Why am I overhauling my life for frugality instead of continuing my path as a middle-class consumptionist suburbanite? Mr. Money Moustache struck a chord in me and awakened a passion I forgot I ever had.
I was six years old when my mom took me to the local bank. She opened up a savings account for me and with it came a passbook. Each time we went to the bank they would print a record of deposits and interest payments in the passbook – super high tech for 1993, I'm sure. I loved seeing a few cents at a time accumulate every month on the $100 or so I had from birthday and Christmas gifts. And then, when we deposited some more money, instead of $.09/month, they'd pay out $.10/month! Getting paid to do nothing? Just from storing my birthday money at the bank – money my mom wouldn't let me touch anyway. Talk about something for nothing. I was hooked.
I knew that the more money I saved, the more I could make in interest. I thought about how cool it would be to win the lottery. With $2 million in a savings account (I didn't know about other investment vehicles at the time), the interest payment would be like $70k/year (hooray for mid-90s interest rates), which was/is a pretty respectable income. And I wouldn't even have to work! Now, how to win the lottery...
And that leads me to:
GOAL: Become financially independent
I want that salary-sized interest payment from my massive 'stash. What MMM has shown me is that there's another way, one where the odds aren't stacked against me (as much). Cut your expenses. Raise your savings rate. Forego material possessions you don't need and conspicuous consumption that's holding you back, and build your 'stash like it's your job.
I know that any goal worth it's weight will have a deadline or a timeline associated with it. This is a big one though and I've been finding it tough to make assumptions and start pinning down specifics. I don't know how marriage and kids are going to fit into my plans for financial independence, and there's a lot of short- and medium-term goals that will lead to The Big One, like paying off my student loans and paying off my mortgage. But I think 10 to 20 years is a good range to target.
Yeah, let's update my goal with an upper bound, to keep things interesting.
GOAL: Become financially independent within 20 years (by 2032)
Much better. By 2032 I want passive income from my investments to equal or exceed my annual expenses. Good goal if I do say so myself. Now let's make it happen.
This is a great goal and I think pretty achievable in 20 years. Can't wait to follow your journey.
ReplyDeleteMarriage and kids will help you along. Alot. For starters, getting married and having a child or two will do things to your tax bill that will make you smile. Second, having a family will multiply and intensify your determination to save money, because the thought of running out of cash will make your blood run cold. Driving economy cars and minivans suddenly won't seem like social suicide anymore. Why should it, after all you're driving around with baby puke on your shirt. As an added bonus, if you tend to be a socializing type, you will finally discover the ugly, 'stache-devouring math behind drink prices at bars.
ReplyDeleteOne potential pitfall: unless your circumstances prevent it, try to make sure your expenses are low enough by the time you have kids for one of you to take some time off (i.e. up to a couple of years), and keep saving enough to meet your goals. I could just tell you why, but it would be far more effective for me to suggest that you call the three most recommended daycare services in your area and ask how much they charge.
Here's a concept: what if you used that massive brain power and energy to create new capabilities and inventions that people would want to spend their money on? Isn't that an easier way of amassing huge quantities of money?
ReplyDeleteA previous commentor talked about "peace of mind" -which really goes to spending your time peacefully, feeling accomplished. So although spending less money, and making sure you are "not getting ripped off" goes to that utopia you are trying to achieve, isn't it really about accomplishing something better than what has come before? Solving real world problems?
The fact is that you can always make more money, but you can't get back the TIME you spend...so why not spend your time channeling that massive energy into something that MATTERS, for creating things that people would WANT to spend their money on, because it's solving a problem they have, or making their world better in some way? So when they do "buy from you", they are feeling they got a good deal.
Time is something we never get back...and for those less fortunate who have such limited time and are in situations they cannot control, who have left this world too short, then we should consider ourselves LUCKY if we can give back and make money on top of that.
In this world of massive communication, it would be interesting to learn what your all these people who are interested in what you have to say - what they would be willing to spend their money on, what they think would be a worthwhile purchase.
Isn't that the AMerican dream? To fix problems, create better ways of living, and make money in the process?
The concept is to channel that massive and brilliant energy into sharing ways to make things better, and that should lead to a plethora of opportunity in making money that you can save away on.
Thoughts?
Don't get me wrong - I believe protecting one's self from not getting ripped off is crucial - and one should spend time understanding how one's money is spent to ensure efficiency. But the bigger picture is to utilize that scarce resource called TIME to its greatest advantage, to take that massive brainpower and channel it to accomplish great things that others will appreciate and pay for. Otherwise one can fall prey to getting hung up on the minutia - otherwise why do so many people sit in front of the boob tube every day? These are the people willing to be led to a better place, and willing to pay for it...accomplishing a win-win is the perfect scenario...
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