Lessons learned on the way to FI

[Geila]

I for one would love to hear from our members who have reached FI - Financial Independence, and what they've learned on the way getting there; and I think others would too. Please share as you feel comfortable with any lessons, stories, advice, etc....

Don't think of it as bragging, think of it as mentoring! :)

:thankyou:

[iris lilies]

The smartest thing I did was to know myeself and how important frugality is to me so that when we married we have never had any serious fights about money. I am actually spendier than he is, and Imtake comfort in that.

I Never dated anyone who was a big spender, that turned me off. I Would rather have dated someone who made $20,000 and kept a goodly portion of it than someone who made $100,000 and spent it all.

[iris lilies]

Sometimes I think about all of the financial mistakes I made. Im not perfect. We are making mistakes right now as we sit here!!! Haha.

but one of them was not getting a cash back charge card sooner. Ive had one about 5 years. There were 15 years there when i could have collected cash.

[razz]

We were so careful never to owe more debt than we could pay off easily. This started very early in my life. I got my first store credit card but put a limit of $50 on it which was my weekly pay check at the time as I knew that I could pay it off. I was 19 then. We lived thriftily with modest homes and assets. Nothing too fancy vacation or holiday rentals but bought a travel trailer when the family was young so we did camping trips a lot and loved that time together.
We agreed on financial goals but DH was better at setting limits on spending most of the time and I insisted upon buying our properties when he would rather have rented. Most of our $$ gain was from the increase in real estate value which was our good fortune. DH managed to work at a company with benefits which helped a lot and is helping me now in my retirement after his passing.
Mostly, as I look back, it was slow and steady mindful spending that contributed to the savings that I have today. Rarely had any loan beyond the mortgage and one car loan, I think. If we didn't have the money, we did without or more often, found an alternative.

[herbgeek]

I'm financially independent in the sense of having f you money, but not retired. I was still mid 20's when I realized all the bs that is corporate life, and found YMOYL and was determined to live beneath my means. Small house, small cars, reasonable vacations, few "status" items, cheap-ish hobbies. Got a lot of grief about it from family, but glad to be in the position I am now. My mother was so embarrassed though. We'd had a condo for 10 years (market fell through in our area, and we still sold it at a loss after 10 years). She was frequently traveling through my area with friends, and I'd ask her on one occasion why they hadn't stopped in. She said "well Claire and Joe's kids (the people she was traveling with) all have big beautiful houses...." and didn't finish the sentence. Of course, mine was paid for at this point and its unlikely theirs were. Still, that stung. Ironically (not), my parents at 80 and 86 had a second mortgage until a few years ago and now have a reverse mortage (a very bad financial move).

[kib]

1. So many things I thought of as must-haves as a young woman got put on hold as I went toward FI. I started out embarrassed that I didn't have The "Good" car, the really nice jewelry, the name brand furniture, the latest clothes; embarrassed but determined to meet this other interesting goal, financial independence. That time-out from acquiring shiny objects helped me to grow up and understand that I don't have any great interest in shiny objects, it was just conditioning. By the time it was "FIRE or BUYER", there was absolutely no question in my mind that I needed to be free of that damn job, I did in no way Need - or even want - status objects. Making FIRE a primary focus may pull you away from people who aren't like minded, but it will also draw you closer to those who are.

2. FIRE doesn't have to be all or nothing. It can be a case like Herbgeek - available but not chosen at the moment. It can also be a modified FIRE - from high stress high pay career to lower stress enjoyable investment income supplementation. It can be reversed if it's not working out, although you may lose your place on the ladder. In other words, it's not scary til you make the leap, and it doesn't have to be especially scary even then, as long as you place your feet carefully.

[Lainey]

kib,
I like your phrase "modified FIRE." I think it scares people away who think their choice is all-or-nothing, but that phrase is great to allow people to realize there's a spectrum.

[Williamsmith]

My financial independence was a result of some luck and some sheer determination. I married my college sweetheart. The week before our wedding I lost my job as an Air Traffic Controller. The day after our wedding she interviewed for a teaching job in Pineville, WV......that's a real place......but after we discussed it , we got the hell out of there and lived with her parents for three months. No jobs.

One day I drove her to a job interview at a facility for severe and profoundly mentally handicapped people. She came out to the car and said, "They want you too." We signed up to be house parents for nine people who couldn't feed themselves, bathe themselves or toilet themselves. We lived with them during the week and on the weekend went to her parents house. Way out of my comfort zone.

I was fortunate enough to score extremely well on a competitive civil service test to be a state trooper. After my six months of training we moved half way across the state, rented a house in the boondocks and started a family. My wife was a stay at home for three kids. She also ran the budget. We bought furniture and carpeting on a monthly payment of $100. We did this for 10-15 years. We never paid a penny of interest on any credit. We never ate out. Except Dairy Queen after church. That's where you could find out what was going on in the mountain community.

