Achieving financial independence is easy. Look at me. Prior to turning 45, I was a financial moron. I had nothing saved for retirement, was brimming with debt, and thought happiness came via the accumulation of unnecessary crap. And then I said enough. Started saving 50-60% of my gross income—and boom! In eleven short years, less than two weeks after I turned 55, I was financially independent and retired. How do you like me now, suckas?
Is Achieving Financial Independence Really Easy?
If I were an egomaniac, I would stick with the superficial version of my life outlined above. It would make me look pretty awesome. But it would also be a lie. I did a lot of things right once I turned 45. But there’s no way I could have achieved financial independence at age 55 without a great deal of luck. To show what I mean, consider the following.
Marrying the right person. I married Mrs. Groovy shortly before I turned 42. I knew she was level-headed and had good values. But I had no idea what financial baggage she was bringing to the marriage. And likewise for her. We never discussed finances during our courtship. It turned out that we both had ample debt and some fairly shabby financial habits and attitudes. It also turned out that our financial situation wasn’t who we really were. In other words, we were financial morons because we were just doing what everybody else was doing. Once we discovered the FIRE community, and learned that there was no law requiring us to live paycheck to paycheck, we quickly ditched the consumerist Kool-Aid and starting imbibing heavily on the FIRE Kool-Aid.
Not having kids. Because Mrs. Groovy and I got married late in life, we decided not to have kids. The thought of having teenagers when we turned 60 made us shudder. And while not having kids will always be a regret, it did have one gigantic benefit: it made life a lot less expensive. None of our income went to such things as diapers, daycare, birthday parties, dance lessons, Little League, braces, video games, SAT tutors, or 529 plans.
A willingness to pursue geoarbitrage. I live in Charlotte, North Carolina. I used to live on Long Island. Property taxes on my 2,000 sq ft home are $2,100. Property taxes on a similar home on Long Island would be around $15K. My Charlotte home cost $225K. A similar home on Long Island would easily cost $500K. I was very lucky that a beautiful, affordable community existed a mere 630 miles from New York. I was also very lucky that I married someone who couldn’t wait to leave New York.
Making the best of an epic housing boom. In 1998 a bought a one-bedroom condo for $70K. In 2006, we sold that same one-bedroom condo for $340K. After satisfying all the closing mumbo-jumbo, we walked away with a little over a quarter of a million dollars. We then used that $250K to payoff our remaining consumer debt and buy a home outright in Charlotte.
Solid household income. After moving to Charlotte, I got a job as a data analyst before the PTO from my former government job ran out. Mrs. Groovy’s transition was even easier. Her New York employer allowed her to keep her job and telecommute. Neither Mrs. Groovy nor I made killer salaries. But our household income was always slightly more than double the national median. And both of our employers provided excellent benefits. In Mrs. Groovy’s 403(b) plan, for instance, she got an 8% employer match on a 5% contribution.
Do you see how crucial luck was in my quest for financial independence? If any of the above failed to happen—if Mrs. Groovy refused to leave New York, for instance—accumulating twenty-five times my annual living expenses by the time I reached 55 would have been impossible.
Don’t Wait to Be Good
Here is my heartfelt plea to young people. DON’T WAIT TO BE GOOD! I didn’t develop solid financial habits until I was roughly 45 years old. And it worked out for me only because the financial gods, for whatever reason, decided to treat me well. Will the financial gods be as kind to you? Will they, in your fifth decade of life, favor you with a great spouse, a childless household, a fantastic geoarbitrage opportunity, a $250K tax free real estate profit, and a nice stretch of stable, well-compensated employment?
I wish it were otherwise, but here’s the cold, hard truth. The later you wait to be good financially, the more you’ll need luck to achieve financial independence. And that’s not a good plan. Luck is very fickle. It’s far better to remove luck from the equation and embrace good financial habits in your 20s.
To that end, then, I have another heartfelt plea to young people. START! Just make a concerted effort to do one of the three following action items. Each one is a gateway habit. Make any one of them part of who you are and you’ll develop an unslakable thirst for better and more consequential financial habits.
- Go to Rockstar Finance every day and read the three featured blog posts
- Use a spreadsheet to track your expenses
- Open a Roth IRA and contribute $100 a month to it
And, finally, since inertia bedevils so many people—especially young people—I’ve included this YouTube video from Brian Johnson. In it, he provides some excellent advice on how to slay the dreaded procrastination monster.
Okay, groovy freedomists, that’s all I got. What say you? Do my heartfelt pleas to young people make sense? Or are my heartfelt pleas an exercise in futility? After all, how many young people are open to the sage advice of an old fart like me? Let me know what you think when you get a chance. I’d love to hear your thoughts. Peace.