Financially Free?

This FIRE community rocks, y'all. There are amazingly smart bloggers who write some really deep articles that really make you stop, think, scratch your head, think some more, write a comment at 5 am, and then enjoy some more thinking.

Ms. Our Next Life is no exception to this. She recently posted an article on Why “Financial Freedom” Means Something Different to Me. I absolutely love it! I love that FIRE means something different to every person in the community. Some want the extra stability in their lives to take risks with their corporate jobs, some want the choice to quit their W2 job to work a lower paying but more fulfilling career, some want to quit and have more time with their families, and still others want to quit and travel the world forever.

I commented this on the ONL article: “I’ll be sticking with financial freedom. It implies a certain sense of wonder, lightness, and awe to those not on the same path. Also, right now I’m not financially free. I’m in handcuffs, chained to my job. The handcuffs might be invisible, and comfortable, but they’re still there and chafing at me. Yes we have it tons better than people in say, North Korea. There will always be people in the world I have it better than. There will also always be people who have it better than me! I wish everyone were equal but alas, our world isn’t set up that way :(”

Her reply: “I love the wonder part of your definition, but I do want to press you: Are you REALLY “handcuffed” to your job? You have tons of skills, and could easily find another. ‘Handcuffed' means you literally have no choice, which clearly doesn’t apply to you. And you just bought a multifamily home at a young age as a single person — that sure sounds like financial freedom to me. You made that choice — an audacious one, at that! — all on your own, and made it happen through your own ingenuity and grit. I can’t think of any better word for that than ‘financial freedom.' ;-)”

Consider this my long-winded response to her comment!

Not this bad of a situation, though.

I absolutely do NOT consider myself to be financially free right now. I am in a great situation, absolutely. But I have obligations to meet and bills to pay. I have $150,000 squirreled away in various accounts. I also need to eat, put gas in my car, and pay my cell phone bill.

Right now I am still wholly dependent on my day job. Since I took relocation benefits to move 5 months ago, I have at least 7 more months to go before I could quit my job and take another position elsewhere. Yes, I could potentially get the new company to pay that for me. But what if I talked about the wrong thing to the wrong person and got fired? I'd be on the hook to pay that back before I could potentially get hired at a new company.

I also bought my house. This means I have a mortgage to pay. Yes, my tenants pay me rent which more than covers the mortgage. But that won't always be the case as tenants come and go and I have to account for vacancies. I can't depend on that money coming in, so I need to be sure I have a way to come up with the money on my own. I can't do that without a decent paying job right now.

I used a VA loan to buy the house. I have to live in this house for at least 12 months before I can move anywhere. Technically I could move and just not tell anyone but that's unethical. I will wait out the year to move…… but that means if I were to get fired, I couldn't move to a new location. Chances are high I wouldn't be able to come up with a comparable position in this town. Maybe I'm not doing the other businesses in this town justice, but it is a very small town ruled by my MegaCorp. I would almost certainly have to take a pay cut to stay in the area.

I'm not even sure I could thrive and excel in a new job. I have the technical skills on paper to get hired into just about any relevant job I want. I get recruited on LinkedIn often enough to tell me this is the case. Add in the fact that I'm a woman in IT, and my chances get every better. I hate to have to use the diversity hire card, but if it helps open doors I'm not going to turn it down. However……… my actual technical skills leave a lot to be desired. While it looks like I have the technical skills, I really don't. I am definitely better at IT stuff than your average bear (or Baby Boomer), but I lack the logical way of thinking to really dig in deep and understand where the problem is or how to improve something. I'm much better at the user support side of things.

This is gibberish to me.

Unfortunately for me, support positions like mine are rare. Normally these positions are contract positions and paid very low to people just starting out in IT. Think your friendly helpdesk before it got shipped off to India. The only reason my job isn't contract is due to the highly sensitive and confidential nature of my day to day tasks. It's so sensitive we can't even fill an open spot on the team to an outside employee. Finding an equitable position in another company would take a lot of time and effort… that I might not have in the first place.