Our only debt was a mortgage and auto loan. However, we did not save for college for our kids. We took vacations every year instead. As a result we have family experiences but our kids have some college debt. Another trade off. We used a home equity loan to pay for half their tuition and room and board. I feel now that because they have some skin in the game so to speak.....they are learning how to be responsible with saving and seeing how crippling debt can be.

I might have approached this all differently had I not been able to take advantage of a decent retirement package. My income is based on the highest of my last five years. Minimum 50 years of age and 25 years of service. After deductions and taxes it turned out to be about 60% with healthcare included. The give back was that I left a large piece of myself with that job that I will never get back. And as the insurance bean counters (actuaries) have figured it....I will probably be dead by the age of 67.

We sold our homestead and moved into a condo in order to minimize costs and downsize. In a way I have been blessed and in a big way I have earned it. I think it works that way for most people who have a plan and stick to it. Because I literally was broke the day I got married. The bottom line is sacrifice.

[kally]

Sometimes you get lucky. We bought a condo years ago in Vancouver, British Columbia. Over 11 years we kept adding to our mortgage payments to pay it down in 11 years. When we bought that place we thought it would never go up. It went up.

We sold it 12 years later for twide what we paid for and got out of the city. We moved to a small town and bought an old house outright. Then we thought "I wonder if we can live on the savings we have if we only work a couple of days a week." So we did and here we are.

We don't really know if the money will last, but today we have a nice, lazy life. I see people working and working so many years because they want to get the last drop out of their incomes. That is fine, it is just not our way. We want to enjoy our days and live frugally and hope that we live a long time. It's a gamble. Who knows, it might not work out, but I am 60 and I think things are just fine.

[rodeosweetheart]

Kally, your post is totally inspirational! It tells me it can be done. I am aiming for the same thing, and we have bought last couple of houses outright, which has saved us a couple of times.

I guess my lesson would be, for me, anyway, no mortgages, or if you have to take one, pay it off as early as humanly possible.

[eleighj]

We just kept our "eye on the ball" and put one foot in front of the other. The original goal was to be totally debt free as fast as possible and beholden to nobody. Once we did that we became massive savers much more than investors. We kept our investable assets in fairly simple funds and did not touch them; any time time we invested in single stocks; it just did not work.:(

Ed

[Geila]

2. FIRE doesn't have to be all or nothing. It can be a case like Herbgeek - available but not chosen at the moment. It can also be a modified FIRE - from high stress high pay career to lower stress enjoyable investment income supplementation. It can be reversed if it's not working out, although you may lose your place on the ladder.

This is why I like the concept of FI better. I like having the concept of financial independence separate from the subject of paid employment. Both dh and I plan to stay engaged and active in some form of another after we achieve FI because we like learning new things and being engaged with the world. But being FI will allow us to do work that we want, rather than what we have to do to make ends meet. When I was in my late 20's I was offered a job working with struggling children in elementary school. I wanted that job so badly but I just couldn't afford to take it. It was not quite full-time (about 75% time) with benefits prorated accordingly. As a single woman with a mortgage and living expenses in a HCOL area, I just couldn't afford it. It broke my heart.

But with FI I can take a job or volunteer because I want to do it. There are lots of local options that I would enjoy: an organic farm, a nursery, working with kids, etc....

I also like the idea of some fun money to spend without worries of using up our savings.

[Geila]

Last night I was thumbing through YMOYL and just reading random sections when I happened upon the section of what it means to be FI:

"Financial Independence has nothing to do with rich. Financial Independence is the experience of having enough - and then some."

"Financial Independence is an experience of freedom at a psychological level."

I was taken with this because it touches on so many issues like fear, control (or the painful feelings of not having control of our lives), what is achievable, etc...

Taken in this context, we can have Financial Independence even when we have not reached the point of having enough money saved up to retire, change jobs, etc... We can achieve FI while still working because we are choosing to work and enjoy the benefits that the salary provides. We always have a choice. I believe this is the concept that people like Victor Frankel talk about. Psychological freedom.

If we look at FI from this perspective, how would this change the conversation?


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[Rogar]

I spent many evenings in the year or years before I left my traditional job going over my expenses and trying to project an income. I am really bad about having a budget, but am thrifty. I kept receipts from store purchases and logged other expenses to come up with an estimate out my outgoing money and where some weak spending points might be. I was very conservative of an income estimate and also have kept less than half my nest egg in the market. My equity investments were in mostly index funds. I left my job just months before the big financial meltdown that hit my stocks hard, but also lowed interest income below what I might have never suspected. Thankfully I was conservative in everything and it's worked out good.

From what I've seen, most people have some method to work through their finances and it mostly works out. What I've seen fail is planning how to budget the extra time. You get a little painting and fixups done, maybe get tired of sleeping in motel rooms or a tent and eating restaurant food in strange towns, and figure out your probably not going to learn the guitar. Then there's the long term to make productive use of. It's not a problem with me but I've seen others flounder some with time management. It sounds like you've a plan, but it's worth some thought.