Freedom Exists On A Spectrum

freedomjumpIt’s funny how we grow and change over the years.

When I first started Dividend Mantra back in early 2011, I knew that I could achieve financial independence by 40 years old on the modest income I was making working for a car dealership. And I decided to start a blog to not only prove and document it, but also to inspire others into change by way of action.

I felt like if I walked this path and provided a road map along the way for others to follow, others would follow. And it’s in that inspiration that I find even more value than in my own journey. It’s said that giving feels better than receiving, and I can think of no better example than this.

But I was absolutely positive that I could walk this path and see it through to the end. And I’m still waking that path to this day, as determined and aggressive as ever. Perhaps even more so.

But I’ve discovered something interesting along the way.

Financial Independence Isn’t A Door You Walk Through

While financial independence can be quantitatively measured – your passive income either exceeds expenses or it doesn’t – it’s not a finish line you cross over. And it’s not a door you walk through.

What do I mean by that? 

Well, I used to think that the road to financial independence was much like the yellow brick road in “The Wonderful Wizard of Oz”. You’re striving to save and invest your way down this road, eventually opening the door to this great world of magic, rainbows, and unicorns. Or some such. It sounded better in my head.

But it doesn’t work like that.

You don’t wake up the day you become financially independent and all of the sudden transform into someone else. You’re still you. For better or worse, you still have to deal with all the benefits and drawbacks of your life. I certainly view financial independence as this amazing life hack where you can eliminate all the stress that comes with being beholden to an employer for most of your waking hours, but there’s a lot more to life than your job. At least, there should be.

Furthermore, you’re becoming more free every month. It’s not like going from the point of covering 95% of your expenses via passive income is a radical difference from being able to cover 100%. You’re adapting, changing, and freeing yourself all the way along.

So what I ultimately mean is that the path doesn’t really have an “end”, per se.

Sure, having enough passive income to cover all of your expenses will deem you financially independent. But the path of financial independence intertwines with the path of life. And that latter path will continue on (hopefully) well after you become financially independent. In fact, that’s exactly what most of us are after: financial independence early enough in life to have enough time to enjoy it.

I once wrote that financial independence is both a journey and a destination. Perhaps the more accurate description is that financial independence is a journey within a journey. After all, we’ll continue to grow, learn, change, and become better versions of ourselves long after we become financially independent. At least, we should. In fact, with incredible resources of both time and money at our disposal, it’s likely that we’ll be much better versions of ourselves 10 or 20 years after financial independence than we were when we initially attained enough passive income to pay for our expenses.

But I have even more incredible news for you.

You don’t have to be completely financially independent to reap much of the inherent rewards.

The Spectrum Of Freedom

I have realized that freedom exists on a spectrum.

I’ve been on one side of the spectrum – the wrong side. For most of my life, I had no freedom. I had no passive income and a whole lot of expenses. If I didn’t go into work for a month, I’d likely be broke. Strike that. I was already broke. In fact, I was below broke and worth less than a baby as recently as 2010.

So forget about taking a year or two off to travel the world or relax by the beach and read great books. No work, no income, no bueno.

If being chained in place in Plato’s cave is having no freedom and freeing yourself from the cave and stepping into the light is complete freedom, we can clearly see how one is better than the other.

Stepping into the light is the opposite side of the spectrum. That’s complete freedom, a.k.a financial independence. You can wake up every single day and do whatever you’d like. Or nothing at all. Or something in between. But your life is pretty much on your terms.

However, there’s also a middle ground there that isn’t often discussed.

If time is money, then we can break time down into monetary numbers and see a spectrum from no freedom to complete freedom, as well as everything in between.

Take my situation, for instance.

I’m aiming to receive $7,200 in dividend income this year. That’s $600 more per month than the me of early 2010 was receiving. Does that not buy some freedom? Is this me not more free than the me that existed five years ago?

Freedom Isn’t All Or Nothing

This realization – freedom exists on a spectrum and it isn’t all or nothing – has opened up a whole new world of opportunity for me.

I quit my job in the auto industry – one paying a pretty decent $60k/year there near the end – to pursue self-employment last summer. (My last day at the dealership was the day after my 32nd birthday.) Now, that would have been an incredibly risky proposition back in early 2010. Not only did I not have any experience doing it and no platform on which to grow, but more importantly I had no other income.

But in mid-2014 knowing that I was earning a good chunk of cash every single month no matter what in the form of dividends from my portfolio of dozens of high-quality companies meant I could take some risks. I could take a leap of faith because there was a safety net of sorts there. I was already more free than I had ever been in my entire life. Sure, I wasn’t financially independent and completely out of the cave. But I also wasn’t chained to a wall anymore. I could move around. I was nimble.

See, freedom isn’t all or nothing.

You have no freedom when you start this journey. No passive income. Expenses like shelter, food, and transportation don’t just go away, no matter how extremely frugal you get at the beginning. So you have to make money to survive. And going to work every day is about the only solution there is for most people. Without that job, you can’t pay your bills or eat. Thus, you are completely beholden to an employer.

However, taking on this journey means there are changes afoot. You’re regularly saving money. And you’re investing that excess capital into high-quality companies that are paying and growing dividends. Not only is your passive income growing from all this fresh capital you’re depositing into your investment account, but the income itself is growing via the dividend raises the companies you’re invested in announce, as well as the dividends that are coming in and you’re reinvesting.

Hey, you’re onto something here.

