Discovering Financial Independence

I found out after starting my adult life that money management is not effectively taught or discussed today. People will happily talk to you about their sex life, but money? Nope, that's taboo. Just follow these truisms in today’s dialog about money: take advantage of the company’s 401k if one exists; get a credit card and pay it off every month to start building credit; rent is throwing money away and houses are always good investments; take out student loans to get a good degree to set you up with a higher paying job for life…

So, I started off my post-college adult life looking like this:

• I had a degree in a popular and well-paying field (Computer Science). I interviewed for a number of jobs in my field of IT, ending up making a salary of $55,000 at the same company where I interned.

• I had about $60,000 of student loan debt, split between my own loans and ones my parents took out on my behalf. I chose the standard repayment plan that was about a 10-15 year loan payoff.

• I set a percentage of my income to transfer automatically into my 401k, some of which was matched.

• I saved up for a down payment on a car, since I wanted “my own car” (even though I had a hand-me-down Jeep which just needed the air conditioning repaired). I ended up buying a 4-year-old Subaru Outback for about $20,000, financed for 5 years.

• I started looking into moving out of my parents’ house. I knew that I wanted to avoid renting if possible. After saving up for about a year and a half, I found a place for $175,000 which I promptly mortgaged for 30 years.

• I bought new furniture, careful to only buy as much as I could pay off on the next month’s credit card statement.

• I expanded my hobby purchases dramatically, again thinking that as long as I could pay all of my bills, debt payments, and my credit card in full, I was doing well. I would regularly buy video game consoles, build gaming PCs, finance the latest iPhone, purchase various audio and video production equipment, etc.

With the exception of buying a house so early, I argue that this looks pretty typical for many college graduates that are blessed with well-paying jobs. My thinking was that as long as I could pay all of my bills, debt payments, and credit card in full, I was living within my means.

Objectively my life was in a pretty great place. My work was fulfilling and in an upward trajectory, and I had my own house and car. But the thought that kept nagging in the back of my head was “couldn’t this all be gone in an instant?” My dad lost his high-paying job when the early 2000’s dot-com bubble burst, and for many years after my parents struggled to make sure that there was food on the table and a roof over our heads. Eventually my dad did find a job doing what he loves for a better salary after many years of stressful, low-paying retail jobs. But that story still sticks with me today when I think about financial independence.

For me, financial independence means:

• The freedom to not have to worry about the money behind life’s regular ups and downs, like an unexpected medical emergency.

• The knowledge that everything will be fine in the case of a job loss.

• Being able to choose what I’m truly passionate about for work.

As lovely as this picture sounds, it’s uncommon regardless of income level. I believe that is because financial independence isn’t a part of the conversation today. I stumbled onto the concept of financial independence accidentally when my work signed up for the corporate version of Dave Ramsey's program. I started following that plan and saw that it was making a noticeable change in my overall financial picture.

Then 2020 hit, and COVID forced my wife and I to re-evaluate what is truly important to us. Around this time I found the FIRE movement, and, after playing with the numbers, I realized that I could have the option of retiring early in 10 years or less.

This does mean giving up the high-end gaming PCs, fancy cars, large houses, and other big-ticket luxury items many of my colleagues flaunt. The path to financial independence is NOT an easy path. Rather, it's the arduous path that may leave friends and family scratching their heads. If you're ready to buck convention and see if financial independence catches your interest, read on.