The idea of achieving financial freedom is enough to spur the laziest person into action, myself included.
We scrimp and we save, and we take advantage of low-cost indexing and compounding. Finally, and hopefully, we arrive at the gates to the “Emerald City”.
All this time, we’re envisioning what life would be like inside. We’ve also been making plans to optimize both our cash flow and our happiness levels. Joshua Sheats and J.D. Roth are two personal finance gurus who have already covered the stages one goes through to get here in depth.
Yes, financial freedom means different things to different people. It’s also used interchangeably with financial independence and I understand the reasons why.
The way I see it, “freedom” is defined very clearly by the last stage of ‘Abundance’ that J.D. talks about, and that’s what I’m shooting for.
So what does financial freedom mean to me personally, once I do get there?
What I do know
Working would be optional
Are you really surprised that this is #1, given the name of this blog?
I would love to work only because I wanted to, and not because I needed to. I could work on what made me happy and what I fancied at that time.
It’s many a self-employed consultant who’s taken on certain clients and projects only to pay the bills – you know who you are and what you’ve had to do.
The mortgage payment would not be the biggest line item
Currently, I don’t have a specific plan to pay off my mortgage by a specific date.
This is deliberate.
In my current accumulation phase, I can put the money to better use by investing in low-cost index funds vs. making extra payments on my home loan. That said, as I get closer to my magic number I would definitely make paying most (or, more likely, all) of this off my biggest priority. I’m looking forward to the day when my monthly mortgage payment isn’t the biggest line item on my mint.com profile.
Kids’ college education (mostly) paid for
My parents paid for my college education. Yes, the costs were nowhere close to what they will be when my eldest goes to college, but it was still a not-so-insignificant chunk of my parents’ income. I’d like to do the same to my kids as much as I can, but not at the risk of endangering my eventual retirement.
Travel, and lots of it. Two plane tickets instead of four. Adult conversations at dinner.
Spending a year in Europe, a different city each month. Living like the locals.
Need I say more?
Starting a lot of sentences with “Back in my day”…
Hey, if I’ve made it thus far I get the right to say that whenever I want, to whoever I want 🙂
Obligatory disclaimer: My kids would argue that I already do this…
No worries about monthly bills
It would definitely be nice not to worry about where the next pay check is coming from, or how bills are going to get paid. We would have a well-planned drawdown strategy in place and with the the two biggest expenses (college and mortgage) out of the way, life would be sweet!
My friends will have a sense of wonder and awe
I’ll be ‘free’, and while I’d love for them to be so as well, chances are they may not. Hence, the stupid grin on my face when I say “I’m retired” is what I’m selfishly looking forward to.
We will be kids again
Our Next Life captures this nicely, and in a way that I could never articulate. As the eldest, I have always had to be the most responsible, the one that everyone could depend on. Not. Any. More.
What I don’t know
The proverbial Elephant in the Room, or should I say the Wicked Witch of the West?
Suffice it to say that no one knows what the situation will be like in a decade from now. Since I’m self-employed, I have to evaluate and figure out which insurance plan I can afford each November. I make too much for subsidies but too little for it not to cause a dent. Thus, I know all too well how the costs keep increasing year over year for no apparent reason. Unfortunately we won’t qualify for access to a health care sharing ministry, but for those interested, ESI has done a great series on the topic.
I am growing our Health Savings Account and using it as a Stealth IRA, nonetheless.
You’ve got to ask yourself one question. Do I feel lucky? Well, do ya, punk?
Unsure what life will be like in 10 or 20 years
What will our needs and wants be? What will we like doing in our free time? Will our health support what we want to do? It doesn’t matter – being financially free means I’m going to have the ability to pick, and to adapt, without skipping a beat.
A whole bunch of other unknowns
There’s probably a zillion other things I missed, or that could go wrong. I choose not to dwell on that, not because I have blinders on, but because I can’t do a damn thing about them right now. I choose to focus on what I do know, and what I can control.
What do you think? What goals or objectives apart from the magic number define what financial freedom means to you?