Fast-forward a few years down the time line and you’re now earning hundreds or possibly even thousands of dollars per month in passive income. You’re no longer completely beholden to that employer any longer. You can cover 20% or 30% or 40% of your expenses via dividend income every month. You’ve moved along the spectrum. You started off not free. And while you’re not completely free with an expense coverage ratio of 30% or 40%, you’re certainly more free than 0%.

You Can Leverage Partial Financial Independence

The spectrum exists to our benefit. And once I realized that I didn’t have to be completely financially independent to leverage that benefit, I took advantage.

I took a leap of faith and decided to work for myself because I moved up the spectrum and became partially financially independent. Not only did I have hundreds of dollars in passive income coming in every month which could cover a good chunk of my necessary expenses, but I had well over $150,000 in assets backing me up. That’s one hell of a runway to see if I can get off the ground.

And I got off the ground, with a goal to net more than $36,000 in self-employment income this year. It’s a far cry from what I was earning before, but I leveraged my solid financial position to the max by going after what would ultimately make me happiest. And this journey is about being happy, not accumulating the largest amount of absolute wealth. By the way, wealth can be judged in many terms, not just the amount of money in your account.

The goal is still stepping into the light. But every move we make on the way is toward that end. Better yet, each and every one of those moves increases the amount of freedom and flexibility you have. You don’t go from 0% freedom to 100% freedom just like that. There’s 5%, 10%, 50% freedom, and so on and so forth. And once you get to a comfortable level, you can leverage that if you so wish. You could take on part-time work, or monetize a hobby, or try on a new career without fear of failing or how much you might make.

After all, work and financial independence aren’t mutually exclusive. And it’s unlikely that anyone enterprising and driven enough to achieve financial independence extremely early in life will never make another dollar with some kind of work once they’re financially independent. I plan to become financially independent at 40. But does that mean that I’ll never thereafter write a book? Or continue to blog? Or speak at events? Who knows. But I’ll be free to do any of these things. Or not.

However, the key to this entire article is this: I’m actually free to do any of these things right now. And you could potentially take a similar approach well before you reach financial independence.

And that’s because freedom exists on a spectrum. It’s not like this is a game where you beat it and you’re done. You become more free with every dollar invested, every dividend received, every month that passes which sees your wealth grow.

If you’re able to get to the point to where you can cover a good chunk of your expenses via passive income, the fear melts away. You can make that leap of faith because there’s a net to catch you. If that leap is like jumping between two high ledges, the passive income is a net to catch you in case you don’t jump far enough. And with every month that passes, the net becomes higher and higher. Eventually, there can be no failure. How much of a leap you’re comfortable with, however, is really up to you and your personal circumstances.

Conclusion

Financial independence and this journey to freedom is really whatever you make it out to be. It can be as challenging and/or rewarding as you make it. Equally so, those rewards need not be a decade or two out into the future. You don’t have to cover 100%+ of your expenses via passive income to have freedom and flexibility. There are degrees there and you can take advantage of that.

Financial independence isn’t a door you walk through one day to another galaxy or something. You’ll own all of your own time once passive income covers all of your expenses, which is, in my view, the ultimate reward. But it’s not like you don’t own any of your time right now if you’ve been at this for a while. I own a good chunk of my time already. If I absolutely had to, I know I could cut my frugal budget down even further, and increase the passive income coverage ratio right away.

Bringing in hundreds or thousands of dollars in passive income every month means you’re already free to some degree. You’ve moved up the spectrum from a previous point of not being free. If you’re earning, say, $500 per month in passive income and your expenses are, say, $1,500 per month, you’re 33% free. You’re 1/3 up the spectrum. That means, if it came right down to it, you’d only need to go out into the world and make $1,000 per month. And knowing that alleviates a lot of stress and opens up a world of options that being 0% free does not allow.

So remember: You are more free than you think you are. Even if you haven’t stepped into the light yet, you’re also likely not completely chained to a wall.

What do you think? Does freedom exist on a spectrum? Is it possible to leverage partial financial independence?

Thanks for reading.

Photo Credit: luigi diamanti/FreeDigitalPhotos.net

Similar Posts

112 Comments

  1. Jason this is an excellent post and I can’t agree more. Financial freedom isn’t a line that you cross all of a sudden one day, or a door that you just magically walk through. Financial freedom is a journey that may never end for some people. You can define FF as passive income covering your expenses but it’s really more than that. As you go through this journey you will change as a human being, your thought process will change, and your interaction with money will change as well. Slowly you will gain more and more freedom and options that will allow you to decide exactly what you want to do.

  2. Dude! I just want to come through this computer and give you a big hug! Seriously, this is golden!! 🙂

    I’ve been thinking along the same lines for awhile. In fact, for the past year or so I’ve realized that even having a passive income isn’t all that important and this year I plan on experimenting with ways of meeting my needs and acquiring my wants by using less money. Maybe I’ve done it in reverse. Maybe I’m becoming the person I would want to be in retirement instead of working on the monetary side of things and then hoping to become the man I want to be. I moved a little closer to FI while I was overseas and paid off my debts and used the excess to secure my housing. Now I create my own income source and have time to explore the life I want. At some point in life you have to learn to be comfortable with “being” vs. always trying to “become”…

    I think if you pay off your student loans and you and Claudia end up buying a home you will move the dial a little closer FI without even increasing your passive income. I know we differ concerning our stance on housing, but if you ever do decide to get a place, don’t buy retail! The offer still stands that I made you when you moved to Michigan; find a fixer-upper and give me a call. I’ll come down and help you get it renovated. It would have to be in the winter when things slow down for me here, but all I need in payment is a nice home cooked meal and great conversation.

