Unlocking Financial Independence

When I first exited college I knew that summer/winter/spring breaks as I knew them would never be the same. I could no longer come home for the holidays and party with my high school friends like we had no jobs because... Well, we were going to have to get jobs, and at that point vacations would become a precious commodity. I knew that I had one last free shot at travelling where how long I was gone for would not matter. At that point I didn't really have a job history that mattered, saying that I had worked at a grocery store or at temp agencies simply didn't matter.

Going into the software industry I knew that while I may be able to take a month off between projects (once I had saved up vacation time) was possible, but the likelihood of being able to take off for 3 months and being able to return to a job was a lot less likely.

So I did what any recent college grad would do, I got the first crappy job that I could so that I could earn some money, but I planned to quit it after 2 months. Then I would travel for a while before I had to get a real job.

The first thing I learned was, that when you set the standards low enough, it's actually not that hard to get a job. I ended up working at Costco, but I actually didn't work for Costco. I was one of the people that handed out free food samples in the store, I wasn't actually a Costco employee so I made much less than those people did but my entire goal was just to make a few hundred dollars in the months leading up to my trip.

I must say that it was an interesting job interview. They looked at my application and probably wondered why someone with a brand new computer science degree would apply for a job that made $6.25 an hour and only offered about 20 hours a week. When I interviewed with them they said that I wouldn't make enough at this job to support myself and for most of their employees it was their second job or just a supplement to their social security checks. I think this was the first and only time I've been completely honest in an interview. I told them that I just wanted to make some money so that could travel, and that in 2 months I would be leaving to Ecuador and would quit then. Apparently they weren't very picky and just needed bodies so I got the job.

So there I was, five years after high school ended, at a job where the employer themselves told me I couldn't support myself on. Working a position that most high school students wouldn't take, back in my hometown, living at my parents house, wearing a hairnet and serving food samples. It was only a matter of time until I ran into someone from my past. I remember that it was a girl from high school, I'm sure I recognized her first because when she finally recognized me she actually couldn't contain her laughter. Trying to not be completely rude at seeing someone that you went to school with working at a very low level service job, she turned away as to not laugh directly in my face as she walked away.

It was known that I did well in high school, so I'm sure the surprise of seeing someone who did so well end up doing a job that most people wouldn't consider might be kind of entertaining. I'm guessing it was one of those schadenfreude moments. Like when the captain of the football team thinks he has the greatest life, but ten years after high school everyone knows that high school was his best days and it's all been downhill since.

Schadenfreude - This word is taken from German and literally means 'Harm-Joy.' It is the feeling of joy or pleasure when one sees another fail or suffer misfortune.

Even when I saw that girl from my past laugh at my expense, in my head I was thinking, "laugh at me all you want, I just finished getting my degree and now I'm about to go on an awesome vacation. I wouldn't trade my position for hers in a minute. I bet she has to go to some crappy job that she pretends to like and hers doesn't even have an end date to it." I admit, I may have been quick to judge too, but at the time all I saw in my future was adventure. Whereas she would most likely face real consequences if she didn't go to work the next day. Leaving my new/temporary food service job at any time wouldn't have surprised anyone, and the fact that I told them ahead of time when I was going to quit was probably a nice change for them.

While I'm not at my final goal of financial independence, I know that I'm well on my way. And while I do have a large chunk of savings, I think I unlocked a powerful key to financial independence a long time ago that has much more value. And that's knowing what's important to me, I know that I don't need a lot of stuff in life to be happy. I don't need to impress others with a big house, respectable job, or fancy technology. And I admit, sometimes houses or gadgets are impressive, but to me, owning my time is more impressive. A simple life doing the things that I want and having great experiences is all that I really need, and knowing that makes financial independence closer.

Have you had any revelations that helped you with your personal finances?

16 comments:

  1. Those are really good insights about understanding financial independence. Having control over your own time, and being able to do what you want, is a good thing. A key is what you mentioned about not needing a lot of stuff in life to be happy. I often think that it's the pursuit of that "stuff" that keeps a lot of people from reaching the financial independence they actually desire.

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    1. I think that stuff is just "stuff"... continuing to work just so you can be a better consumer is a never ending cycle. I'm just glad that impressing people with outward appearances was never a high priority to me. Perhaps my goal is to impress them with stories of my travels :)

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  2. For us I think the moment when we had a revelation about financial independence was when we realized that working our stressful jobs with our crappy bosses was just not going to be a realistic long-term deal. We knew then that we'd better start saving our butts off and do something radical or we'd be stuck in these

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    1. I had a specific work revelation like that.... It was one of my first posts I wrote about workplace bullying. My boss was a nightmare and I put up with it because the economy was crappy and I was just thankful to have a job at the time. But eventually I realized that life was too short to have to deal with abusive bosses. I got out of that and I'm at a much better place now, but looking back I'm not sure why I dealt with that for so long.

      The one good thing about having that crappy boss though was that I also kicked my finances up a notch because I knew I couldn't work a corporate job for 3 decades.

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  3. I think I'm in lockstep with you here, Zee. I thought I owned fancy homes, fancy German autos, a Harley Davidson...but as it turns out...those "things" owned me. But no more... I'm curious if "cashing out" on your Bay Area home is part of your eventual ER/FI plans. It certainly could expedite the process if you moved to a lower cost of living area.

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    1. Hey Jon,

      I've never really planned to cash out my home for early FI. I love the bay area too much, I have lots of family here and I've never found another place I would rather have as my "home base" so I think I'm fairly rooted here. I will probably downsize my home, or perhaps it will be moving out of San Francisco and over to Oakland where I could get more house for less.

