Good morning all! Today I am blog swapping with John from Frugal Rules who gives us his opinion on financial independence. Please visit his site too, I wrote a guest post about how to learn languages frugally!
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What Does Financial Independence Mean to You?
We live in a society that tells us we need to have a lot of money and things to be happy. The message is everywhere, from TV ads to products that get hawked at on us the radio to our own inner conscience telling us we need something to feel complete. It’s easy to equate wealth with financial independence. Heck, even I can’t count the number of times I’ve told my wife that I wish we were independently wealthy. Experience tells me that wealth and financial independence are distinct. Many people burn loads of cash each month because they’re not living a disciplined life. Undisciplined individuals, no matter how wealthy, are not financially independent. The key to financial independence is being free from financial obligation to others.
Financial Independence Looks Different For Everyone
What works for one individual will not work for another, and the person with little might have more financial independence than the person rolling in cash. We all have different lives and experience different circumstances, but we all have the responsibility to find the level of financial independence that is right for us. Just because the person next to you desires to be retired by the age of 40 and you don’t does not mean that you’re not financially independent, it just means independence looks differently for you.
Being Obligated to Others Does Not Make Independence
The person who’s jet-setting and living high on the hog but has credit card debt up to his eyeballs is not independent; he’s bankrolling an extravagant lifestyle off the scrupulous lending of others. Those “others” are credit card companies that stand to make a killing from the interest earned on the loans they make to those who cannot stand to live within their means. Independence, by definition and nature, is to be free from others. Free from owing others and free to do as you choose. But, just because you can choose to do something does not mean it should be done. Being financially independent requires discipline and a conscious choice to live a certain way.
Financial Independence is What Helps You Sleep at Night
Ultimately what financial independence looks like is what helps you sleep at night. For some that means absolutely no debt, not even a mortgage. For others, that means they’re ok with some debt, even credit card debt as long as they can keep their heads above water. There is not one cookie cutter approach to financial independence, but simply what helps you be at peace. I used to have a terrible addiction, self-imposed at that, to credit cards and I will never go back to that situation ever again. That is how I sleep at night, knowing that what I have is mine because my wife and I bought it with our own money and is thus wholly ours.
What Does My Financial Independence Look Like?
What my financial independence looks like is being free from virtually all forms of debt. The only debt my wife and I carry is our mortgage debt and if I could, I would get rid of that altogether. We don’t necessarily have dreams of retiring when we’re 40 or rolling in cash, but our independence is one of balance. It’s one that allows us to make choices and know we can do it because we’ve been frugal, lived to a budget and have the funds to do whatever it is we’ve chosen. It’s an independence that allows us to do this on our own, without having to pay someone back. It’s an independence that looks past what we’re doing today with a view to the future.
What does financial independence look like to you? What are you doing to get there?
John is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting, and frugal living. John is a father, husband, and veteran of the financial services industry who’s passionate about helping people find freedom through frugality. Visit him at frugalrules.com.