    All the best my friend, all the best…
    The Stoic

  3. Great article Jason. I enjoyed it tremendously. I’ve been obsessed with investing and I just gotta calm down. I’ve finally found a hobby I enjoy and that’s investing in great quality stocks. Thank you for taking the time to write this insightful and thoughtful post. Keep up the great work my friend. I’m with you all the way.

  4. I agree that it’s definitely a spectrum.

    Another angle to that gray area is that the more you have passively coming in on the side, the less stress is involved when it comes to your day job. For example, half of Houston right now is either getting laid off or is afraid of getting laid off. If you have a 6 month emergency fund and your dividends cover 1/2 your cost of living, you can breathe easy knowing you have an entire year to figure out your next move, and that’s if your a single income family and you don’t adjust the lifestyle at all.

  5. Hi,

    I enjoy your site, and I look forward to your posts. I am sure you answered the question I’m going to ask but I can’t find it anywhere yet. I get it to that you are building up passive income stream via dividends and that this is being done in a taxable account so you can tap the money in your 40s. I also get it that your income will be low enough that you won’t get hit by taxes when you are retired. But aren’t you getting taxed on those dividends now? Thanks for the time.

  6. Tawcan,

    Absolutely. It’s more than just passive income divided by expenses. It’s about becoming the you that you really want to be, and having the time necessary to be that person. 🙂

    Thanks for stopping by and adding that!

    Best wishes.

  7. Stoic,

    Thank you so much. Glad you enjoyed the post! 🙂

    Right. There’s more to freedom than just the money side of it, which is also something I plan to write about at some point here. You’ve experienced that yourself via acquired skills. There’s a spectrum there as well between money and skills. The more skills you have, the less money you’ll probably need. I exist on a different side of that spectrum than you do, hence my need/desire for more income, but I think both sides of that spectrum can be equally fulfilling/successful, depending on who you are and what you really want out of life.

    We’ve talked about buying a house, and she’s probably just as much a fan of renting as I am. I doubt we’ll buy a house at some point, but you never know. Maybe something will come along. I think the more likely scenario as far as moving the timeline up would be living abroad. We could live in Central America (she’s from El Salvador) or SE Asia pretty cheaply. In fact, I think the dividend income will more than cover our combined expenses somewhere like that within four years, which would put me at 37 years old. Wouldn’t be on the level of Jacob or Pete, but it’d be pretty fast, considering when I started and how much money I made. Plus, I’d be earning for two. But we’ll see. Exciting opportunities abound!

    Appreciate the offer and all the support. Hope we get to meet up at some point.

    Best regards.

  8. Tyler,

    I hear you, my friend. I’m just as aggressive as excited for financial independence as I ever was, but I also know that I’m more free with every day that passes. And I think that instills a type of patience and calmness. And once you start to move up the spectrum, I think you feel better and better. So the benefits start to come your way long before you hit FI. 🙂

    Keep on hustlin’!

    Cheers.

  9. Adam,

    I definitely agree with that. I’ve written about that before, comparing one single paycheck from a job to 50 or more “paychecks” from a diversified dividend growth portfolio, and I know I personally felt the stress start to melt away the longer I was at it. Of course, less stress and a long runway makes you feel like you can jump to the other side…which is what I did.

    Thanks for adding that.

    Cheers!

  10. Yes, I definitely agree with you here. I reached the same point a few years ago when my investments hit 200K. I realized I couldn’t completely quit my job without it being a major financial hit; but at the same time, I had options. It wouldn’t be the end of the world if I lost my job and had to take a lower paying one. It wouldn’t devastate me financially if I couldn’t contribute to retirement savings for several years because the portfolio was now starting to do some of the hard work for me. Even though I haven’t changed anything about my work life over the past few years, it’s great knowing that I have some real breathing room if adversity pays me a visit.

  11. Grettman,

    Right. I’ve written about the tax-efficient nature of dividends, but you are correct in that I’m getting taxed on the income now. The good news is that if I do end up in a low enough tax bracket to pay no federal income tax on qualified dividends, that’ll be right about the time my dividend income is sizable. Paying taxes on $5,000 or $7,500 in income is a lot different than paying taxes on $40,000 in income. Furthermore, this income is still favorable since there’s no FICA.

    Thanks for stopping by!

    Take care.

  12. Good post and good point. Keep it up I need the motivation. I picked up TIS today on the 9% drop and look forward to them bringing there new plant on line so they can get to raising my dividend. Thanks for helping give me the long term view. It has kept me from screaming like the crowd that the sky is falling. I see this as several small victories instead of one big windfall. All strung together. Keep it up, I appreciate it.

  13. Mysticaltyger,

    That’s great. See, you’ve already received benefits, even though you’re not completely financially independent. Even if you don’t take that leap to the other side, knowing that you could probably make it if you absolutely had to is an amazing amount of peace of mind. Certainly helps one sleep better, which is hard to put a dollar amount of value on. 🙂

    Keep up the great work!

    Best regards.

  14. Pygmycoho1,

    Exactly. A thousand battles with victories along the way, rather than one long war. 🙂

    Nice job there with TIS. The management compensation seems a little excessive, but the moves they’re making regarding Fabrica and additional capacity will surely bring a lot of value. I expect good things toward the end of this year and into 2016 with that company.

