Financial Independence is one of those hot topics, which has been floating around the personal finance community over the last couple of years. It’s at times, I believe, misunderstood by the mainstream audience. Mainly because so many people are barely scraping by, so why even bother thinking of FI?
I also think it’s a deeply personal topic, and the definition depends on who you ask. In general, FI to me means I don’t have to work if I don’t want to. But that’s the very shallow answer. It goes much deeper than that. So I decided to sit down with myself and have a one-on-one interview on the topic, to give my perspective of the whole FI movement. 🙂 hee hee
BATB: Why are you so interested in Financial Independence?
Tonya: For the longest time, I floated through life with decent jobs and steady income. I saved a little, but I spent money incredibly mindlessly. Many things were on great experiences, but more often than not it was just “stuff” I was buying.
When I was laid off in 2008, my world turned upside down, and the next eight years of freelancing I was pretty much living paycheck to paycheck. Luckily I never touched my long-term investments, but I also have a very low tolerance to money worries. I considered myself “broke” when I barely had money in my checking account, even though I had money in retirement.
When I got a full time job in December 2015, I vowed to pursue Financial Independence!
BATB: But why? Was there a specific moment where the shift happened?
Tonya: Not a specific moment, but something that was eating at me daily that was creating long-term, low-grade stress. Because I was living (my version of) paycheck to paycheck, I had to take whatever freelance work I could get. My bread and butter check was working with a producer who (trying to be polite here), challenged me emotionally (read that story here).
I needed the money, but it was never quite enough to get ahead, so I kept having to work with this person. It’s like someone who is in an abusive relationship, who can’t really leave because it might be worse financially if they did. So they keep putting up with the abuse.
I also want to make it perfectly clear (and this is TOTALLY different from someone in an abusive relationship) that I am the one who got myself in that situation. I was not a victim. I chose to put up with that situation, so I don’t blame anyone but myself.
But, you can see why FI is so important to me.
BATB: So you’re saying people (or you) are pursuing Financial Independence because you hate your job/boss/co-workers?
Tonya: Absolutely not! I think this is one of the biggest misconceptions about FI. I love my current job. But…let’s just say hypothetically that someone bought our company and our positions were dissolved. I want to be prepared financially not only to take care of myself that month, but that year…or in the best case scenario, for the rest of my life.
Or if a work environment suddenly turned toxic, or having to quit my job to take care of a sick relative, or some other random life occurrence.
Change can be very stressful. Not having to worry about money too, just makes life that much easier.
Plus, as 10! Factorial Rocks said in his article, Financial Independence is Mandatory, Retiring Early is Optional, “You can speak your mind as you care less about getting fired. This makes you a refreshing addition to any project team.”
I think it probably makes people happier that at any time they can leave a job. That they are there by choice, not by being a slave to the paycheck.
BATB: What are the biggest challenges for pursuing Financial Independence?
Tonya: Just… life! lol! OK a couple of things. One is just financial stuff that gets in the way of saving money. For instance over the last year I’ve had a sick cat. Trying to figure out what is wrong with him has resulted in several thousand dollars being spent (and counting-ugh!). He is the only “child” I will ever have, so I will do my best to get to the bottom of it, which requires dollars being spent, until I have reached my own personal and financial threshold.
Another thing is FOMO, a very real feeling when your friends tell you about all the fabulous trips they are taking. As we sit here, I have so many friends chasing the powder at ski resorts since California has finally gotten tons of rain. It can make one feel sad and lame, especially when you know FI is a ways off.
But you have to practice gratitude, and shift your perspective. Yeah I’m at home while so many of my friends are at resorts, but my home is a half a mile to the beach. And I’m going to enjoy the day when someone asks me, “so what do you do for a living?” and I can answer, “whatever I feel like, whenever I feel like doing it.” Not too shabby.
Another challenge is finding balance between saving a TON of money, but not living like a hermit. Still a work in progress.
BATB: So do you hate work? Are you lazy?
Tonya: Wow, that was mean! No, in fact many people who are pursuing FI love to work, but many have passion projects they want to work on that may or may not produce income. Stuff they don’t have time to do while working at their full time gig.
That is another common misconception that people who are FI or want to Retire Early (RE) (put together commonly known as FIRE), just don’t want to work.
I actually believe that not working on anything is the fastest way to an early grave. Studies have shown that people need a purpose or a passion to pursue to retain vitality in life. Those who don’t die sooner. Fact.
There are many people, for instance Mr. Money Mustache, who have become perhaps even more successful in FIRE than their previous career. I think there is something to be said about working on stuff that makes you come alive. Somehow the money does follow. And if it doesn’t, well then there is FI! See, it all comes back to that.
BATB: Does pursuing Financial Independence mean you have to be cheap? Do you have to dumpster dive if you are pursuing FI?
Tonya: I see you’ve been watching Extreme Cheapskates! Depending on what you earn vs. what you are saving, then more than likely you will have to be very frugal and mindful of what you are spending money on, but that’s not a bad way to live anyway.
I am NOT a natural saver, although some frugal habits have been developed over the years, which make it easier not to spend. For instance, I don’t worry about having a closet full of super trendy clothes or shoes for every outfit. I have some basics that I have in rotation.
But I will spend money on things I really value, like my health. Forget that cheap ramen crap! What good is dying from heart disease with a ton of money in the bank? You want to be able to live well to enjoy your money!
BATB: So when will you achieve Financial Independence?
Tonya: Still trying to figure that out, but I’m hoping 8-10 years.
BATB: Do you have plans for what your life will be like when you achieve that goal?
Tonya: Another work in progress. I have “visions” of how I want life to be. I think perhaps living in a smaller, more relaxed town would be nice. Just a life that is slow, peaceful, simple, and full of meaningful and fulfilling activities. Wow, that narrows it down, doesn’t it? lol!
BATB: Any final thoughts?
Tonya: While I know pursuing FI does require a lot of sacrifice and focus and is not for everyone, what should be for everyone is being more mindful of your spending.
You also need to take care of your debts first, and have a basic knowledge of how much money is going in vs. going out, and what your net worth is.
So many people bury their head in the sand and put off getting their financial act together because they are all about pursuing what feels good now.
It’s like stepping on the scale after Christmas. It can hurt, but you have to know where you’re starting from, and I guarantee that having control of your finances reduces so much stress in life.
So just start there, and who knows, maybe you’ll hop on the FI train yourself!
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