Financial independence… That wonderful thing that happens when your passive income equals or exceeds your expenses. It takes a sizable amount of money to get there. How much exactly? 25 times your annual expenses using the 4% percent withdrawal rule. For me and my family, annual expenses are about $29,000, so I would need at least a $725,000 portfolio in order to reach financial independence. In other words, the ultimate freedom costs $725,000 for us, and that’s what Elisa and I are working towards.
What Do You Mean It’s Not About the Money?
Clearly, money is a key ingredient to financial independence. However, money is just a tool, not the end goal. At the end of the day money is just a medium of exchange. Most people in the developed world earn plenty of it. Sadly, most people also exchange that money for a consumerist lifestyle where cars, gadgets, and other adult toys suck away all of it. Such a life style leaves people chained to their jobs for pretty much all of their lives, whether they want to be or not.
As much as I’m looking forward to start my new job, I don’t want to be chained to it all my life, so I choose to save and invest most of our money to eventually exchange it for financial independence. Being financially independent allows you to spend ALL of your time, not just weekends and holidays, doing whatever you choose. Traveling, spending time with family, working, starting your own business, etc. Whatever it is, it is YOUR CHOICE. And that is what it’s all about: freedom and happiness.
The Big Picture
As great as post financial independence life sounds, we should not fail to appreciate how good life is right now. I am healthy, have an amazing wife and daughter, a loving family, and wonderful friends. On the material, less important world, things are going pretty good as well. I have everything I need and then some. I am not telling you all of this to brag or to make you jealous. On the contrary, I am doing it to help you realize how fortunate you are as well. Chances are you have people around you who care about you, and if you can afford an internet connection to be reading this, you are already better off than 60% of your fellow human beings.
Taking it a step further, if you happen to belong to the middle class of a rich country, YOU ARE RICH! Believe me, I grew up in the Colombian middle class, and even we were rich. We had family, friends, abundant and delicious food, a lovely home, and could even treat ourselves to travel and other non-essential stuff. That’s all you need to be happy! Don’t let the marketing machine and The Joneses convince you otherwise. Appreciate and be grateful for everything you have. While you are at it, ask yourself whether you want to spend most of your life at work. If the answer is no, the financial independence community has a wealth of information to help you escape. Check out our new resources page to start exploring!