    Thanks for dropping by!

    Cheers.

  15. I award this post 1,000 points!

    On my journey to FIRE, I noticed a couple years before the final date that my attitude had changed…a lot. Things that used to bother me at work didn’t anymore. I was bolder. Management was completely incapable of intimidating me (I had to change supervisors at one point because she wasn’t going to have an independent thinker on board.) I started waking up on my own before the alarm went off because I actually looked forward to the work day (each excel spreadsheet put me one *.xls closer to freedom.)

    I thought about partial retirement and just working 20 hours at week at the Houston Zoo or as a symphony usher or something else poorly paid but FUN but I just didn’t need out that badly anymore. It is definitely a process and a mental adjustment. And I enjoyed it immensely.

    Thanks for sharing Jason.

  16. Great article. I am certainly not near being FI, but I feel much less worry and stress knowing that I’m on the right path. The journey itself is enjoyable and I’m changing along the way w every passing paycheck and good decision not to waste money on crap. I become a little more free every two weeks knowing that every paycheck is chipping away at that wall inside my jail (being beholden to an employer). I have no debt, I have enough money for most emergencies, and enough invested that I’m on my way to pull the trigger when I wanto (when my kids leave the nest). I truly like this site and it’s in my bookmarks along w: MMM, Budgets Are Sexy, and Bogleheads. Thanks !!!

  17. Nice article, DM. Though the various thresholds on the spectrum vary from one individual to the next, you’re absolutely right in that the journey to financial freedom is not simply two dots connected by a line. It’s hard to remember that every dollar of passive income potentially opens up new possibilities. Amass several hundred dollars a month and suddenly maybe you can abandon a less desirable day job and work somewhere else with less stress and more interest.

    Best,
    DWC

  18. I like to think of it like a lever and fulcrum (yay physics!)… the bigger the passive income flow, the longer the ‘arm’ of the lever, giving you the ability to maximize life in ways you didn’t have the [financial] strength to do so previously.

    Another somewhat similar way to look it… If your life expenses are like a car, your passive income is like a jack. The bigger the jack, the easier it is to lift up. The goal is to get to the point of having a full lift in place like a mechanic would, but the best part is even a small jack can help you change the oil and improve your life.

    You’ve shown, by example, that finding a point where your supplemental activities or passive income achieve a certainly level of production you can step back and pursue other forms of money making. Perhaps a career or job that fits your desires but historically didn’t fit the budget. It is all really exciting stuff, and a place I can’t wait to be in a few years. Once the investments start generating that $10, 15, or 20,000 per year, there will be tremendous leverage in determining where to go and how to get there.

  19. The way I like to think about it is that I now have X years of living expenses covered, even if I had to sell my assets. It’s a very powerful feeling.

    In my case, my spouse and I now have about 3-4 years of living expenses covered if we had to liquidate, even though our dividend income would only cover a small amount of that sustainably.

    And that makes me feel a lot more free and less stressed. I know that even in the worst case, I would have a few years to figure things out.

  20. Pretty sure with a little tweaking, you could turn that into an inspirational speech and take it on tour! Your journey so far definitely inspired me to start tracking and making posts as well. And certainly relate to the feeling of every additional dividend I get, and the more passive income I accumulate takes a little bit of financial stress away.

    thanks for the post!

  21. So true. Having a large savings let me quit a highly stressful job without having another job lined up. I took only part-time semi-fun jobs until I recovered. Then one more job to get me to the finish line.

    But I want to add that even once you have achieved financial independence, you can’t really “wake up every single day and do whatever you’d like.” You are free from having to work for money, but there are still obligations–to your health, to your loved ones, etc. (And sometimes you might want to visit a place that is closed, etc.) It’s really another step along the path of becoming better able to mix more and more rewarding things into your life.

  22. I’m right on board with this perspective Jason!

    Financial Independence is a wonderful aspiration, but it could also be dangerous to believe that once you reach that destination, life will just transform into a perfect, magical situation with absolutely no issues or challenges ever again. But every step along the journey to FI definitely gives you a little more flexibility and freedom in your life, which we should use to continually work towards becoming the people we really want to be and the life we want to live.

  23. Jason,

    You are like a carpenter, you keep hitting the nail on the head. I am turning 52 this weekend and I am in the grey area of FI that you are describing. We all have different financial situations, so our journeys are a bit different. Each day I go to work, I realize every dollar I earn goes toward investments, this is a gratifying feeling. I really don’t need to go to work for the money, I enjoy the challenge and satisfaction of doing work that is meaningful. I am a teacher and doing some of the best work of my career.

    I am a backpacker and I think about the ways people backpack, from the ultra light guys to the guys that have the “mini van ” on their backs. All are doing the trail their own way. Folks all have their opinion about how to make their trek, but the bottom line is it really does not matter as long as you are on the trail. As my back packing trips have gotten longer over the years, I am finding my stride. It takes time and experience to figure out what works you on the trail, just like it takes time and experience to figure out what works for FI. There is no hurry as long as you stay on the trail.

    My next hike is the Colorado trail from Denver to Durango this summer. 500 miles. This is my warm up for the Pacific Crest Trail (Mexico border to Canadian border) which I am planning to walk after I retire from my job in two years.

    Life is the journey that you make it and I keep telling myself “life is a one way street”.

    Keep up your great work.

