July 4th is coming up tomorrow, or Independence Day in the United States. Sadly for me, I’ll miss the festivities, because I’ll be on a plane most of the day on my way back home. But I’m pretty sure no one is feeling TOO sorry for me, I just finished up about two and a half months of traveling around the world. As many know, I took a 10-week sabbatical from work to celebrate ten years at the same job… (Who would have thought I could actually STAY at the same job that long, or that they could put up with me!)

Anyway, I had a lot of time to explore, think, and reflect on my trip. It’s been an amazing time, and I’ll share more of my adventures in a future post, but today I want to explore a revelation that has occurred to me as I travel.

But backing up for a minute, as you know, being a financial planner is all about helping people manage their money. Ok sure, but to what end? What’s the ultimate goal of getting out of debt, budgeting, and learning how to invest? Even a money nerd like me doesn’t want to focus on personal finance 24/7; there has to be life beyond the budget.

Well, thankfully, there IS a point to this stuff.

For some people, the point is just to QUIT FREAKING WORKING. They want to retire as early as possible and spend the rest of their days sipping mimosas on a beach. Or sweeping the driveway in their PJs on a Thursday at 11 am. In other words, whatever the heck they want.

financial independence meme

Others are convinced they will never retire and will be carried out in a wooden box. But even these folks would admit it’s better to work on projects they’re passionate about rather than out of financial fear and pressure. So my goal is simply to try to help folks focus on a simple, universally attractive goal — financial independence.

What is Financial Independence?

Financial independence is simply having sufficient assets to facilitate your desired lifestyle without having to work. Or to put it another way, to get your money off its rear end and working, so you don’t have to.

Many people don’t believe this is possible. So they accept the lie that is fed to them — that the “American dream” looks like this:

  1. to go to college, graduate with a slip of fancy paper and a mountain of debt
  2. start a career slaving for “the Man”
  3. pile up a mountain of debt to accumulate crap they don’t need
  4. continue working at said barely tolerable job so they can pay back said mountain of debt
  5. live for the weekends, if any
  6. cycle and repeat until they’re old
  7. hopefully (somehow?) retire, and then die

Sorry, I just can’t live that way.

Thankfully, there is another way. It involves a little discipline and a plan, but it’s definitely possible. It involves building wealth so that you can work (or not work) on your own terms, doing what you are passionate about. Or, you can assume the aforementioned lifestyle involving your butt in a chair, a beach, and a mimosa (or two) in your hand.

What the Heck is My “Desired” Lifestyle??

Ok, that all sounds simple enough, but how exactly do we get the money to do this? Good question, and I’ll get back to that in future posts, but first we have to figure out what the “desired lifestyle” is. Most people just focus on the money, and never do the introspection necessary to figure out what they truly want out of life.

If you aim at nothing, you will hit it every time. –Zig Ziglar

As I passed through seven different countries in ten weeks, it struck me how differently humans live across the globe. Not just different monetary standards of living, but the emphasis that they place on health and relationships over career and success often differs so much from our “American dream.” Simply put, many people were happy and content (gasp!) without all the crap we have (how dare they!)

Family, friends, health, meaningful work — these are the things that bring happiness. Most studies show that once you achieve an income that meets your basic needs, more money will not make you (much) happier. For example, I met a Mexican in Los Cabos that had emigrated to the U.S. to study engineering. He finished school, got a job, and began making a good salary. The “only” downside was that he was miserable. Eventually, he moved back to Mexico and opened a beautiful little seafood place a few blocks from the beach. Now he spends loads of quality time with his family and runs a thriving little restaurant. Oh, and his ceviche is to die for!

My point is that when you really begin to think about the things that make you happy in life, it becomes easier and easier to strip out all the extra stuff that isn’t so important. And when you do that, it becomes clearer to you what makes you happy, so you begin to purge even more.

You may find that a simple life is as good for your happiness as it is for your wealthiness.

The Money Part is Simple to Understand (but Hard to Do)

Once you’ve defined your ideal lifestyle, and better yet have started living it, you just need to track your spending to know what that lifestyle costs. Give it some time, maybe 6 months to a year at least, to know that you’ve included everything in your monthly expenses. (One free tool that can help is Personal Capital. Open an account there and begin tracking all your spending automatically.)

From there the actual math is pretty simple. There is a concept in finance called The 4% Rule. It essentially says that you can take 4% off of your investment portfolio and expect it to continue to provide that level of income plus inflation over time. (That is assuming, of course, that you have a well-designed portfolio, appropriate for your risk tolerance and goals, but that’s a post for another day…)

Looking at the other side of the coin, the 4% Rule simply means that you need to save 25 times your annual expenses. So, for example, if you need $3,000/month to live comfortably, take $36,000 ($3,000/month x 12) and multiply it by twenty-five to get a $900,000 portfolio.

So, if you sold everything–the boat that you don’t use, the fancy car you don’t need, the big house (half of which you never go into), and added in your investments (minus your debt, of course)–if that number comes up to $900k or higher, you are officially financially free! You can hand in your notice tomorrow if you want to. Or you can continue to go to work every day with the freedom of knowing that if they lay you off, bring in a new boss that you hate, or you just grow tired of it, you can walk away without worrying about money.

Ok, so maybe $900,000 is a lot of money.

But what if you just needed half of that $3,000/month budget to live comfortably? In a lot of places that I visited — Colombia, Mexico, Thailand, even southern Spain — $1,500/month is more than the average income there. And these are beautiful places with sunny beaches, friendly locals, and vibrant cultures.

I’m not saying you would sell everything and move there just to put your feet in the sand, but simply knowing that you could do that if you had to should provide tremendous peace of mind.

What a fantastic feeling, right?!

My Financial Independence Revelation

First, I have to confess that I HATE talking about my own finances. But, the point of this blog is for people to learn from my experiences (and to keep me accountable to reach my goals), so if I don’t get over that feeling, no one benefits. So, before I financially “get naked” in front of the whole world, let me preface this by saying that I’ve made every mistake in the book. I’ve been lucky as much as good, and I’ll gladly admit that. You can read more of my story here.

Ok, on to the big reveal… For me, this trip has been an eye-opener because I’ve realized that it doesn’t really take much to be happy. I won’t reveal my exact numbers, but the truth is that I could reproduce a basic level of income from my investments, enough to live comfortably in many of these places. I’m not sure I would call it my permanent “desired lifestyle,” but I could definitely make it work comfortably and be content.

Thankfully, I like my job and have no plans to quit. I love helping people plan for financial independence and seeing them get there… All of that is very gratifying for me. But also, knowing that if something happened I could walk away without worry is a pretty amazing feeling as well.

The great news is that almost anyone can do this… just get started.


Life is short. Most people simply trade their time for money until they get too old to work, and then they depend on government programs for survival. There is a much better way — with a little knowledge, discipline, and hard work, you can reach financial independence. I’ve seen dozens of other people do it, and you can too.