Let me tell you how I found FI and how it rocked my world.
First things first, here’s a great little primer series that explains the basics of FI. If you’ve never heard of FI this will give you a basic run down.
Now, let’s get into my recent PRE-FI days:
It was a brand new year January 2019. I found myself searching for something.
Another holiday season and Root Jrs’ birthday in December were financed with credit cards. Hosting Thanksgiving and Christmas left me feeling resentful and stressed, not joyful.
Income was tight the previous months as well but we hadn’t reigned in our spending. Our groceries got charged to plastic. We raided our savings account and even dipped into some of the cash we kept on hand for emergencies.
This was not how I wanted to start the new year. I was really over this annual cycle.
I wanted a CHANGE.
A TURNING POINT
An article in the NY Times caught my eye. It was about families who were pursuing FIRE.
FIRE was new to me but I was intrigued. The article mentioned a few financial independence blogs and the book Your Money or Your Life by Vicki Robin. I read the book and devoured the blogs. Those blogs led me to more blogs and more books about Financial Independence.
Down the rabbit hole I went and read everything I could find about FI and listened to podcasts about it in my car on my commute to work.
Here's what I learned that rocked my world
1. The formula is simple.
Reduce Spending, Increase Income and SAVE as much as possible.
Yep, it’s that simple. Mind boggling huh?
Well it was to me. Whether our salaries went up or down, we lived paycheck to paycheck and financed the rest.
It never occurred to me that I could decrease my expenses and increase my income to “grow the gap” and invest the savings.
There was an alternative to working my 9-5 until I die. I could stop living paycheck to paycheck and get off the hamster wheel.
2. You don't have to be a young-twenty something with a high salary to pursue financial independence.
There are many different paths to FI. For those who are in their 20s and are smart enough to be FI, yes, they can totes RETIRE EARLY.
However, people just like me can play too!
- I’m 47. I’m late. I’m late. I’m late, I’m late, I’m late!
- I have a ton of debt. Over $63,000!
- I’m a parent of young child.
- I have a median salary for income. Mid 60s and so does the hubs.
- I have almost nothing saved!
BUT, by following the principles of FI I can:
- Get out of debt.
- Start saving and investing.
- Have a nest egg for retirement.
- Save for Root Jr’s college.
- Build legacy wealth.
3. Live below your means and discover what you really need to live and be happy.
There’s an alternative to living my life with a perpetual debt cycle.
Epiphany: we are in debt because we spend outside of our means – a real “duh” moment for me. Or maybe it was an “aha” moment??
Being careful with our money gives us the freedom to afford what we love.
People are saving half of their incomes, sometimes more, and living very comfortable and fulfilling lives!
We don’t have to keep up with Jones’s. Guess what? They’re probably in debt up to their eyeballs anyway!
Lifestyle inflation is a thing and we can say – nope! Not for us.
My paid-off car works just fine. What? You mean I don’t have to finance a brand new car just because my car is 10 years old and has over 100,000 miles on it? Get out!
4. Track your money, everything in and everything out.
No this was not the first time I heard this. Dave Ramsey told me to do it.
SO. MANY. RECEIPTS.
We tried and failed miserably. Receipts everywhere. So many transactions to keep track of!
Turns out you can do this for free on apps like Mint or Personal Capital! They are THE BEST.
If you love spreadsheets there are tons of templates that awesome personal finance bloggers share for free!
5. Frugality, saving, and striving for financial independence works well with decluttering and sustainability.
By finding ways to be frugal and save I can help the planet and live a simpler life. For example:
- Cooking our meals at home: saves money AND reduces waste produced by restaurants like single serving cups, straws, napkins, and utensils.
- Buy less THINGS: saves me money AND keeps clutter out of my home and out of the landfill.
- Buy food from bulk section at the grocery store: saves me money AND reduces packaging waste.
- Make my own bread, school snacks, tooth powder, and laundry soap: saves me money AND reduces packaging that ends up in the landfill.
on a new path
Learning about Financial Independence felt like I had been living in the matrix and swallowed the red pill. I started seeing things all around me through a completely different lens and I couldn’t believe I was so asleep before.
Like I had been sleep walking through life. A zombie hamster on a wheel.
With this new found knowledge I feel empowered, inspired, and motivated to take control of our financial health. There is no going back to our PRE-FI ways.
Not only are we getting out of debt, we are saving and investing for our retirement. Additionally, we’ll build legacy wealth for our son. Most importantly, we’ll teach him how to use the magic of compound interest and save for a future so he can choose his own life path.
Have you ditched the hamster wheel? I’d love to hear from you.
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Glad you found FI. I too am pursuing financial independence but not 100% sure on retiring early. I’m trying to achieve work optional. Love that you included the sustainability piece – not something I would have previously considered but definitely something getting more of my attention lately.
Thanks Maria! You are my first comment! I love the work optional approach.
Great post! It’s so complicated, isn’t it, until you realize it’s not. You can do it! (And hopefully I can, too).
Thanks Deb!