  24. Hi DM!

    Very nice article! I have a question: do you think it is possible to reach FI by investing 400-500 € a month (450-550 $)? I’m the same age as you are. I haven’t done any calculations but I know it will take a pretty long time if possible. I’m working part time and thats about all I can invest in a month. I’m also living very frugally so I think I can’t save any more than that. Reading your article brings me comfort that even if I can’t ever reach FI there is still a level of freedom I can reach. Thanks in advance!

  25. You should totally turn it into a speech.

    I think the interesting thing for me is how the mind becomes more independent as a result of your lower stress levels, i.e. you free for mind from the worry of how to pay your expenses, so you actually start to be able to think clearer about other things.

    Since you have that path of income covered, you can use all that mental energy for other, more interesting, more rewarding, and more renewing activities.

    We are truly learning a lot on this journey!

    Thank you so much for your inspiration Jason. I really look forward to reading your posts, and this was a really great one.

    Cheers

  26. Sampo, this is definitely possible, check out Mr money mustache’s website and search for years worked until retirement. He has a table that shows how many years it will take to reach FI depending on what percentage of your income you save. Jacob from ERE made it into a graph, but MMM’s table shows the details from the graph really clearly.

    Cheers

  27. Jason,

    This has got to be one of your top 5 posts, and you’ve written some really good ones.. but this one may be your best. I’ve had that mindset for the last several years, but to make that analogy about the two ledges and the safety net really hits home. I think that’s what makes people finally see the light, when slowly but surely, little expenses here and there are covered…

    And through the processes of compound interest, consistent investing, and debt reduction it magically becomes apparent that huge chunks of expenses can be covered. Keep at it long enough and one is “there”. I’m not there yet by any means, but I’m more there now then I was a few years ago. The stress reduction is immense. I can realistically visualize what I will do with my free time.

    My passive income stream is a bit different, I have a portfolio of dividend paying equities that I’ve built the last 12 years or so (liquidated a portion to pay for taxes– I’m an independent contractor, and forgot to budget for that like an idiot), and I have a couple of rental properties. It is absolutely gratifying to have those dividend/rent checks hit my bank account like clock work! I often think if I only started sooner on this, I’d be financially independent already! But I guess one has to understand the lesson before they begin.

    My first dividend check from a utility company was $4.51 fifteen years ago. Verizon paid me $6.30. It didn’t seem like much at all, but if you see it in the context that it could buy you a Big-Mac or something of that nature, the idea that continuing this investment thing for a few years consistently would ultimately pay for one’s expenses. Hence the “safety net”. Keep at it even longer, and there is no more need for a net. What a refreshing feeling. It’s quite liberating actually.

    Thank you once again for a most thought provoking post. I’ve been thinking this for a while, but as a previous poster said– I’d give you a “hug” too! You’ve put it in words and context that everyone aspiring to be financially independent can relate to.

  28. Yes, even if you only get 200$/month extra money, this can give you a part of freedom. May be with this small sum it is too early to make major changes, your mind will learn, if you are continously increasing this income you will have more and more possibilities. This is an excellent thought and you can see this now in your real life doing something completly different than before. There is a second idea behind this: If you get unemployed and you haven`t reached FI you have the security to have money behind you to solve this problem without getting in panic or the must to take every job to catch some money for living.

    I´m a person who is thinking quite secure and my target is to have 500 € more than I need today for living to get real secure. On the other hand: I will work anyway till 60 or 65 because I like doing it. FI is for me only important if I decide to quit the job if I don´t want to do it anymore and start something new in the time I want to start.

    There is another advantage in doing that: On the journey you will feel more and more confident the closer you get on FI. You know you are successful and this is very positive for yourself. Even if you have just started, being motivated and keen on getting the first time 100 € or 150 € per month divident income. Its a positive living. Nice article.

  29. So well said! I was thinking yesterday that our goal to reach FI isn’t just a symptom of running away from something (our jobs) but also the even more motivating factor of running towards something (our future homestead). I

    t’s this double motivation that really lit the fire under us and caused us to accelerate our timeline and ramp up our frugality. I also totally agree with you on the concept of degrees of FI. We absolutely don’t plan to have “traditional” jobs post-FI, but we also plan to earn money through various methods that we enjoy.

    In a way, we’ll still be working, but we don’t really see it that way. I think achieving FI is all about achieving the life that you are meant to live, not the life you have to live.

  30. In my opinion, this is one of the better posts that you have put up in a while. I was actually just running the numbers today and figured out that I could do Leave Without Pay from work for 18 working days (almost 4 weeks) per year at the current time and not lose out on any income. That’s all because of those dividends rolling in!

    As I write this post, I can feel the weight being lifted off my shoulders. It is an amazing feeling to know that I only have to work for 11 months right now and I’d never miss a penny. With our savings right between 40-50%, I could quit the 9-5 way before 11 month and do something more meaningful with my life.

    Thank you again for the ongoing inspiration that you give all of your readers, especially me. I am so happy that I stumbled upon your little corner of the internet world 3 years ago.

    Thanks,

    ADD

  31. I found the MMM blog but didn’t find the table. Could you give me a link to the table? Glad to hear that FI could be possible to reach with my monthly savings. I’m excited even if it takes many years.

