Financial Independence – What’s the point?

04 Oct Financial Independence – What’s the point?

Just to be clear… I’m not retired. I don’t intend to retire. I don’t want to stop working. I want to work for things I care about, on things that interest me, until I die. Like Thoreau, “…I wish to live deliberately…I want to live deep and suck out all the marrow of life… and not, when I came to die, discover that I had not lived.”

Yet I’m identified with the FIRE movement (financial independence retire early) – that’s grown up around Your Money or Your Life, the book I coauthored in 1992 with Joe Dominguez. I’ve been called the “guru” of this movement, yet I’ve come to believe that there is a poison pill in the very name of it. Retiring early leaves people with a disturbing challenge. What will they do with the rest of their lives… if not work? Living on a beach somewhere may be enticing, but after a few months it gets old. Travel to distant lands may be enticing, but an outsider, an onlooker, might be fascinating for a few months or even a year, but it gets old. Eventually you want to DO SOMETHING. I’ve come to believe that retirement isn’t what people really want, but rather being employed in different ways, in ways that bring life meaning, joy and purpose, really the point.

I think people want to retire from jobs that have no meaning, that only produce money but cost as much or more in health and sense of purpose. They want to exit the cubicle. They want to be free of a chain of command in which they are a disposable cipher. They want to have enough money to say, “Take this job and shove it.” They want to be alive while they are alive, and that might mean travel or building relationships or learning. They want to advance, but not necessarily in their corporation. They want to advance in pursuing interests and finding meaning.

One key to this confusion of “retirement” and a happy life is in the subtitle of Your Money or Your Life: transforming your relationship with money and achieving financial independence. That’s two promises, not one. Transforming your relationship with money is to see what it really is, how you behave in relationship with it, and whether this behavior is buying you a life you love. It’s a wake up call. The effort to buy your way to happiness soon looks silly. The stuff you have seems like far too much. Saving money feels like beating some system, like stealing back your autonomy. Asking of your purchases whether they bring you fulfillment introduces a question that seems irrelevant to cubicle life: what is my purpose? If I didn’t have this job, what would I do with my time? Your expenses go down. Your savings up. Your debts shrink. But more than that, your sense of purpose, your moments of real happiness, your relationships, your agency over your life will multiply.

For many people this is enough to feel liberated. Maybe they work part time. Change jobs. Start a business. Buy land and build their own house. Take 6 months off. Go back to school. Start a blog. Paint. Join an organization making a real impact in the world for half the income. Teach. With no debt and a financial cushion, working for money is more of a choice, less of a hound baying at your heels.

In Your Money or Your Life we offer a ladder of financial independence.

The first rung is freeing your mind from the siren call of the consumer culture. It is questioning your assumptions about money, success, status, etc. and shedding ideas that don’t fit. It is having that freedom of “enough”, of stopping the incessant drive for more.

The second rung is getting out of debt, which gives you another degree of freedom. Many programs help with getting out of debt, the most famous being Dave Ramsey. In Your Money or Your Life, people focus more on the core steps of tracking, categorizing and evaluating spending in light of values and happiness. Debt reduction tends to be a by-product, but when people start to see their debt melt they really do focus on flattening it. It’s amazing what people can do once they put their mind to it.

The third rung is building a financial cushion, readily accessible, equal to approximately 6 months of expenses. This becomes the foundation of building a nest egg that can grow as well as yield a passive income. This cushion can help you weather a period of unemployment. You might stay home and look for work, or travel or explore a new interest, or give yourself a paternity leave. Your cushion allows you to bridge between jobs as well as cover for emergencies and illnesses. If you spend it, you build it back up.

The next rung is building your other forms of wealth: your skills, your networks, your close friendships, your service to community. I am so blessed to live in a semi-rural community with lots of good people. We watch one another’s pets, help one another out through sicknesses, dance together, entertain one another and help one another with errands or chores.  You earn your place in such a community by showing up and giving service and getting to know and care about people. One dynamic of the consumer culture is that it breaks bonds between people and then sells everyone products to fill those holes. Reweaving the web of community is independence from the money economy while being interdependence in the relational economy.

Over time, those who are steadfast build up enough savings, invested in ways to produce passive income, to not have to work for money.

None of this is about retiring, though people confuse retirement with financial independence. It’s about having choices, and being able to deepen your self-knowledge while aligning how you spend your time with what you care about most. It feels amazing to live life this way.

I have not worked for a paycheck in 50 years, though some of what I’ve felt called to do has produced an income. My frugality has bought me so many freedoms – time, space, thought, curiosity, creativity and risk.

I am not retired in that I love to work, to use my intuition, instincts and intelligence to continually know myself and the world better and to do projects that feel like my calling. I believe work is our birthright. Work is applying ourselves to tasks that have meaning and matter to others – and it’s our joy to do this. Of course many of us have utterly lost any connection to this definition of work. Work for far too many of us is a job… is a paycheck… is a sacrifice the hours of our lives to activities that may harm us body and soul.

Financial independence isn’t a condition, it’s a direction

It’s a day by day, transaction by transaction, declaration that your life is yours, that you want to use it for something you think is important and in ways that make you happy. It’s buying back your freedom by paying attention to how money comes into and goes out of your life.