Financial Freedom Is More Than A Number
Recently, I asked the question “Have We Got It All Wrong?” In that post, I examined the path that we are taking to financial independence. I compared our situation to that of friends of ours who are a bit younger than us. I offered only very surface level facts of their situation as necessary to tell our story without compromising their privacy.
We met up with them for a cookout and play date recently. “The Prophet” (the ID he uses when commenting on the blog) offered to share his story more fully. I told him I thought it would make a fascinating case study if they were willing. They are behind us in the path to financial independence as defined by having assets equal to 25X your expenses. However, they are far ahead of us in having financial freedom as his post shows. Enjoy!
Case Study of an Adventurer
On June 8, 2015, Mr. Elephant Eater wrote a post titled “Have We Got It All Wrong?” I was featured in that post and have decided to respond.
So here goes…
In the original post, Mr. EE mentions going to a 2 year old’s birthday party where he caught up with a friend who shares similar life goals but who is way behind the Elephant Eaters on his journey to financial independence. I am that friend.
I am 31 years old, married, have one child and have been obsessed with freedom since a very young age, actually since birth I am pretty sure. I was a stubborn and independent child who wanted to learn and accomplish everything early and who wanted to do everything on my own. By the time I was 16 years old, I had amassed about $20,000 in savings via paper routes, dish washing jobs and other various legal and otherwise hustles. I dropped out of high school (hey, I had saved as much as most do for retirement 😉 ) but eventually found my way to University where I learned all about finance and trading studying financial engineering. I earned a business degree and headed out into the big bad corporate world…
It took me about 2 weeks to realize that I cannot sit at a desk all day. If I am not busy doing something, I have to leave that desk and get busy and it doesn’t matter whether it is noon or 5pm. Let’s just say I have been fired a few times. I have also had some jobs for many years in places that respected people for their skills, personality and the job they did and not the number of hours they were able to sit in one place. (Most people probably consider “many years” to be greater than 2-3, but we’ll go with it 🙂 –EE)
I love doing new things and get bored easily once the challenge is gone and so one day I left my fancy 6 figure corporate job and moved to Chile to make about $1500 per month as a backcountry ski guide. I loved it! After a few years of skiing 100+ days per year I eventually wanted something different so I joined a tech startup which was fun, but recently it was sold to a massive corporation. I had a very generous offer to go the corporate route. Not wanting to join a big corporate-style company and once again looking for more adventure in my life, I am off to work and play in the mountains, this time in Montana. I have lined up a decent paying job doing ski patrol and avalanche control work. I will likely save very little for the future and I definitely do not have 25x my annual expenses but life, more than anything, must stay interesting! I don’t care about arbitrary numbers like 25x. For all I know if I save 25x I may die the next day. I will always jump on interesting opportunities as they arise and strive to keep life interesting as I don’t really care about retirement and I already have financial independence. Independence is in the mind (okay, maybe a little bit in the bank account). By not fearing the future no matter your bank balance, you are already free. Do you really need the comfort of 25x?
“The lust for comfort murders the passion of the soul, and then walks grinning in the funeral.”
To answer the rhetorical question posed by Mr. EE, I do not think he has it all wrong. I think it is okay to look at another’s path and be inspired by it, but we are each on our own path and so long as you know you are doing what is best for you and your family, that is what counts. That being said, if you are not enjoying your short life just so you can reach some arbitrary savings balance, then yes, you have got it all wrong!
So I leave you with my financial information (slightly vague for privacy reasons). Am I making a bad decision by leaving a 6-figure job offer to make $16/hr. doing what I love?
31 years old
Married, one beautiful child
Spouses Income: $75-100k (Work from home, location independent job)
My current Income: $75-100k
My Corporate offer: >$100k
My Mountain income: $35-40k (Assuming ability to match winter income in summer months. May be less or more)
Paid off home: $150-175k
Retirement Savings: $300k
Other Taxable Investments: $30k
Annual Expenses: $35-45k
Thank you “Prophet” for sharing your story! I would like to add a few notes and give a few thoughts.
We became friends through a local outdoors club about a year before he quit the 6 figure gig (which he didn’t even mention included seemingly unlimited vacation time and generous financial bonuses). To clarify the post, it was not a straight path from the cushy corporate gig to guiding in Chile. He left that job with no real plan. He began ski patrolling at our local ski hill at about $10/hour. We began to wonder at that time if he was insane!
But therein lies the beauty of the story. He had the courage to make a change, some “F-You Money” in his bank account, and new-found freedom with his time. This enabled him to get this patrol experience and take several avalanche courses. Together, they gave him the qualifications and time to seek out the amazing opportunity in Chile, when his wife had a work assignment in that country about a year later.
I also think it is interesting to note that despite the far from straight line path they have taken, they are killing it financially. They have been able to get debt free (including home) in this most recent period of being a two professional income family because they keep their expenses low. How many people’s home value is less than 1X their annual household income? Barely in their 30’s, they have assets of about 10X current expenses. While expenses will likely rise with the move, they have little need to save more for traditional retirement. Simply keeping their current investments growing at a reasonable rate of 7% they would double about once a decade. They should have about 2.5 million dollars by age 60 without ever saving another penny.
As we constantly emphasize, it is vital get started on the right foot as soon as possible (like right now!). To get ahead, you must limit debt and recurring expenses by getting the big things right. This includes paying for education, housing, and cars in a sensible way, focusing on a strong marriage (if going that route) and avoiding excessive consumerism. You can live an amazing life without sacrificing, being an investment guru or tax genius.
The key difference between our two paths is the amount of importance we each place on financial security of more money in the bank versus the financial risk that comes with seeking more adventure immediately. Without a child, I think it is a no-brainer. The riskiness of their path is minimal as each adult is easily self-sufficient and they have a nice financial cushion. With a child, the biggest factor in taking our more conservative path is craving security for our family. If something were to happen to one of us, how much stress would that place on the other and child? We lean more conservative, but it is not a clear cut decision and they are obviously far better off than your average American living a lifestyle of consumerism.
I’ll be the first to weigh in on whether he is making a bad decision to pass on the high-paying corporate gig for a $16/hour job he’ll love. Once the risk/security issue is addressed, it all comes down to one question – – will you be able to afford a spare bedroom or at least a fold out couch? We’ve never skied in Montana…yet 😉 .
So are they making a bad financial decision? Is it smart to pursue your passions, even if it means making far less money and increasing living expenses? Do you think their plan is “too risky”? Share your thoughts below.
Are you taking an unconventional path to financial independence? Do you have an interesting story to tell? Contact us and we’ll consider you for a future case study.