  32. Thank´s Dividend Mantra
    This was a post i realy need at this point of my life. It gives me some hope in the misfortune.
    Yes, its a spectrum, and i´m 6% free. So i can se some light from the independence…

  33. Thanks DM. I think a great way to speed up FI, is to find a hobby or other entrepreneurial endeavor which you can earn income from and don’t look at it as “working for the man” or “having a job.” I think you are a great example in which I don’t believe you look at writing as a “job” and more of something you enjoy and that you get paid for. And because of it you were able to speed up your FI, even though you are still “working.”

    Even if I become FI, I don’t think I’ll ever stop working in some regard. Maybe that’s one day a week doing something I enjoy, but still have to keep the mind active and challenged, and why not get paid for something you can enjoy!

  34. To me, it is possible to leverage partial financial independence, absolutely. Of course, the term “leverage” can mean many different things to many different people. For my wife and I, we leverage our partial financial independence (via passive income) by simply reinvesting those dollars and make them continue to work for us, to get us closer and closer to our end goal – which now includes a move to beautiful Sedona, AZ, as well as a rental property in that area. Without this “extra money”, it would be that much tougher to see the light at the end of the tunnel.

    I think one of the most important things that you said in your article is “Freedom isn’t all or nothing”. To be “free”, one doesn’t necessarily need 100% of his living expenses covered by passive income. Life is a journey not towards perfection, but towards happiness and achieving that spot in life where you feel comfort from 360 degrees, and everything just feels “in place”.

    Whether that takes $20k or $50k a year to maintain is up to the individual.

  35. Good article. I was wondering whether you reinvest your dividends or take the payouts? And what is you’re reasoning? Thanks in advance.

  36. I must admit that you have done a truly wonderful job with your blog posts building on top of each other. In this post you refer to many of your previous ones (net worth, working in retirement, etc).

    Having said that, I fully agree with this particular post. I will personally be using much of my savings/investments to make a large life change in the near future. Without me having the savings rate (the gains from investments also helped, but these can only add to my savings) I would be unable to make this life change. Am I fully free? Not even close! I have maybe 20 years of savings ahead of me. However, with the savings I have done I am free enough to pursue something which I feel will make my life significantly better.

  37. Hi Jason,

    An excellent post. I think about my dividend income a little differently than you do but the end goal is the same. I set my goals to have enough passive income to pay specific expenses. First, pay mortgage payment. Then mortgage plus taxes and insurance. I will certainly achieve that this year. Next goal is to cover all monthly expenses. Should get some of that covered this year too. Then for me a biggie is to cover my hobby expense.

    So, instead of thinking about passive income as a percentage, I think about it as covering specific expenses. Just a different mental path to the same goal.

    Jan

  38. FV,

    “I award this post 1,000 points!” – Did you mean you award this post 1,000 dollars? 🙂

    I completely agree on the attitude change. I noticed much the same with my own job, though due to my disdain for the industry and my overwhelming schedule with trying to blog full-time at the same time, I still made the leap. It’s interesting to think if I’d still be at it had I never started blogging. Probably not.

    A fun part-time job sounds awesome. I think that I would have eventually done something like that either way. If I had to stop blogging/writing for some reason, that would probably be what I’d do. Live off of what dividend income I’m generating now while doing something fun part-time. Life could be a lot worse. 🙂

    Thanks for stopping by. Glad you were able to hang on until the end!

    Cheers.

  39. Grettman,

    Appreciate that. Big honor to be listed alongside some excellent sites/resources. 🙂

    You’re right in that every paycheck, every dollar saved/invested, and every dividend that comes your way is just another step toward freedom. You don’t go from completely not free to 100% free instantaneously. There’s a gradual process there where you can leverage what you’ve built at any time. The further up the spectrum you are, the more opportunities you have. But most people probably have more opportunities than they think.

    Best wishes!

  40. DWC,

    I like that – two dots connected by a line. That’s exactly what I was trying to say. I could have just said that and avoided the 2,000-word essay. 🙂

    I agree that the spectrum will vary depending on the person, largely because we all have different lifestyles and savings rates. Those who live on little will notice that their spectrum is quite small, allowing them to move up quickly. It’s a wider spectrum for others. Furthermore, we all have different comfort levels. Some can make a leap early. Others want 200% of expenses covered via passive income. Those who fall in the latter camp are also likely to suffer from OMYS. All depends on the individual.

    But the key really is, like you’re saying, you have a lot of flexibility even with a few hundred dollars/month in passive income rolling in. Once you’re able to cover a good chunk of your expenses, you have opportunities. And sometimes just knowing that makes the journey easier.

    Best regards!

  41. W2R,

    Exactly. Even more so, if you’re able to live frugally, that limits the weight of the car, meaning even a small jack can you lift you quite high. 🙂

    I’m certainly still aggressively seeking full financial independence. And that’s because I want to know that I’m doing what I want to do on my terms every day. But the fact is that even routinely covering 20% or 30% of your expenses via passive income affords you a lot of options. We’re experiencing the benefits of this journey all the way along, rather than just at the end all in one shot.

    Thanks for stopping by. And thanks for letting me know about the site being down yesterday. What a fiasco!

    Cheers.

  42. innerscorecard,

    Great point there. I always like to ask myself: “What’s the worst-case scenario?” Once you have six figures in the bank, that becomes a question that’s a lot easier to ask. Furthermore, the odds are good that you can always go back to doing what you were doing before anyway. I’m a cautious person by nature, but I’ve realized over time that the leap just isn’t that risky. 🙂

    Thanks for sharing!

    Take care.

