock me like it did just over a year ago. Actually, I could probably even go part-time right now and be just fine.

Post-FI

What happens after you get to the Endgame? This is a common question that gets asked a lot from spectators and skeptics of early FI. Most commonly, you’ll hear something along the lines of:

Won’t you get bored?

-No, I won’t get bored! I’m bored now (at work)! I have a list of so many “things to do” that I don’t even think I could fit it all in a single lifetime. I could spend decades trying to master just one thing… Though I want to give it a shot, anyway and try MANY things. Here are some ideas: guitar, piano, singing, martial arts, foreign languages, travelling the world, reading, blogging, dancing, skiing, snowboarding, photography, cooking, etc.

This doesn’t even take into account any post-FI careers I want to attempt. Real estate investing is already fun for me. Why not give it a go and try it full time? I can get my real estate license and build on the network that I’ve already been establishing.

If I get bored of REI, or if it proves too stressful, well, since I’m not financially dependent on it, I could do something else. Again, this is the beauty of financial independence — I don’t need to do anything I don’t want to do. I have the freedom to walk away at any time. 🙂

Eventually, I want to try teaching. I’m sick of engineering in the corporate world, but I still appreciate it in its more pure nature. I can see myself teaching electronics at a community college…

What if it’s not as wonderful as you anticipated?

-I don’t see how this is even possible because I can’t imagine anything more wonderful than having absolute control over my own time. I’m an independent thinker and don’t need someone telling me what to do. I’m not one of those people… I’ve been taking orders since I was 5 years old. Enough is enough. Let me run my own life.

Don’t you worry about falling behind others?

-No, early FI is not a race. Just do what’s best for you and your own situation.

There’s more to life than money, you know?

-There sure is. That’s why I want to get to early FI so bad. I want to stop thinking about money for a change.

What if you run out of money?

-Then I’ll have to use that sponge between my ears and think of something creative. 😉

What if your plan fails?

-I get a kick out of hearing this one. I’m not sure why so many people feel like life has to operate in such absolute (binary) terms. Early FI isn’t like playing a videogame… I won’t have to start the game all over ($0/month in passive income) just because I attempted to jump over a ledge and landed on a spike right before the last level boss.

If the plan fails and my passive income is not sustainable long-term, then I simply go back to work, or pick up a part-time job to compensate for any differences. I can dust myself off and try again later.

But why worry about it? Neo didn’t make the first jump (The Matrix)… but he eventually figured it out… If I have to go back to corporate, then NOTHING will have changed, and I’ll just be back where I am now. If the plan fails the first time, I’ll work harder to save up more passive income and re-attempt it at a later date.

Only if failure meant that my entire nest egg got wiped out completely would I be scared to try…

Summary

Attaining financial independence early in life is something you will never regret doing. It only serves to enhance your life without introducing any drawbacks. The only complaint you’ll ever hear from someone who is financially free is that they only wished they had gotten started even earlier. You cannot start the journey to financial freedom at too early of a time. That’s like hearing someone say they have too much money!

However, you will very commonly come across people who failed to take their finances seriously earlier in life, and who are now regretting their decisions. “I wish I started thinking about saving money when I was younger“, or “I wish I didn’t blow all my money on useless junk” are phrases you’ve probably heard one too many times before.

Don’t be one of these people! Start the journey to early FI TODAY and help yourself create an infinitely better TOMORROW. When it comes to early financial independence, there are only upsides to be had… no downsides. Make the decision to start early in life, and someday it will prove to be the wisest decision you ever made.

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The Round Table - March 16, 2014 - MoneySmartGuides.comPCThe First Million is the HardestFI FighterNo Nonsense Landlord Recent comment authors
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Income Surfer
Guest

Working toward FI was about options for me. Having other sources of income, when my job was in jeopardy. The possibility of my wife and I both working part time when our son is born, which we’ve actually achieved. In semi-retirement, it will be about having the time to follow my passions, heck I’m starting to do that now. If I hadn’t laid the foundation by saving and investing years ago, I could never have the options I have now.