Fortunately, I love my job and have no plans to leave, and definitely no plans to get fired anytime soon. All of this goes to show though, that while the tide is turning for me, I'm nowhere near financial freedom yet.

I definitely have the cushion needed to take some risks (which I did when I bought the house) but I'm not financially free yet. To me, financial freedom is the same as financial independence. I can take baby risks right now, but big risks like quitting my job and moving to a different location will have to wait until I have more money squirreled away.

So if $150k isn't enough for me to take big risks, what number is big enough?

Honestly, I have no idea. I know I've set $587,500 as my FI number but I'm thinking as long as I have a steady income stream I won't have to get quite that high before I can quit and do what I want. I'll be almost half way there by the beginning of 2018! The higher my number and passive income goes, the more comfortable I'll feel taking bigger risks.

Until then, I continue to stay the course! Onwards and upwards!

What's your definition of financial freedom? Do you think I'm being too cautious?

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38 thoughts on “Financially Free?

  1. The path to FI seems so long sometimes. I’m just happy to be on the journey to it now. We are all many times closer to it just being on the pathway itself.

    Plus at least with the Rockstar finance forums it isn’t a lonely path!

  2. I saw your comment and Ms. ONL’s response on the original thread, so I was excited to read this reply! I appreciate where you’re coming from, but I think I align more with Ms. ONL’s take. But it obviously depends on one’s definition of “financial freedom.”

    I just appreciate the subtle reminder that we are all free to take risks and make choices and we’re never truly stuck in any one situation (or location!), so long as we are lucky enough to live in the free societies that we (or, most of us reading this, anyway) inhabit. For me, thinking about it that way reminds me to be grateful, as well as to take responsibility for how my actions and decisions effect my future. There so many options open to us and I am optimistic about how our generation, especially in the FI community, is taking advantage of that freedom, and not just accepting the status quo as a given.

    • I’ve noticed the impact my monthly contributions make on my net worth is starting to matter less than the market fluctuations now. It’s startling to realize I just lost a month of contributions and realize I’m perfectly ok! I think the snowball will really start to grow here in a little bit!

  3. I greatly admire you for taking the risks to move, get a new job, and buy a house. What I admire most is your confidence.

    Ms. ONL’s take on handcuffs was very literal. I have no doubt if you lost your job you would find a way to make things work, but it might not be as optimal as your current situation. The handcuffs still chafe a little but we all do things we don’t like 100% in support of a goal. That’s called being smart. You don’t have financial freedom right now but it will come. However you do have personal freedom and you’ve used that to your advantage.
    Mrs. Groovy recently posted…That Time I Lied and Fake-Cried to Save My Family $1,000 in Airline FeesMy Profile

    • Thank you Mrs. Groovy! I like the take on personal freedom. I feel like I have a lot of personal freedom as a young, unattached lady. Take a vacation to Ecuador? Just say when! No need to consult with anyone……. just go! If that’s not freedom I don’t know what is!

  4. Well, we’re a bit in the same boat. We definitely have to stick with what were doing because we aren’t self sustaining quite yet.

    But we’ve set up enough to take some risks and see where they go. Its kind of a weird crazy feeling that you can take some risks and be OK.

    You might feel like you’re locked in. But really you’ve set yourself up pretty well. If all that stuff comes to fruition, you’ll still be alright, might set back your goals some. But that’s the whole point, comfort in the unknown and knowing you can handle these uncertain events.

    I feel like you’re in a better spot than you think.

    • I don’t want to downplay how great a position I’m in right now. I’m aware of how incredibly blessed I am to have this job, with this kind of pay, in this area. Not to mention finding all this FI stuff early in my life. The initial discussion was whether or not I was free to do as I wish. If I continue this path, I will be……. but not right now.

  5. Not too curious at all!

    Haha, given the name of my blog, you can tell I also love the term “financial freedom.” Similar to you, it’s really more financial independence in technical terms. It’s the point at which we don’t need to make any money to survive.