  43. I agree with most everything you said in this post. I can already feel the change with having a larger balance in my retirement/investment accounts. I couldn’t quit work today, but there is definitely a strong inverse correlation between the size of your nest egg and the stress around work.

    Financial independence will just be turning off the alarm clock for me. At that point everything else will have already evolved over time and feel liek normal.

  44. DW,

    Appreciate that. I guess you never know. Maybe I’ll be speaking soon! 🙂

    I’m so glad you’ve found some inspiration in what I’m doing and what I talk about. I only share what I’ve personally experienced, and that’s why the blog has transformed over time. I think you see a desperation early on, whereas now I realize that the freedom started opening up much sooner than I had anticipated. It’s really wonderful.

    You’re more free with every month of growing passive income. Don’t forget that!

    Cheers.

  45. Hey Superstar DM. Great post again (argh.., I hate you! ;)).

    I think you have done extremely well and I understand why you feel more free. Heck, all this side income feels like free money, doesn’t it? But you earned it and props to you.

    I told you before, I think your portfolio is great but maybe a little over diversified. It dilutes your leverage in my opinion and makes it hard to follow all the stocks closely.

    If you really want to diversify your assets I would maybe think about buying a place to stay. I know you said you weren’t to keen about that. I understand your point because I have a been a renter for a long time. And there are many benefits.

    I still think your do-it-yourself attitude would be very much in phase with the mentality of an owner. You take all the decisions, do all the renovations, etc. You are “Master of the house”, “Keeper of the Zoo”… (Les Mis). Just an idea.

    Kudos to you for mentioning Plato in your piece. Keep up the very good work. True inspiration.

    The Great Escape (trying hard too, to get off the rat race)

  46. Debbie M,

    That’s fantastic there that you were able to take the leap. We’re all afraid of the unknown. But having passive income and/or a large asset base to fall back on makes it a lot easier to leap. Not as scary when you’ve got a net to catch you.

    As far as doing what you want, I mentioned in the post that you’re still you. So you’ll still have a normal life filled with whatever obligations you may or may not have. But for most people, the average day is going to be on their terms, or I should say on their terms as much as is possible. You still have to pay bills, run errands, get groceries, take care of your family, etc. You’re not King of the Universe or something. 🙂

    Cheers!

  47. Jason,

    Absolutely. When I first started this journey, I probably did think that my life would magically transform once I got there. And that’s because I was coming from such a dark place. I needed to cling to something, some kind of hope. But walking the path means you move further away from the darkness and closer to the light with every step forward. And your eyes adjust to that as you go. It’s not one big, blinding change. And as you go, you start to realize why you’re walking there in the first place. You slowly become the you that you set out to be. It’s really amazing. 🙂

    Best wishes.

  48. Brad,

    I have no carpentry skills whatsoever, so it’s a good thing I can write. 🙂

    That’s a great analogy there. Not only is it important that you’re “on the trail”, but also that you’re walking it in the way that best befits you. We’re all different, with different goals, aspirations, lifestyles, desires, experiences, etc. But the great thing about this is that the journey to FI can be customized to your specs. You get there at your own pace and you make it what you want it to be. I decided that I didn’t want to stay at the dealership any longer and would rather write. So that’s what I did. Not being on the trail meant I would have never came upon that fork in the road.

    Have fun with that next hike. 500 miles is serious. I think I’d be done after 20. 🙂

    Best wishes.

  49. Sampo,

    M was right. It’s impossible for me to say when you’ll reach FI just based on how much you’re putting away. It really all depends on your savings rate. The higher the rate, the faster you’ll be financially independent. I always target a 50% savings rate of net income. Any lower, and the journey is probably going to be closer to 15-20 years.

    MMM’s article is here:

    http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

    The post and table loads fine for me. Let me know if you still can’t load it and I’ll try to give you some examples.

    Cheers!

  50. M,

    I’ll keep the speech idea in mind. I may have an opportunity at some point to do just that. 🙂

    I agree with the lower stress levels. And that all comes from a primal instinct to keep a roof over our heads and food in our bellies. Once you know you’ve got the basics covered, you’re not so stressed out anymore. That’s one of the major benefits of all of this. And since stress is a common risk factor for many preventable forms of death and disease, it improves your quality of life (and possibly length of life) dramatically.

    I certainly started to stress less at the dealership, especially the last year there. I didn’t care if I lost a big sale to a competitor or if a customer was really mad about their car. It didn’t matter so much because even if I got fired, I’d be okay. It’s awesome knowing that – that you’ll be okay.

    But, as you mentioned, I also knew that my focus was limited. And if I could concentrate my focus on my writing, good things would happen. The passive income allowed me to harness that focus and make the most of it. Once you control a little bit of your time, a whole world of opportunities opens up.

    Glad you enjoyed the article!

    Best regards.

  51. jm,

    Thank you very much. That’s a big compliment. It’s sometimes tough as a writer to put out new content that’s better than what’s already been written. And it’s hard to keep things fresh and interesting. So producing great content that you enjoy four years and 500+ articles later is a huge win for me. 🙂

    Right. It’s that net that will catch you if you fall. Jump too early and not only will the ledges be far apart, but you might still bottom out if that net isn’t very high up. But once you get to a point to where passive income is covering a healthy portion of your expenses, it’s hard to fail. You just don’t have to jump very far. And if things don’t work out, you just climb up and try it again later. It’s not like you’re going to fall to your death.

    It’s great that you’ve been at this long. I’m a few years into the game, but I can’t wait to be in a position to where I can show 10 or 20 years worth of results.

