This is the third part in a series I’m doing called “Younger Me,” in which I write as if this were something the younger version of myself could pick up, read and have a head start on achieving financial independence.
Message #3: Keeping Up With The Joneses Is For Suckers
Typically, financial independence and being frugal go hand in hand. The general answer to people asking the question, “How can I retire early?” goes something like this — “Save 25 times your annual expenses and withdraw at a 4% rate.” Think about that for a second. The message we’re sending to people just getting into their groove with saving for retirement is to save their annual expenses twenty-five times over. It’s no wonder so many people think it unachievable.
I’m sure the psychology behind brushing the idea off is tied to people thinking they automatically have to earn more income to reach such a goal, while a little bit of reading blogs like Mr. Money Mustache (specifically, the post on the math behind early retirement) will let you in on the little secret to retiring exponentially earlier: spend less. A person who can cut his or her annual expenses in half, for example, can retire much sooner. This is a light bulb moment for some people and there’s no confusion in it. All I have to do is spend less and I can get to doing whatever I want sooner? Uh, yes please.
And then there are those who realize you can do both and retire even sooner.
For anyone just getting started though, you’ve already got a head start. You’re not spending much. The trick, then, is to keep from accumulating things for the sake of checking things off of a list. Young FI Monkey was guilty of just that. Having relatives who had much more money than I did buy toys was somehow offensive to my manhood when I couldn’t just go out and buy the same thing. And that’s just skewed thinking. That pursuit is empty. Once you have the thing they have, rather than feeling like you’ve evened the scales of justice, you feel good for a few minutes until the scales start tipping once again. This never ends.
The secret to general happiness is not difficult: be satisfied with less and mindfully appreciate what you already do have. There’s a lot more to it, of course. Unfortunately, there’s no one-size-fits-all solution but that’s a pretty damned good rule to go by.
Of course, I didn’t have this wonderful advice to read when I was in my 20s.
Like sand slips through the fingers, so went all the money I traded in my time for. I’m not saying there weren’t amazing experiences (there should always be a healthy mix of those) along the way, but I failed to put my money to work for me so I wouldn’t have to trade my time in for money for the rest of my life. I saw what others were buying and wanted the same. This is starting to feel more like a confessional than a helpful article, but I suppose that’s an important part of understanding my reasons behind wanting to be free from a job. We must re-focus from time to time, because it’s easy to lose sight of that one simple desire. Repeat after me:
I don’t want to need a job my whole life.
There, we’ve refocused. Meditating on that single thought and holding it in comparison to just accumulating things helps bring shocking clarity to doing what everyone else is doing without questioning it. Of course, that thought had been in my head since I was about 18, but sort of clunking around in the back. It was more of a general nameless feeling back then. It’s the driving force behind my reading so many books about getting rich and what were effectively get-rich-quick scams. I call them scams because if the thing being sold to you is a way to sell the same thing to someone else, to me that’s a scam. That’s exactly what I’d read about time and time again. It’s also the reason I got into Internet Marketing for a long while. I knew I didn’t want to need to work for someone else. Every time I go on a vacation, I never want to go back. I often read or hear about working people who go on vacation and can’t stop thinking about work until about a week in. For me, it takes mere hours to forget about the trivialities of work and enter vacation mode. And that’s something I want to hold on to. Coming back to work after that kind of letting-go is, frankly, depressing.
Whether it takes a week or even if it’s instantaneous, there’s a reason we feel this way. It’s because we don’t truly feel free unless we aren’t scheduling freedom in between work hours. So the goal is to eradicate scheduling freedom and make freedom the default.
Going back to the point, when freedom is the default, you no longer need that job your whole life. So if we can consider this whenever the idea of keeping up with the Joneses creeps up, the decision is immediately made simple. Does buying this thing get me closer to being comfortably jobless? If the answer is no, you should probably sleep on it. I am in no way saying that there isn’t room for just having fun and a huge part of your twenties should be primarily about that. On the other hand, that fun should happen with what’s left after you save. Pay yourself first and then go nuts.
Do not go nuts and then pay yourself with what’s left.