    When we’d actually retire might be slightly after that point, where we have enough cushion for our normal standards of living.
    Felicity (@FelicityFFF) recently posted…4 Things You Should NEVER Do When InvestingMy Profile

    • Yeah bare bones existence isn’t much fun. I’ll more than likely keep working until the end of a year, just so I can get the bonus! (if we still get bonuses in the future, of course)

  6. Today I got up before 5AM and ran 4 miles with my wife and some friends, planned to review some documents for a consulting engineering gig, then lunch with a friend, then tennis, then a retreat with the steering committee on the low income medical clinic I volunteer with. But, because I am FI I blew off the engineering stuff. I can do it tomorrow! My days are mine, I earn more than we spend just working a couple of days most weeks and I pick the days! Plus way more investments than we’ll ever spend. It also leaves me time to help run a charity foundation, a local college and my old university engineering department as volunteer work. Life is good for us, it is a long path but it is so worth it.

    • Gosh I can’t wait! Knowing I’m about 30% of the way there helps so much though in my day to day life/anxiety over it.

  7. The dictionary definition of freedom is “the power or right to act, speak, or think as one wants without hindrance or restraint.” It doesn’t say anything about there being no consequences when you choose to exercise your freedom. So no, you aren’t handcuffed to your job. You are ‘free’ to quit without hindrance or restraint, to decide to travel for a year, to find another job. So yes, in that sense you are free. Will there be consequences to your plan if you decide to take advantage of your freedom? Absolutely there will.

    Fundamentally, you are defining freedom in this context differently from Mrs. ONL. Your definition is “I don’t need my job any more”, and that is a fine definition too.
    Mrs. BITA recently posted…How To Make Money Despite YourselfMy Profile

    • What a great description! I love it. Yes, we are free to do whatever the hell we want in the world….. just as long as we’re prepared to deal with the consequences afterwards! I am free to be a b*tch, but others are likewise free to cut ties with me because of it!

  8. If you’ve got $150k squirreled away, why do you have a mortgage? (Probably b/c it’s in a tax-advantaged account.) I hope you put down a big-enough down payment to avoid PMI. Else try to make some simple improvements to increase valuation to increase equity or watch the market carefully for increases above that.

    My first rental was a four-plex and I lived in one unit. It felt good to have tenants paying the mortgage, etc. If you work it right, your housing expense should be zero. This should lift a lot of the worries about keeping your job at megacorp. If you get sacked, you may have a bare larder, but you’ll at least have a roof overhead.

    • Like you said, most of my net worth is tied up in my 401k and therefor inaccessible. I did however, put down 10 percent on a VA mortgage so I have no PMI to worry about. I absolutely love having my tenants pay down the mortgage for me. It is nice to know I won’t immediately be homeless if I lose my job.

  9. Bah! I think you’re doing spendidly. There are times to throw caution to the wind, move to Thailand, and shave your head, but this is not one of those times. 🙂 I don’t think there’s anything wrong with staying where you’re at and following your plan.
    Mrs. Picky Pincher recently posted…What a Frugal Weekend! May 7My Profile

    • *slowly nudges emergency Britney plan to the corner with a toe* Phew! I rather like my long hair 🙂

  10. And that is also the beauty of why everyone has it’s own interpretation of financial freedom or independence. I tend to agree with both of you. But as long as you feel like you are not there yet, you aren’t. No one else but yourself is able to change that.

    I have the feeling that your sense of financial freedom has nothing to do with a number, but with the freedom of having no restrains what so ever. Like a job.

    What if those restrains weren’t there, and you haven’t hit on your target number yet? Would it still be possible to achieve financial freedom already? Because then you could do whatever you feel like? And although money still has to be earned, you could do it in such a way you wouldn’t feel handcuffed probably. Or is it as Mrs. Bita says, and you just have a different view on what freedom means to you…

    Great way of figuring it out like this. Everyone should ask themselves these question in order to define you own path to your own goals/targets!

    • EXACTLY. I don’t mind having a job as long as it’s something I want to do/find fun/is fulfilling. Most of the highly paid IT jobs out there do NOT fit this definition. I’ll be able to make the money work no matter what…. if I know I have a healthy cushion to fall back on.

