Financial Independence Equals Freedom

Steve Cummings

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People talk about retirement all the time. Will there be social security in retirement? Will you have enough money when you retire? What will you do when you retire? These are all great questions. The one thing that sticks out with retirement is freedom. You will have freedom of choices of what you can use your time on. These same concepts are also used for Financial Independence.


The big buzz word that is coming about is FIRE. FIRE stands for Financial Independence Retire Early. As I read about it and study it I see that a lot of people that are part of the FIRE movement stick to the FI part more often than the RE part. It is a part of life.

If you are young you will more likely have the freedom to do other projects in life than may reap benefits such as extra income. If they are older they may just stop work all together.

I want to focus on the FI part. Reading Mr. Money Mustache, I was enamored to learn about how to reach financial independence to one day not have to depend on my job for income. It has created a drive to seek that number for freedom.

Freedom is time

Choose FI is a podcast that is dedicated to interviewing and talking about Financial Freedom. In the book Choose FI, the author Chris talks with Brad and Jonathan, the hosts of the Choose FI podcast, about Financial Independence.

They basically make the case that they chose Financial Independence as a means to gain freedom and use their money as a tool to buy time.

Time is something that is not all too abundant. As we get older our time starts to run out. That is part of the reason Warren Buffett talks about time being the biggest factor with assets. It is the greatest contributing factor for your assets to grow.

Time is also something that people love to have. You have time to travel, be with your family, kids, other projects, and the multitudes of things you can be doing besides work.

Not all jobs are terrible. Work sometimes can be draining, and maybe you just need time off. Oftentimes, we see relatives that work hard in order to create opportunities for their kids and loved ones, but as their time dwindles that may have wished that time was still there.

The 4% Rule

In my quest to buy more time, I need to figure out what number would give me the opportunity to stop working. My job is fairly great with time off, but my job may not always be around so Mrs. FE and myself must strive to save in case our situation changes.

Using the 4% rule, is the way we have come up with our Financial Independence Number. We take our annual spendings and multiply by 25.

That number gives us a goal to set-up before us to achieve that moment where we can withdraw just 4% of our portfolio for almost the rest of our life. That does not mean that we will quit working, but we have freedom and choices to see what other things may be important in our life at that moment.

Let’s break down what our goal number would be. On average, we spend close to $24,00-25,000 USD per year. We enjoy traveling so that is added up that number, plus any other things that we usually spend money on such as rent, food, transportation, doctor's visits, and miscellaneous.

If we take $25,000 times it by 25 it should equal $625,000 USD. ( $25,000 x 25= $625,000). Now we have a goal number. Our FI number will be $625,000. You guys can do this at home.

Take your annual spendings multiply it by 25 and it will equal your FI number. This is the number that you can effectively stop working and withdraw 4% of that income for the next 30 plus years.

Our Goals for Freedom

Our number is $625,000. We will be creating Net Worth’s for each month to track the progress of our goal to reach that number. Each month is different. So there will be months with ups and months with downs. Our goal is simple: let's hit $625,000 and see where life takes us after that.

Goal-making is something that helps direct your life. Our goal is quite straightforward: let's earn income, save, and reach our final number. As you watch our journey, I will help show the ups and downs of each month.

In April, we were unfortunate to have a downturn in the market, plus some expenses that we had not anticipated due to canceled flights for trips. We are now in June. Life has normalized quite a bit, and we are trying to rock in roll while enjoying our life together.

What are you going to do?

Take a look at our Net Worth statements and follow our journey. 

I hope this post inspires you to think, plan, and do some action. If anything just try to figure out a number you would like to retire at. Use the 4% rule, and make a goal. 

What is your FI number?

” Spend less than you make, stay out of debt, and invest the rest”

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