Redefining Financial Independence
Redefining Financial Independence
There are may arguments out there about the best path to reaching FI. Some are enamored with frugality while others preach to the god of W2 wages. There are even catchy monikers to define the different levels of FI. Barista FI, Lean FI, fatFire, and even Boring FI. Although the arguments abound, most in the community have a crystal clear vision of exactly what financial independence is. We have a series of calculations, spread sheets, and online calculators that are meant to answer one simple question. Am I FI or not? But I have to admit that in the process of reading and writing about personal finance, this often commented on phenomenon has undergone a series of permutations. I am continuously redefining financial independence. Refining my beliefs and my preconceived notions.
It’s Not a Simple Equation
So I used to define financial independence by some sort of equation or another. Everyone has their favorite. Whether it is the 4% safe withdrawal rate or the 25X annual spending. Others prefer to call it the point when monthly passive income exceeds spending needs. All these basic mathematical equations are enticing but as my thinking has evolved, my mind has changed about them.
Let’s say that in order to live off 4% of total savings, your whole family has to squeeze into a one bedroom apartment. And you can’t afford a dish washer or washing machine. So you have to wash all clothes by hand. Maybe you are no longer dependent on outside revenue streams, but you spend all day doing arduous household work to support this lifestyle. Furthermore, you all sleep cramped in a single room, and find your angst rising because of lack of privacy and personal space.
Although the economics work out, I think redefining financial independence takes these quality of life issues into account.
This is not financial independence, it’s hell.
It’s Not Absence of Work
Others like to define financial independence as the point that you no longer have to work to survive. There is this dream of lying somewhere on a beach in Mexico most days of the week. As enticing as that sounds, it is just not reality.
Work is the creation of goods or services. When we do this for someone else, we call it employment. When we do it for ourselves, is it any less work?
If you work in a restaurant as a dishwasher, you get paid by the boss for washing dishes. When you go home after a long day and eat a satisfying dinner, what happens? When you are finished with the meal you get up and wash dishes. Exactly like on the job.
So why when you retire from the restaurant, and spend the rest of your life doing your own dishes, are you not doing work?
We work our whole lives. Whether we are providing goods and services for someone else or for ourselves, we will be doing these activities until we die.
Redefining financial independence means letting go of our previous held notions of work and employment.
It Is Living With Meaning and Purpose
Financial independence is the act of extirpating the importance of money from our daily activities. Since work is just providing goods and services, and this is a necessity your whole life, you might as well search for a job that is meaningful.
When you find joy and meaning in the act of providing goods and services, you are financially independent. You have created a perpetual money-making machine.
And barring physical injury or disability, the money-making machine is you.
Final Thoughts
I was financially independent the day I started working in medicine. By becoming a doctor, I was fulfilling my meaning in life. I was providing those good and services that gave me joy (and also earning enough money as intermediary to pay for all those goods and services I couldn’t provide myself). I could have done that forever.
Until I couldn’t. Over the years stress and burnout have taken their toll. Luckily, through frugality and investing, I have saved enough money (an intermediary, potential energy for goods and services) to leave this perpetual money machine and keep myself busy with other life affirming activities.
I am redefining financial independence.
Won’t you join me?
That sounds good, but also equally unrealistic. It’s pretty difficult to live with meaning and purpose. Most people probably aren’t doing this. They are just trying to get through the day/week/month/year. It’d be nice to live with meaning and purpose, but I think it’s very elusive. I’ll work on it.
But Joe…aren’t you living with purpose and meaning now? You are doing a “job” you like and have plenty of time for family and travel. What is lacking?
I view Financial Independence as surplus. I’ve had those employment positions where each day that you showed up, your soul died a bit more, until you could no longer convince or justify the work. Some stay too long , some never leave positions that aren’t what they truly want to be doing. Sometimes the money or benefits are just too good to give up. Some can manage the tradeoff, some can’t. My motto is do what you love and love what you do.
I hate to think of people lasting to long in soul crushing jobs. Those, most of all, are the pits.
work work work work work employed or self employed. What it should be is risk risk risk risk risk. When you work for someone you hand off your risk to him for him to manage. It becomes HIS problem. When you RE and the old lady is still working you hand off the risk to her. It becomes a game of hot potato. The amount of cash you possess is the dependent variable. Risk is the independent and controlling variable. When you quit, your risk sky rockets UNLESS you understand your risk and have planned accordingly. When you quit you own the hot potato. If you have a risk averse plan get out some buttah and salt and have a party. I just wrote an article on this over on TJ’s site
https://halflifetheory.com/early-retirement-is-for-suckas/#comment-926
But in medicine, going to work everyday accrues risk too.
For me financial independence is when I no longer have to be employed by anyone. Sure I will still do work as you suggested washing dishes, mowing lawn, etc but it is on my time horizon and not dictated by anyone else. I agree there are degrees of financial independence governed by quality of life. I could be financially independent a decade ago if I wanted to be minimalistic like Mr Money Mustache. But that lifestyle is not for me.
Me neither. I like to spend.
If you don’t want to wash your dishes, Cook your meals, grocery shop, do housework, do laundry….my in laws already do that. It’s called an old age home. Eventually, they also need someone to help them bathe and wipe their bottoms as well.
There are benefits to doing things for yourself.
Otherwise, keep your life simple and perhaps it won’t all be that arduous. Just saying DocG.
On a more serious note, I really hope you figure out the best route for yourself. Sad to hear about you burning out. You have so much energy. There may be no hope for the rest of us.
With my luck after being a medical director of nursing homes for so long, I’ll end up in one.😀
I think my best road is to do hospice work only.
If I had your luck I’d throw mine away
The more I work for myself the more I like it. I’m still waiting for someone to send me the fire blogger who proclaims that they want to sit on the beach all day and sip margaritas. I just haven’t seen them
They don’t exist.
Then why is it marketed like that? CNBC says “Billy Bingbong retires at 29!!! Is FIRE really all market hype? “well ya see Billy left his IT job at $200K per year to go ride his bike saw some wood, hammer some nails, and run a blog for $20K.” That’s a question about freedom not retirement.