What is Financial Independence Really?

I just left an amazing and weird conference of money hackers called FinCon 2019 in Washington DC.  I met dozens of extraordinary people.  I would love to write all about these new friends their stories, and the adventures we shared.  However, there are 2 people that are hanging in my mind as my flight lifts off from Reagan National airport with this laptop resting on my knees.  I think their stories get at the heart of what financial independence really is.     

Bryan’s story

Bryan lives in DC and came to Fincon simply because he is passionate about this stuff.  Eleven years ago Bryan got married.  He also got a summons to court 4 states away for debt collections.  They had bought new cars and amassed credit card debt.  As the collections started coming in, he realized that he needed a new model. 

Sometime around then he read the richest man in Babylon about how money has power that can either work for you or against you. Bryan asked, “what is each dollar of debt costing me?”  He explained how he could have gotten a financial planner but they charged $600 up front just to get going.  He has always been the type of guy that learns things on his own and so at age 22 he started chipping away at the debt and learning about personal finance.  

Key pieces he mentioned in his FI journey have been maxing out tax advantaged accounts and employer programs including a military pension.  Bryan spent 8 years in the Air Force before exiting a few years ago.  He is married with children as well.  His wife is 12 years in with the military and is continuing.  Every time they made rank, they kept their spending the same while saving and investing their raises into index funds.  If his wife completes 8 more years (20 total) she will qualify for a pension and $400 healthcare per year. 

By Bryan’s estimation they will reach financial independence by age 45 or 50.  It has taken him and his wife 11 years to get to this point from where they started with that debt court summons.  However, with discipline and drive I believe that they will reach their financial independence.  Bryan has also recently started to learn about real estate and computer science.  Either one could get their finances there even sooner.

Kat’s Story 

When I plan to meet up with Kat she tells me that she will be the one wearing a squid hat.  The hat is super colorful just like her.  Kat starts her story 25 years prior.  She started her professional life in forestry. At age 28 or 29 health challenges kept her from working those jobs.  She spent time as a short order cook, cleaning houses, and as a driver.  After “scraping by” for a couple of years, Kat happened into government work and climbed the ranks to making $45-50K per year.  She was paying the bills but not saving much. 

As she passed into her early 40s Kat went through a divorce as well as some disillusionment about work.  Looking ahead at being a “bureaucrat” for a few more decades felt soul crushing.  However, she looked back fondly at those times when she was just doing odd jobs.  That is when she hatched what she calls “the plan.”  By age 50 (7-8 years away), she would do nothing but fun jobs.  If she could save up enough by age 50 and keep it invested, she could work doing only fun jobs that just make enough to pay the bills until retirement.  

Kat started by aggressively saving 60-70% of her income and living super lean. She was paying down her mortgage and saving in retirement accounts. A couple of years in she got the help from a flat fee financial planner and started investing in some index funds. By 2017 she had paid off her mortgage and had a mortgage burning party. For friends that couldn’t make it, she sent a couple of pages of the document for them to burn or destroy in solidarity over the achievement. In 2018, she even got some help from Jillian at Montana Money Adventures who offered 6 months of coaching into helping her with the plan. At age 50, Kat felt that she had the spiritual answer that she was ready. She left her desk job for good!

I ask Kat if the last 8 years had been made easier knowing that she had “the plan.”  She smiles while sharing that toward the end of the push she was working 70 hour weeks between her government job and the side jobs.  I ask her if she has any desire to not work at all some day.  One day maybe she indicates but “I’m only 50 and a half.” 

Kat talks about how she is now working at a natural foods store and how she has not had to pay for groceries.  She shares a story of how she recently did some manhole inspections for her old government employer.  Old co-workers ask if she is back and tell her that a full time role is open in another department.  However, they don’t get it.  She doesn’t want it and she doesn’t need it.  Why would she give up being free?  Now she wants to help others pay off their house, save for retirement, and do work they love.  She’s started writing about her story at mmmdeliciousmoney.com

What Financial Independence Really Means

What I love about Bryan and Kat’s stories is that the definition of financial independence is different for each.  One involves never needing to work again and another appreciates “fun” jobs as opposed to nothing at all.  Some things on the path even contradict each other such as getting an advisor versus believing that a financial advisor is too expensive.  There are multiple right answers and multiple definitions to FI.  That is the truth of financial independence.  My personal FI story has involved getting here with high income and no credit card debt.  The stories above are different from mine.  They inform my understanding.  What all of our stories have in common is saving and investing coupled with a plan to get to a better life.  

At this convention that is Fincon, there were writers, investors, money hackers, and all kinds of business and press interests.  One of the most interesting things that I did was show up to a round table discussion about financial independence where the moderator never came.  We had about 30 people and just broke into an informal and at times rowdy and contentious discussion around personal finance and investing.  Not boring stuff like numbers and what to invest in but the fun stuff that really matters.  What are the biggest things you did that got you to FI?  How does it feel to be FI and what changes?  I heard lots of passionate perspectives: 

“In my community, people ask me how you buy a stock.  They don’t know how it even works”  

“It is less about money and more about living life on your terms.”  

“Where I’m from debt is status.  You’ve made it if you drive the BMW.  If you never had it growing up and you start to get success, you feel like you deserve it”  

“Freedom came in stages.  First I had enough to be able to get another job if I didn’t get that raise I deserved.  Then I had enough to take a break if my family needed me.  Then eventually work became optional.  It was like levels of freedom”

Some talked about money and social change.  Some about ethical investing, and some about how to just get their hands on more cash in any legal way possible.  In each of our ways, we were sharing our concern over the low level of financial literacy that we were raised with and/or see in our communities.  We all want to raise that bar.

The reason it matters is that money is not just something that we use to pay for things and receive for work.  It can be the stress that hangs on us or it can be mobility in life.  Money affects our hopes, our aspirations, and the adjacent possible.  Perhaps if we can raise the bar of financial literacy, we raise ourselves.    

What do you think? Please share your story or comments below