There are 3 philosophies on money that I used to get to F.I. Here is my take on the philosophies and how I used them in my life.
This book came out in the 1990’s, but the first time I had heard of the concept of financial independence, it was from a friend who had taken the course “Transform your relationship with Money”. The most revolutionary concept from the book, is that you could earn enough money that at some point when you had enough you could use excess to change the world. I read the book, because the internet wasn’t a thing yet, but now they have a web site full of resources for living Financial Independence. http://www.financialintegrity.org/index.php?title=Main_Page
Some of the ideas still stick with me all these years later:
The point where your expenses are low and your income covers your expenses. This was fun to do, you put up a wall chart that showed your growing dividend income and your expenses and you did it monthly and you would watch the two points grow closer together and until you reached the cross over point. If I find my old copy, I’ll take a picture and post it.
That you can only buy so much, and after a certain amount of purchasing you no longer get satisfaction from owning or purchasing more. You have enough. Excess, or buying more than you need it just clutter and takes your time away from what you value in your life.
Once you track your expenses and put them into categories you ask how you feel about your expenses with the following 3 questions. You just give them a +/- or 0 no effect.
- Did I receive fulfillment, satisfaction and value in proportion to the life energy spent? (You have to calculate your time = money)
- Is this expenditure of life energy in alignment with my values and purpose?
- How might this expenditure change if I didn’t have to work for a living?
I first heard of Dave Ramsey on a NPR radio story around 2002. He wasn’t broadcast in the west coast yet, so I started listening to his podcast. This was right after my divorce, when I was in serious debt, had no job and had to pay my ex for his ½ of the house. Listening to the caller’s on Dave’s show, was like a daily reminder and motivation of where my life could go. It made to me to want to reach the point where I could call the show and yell. “I’m debt free”. Those callers were so inspirational and that is what I needed at a time when everything seemed impossible, I didn’t even have a job, for goodness sakes! The tools:
The baby steps were 7 steps to financial freedom. They were like goals mapped out for me and I love goals. I still have the baby steps printed out, and I wrote down the day that I reached the goal. The first 3 goals were the easiest to achieve, so you feel very motivated to keep going.
Step one: $1000.00 to start Emergency Fund
Step two: Pay off all debt using the debt snowball
Step three: 3 to 6 months expense in savings
Spending all your money on paper before the month begins. – This was a different kind of budgeting that YMYL tracking every expense. Instead you spend intentionally on paper (or computer doesn’t matter), you just have to decide where all your money is going to go at the beginning of the pay period. Once you spend all your money on paper, if there is any left you decide where it will go. I still use this method today.
Financial Peace Class
I took the Financial Peace University course. It’s a course where you meet with others who are looking to get debt free. The best part was that you had others to talk to about debt, spending and we learned from each other. It has a Christian focus, but Dave makes is accessible for all participants (at least he did then, I haven’t listen to him in several years). Where I took the class we did have a prayer because the course was led by a pastor. It really motivated me to keep on track, and share with others who were on the same journey. Which leads to the most important tool:
Dave recommends selling things, taking on part-time jobs, looking for more income and making short-term sacrifice to start seeing results. Seeing results motivates you to keep going. He has some memorable sayings:
“Gazelle intensity” – you go fast when your being chased by a lion.
“Boom! Get after it”
He has some statistics about how long it takes for each of the baby steps and I pretty much met the averages. Eighteen months to pay off the debt, seven years to pay off the house. Dave’s focus is about being free of debt. Once I reached debt freedom, his program didn’t serve me as well and I no longer listen to the podcasts.
At this point in my Financial Freedom Journey, I wandered around being debt free, saving some money, but spending more on travel and other indulgence since I felt I had been sacrificing for so many years to reach my debt freedom. Then I found Mr. Money Mustache.
MMM is “Financial Freedom through badassity” and he provides a view from someone who is there. Where financial Independence is real and all you have to do is get it and embrace it. There are some specific posts that really encouraged me to take the plunge and say “Yes! I have enough, I don’t have to work any more”.
The DIY spirit – http://www.mrmoneymustache.com/2011/12/05/muscle-over-motor/
Just cause I stop working, doesn’t mean I’ll never work again – http://www.mrmoneymustache.com/2015/04/15/great-news-early-retirement-doesnt-mean-youll-stop-working/
The Retirement calculator are designed to keep you working.
Money management is a lot like dieting, you can read all the diet books you want, but until you are ready to change your eating habits, nothing is going to happen. F.I. was like that for me. Even though I learned about YMYL and applied the steps for a while, once I was a mother and wife, I focused on other things. When I got my first job after the divorce in 2004 (I had been a stay at home mom for 8 years), I applied the Dave Ramsey steps and reached debt freedom in 2011. Then I wandered around in the financial wilderness, continuing to working enjoying the extra income, having fun, but not working on F.I. Once of my favorite bloggers issued a $100,000 challenge, to save up that much money as quickly as you could, lacking a specific goal in my life, I took up the challenge. It took me three years. Once I reached that goal, then what? Make the leap to F.I. and give it a go. After all those years of working hard to reach a goal, it is a huge adjustment to stop working and just appreciate what you have.