Is this what independence looks like? Inspiration Point, Banff, Canada
I follow Paul Graham on Twitter, and about a year ago, he tweeted about this post below. The contents of the post immediately resonated with our lives. We started with that one post (which is really good) and then pored over the MMM blog for days. We had discovered a future version of ourselves, an inspiration for what we could engineer our lives to be over the next decade.
Mr. Money Mustache's blog opened our eyes to the fact that financial independence was very much attainable, and that there's a clear path ahead to exit the career bandwagon without having to worry about money. We're both extremely focused on optimizing our lives for happiness, and money is merely a means to that end. Here's the story of how that aha moment came about for us (thank you, MMM!)
We had the Basics Figured Out
As Mr. FH talks about in this post, we've been living on this path to FI since our teenage years, without even knowing it! We still made some bad financial decisions along the way such as not investing our savings in the stock market early enough, not taking advantage of 401k every year it was available to us, etc., but for the most part, our life choices have been the result of rational decision-making powered by basic logic.
We found ourselves living a comfortable life in the city of our choice (San Francisco, CA), working at cushy desk jobs that paid well, and had plenty of time and money for hiking, cycling, and traveling the world. In 2015 alone, we traveled to cities all around the western hemisphere namely Toronto, Vancouver, Las Vegas, Grand Canyon, Paris, Stockholm, Prague, Vienna, Budapest and Malta, and then spent two weeks exploring the country of my dreams, New Zealand. We weren't trying to be deliberately frugal in 2015, and with a gross income of $197k, we still saved up $60k between the two of us. Mr. FH even took 3 months off of work between jobs that year, we fulfilled every last travel dream (unlimited vacation is a real perk), didn't think or talk about frugality even once, and still saved up 47% of our after-tax income that year.
~50% is a pretty decent baseline savings rate (esp. when the average American saves only 5%), and it mostly came from unconsciously reaping the compounding financial benefits of these 7 simple frugal hacks.
Why Should Our Jobs Define Our Lives?
Mr. FH got his first paid software contract when he was 16 years old. I turned a hobby into a business when I was 19. Instead of working minimum wage hours at cheap coffee shops like Tim Hortons, I invested in sharpening my skills and built an active side-business that would let me charge $75/hour. When you have an entrepreneurial gene in you, going to a job every day feels really limiting and unfulfilling.
I have to pause here to say that I've hacked my way through the system to end up at an Accounting job that I truly love. I work at an action-packed startup, work with ultra-smart people, get to build many things from scratch, and deal with zero politics. Dream jobs in Accounting are rare, but after many risks and leaps of faith, combined with strong mentorship and role models throughout my working life, I think I've found my happy place.
Regardless of whether you love or hate your job, one thing is for sure. A full-time job is exactly that - it takes up the biggest chunk of your time, and by extension, your life. The world is vast and there are so many things to do, to learn, and to explore. Being confined to one place for 40 - 50 hours every week for the next 50 years is a scary thought.
Lottery Ticket to Freedom
In the SF Bay Area/Silicon Valley, every fifth person you meet talks about how they quit their jobs after an amazing equity exit from their last startup. Playing the startup equity game boils down to joining early stage companies, collecting stock options when they're cheap and later exercising and selling the company's shares when they're publicly listed at a much higher valuation.
Playing the equity game is also like playing roulette. Sure you get better at making your bets over time, but at the end of the day, it's still a gamble. Mr. FH and I made some equity bets of our own (none of them have resulted in any windfalls over $100k), and we thought the luxury of quitting your job forever was reserved only for those lucky few who win the gamble.
Our Aha Moment
We read MMM's post about the simple math behind early retirement and that was our moment of epiphany. We did some number crunching of our own, and found that we were only 3.5 years away from hitting our own Financial Independence goal. Oops.
From our savings rate of 47% in 2015, we worked hard to now make that 70% in 2017 so we could accelerate our pathway to FI. Shifting grocery and household expenses to Costco was one of the strategies we employed to get there (more on that in a future post).
Mainstream media and popular culture have painted this picture of frugality that looks like eating only canned food, clipping coupons, a life full of sacrifices, living in dire circumstances, etc. What if I told you that we live a life of extreme comfort (sometimes it's a little extravagant and I'm not so proud of that), eat like royalty, spend our weekends enjoying the great outdoors, cultivate and maintain meaningful friendships and relationships, and generally have gratitude for the abundance of money and joy in our life? This is all while we continue to save 70% of our after-tax net income.
What Does this Mean for You?
The bottom line is, everyone's path to Financial Independence (FI) looks different, but you need to believe that you can achieve it. FI is certainly not reserved just for the top 0.5% of people, it's not something you have to inherit from your parents, and it's certainly not a jackpot you win. MMM's post shows how even middle-class high-school teachers can retire after just 13 years of working.
Both Mr. FH and I had a normal middle class upbringing with an above-average focus on education and technology. We definitely had many privileges that we cannot discount, but we also fought many setbacks by hacking the system. The biggest limitation to making progress and realizing dreams is our own mind, and sometimes all you need is one blog post to give you that kick in the butt. If you can learn to ignore marketing, advertising, and fashion/lifestyle magazines, and instead blaze your own trail in the woods, you're already 50% of your way there.
