This post isn’t about tropical islands or beaches, etc. It’s also not about fire, as in flames and smoke. It’s about gaining control of your money, and pursuing happiness. If you’re not interested in being happy, then you should go ahead and skip this one, but I hope you won’t. 🙂
I just read an excellent article at MarketWatch about the concept of FIRE, which means “Financial Independence, Retired Early” and variations of that. You can Google this subject, there's a lot of good info out there, including this one, and this one too. I’ll link to the piece that inspired this blog below, but I’d like to put my take on this subject first. Many people who are really into FIRE retire at very young ages (is 30 early enough for you? Some do this!), and they do it with smart investing and extreme levels of frugality. There are jokes about re-using dryer sheets, shopping from your neighbors’ junk on the curb, and how driving a car makes you a fool. Side note: I just found out Deb re-used dryer sheets (ha!), also we had a table in our home for years that came from someone's street-side cast-off, not mention all the garage sale furniture.
Actually, many of the FIRE people are not retired in the classic sense, because they generate income with properties but have to work on advertising, closing contracts, and especially maintaining the properties. Or they write a blog, publish it, advertise, and pull income from that. Or they find ways to monetize other hobbies. Those are all fine, but to the frugality point, I'm only willing to go so far. Managing to extreme frugality becomes a job in itself. But they have retired from the corporate world that was running their lives, just like yours truly.
In reading this article and many others, I’ve come to realize that many of these concepts don’t just apply to those financially motivated individuals and couples that want to retire decades ahead of schedule. This is bigger than that, more important than that, the lessons can be applied by almost anybody regardless of their retirement plans, in their own pursuit of happiness.
So let's talk about the pursuit of happiness. Don’t gloss over that phrase - it is a powerful idea. The Founding Fathers of the United States of America considered Pursuit of Happiness an inalienable right bestowed upon us by God, right alongside Life and Liberty. Think about that. Life and liberty are pretty basic fundamental rights, wouldn’t you say? You have a God-given right to live, and to be free. But Pursuit of Happiness? The Founders held this in such high regard that they grouped it along with life and liberty as inalienable rights. That’s how important it was to them and that’s how important it should be to us all!
If you don’t make a single effort toward your own financial independence, if you don’t save a single extra dollar, if you don’t retire even a week earlier than normal, I hope you will at least consider this: pursue your own happiness. This should be intertwined with your own values, the things that matter most to you. It’s your spouse, your family, your friends, your personal hobbies and interests, or that special place that touches your soul. For Deb and I, it was about getting out and seeing more tropical places, meeting and befriending people who are different from us, speaking new languages, exploring beaches and reefs, and living in very different communities. We pursue happiness, we don’t just go through life on autopilot. Of course if you are married or otherwise with a partner for life, we hope those values and those things that make you happy are similar and compatible. Deb and I are certainly blessed that way. So pursue happiness together, and pursue it with gusto!
The phrase I picked up somewhere and often use is to “live your life on purpose”*. Live your life on purpose. What does it mean? Well, let’s talk first about the people who live life by accident, on autopilot. So many people go through life this way. They grow up, go to college or pick up a skill, get a job, work at that job to make money, spend that money on whatever they see on TV, on the 4000-channel satellite TV package, those cute sunglasses they walk by in the mall, whatever restaurant they happen to drive by, or on a string of expensive cars throughout their lifetime. And of course with most people, this spending is enabled only by going into debt, with credit cards, car loans, home loans. They repeat this for 40 or more years, and eventually retire on a meager Social Security income. That’s when they discover they didn’t live their lives on purpose. They sleep-walked for decades, being manipulated by advertising, driven by their own thoughtless urges, and by an entire culture built around consumerism. Did it really make them happy? Maybe...but did it really? So they retire at the mercy of the government, and lenders, because they’ve only managed to save a year’s worth of salary over 45 years.
*In this case, I'm not talking about living your life "with a purpose". The concept of having an "ikigai" is a great one, that gives life meaning. But it's a little different from what I'm talking about.
Now let’s look at someone who’s living life on purpose and pursuing happiness. They recognize that advertising has one job, which is to separate you from your money. They see that buying things on a whim doesn’t buy happiness. They learn that most restaurant food is full of fat, sugar, and salt, and that with a little learning they can make better, healthier, and far less expensive food at home (and often in less time). They know that a car is a tool to take them from Point A to Point B, and that a new car is only new for a week. So they don’t spend money on things that the culture tells them to spend it on, they spend it on the things that are in line with their values, that allow them to pursue happiness. They shop for discounts, they cook great food at home, they drive used cars. They avoid debt like the plague. But they enrich their lives with hobbies, sports, good friends, learning a language, or whatever it is they truly love, and spending money on those things is OK! They find a way to have fun everyday. And they enjoy their lives more, because they’re in control. They’re also very likely to retire early because their money isn’t disappearing behind their backs, or in front of their faces.
Back to the recent MarketWatch article, I love it because the advice given still allows you to be you. You don’t have to ride your bike to work every day in a snowstorm if you don’t want to. You don’t have to shop at Goodwill. You can go on vacation, and you can eat in restaurants if you like. But if you do these things on purpose, if you know where your money is going, you are in control. Which brings me to the family budget – the primary tool to understand your spending. If you find out where all your money is going you immediately gain control over your life. So you simply start by tracking your current spending. There are lots of tools online like Mint and its associated mobile app, along with a bunch of other apps like GoodBudget, YNAB (You Need a Budget) and others, and there's always good old paper and pencil. Once you know where it’s going, you’ll naturally spend less. And you can direct your spending toward the things that make you happy, toward long-term goals (retirement maybe?), hobbies, travel, on whatever you like. It’s not the TV advertisers’ money, it’s your money! So take control of it and take control of your life. That’s a really good feeling.
Finally, I want to say it’s never too late to start living your life on purpose. If I was aware of these concepts in my 20s or 30s we would have retired a LOT earlier and I would have been much happier with much less stress during all those working years. But I was blessed with a good education and jobs that paid well, which made up for a lot of ignorance.
Our personal journey to FIRE was a slowly growing snowball that started in our late 20s with the very basics of saving just enough (3-4%) to take advantage of things like a company 401K match. Later we added IRA contributions, and started investing in stocks. We worked to get out of debt, except for the house. By the time we were in our mid-40s we were seeing real progress toward our retirement goals and our motivation grew. We had great credit because we paid all our bills on time, and we used that to buy, renovate, and flip a house. But we didn’t really get serious about slashing our spending and driving hard toward retirement until we were in our late 40s, almost 50. We paid off our house, which was a tremendous feeling, and we were immediately pouring tons of money into our accounts (saving upwards of 40% of our income). A few years of that and we finally we took the plunge, retiring in 2017 at ages 56 and 52. My point is that you can do little things to start, at any age, and grow those as you see progress and gain your own motivations. Do it on purpose, do it for yourselves and for your families. Best of luck to all of you in your pursuit of happiness!
Here’s the link to the article - it’s short and a very good read. Let me know your thoughts please - I love this subject.
TODAY'S SPECIAL: “Buy Me a Boat” by Chris Jansen – it's a fun take on the whole money thing, and maybe one day we'll have a boat. 🙂