Where I’ve Been and How I Started on the Path to Financial Independence (FI)
I became serious about working toward financial independence (FI) about four years ago at the age of 42. Prior to that, I was chasing what I considered to be the American dream. I was a bachelor with a decent paying job, a beautiful home, and a nice car. In addition, I was fairly responsible, always lived within my means, and never carried a credit card balance. I had some savings in a 401(k) and a decent sized emergency fund.
Sounds great, right? I certainly thought so. However, I also accumulated a lot of what financial experts refer to as “good debt”, which included a large mortgage and education loans. Although I didn’t realize it at the time, I actually had a net worth of zero, despite a decent income and savings.
I was feeling a bit burnt out from my career. Like any other job, it had its good points. It also had its bad points, including unrealistic expectations and bureaucracy. What bothered me the most was the amount of control my career had over my life and how much I came to rely on it financially. I just couldn’t see myself doing this until I reached traditional retirement age. There had to be a better way.
Then it happened. I met a wonderful woman who would eventually become my wife. As our relationship blossomed, we discussed finances and whether to reside in my home or hers. Fortunately for us, my future wife was a hard working, financially responsible woman. Her only debt was a small mortgage and her net worth was a bit better than mine at $50,000.
My wife works very hard at her career. However, she is not someone who enjoys home and yard maintenance. One day, as we were completing some extensive yard work at my home she stated, “Honey, we can’t live here. This is just too much.” That same evening, I had an epiphany of sorts. I realized the extensive amount of time and money required to maintain and finance my large home. I started running the numbers and realized the life changing impact that moving into my wife’s small, low maintenance, low mortgage home would have on our financial lives. This, of course, would be compounded by the fact that we would now be living on dual incomes.
It was a huge eye opener for me. I did the math and the numbers could not be denied. Staring me in the face was the opportunity to take control of our lives by becoming financially independent.
I became obsessed with educating myself as much as possible on personal finance and investing. I simplified and took control of all of our investments, created a detailed budget, and adjusted my perspective on what a fulfilling life consists of. We both picked up extra work and side hustles to make some extra cash. I increased our savings rate to 65-70%, most of which went into stock index funds with low expense ratios. After four years of happily living well below our means and maximizing our investments, our success toward financial independence has greatly exceeded our initial expectations. It occurred rapidly and appears to be accelerating as time goes on, thanks to the power of compounding interest.
We are quite content living in our smaller but completely adequate home. Amazingly, we have never felt deprived as we identified simple ways to cut our spending and reduce debt. These days, the focus of our spending is on experiences and travel. It has left me kicking myself for not realizing this road to financial freedom at a much younger age. But hey, you live and you learn. Which is what this blog is all about… continuing that learning process. I don’t exactly know what lies around the bend for us, but I’m definitely excited by the possibilities.
So, What’s your story?