      I have been considering moving for a while though, once again to Oakland where it's cheaper but still feels "right" to me. The problem with that plan at the moment is that once I move my living expenses will go up and my commute time/expenses to my job will go up as well. If I sell my house to move I will not be buying a home where I share it with roommates, I'm getting too old to have to deal with other peoples crap that are not significant others.

      I've also owned my home long enough that it's could be a pretty good source of income to me. Right now if I moved out and rented the whole place out I would probably net about $500-600 per month. But since I don't rent it out it just makes my portion much smaller. But that's what happens with all homes over time, the payments stay the same (or smaller if you refinance) and the rent in the area goes up because of the market and inflation. I admit the first 3 years or so were painful to me and I was paying more than I should have been, but long term I'm better off now.

      So while moving will come eventually for me I'm sure, it probably won't benefit me all that much for the first 4 or 5 years after moving.

      I have a while to think about where I want to finally end up at anyways.

      -Zee

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  4. Inspirational post, Zee!

    It's weird how some people judge you by what you visibly have rather than what you do all day. It's more impressive to drive around in a massive BMW than to enjoy a 20-hour work week and enjoy a long vacation abroad... How does that work?!

    One of my biggest financial revelations was the fact that buying a house is not always better than renting one. Most of my peers are eager to buy a property asap since renting is "throwing money out of the window". After some maths I came to the conclusion that living frugally and investing the difference makes me come out ahead by renting.

    Keep it up!
    NMW

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    1. NMW,

      I imagine that early retirement looks like this to a lot of people. Most people that decide to retire early live simple lives with just the things that they cherish most, and for most of those people the answer is time and relationships rather than cars and houses.

      In certain situations I'm inclined to agree with you about renting over owning a house. But that depends on what timeframe you are looking at and the opportunity costs of what you think you can make investing the money that you're not throwing at a home. I've owned my home for almost 8 years now... I think closer to 7.5 now. But I rent out 2 rooms in my house to help pay for all the bills. For the first 3 years or so, I was paying much more than renting. But now my portion costs fractions of what renting does in San Francisco. I probably pay about half what other people pay because of the rising costs of housing here. My mortgage has not increased (it decreased when I refinanced) but rent in San Francisco has skyrocketed (hence my roommates also paying more). As time goes on this will continue to shift in my favor since inflation will always make costs rise whereas my mortgage will stay fixed.

      So I think it may depend on the time frame that you're looking at with homes. I think that if you're unsure if you will still own that home in 6 years then perhaps it's not a good decision to buy.

      But once again, this all comes down to the opportunity costs. If you bought your house in a down market and have benefited from the increase in housing then you did well. But it's also possible to invest your money in the stock market and get a better return than in the housing market.

      For me, I view my home kind of like monthly dividends now. My roommates give me checks every month and every year I increase the rent and therefore increase my dividends. When someone moves out I may not get those dividends for a month or so but when a new tenant moves in they are usually at the new market rate which is higher so therefore my dividends are higher again.

      But I see this working either way.

      -Zee

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  5. Zee,

    Right. It's all about finding what matters to YOU and then going after it with all you've got. For some people, that's a big house and a fancy car. I have nothing against these people, but rather just feel sorry for the people that *think* these things will make them happy, only to find out years later they made a huge mistake.

    If financial independence is what will make you happy (how could it not?) then it's important to ignore the laughter and doubt from the peanut gallery. They won't be laughing anymore when you're on top of the mountain looking out across the world.

    Best wishes!

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    1. Dividend Mantra,

      The thing is, I imagine that I will go full circle on all of this. I started out my working career by postponing it to get any job that I could to travel. In other peoples eyes it looked like I had not taken a good path in life and ended up serving food samples as a result.

      I also imagine that early financial independence will look much the same to other people. I don't plan to have a fancy car or huge impressive home. I will probably just be living a simple stress free life where I get to choose what to do with my time. I doubt I'll own the latest and greatest phone or tablet, but since I've been getting along fine with the same phone for about 5 years now I don't think that's a big concern to me.

      But outwardly others will probably still judge it and jump to conclusions and just think that I'm scraping by without a job. But I'm guessing that when that day comes I'll be fine with being misunderstood.

      -Zee

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  6. Great post. We all strive for independence from different perspectives. Our time is hugely important, and I respect your willingness to give space time and experiences in your priorities.

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    1. Time has always been one of my biggest priorities, I don't want to have to spend the majority of my life working for someone else in the pursuit of money to pay my bills. I want to be able to choose what I want to do with my time.

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  7. I agree about time and doing what makes you happy is most important. I was a status seeker when I was younger. I always needed name brand clothes and the newest gadgets. Then one day I saw someone with a shirt I loved and asked where he got it. He told me Macy's. It was on sale for $20. I paid close to $80 a shirt where I shopped. It was then that I realized the only person that saw the label was me. As long as the short looked good on me, it didn't matter the brand.

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    1. Well, at least you learned that lesson, some people never learn!

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  8. I've had a few revelations along the way such as I know I have a repetitive debt cycle that I have to acknowledge and budget very closely to not fall back into (I rack up debt, pay it off, then get back into it a few years later - the whole cycle is usually 8 years long), I also realize that not everything revolves around money. Many times, my decisions to do something are finance based, when I take that out of the equation, it boils down to if it's important to me. Tangible items aren't that important to me, instead experiences are.

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    1. I definitely live for experiences, there may have been a time in the past where I wanted stuff but now I just want my time and good memories. Being at work is not a good memory for me!

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