  11. Nice job Gwen. I’m new so when my peripheral skimmed “$150,000” I immediately thought negative $150K (student loans etc.) Pleasantly surprised my reading abilities failed me! :p That number is amazing, amazing (!!) especially for a millennial. You are well on your way. FI is in the bag, it’s more or less a when vs a how now.

  12. Couldn’t agree more! I’m writing a post about quitting the workforce before hitting 100% FI, because I am considering taking this route myself. Trinitiy study shows that 4% of the time portfolios fail with 4% rule. But the flip side to the coin is the fact that more than 50% of the time, those same portfolios double. Which means about half the time, you have more money than you need, and could safely pull more than 4% withdraw rate (smaller FI number necessary).

    I’m OK with taking more risk to get out of my ‘handcuffs’ earlier… considering quitting my day job at about 85 – 90% of my FI goal. There’s a decent chance it will still be enough (especially if I have a small side hustle). Worst case scenario: I go back to work in a few years, probably doing something less stressful, possibly part time. My literal worst-case scenario is the rest of the world’s every-day scenario. I think I can live with that.
    Joel recently posted…The Car ProblemMy Profile

  13. Hey Gwen,

    I am at €185k ($200k) net worth right now, and I am about half a decade older than you. I’ve made terrible mistakes on my way to FIRE. Sure, I will learn from these. It just sucks to know that I could be way ahead at €230-250k if I had just kept it simple from the start.

    In my particular case there are other challenges ahead unrelated to the actual dough management. How will my girlfriend digest all this FIRE story that she doesn’t know anything about yet? Will I reach FIRE at 43 years old if I decide to have three children?…

    You seem to have everything better figured out than I did at your age. Just keep it up and enjoy the ride!

  14. “I hate to have to use the diversity hire card, but if it helps open doors I’m not going to turn it down.”

    I’m going to pick on you a wee bit for this statement. I’m not sure if you meant it that way but I challenge this view that the idea of hiring diversely as a card or a tactic which also usually comes with the implication that it doesn’t have inherent merit.

    Your value as a rareish woman in IT isn’t solely the fact that you’re a woman and not a man, it’s that you have insights and perspectives as a woman that most men tend not to have as a general rule. It’s the limited perspective that produces results like Siri not recognizing what rape or sexual assault is and being unable to direct the user to get help.

    You’re valuable because of your skills and as a whole person who would recognize problems that are unique to women. We are rather an important half of the population, after all. You deserve a seat at that table, and frankly, we need you there! 🙂

    As to your financial freedom – I can’t call you overly cautious when I’m equally cautious. I’ve navigated too much financial ruin to not be. It leaves a hell of a mark. But I like defining freedom as being able to make choices without negative consequences a lot!
    Revanche @ A Gai Shan Life recently posted…Just a little (link) love: love music must dance editionMy Profile

    • I’m blushing. Thanks for all the kind words, Revanche! I have worked incredibly hard to get where I am. I know I earned everything I’ve got. But. At the same time, I also wonder if I would be so successful as a man. If I were a guy, I would’ve had a much harder time getting hired that first time for my internship. I don’t think being female has hurt my case any. If anything, it’s only helped me, because you’re right, we do need more women in STEM careers.

  15. I’ve loved following folks’ responses here, in addition to hearing your take. You know I’m a total fan of defining this stuff for ourselves, so right on for creating your own definition of financial freedom. The only thing I think is worth thinking through is my huge belief that thinking of ourselves as “not free” puts us into a scarcity or deficit mindset, while if we see ourselves as free, we shift to an abundance mindset. In my view, you unquestionably have abundance — an abundance of options most of all (even if you can’t leave your job right this second, you can in pretty short order in the grand scheme of things), and a huge cushion of safety (your renters and their rent, your savings, your retirement accounts if things got bad, plus I assume credit cards if things got REALLY really bad). So it just feels a tiny bit sad to me to see yourself as “trapped” or “chained to your desk” when in truth you have vastly more options than 99% of the people on the planet. That feels like something to celebrate!

