There Is No Magic Formula for Financial Independence
There is no bullet.
Here’s an infuriating bit of click-bait for you to read in between bites of salad and donating to the ACLU. I’m sure you’ve heard this before: two people younger than you “retire” with “a lot of money” and want to offer you their advice so you can also stop working and start living.
Joe and Ali Olson were schoolteachers who managed to save $1 million and “retire,” traveling the world with their daughter and documenting it all on a blog. What the blog leaves out but Business Insider considerately notes is that part of the reason this couple was able to “retire” with $1 million before 30 is because of their extremely lucrative second income stream — flipping houses in Las Vegas. The money they saved as a result of that, plus their salaries as teachers and whatever they saved from living frugally was enough for them to quit their jobs and travel the world.
The secret to their success — aside from flipping houses and generating rental income from those houses that they own — is a guru-esque commitment to austerity that isn’t as severe as those who would call themselves minimalists, but is close enough.
For the record: here is how the Olsens made money. This is how they continue to make money. They achieved financial independence by owning property. Just so we’re clear: they did not save $1 million on two schoolteachers’ salaries while raising a baby. They did it beause they had 14 rental properties that made them money.
In the following couple of years, the couple scooped up 14 more rentals. Though they lost money on these during the financial crisis, the market eventually turned and their properties starting bringing in steady profits, eventually pushing their net worth over $1 million.
It sounds easy: resist the temptation of consumerism asking you to buy an iPad and a dongle and a face mask and things that are hygge and you’ll save enough money to stop working forever. Simplicity isn’t cheap. Assuming that a “fill-in-the-blank thing” is both a waste of money and unsatisfactory makes an uncomfortable assumption — that those who find themselves drowning financially are doing so because money disappears from their hands the moment they have it, frittered away on home theatre equipment and lattes and handbags and designer clothing.
“For me, financial independence was really easy to get because we were happy just living in our fairly small place, and eating at home, and just being efficient with how we spent money,” Joe explained to the Mad Fientist. “And so our high savings rate was just because we enjoyed simplicity. And we didn’t have to cut our budget. We didn’t have to deprive ourselves.”
By choosing to live simply and enjoy life instead of always looking toward the next fill-in-the-blank thing that might satisfy them, Joe and Ali were able to live on around $20,000 a year without feeling like they were sacrificing full lives.
Keeping up with the Joneses is for those who never actually lived like the Joneses in the first place. Wanting things — fill-in-the-blank or otherwise — is not a sign of weakness or financial stupidity. Buying those things for yourself when you can because you never were able to before doesn’t mean you’re not interested in your own financial security. Assuming as such is the latte tax, writ large.
“We cultivated a concept of gratitude about everything,” Ali says. “And once you’re grateful for everything you have, to try to get more seems silly.”
You can be grateful for what you have and still want more because sometimes, if you don’t have a lot, what you do have isn’t that great. Material possessions aren’t the devil — debt, healthcare, childcare, rent, mortgages, student loans and almost everything else about being alive are. Some people make enough money and the rest of us do just fine. Many of us do not. If you have the money, buy the thing. Feeling shameful about why you’re buying it or feeling like you’re justifying the purchase to anyone other than yourself is pointless. Keep your eyes on your own paper. Understand that many things in life that sound to good to be true actually are. Know that a hankering for stuff isn’t going to be your downfall.
Buy what you can. Buy what you need, and a little bit of what you don’t. Spend your money, save some money, live your life the way it needs to be lived for you. Make your own version of financial independence, but don’t believe this hype.
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