Achieving financial independence is hard in spite of the math being surprisingly easy.
Here’s the math:
Mr. Money Mustache tells the shockingly simple math behind early retirement much better than I can.
Save 5% of your take home pay and you’ll need to work 66 years; save 20% and you’ll need to work 37 years; save 50% and you’ll need to work 17 years; save 70% and you’ll need to work 8.5 years. Yep just 8.5 years.
This is a bit simplistic–but close.
I have my retirement mapped out in mind numbing detail. And you should too.
But for the smarty pants readers of this blog, it’s not too hard, right?
But here’s what’s hard:
If you want to reach financial independence, you have to be different. You can’t spend money on things that don’t feed your soul. And your soul needs to have a reasonable appetite.
I spent most of my life trying to fit in, trying to be like everyone else.
Because I didn’t come out of childhood with a rock solid self esteem. I’m not sure why–I had two parents who loved me and did their best for me. I did well in school. I was reasonably attractive–if you overlook that awkward stage. I had a few good friends and lots of acquaintances.
But I didn’t have what the other kids had. And somehow that affected me more than it should have. Other girls could wear their brother’s hand me down clothes and still appear to have a great self esteem. Not me.
So when I made my first money–I mean my very first money busing tables at a Mexican restaurant at 13. I had a friend take me clothes shopping. And I spent all $150 of it so I could fit in. And $150 was a ton of money in the late 70’s.
And when I was getting ready to start my first real job at 22, I bought a brand spanking new Toyota Celica. I was about to earn $22,500 a year and I bought a car for $14,101.
I had no down payment for that car. So I got two loans–a 12 month loan for the down payment I should have had plus a five year loan for the rest of the car.
In that first year, my car payment was $431 a month. My take home pay was $1,278. 34% of my income went to that car payment.
Because I wanted to be cool and look successful. Oh and it was cool–I loved that car. And the future Mr. Ms. Liz took notice of that cool car–it may be what prompted him to ask me out.
But that big a$$ car payment bugged the crap out of me and that was the start of me making different decisions.
I still have my greenbar budget sheet from 1986 where I mapped out how I could pay extra on that down payment loan. I paid that twelve month loan off in five months.
Then I started putting an extra $100 a month towards the five year loan. It was paid off in a little over three years. And that was my first and last real car payment. To be fair, I had a payment for my next car–a Lexus but the loan was 0% with the Bank of Mr. Ms. Liz so it doesn’t count . . . right?
And a funny thing happened. I started to enjoy being a bit different from those who surrounded me.
By my late 20’s, I was tracking my spending and net worth on Quicken. I was proud of what I had invested rather than what I wore or drove. Even though no one else really knew.
I had no debt other than that Bank of Mr. Ms. Liz car payment and our mortgage. By my early 40’s, I had no debt.
My savings rate went from 20% to over 70% of my take home pay. And my net worth grew until it could easily support my retirement.
So now I’m different again.
I’m on the pickleball court with my new old friends while people my age are in the office.
I’m a snowbird, migrating to the desert for the winter while people my age are griping about their winter commutes.
I’m the girl who doesn’t worry about money . . . at all. Because I have plenty for the experiences and things that feed my soul. For my soul has a reasonable appetite.
Does your soul have a reasonable appetite?