  16. Thoughtful post. I think you are financially free but have a long-winded way of describing why. My younger sister hates talking to me sometimes because any time she tells me she feels stuck, I reply with “well, here is how you could get out of that situation by doing XYZ. You’re not actually stuck” or whenever she complains about something that seems so insignificant in the scheme of things, I reply with, “that’s a first world problem, not a real problem. You’ll be OK.” I am trying to be helpful and provide perspective/solutions (it’s who I am) but she hates that. She just wants empathy like a normal person. I am clearly a jerk, but this community has changed me and I tend to agree with Mrs ONL that many of us are coming from an abundance of options and we are in a more privileged position compared with many folks. We are also fighters and we refuse to accept that we cannot change our situation or directly improve our outcome. It’s hard to hear other people be in a place where they feel stuck or financially trapped because I don’t believe it. My sister has taught me though, that I need to respond to people with empathy and put myself in their shoes because they are experiencing feelings of being trapped and that is what is important – how they feel. So anyways this is a long-winded way of saying that if you are feeling financially stuck, I support you and emphasize with you. I am not hear to tell you that feeling is fake.
    Millennial Boss recently posted…25 Quotes for Lady Entrepreneurs and Badass WomenMy Profile

    • I’m back. This is one of those posts you think about all day ha! Great job. Relocations are totally trapping and I experienced this first hand. So in that case, one would not be financially free.

  17. I agree with you, it’s financially smart to work towards your next two milestones for the ethics of a VA loan and the relocation payback. Let’s call those “soft ropes” and not handcuffs. Sure you could move, but it would hurt.

    I’m in a similar position, 7 months away from a relocation payoff and my house gains being tax free (and I will GTFO of Dallas when I retire). But I look at that and realize there are always ropes and “golden handcuffs”, if I work 3 more months, is bonus and stock time, then another three more and I hit a pension year, then another 9 months and it’s a really big stock/bonus, then another pension year, and on and on. These are 100% first world problems, but we all must make a decision on if/when/how we trade time for money. Your job/career/side hustle is a constant trade of time for . Each of us must make that personal decision of how we value money relative to time.

  18. I agree with you on this one, Gwen. I don’t know your whole financial situation, but as a very independent person myself, I wouldn’t feel “financially free” until I reached my FI number. Buying a house and having the mortgage covered is nice, but I’m assuming you still aren’t able to just quit your job and have all your expenses paid for. For me, being financially free is when you can quit your job and trust that your expenses will be paid for by either the money you’ve invested or by other income streams.

    I also think that sometimes we have the “handcuffs” on for so long that it still feels like they’re on even after they’ve been taken off. So it’s definitely important to look down every once in awhile and check how “imprisoned” we really are. As you get closer and closer to your goal, hopefully you feel more free as you gain the leeway to explore other options you didn’t have before.

    • Thanks Matt! I definitely feel a lot less shackled now that I’m in a job I enjoy, my 401k is vested, and my pension is soon to be completely vested.

  19. I think it is more a matter of perspective than of encouraging you to do something else. Studies have shown we can handle a lot more pain when we know we have an escape button. It is about thinking of your job as something you choose than something you have to do.
    It reminds me of going through college. I made it through reminding myself that it was something I chose. That I was free to make different choices, and if I was miserable it was all in my power. If I didn’t like the consequences of the alternatives then I needed to put on my big girl pants and keep pushing down the path I chose. But the choice was always mine. I was never trapped.
    All of your reasons are sound, but how you list them comes across as a little defensive to me. And since it all starts with a job you enjoy, even if you don’t love it, I’m also having a hard time with the mentality coming through. It’s like you know you’re lucky, but you feel trapped and you are trying to justify that feeling. The alternatives might not be ideal (that’s why you don’t choose them) but they are THERE.

    • That’s an entirely fair assessment! I do have options, yes, but I don’t like any of them as they’re not as good as the path I’m on now. Maybe I’m finally going through my quarter life crisis!

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