Great guest post on Jason’s blog, by the way. That should help expand your readership!
-Bryan

Retire Before Dad
Guest

FIF,
My favorite question is “won’t you get bored?”. Some people actually do get bored in retirement and it blows my mind. One woman I work with retired ten years ago, but came back after 6 months because she had nothing to do and missed the people! Not for me, there are so many things I would prefer to do all day if I was at home, and so many more places to visit.
-RBD

writing2reality
Guest

The “bored” thing is especially annoying. I hear it as well and it blows my mind. I have so many hobbies, interests, and other activities I’d much rather be spending my time on then working. As my parents told me often as a kid, there is no one to blame for being bored except for yourself. It is something that has forced me into having the interests and hobbies I do now.

Dave @ The New York Budget
Guest

I think it’s also true that the longer you spend at a job, the more it starts to define who you are. So a 60-year-old might get bored quicker than a 30-year-old. Now, letting your job define you is ok for some, but not the direction I want to go in. For me, it would actually be the CAUSE of boredom later in life.

Max
Guest
Max

I’m pretty sold on the idea all in all, however, I think there are a number of reasons when it simply doesn’t make sense – if for example you are doing something that you enjoy even more but that doesn’t allow you to save – hiking, backpacking, bike touring, traveling, studying, raising a family, learning a new skill, etc.

Additionally, while this is pretty much the point I’m at now – I think becoming FI requires a great focus on trying to make as much money as possible in as quick a time as possible which to some extent has to put extra strain, mental/physical anguish on the body. Granted it’s knowing that you won’t have to do it forever – but it’s still not quite being able to enjoy the fruits of your labor and delayed gratification. I’m mostly all about it, but what if during your growth period you had an accident that didn’t allow you to live to a point where you would be able to enjoy it? I think there needs to be some sort of balance to reward yourself along the way. It doesn’t need to be extravagant like spending huge amounts, but maybe taking more than 2 weeks off to do something fun.

I know for myself I would not have traded all the incredible experiences I had that has delayed my journey to FI for a few extra thousand dollars I may have earned earlier on. But it’s realizing choices and opportunities and taking whichever one most suits you.

No Nonsense Landlord
Guest
No Nonsense Landlord

It all takes time. I am 54 and expect to pull the plug in two years. The goal being to replace, 100%, all my 6-figure salary. I believe I am there already, but I am making sure I can save over 100% of my salary for over two years.

I was actually able to save 100% of my salary since 2007, but I bought properties every year since then. 2014 will be the first year of not buying a property (maybe…). It helps to have a job when you need/want a mortgage.

I will write about my journey on my own blog sometime in the near future. I started pretty poor, and have made a huge leap.

No Nonsense Landlord
Guest
No Nonsense Landlord

I forgot to include my link to my blog site.

The First Million is the Hardest
Guest

One of the things most people (I’m guilty of this as well) forget a lot of the time is that if you give early retirement a go & it doesn’t work out you can always get another job! Plus chances are you’ll still have passive income coming in so in a way, even if you “fail” you’ll still be way ahead of the game.

PC
Guest

Funny, I work in an engineering firm (I’m not an engineer), old school one might I add. There’s an engineer that’s been with the company for over 35 yrs I believe, he’s way WAY past retirement age. Yet he’s still comes in once a week to work. Some people just love what they do, even if it’s a day job. Everyone has different goals and aspirations. I look at my coworkers most of them in their 50s-60s… I really don’t want to be working at that age!

One of my coworkers got let go end of month unexpectedly due to shortage of work, and I feel for him as he has a family to take care of. Life is full of unexpected twists & turns. I want to build a safety net, so I don’t get suckered by the work force. Building passive is key. I am a negative cash flow on my rental property… but I am working on it.

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