A crucial aspect of achieving financial freedom is the desire to do so. It is easy to talk about it, and wish for it, but there are many roads and it is different for each one of us.
You can’t know where you’re going until you know where you’ve been
Frugal Is In My Blood
Growing up in a middle-middle-class family in a third-world country meant that you were born frugal. Nothing was ever wasted and almost everything could be repaired at a fraction of the cost to purchase a new one. Dad was always the breadwinner and while Mom worked on and off, the household ran on a fixed amount that was handed to her at the beginning of each month. Somehow, my siblings and I never felt like we were left wanting for anything, except for the occasional expensive toy. (I still remember that slot car race track set my buddy downstairs had, that the 10-yr old me could go over and play with, but could not have.)
Fast-forward fifteen years, and here I was halfway across the world, about to start a new job in the New York area. My salary was 10x more than what I was making back ‘home’ and life was great. As was the norm for us FOBs , I had roommates; it helped to conserve cash and you shared and learned from each others’ trials and tribulations.
Of course, with more disposable income came lifestyle creep and the desire to purchase all the cool ‘toys’ (read: electronics) that I never had growing up. The Indian in me would always look for the best deal or bought at sales to minimize the impact to the bottom line. Of course, we only bought what we could afford and paid off the credit card bill promptly when it came due.
Somewhere around this time, I started to invest in active mutual funds. Even so, I’d try to find the right balance of no-load funds with low (< 1/1.25%) expense ratios as I wanted value for my money. I remember saving up to meet the minimum investments and spending time on mutual fund comparison and scoring sites. I happen to stumble across the Vanguard Diehards forum (the precursor to Bogleheads – yes I’m that old), and would lurk on and off as time permitted.
A decade or so later…
You would find me with kids and a mortgage living the blissful suburban life on the west coast.
Financially speaking, we:
- Are still frugal-ish, watching what we spend but occasionally giving into a want versus a need.
- Pay off all bills every month, and have no debt other than our mortgage. That said, some months are tougher than others.
- Eat out or get takeout once in 7-10 days, from a reasonably-priced restaurant.
- Driving our cars until they cost more to keep around. The nice (not super nice) car itch has been scratched. The last one I had to give up was 13 yrs old, in great condition but wouldn’t pass emissions without spending more than the car was worth.
- Upgrade our phones every 2 years (or more, preferably). The last few devices we’ve had become more and more sluggish and lose juice faster with multiple software upgrades over two years.
- Live in a high-cost of living area. This is partly because we love the weather and partly because of the excellent school district (filed under: the things we do for our kids). If I could have the weather and the school district without the high cost with all else being equal (yeah right), I’d take that in a heartbeat!
- Do like to entertain, which unfortunately means our grocery/drinks budget is sometimes higher than we’d like it to be
Finding the Yellow Brick Road
Turning 40 didn’t feel any different from the previous day, although I’d always wondered if it would.
I’m also not sure when I started to think about financial freedom, but it definitely wasn’t a switch that turned on when I turned the big Four Oh.
All I know that it was gradual. It took a couple more years before I finally understood and what it meant to us as a family, and where we would be – financially and otherwise – when we arrived at that juncture.
It’s heartening to read others’ plans about achieving their goals of FI. Unfortunately, our plan is always evolving, even though the end goal is clear.
The view from 30,000 feet:
- Explore new endeavors to make more recurring and consistent incomeOur income fluctuates from month to month, forget year over year. That means we’re always saving for a rainy day. This is both good and bad, as we sometimes forget to have fun. It also makes long-term planning difficult.Current Status: It took me 18 months to get off my complacent ass! I’m glad to say I’m finally starting to work at new ideas, although this is just the beginning…and its tough as hell 🙂
- Use a combination of taxable and tax-advantaged accounts with index funds & ETFsCurrent Status: In place, but lopsided – the tax-deferred is the largest chunk. I’d like to balance this out going forward, but the Solo 401(k) is so enticing!
- Buy & hold rental real estate for cash flowCurrent Status: Started to add extra cash to separate savings account earmarked for this purpose. Hello, mental accounting!
- Travel more
This one is just thrown in so that we don’t forget to have fun while we’re at it. As my wife reminds me, once the kids are grown they’re done listening to us and we won’t get those years back.Current Status: Some progress over the last few years thanks to travel hacking. More on that later.
Emerald City, here we come!