Becoming Financially Independent
Posted by creining | Filed under Financial Independence
It has been 10 years since I joined the workforce. As a bright eyed and bushy tailed college grad I signed up for a 40 hour a week job soon after graduation; my start date was June 11th, 2001. That puts me at 10 years, a whole decade, in the rat race. My thoughts around having a job, which to me means trading my time (and expertise) in exchange for money, started changing a few years ago. I realized a few things then, mainly that I didn’t want to work straight until I was in my 60′s only to realize that life had passed me by, along with all those years of good health. Then last year I stumbled upon and read a book entitled Your Money or Your Life. It was one of those books that really excited me and made me think that yes, the idea of leaving the workforce early is a reality. The book is written as 9 steps and demonstrates how people are making a dying rather than a living.
I did not do all the steps of YMOYL although I read the book and each step carefully. Three steps stood out for me. First, Step 2 makes the point that the monetary cost of working can add up when you think about commuting with a car (cost of the car itself, gas, maintenance, parking), eating out for lunch, snacks and sodas, the right clothes and shoes. And then you are paying for things you can no longer do because you spend all your time working. Things like childcare, house cleaning, car washes, food preparation and eating out, lawn services, house maintenance, dog walking. And because of all the stress of dealing with work and these other things you need to get away so you pay for a vacation to the Caribbean. You come back relaxed but soon enough you are stressed again and are paying for a psychiatrist. And you eat out quite a bit for dinner because you do not have time to cook let alone time for exercising so you have to pay for the latest diet fad and then a personal trainer. I can go on and on with this but you get the point!
Second, Step 5 in the book makes the case for keeping track of income and expenses and charting these. I had been using a spreadsheet to keep track of these things since 2006 so all I had to do was begin charting. This is a great visual tool! I chart my expense, my income, and the capital income I am projecting to make. I would love to share it someday but it is a bit personal for the internet. Another option not mentioned in the book is to use an online tool like Mint to accomplish this. I signed up for Mint about 6 months ago and have all my accounts hooked up to it but I found that I do not log into it. I love technology and Mint being right up there as a high tech financial tool I would have thought I would be a quick convert but for tracking these things I prefer a spreadsheet. For me, simple is better in this case.
And third, Step 6 delves into spending less meaning being frugal. I have been on both sides of the spending fence. I think I have always been frugal because my parents were cheapskates. For a bit of time I switched over to the other side where I was spending a lot of money needlessly, dipping my toe in the conspicuous consumption pool. I realized that it was not me. And you know what? Needless spending did not provide me with more happiness! I switched back to being frugal. The step is great, however I did not learn much from it because I had been practicing these things for years.
The whole book is a fascinating and inspiring read. With what I learned from the book in combination with my own pre-existing philosophy around finances I can say that I want to live a life where I spend less, save more, invest what I save.