Lately, I’ve done a lot of reflecting on the first post I ever wrote for InterestingMoney. In that (short) post, I wrote about my longer-term goals. Specifically, I mentioned that my purpose in founding InterestingMoney was to track progress toward a single, specific goal. Here’s the first paragraph that I wrote here, back in 2007:
Alright, so my goal for this site is to keep track of my journey toward financial freedom. What is financial freedom? Good question. The answer varies, of course, but one answer is the ability to live comfortably off one’s interest earning without touching the principal investment. This is a lofty goal – one that I will not achieve for quite a long time.
I emphasized the first sentence. And do you know why? Because since I wrote that little paragraph, I’ve hardly said a word otherwise about my progress toward that goal. Sure, I’ve written occasionally about frugality, chasing yield, mutual funds, and a bunch of other probably-not-terribly-useful blather, but I haven’t written anything else about tracking my journey toward financial freedom? Pathetic!
No longer. It’s time to return to my original goal: tracking progress toward financial freedom.
Financial Freedom – Redefined
Also in that first paragraph, I attempted (rather pitifully, I might add) to define what was meant by Financial Freedom. What a load! Can you imagine the audacity? There I was, a bright-eyed student, still wet behind the ears, starting a spiffy new personal finance blog, and in my first paragraph, I attempt to define the impossibly broad concept of financial independence, and only in a single sentence?! If I could go back to March 2007 – when I wrote that post – I might give myself a good boxing about the face and shoulders. In other words, I’d punch myself in the neck.
Let’s take another stab at it, and allow me to admit upfront that I don’t have a great answer to the question of What is financial freedom? I believe that this is one of those sliding-scale concepts that means different things to different people. One person might view it as bringing in large enough paychecks to cover the monthly spending, hopefully with a little bit left over. While that may be comfortable, I wouldn’t exactly call it freedom.
Another person might define financial freedom as having an assload of money in the bank – so much that they could buy the monocle off Rockefeller’s very eyeball with that kind of cash. Oh, and the monthly interest will allow them to march around in gold pants in no time! That’s closer to what I had in mind with my original goal, but it’s not a realistic goal, at least not for most anyone post-2008. In March 2007, banks paid 5-6% APY on savings, and CD rates were even higher! In my naïveté, I thought that rates would stay that high for years, maybe even decades. So why couldn’t I build up a war-chest of cash, then quit my job early and live frugally off those sweet-and-steady 6%+ dividends?
Given that bank interest rates are presently under 1% in almost all cases, that vision faded pretty quickly. I was so young, and didn’t have a clue about investing, or recessions, or budgets, or… pretty much anything.
My New Vison of Financial Freedom
InterestingMoney has been around since March 2007. As far as personal finance blogs go – at least the ones see receiving occasional updates – it’s a bit of an old-timer. Back then, I was a fresh-faced, idealistic young doctoral student earning an offensively low salary. Now I’m a weather-worn, thick-skinned, bitter old professor* earning a middle-class income. While I enjoy my job right now, I know that I don’t want to do it until I’m 60+. Every year or so, I tell my students that while I love teaching, the day I begrudgingly walk into the classroom feeling resentful about having to be there, that’s the day I resign and go do something else. I already know that I don’t want to actually become one of those bitter old professors who should have retired a decade ago, but is still hanging in there, going through the motions because he didn’t save enough for retirement.
And herein lies my new vision of financial freedom: Having the ability to quit full-time work if I choose and live off of multiple income streams, including:
- Passive income: Bank & CD interest, stock/bond dividends
- Semi-active income: Rent from one or more investment properties
- Active income: Part-time work, if necessary, or self-employment ventures
Yes, I’m talking about early retirement, and while it’s not a new concept, it IS time for me to get serious about it. It was, after all, my original goal to track on this website. Despite the prospect of having a child by the end of the year, I want to make this happen.
And I have a long way to go, but I’m optimistic. I’ve already started learning a lot from this mustachioed master. I hope you’ll stay with me as I navigate the rough waters toward early retirement. What I learn – and what I dream – I’ll share with you.
* P.S. Nah, I’m really not a bitter old professor, but one can dream, right? I’m 33, and I definitely still enjoy my job, at least for now.