    We all wish we would have started earlier. I know for an absolute fact that had I started when I was 21 with an inheritance check fresh in hand, I’d already be financially independent right now. But I know I’ll appreciate it all the more knowing that I had to climb out of a hole before I could even start walking down the yellow brick road.

    Thanks for stopping by and sharing. Stay in touch!

    Best wishes.

  52. olli,

    Exactly. The benefits of financial independence aren’t all or nothing, just like your freedom isn’t. You slowly gain confidence and freedom along the way, while reducing your stress and uncertainty. As you move up the spectrum, stress melts away and happiness increases. You become more free than you were yesterday or a year ago and your options thus increase dramatically. Even if you continue working, knowing that you don’t “have to” is a great feeling.

    Keep up the great work over there. You’ll be able to do whatever you want, even if that means continuing to work. 🙂

    Cheers.

  53. Mrs. FW,

    Definitely. I have an article that’s already drafted on that – the concept of moving away from something and moving toward something else. I think if you’re only moving away from something, you’ll be sorely disappointed to realize that you can’t run away from your problems. You have to combine that with moving toward something else. You have to know what you want out of life. Otherwise, you’ll move away from one situation with nothing to replace it…meaning you’re just kind of floating around.

    Completely agree in that FI is all about living the life you want to live. It’s being able to customize/design your lifestyle. Those designs can run the gamut of one’s imagination, but generally a simple layout will not only be the easiest/quickest to achieve, but will also lead to the most happiness.

    Thanks for dropping by!

    Best regards.

  54. ADD,

    Thank you for the kind words. Really glad you enjoyed the post. 🙂

    You’re right in that you already own a month of your time. You’ll soon own two months. And then three. At some point there, you can make choices. You’ll have freedom to really do what you want. And it’s amazing to have that kind of power. I think it’s a kind of power that is beyond a lot of people’s comprehension. That’s sad, which is why I’m doing my best to change that. I can tell you, however, that it’s amazing knowing that you can walk away from any situation you no longer want to be a part of. You can do what you want to do and be what you want to be.

    Keep it up. You’re on the right path. 🙂

    Take care.

  55. Fattigbonddräng,

    6% free is better than 0% free. Furthermore, 10% free is right around the corner, and the trip across the spectrum accelerates with the power of compounding. 🙂

    Glad you enjoyed the article. Thanks for dropping by!

    Cheers.

  56. FF,

    Exactly. That’s really what this adventure in writing full-time has been. It’s served as not only a huge benefit to my own life as I’m really not “working” anymore, but it’s also “proof of concept”. It’s one thing to write about these things, and quite another to experience it and share it in a way that’s tangible. And that’s what I am to do with every article. My experiences serve as proof that this isn’t all BS. 🙂

    Like I recently wrote, financial independence and work aren’t mutually exclusive. You’ll always be able to work. Thus, getting to the point of covering half of your expenses via passive income might mean you’re about as far as you’ll ever need to be. That doesn’t mean you stop saving and investing. Rather, your options are probably already wide open at that point. Do what you want, make a little money, and life is pretty much on cruise control.

    Best regards.

  57. Steve,

    Great point. Freedom isn’t the same for everyone. What freedom is to me and what it is to you will vary. Luckily, you can tailor your journey, savings rate, passive income, and plans to suit you. I think what’s important to keep in mind, however, is that it doesn’t take much to open up opportunities. Freedom comes long before 100% of your expenses are covered via passive income. And that means the light at the end of the tunnel starts to hit your eyes well before you get to the end.

    I’m glad you guys are making the choices that best fit your lifestyle. And you’re absolutely right in that financial independence is ultimately about being happy, not perfect.

    Cheers!

  58. cn1ght,

    Thanks. I think all of my posts work together because most of this is based on personal experience. I don’t write just to put something out there, but rather to inspire through action. It just so happens that those thoughts and actions play out as one-long journey, where all these posts are woven together like a book. So it’s easy to put them together and see how this works.

    That’s great that you’re making that leap. Improving your life is really what this is all about. It’s about maximizing happiness, where owning your own time gives you the best opportunity to do just that. Waiting until you’re old and gray to finally “make a move” is just silly. You’ve already opened up opportunities just by being able to maintain a high savings rate and get some passive income working for you. It really all comes from the savings rate, as you’ve discovered. Getting to a position to where you’re saving a high rate of your net income means it probably doesn’t take that much income to sustain your lifestyle.

    Thanks for sharing. Best of luck with the transition. You’ll likely look back on it as one of the best decisions you ever made.

    Best wishes!

  59. Jan,

    Sure, I hear you there. I also look at my expenses in a somewhat similar manner as I go, though I present it in a more holistic manner. But I plan to write a post about unlocking certain expenses as you go. 🙂

    For instance, I recently looked at my AT&T dividend as covering more than seven months of cell phone bills.

    But I say do what works for you. As long as you get to where you’re going, doesn’t really matter how you got there.

    Cheers!

  60. Vawt,

    Glad to hear that. I experienced something similar where the stress started to dissipate as the passive income grew. It’s a great feeling. You don’t know the weight’s there until is starts to go away.

    I wish I could turn off the alarm clock. Unfortunately, I haven’t been able to get rid of it. Just not a morning person. I’m sure you’ll have more success than me. 🙂

    Take care.

  61. Jason,

    Great and encouraging post for me. I’m still in the infant stages of financial independence. When I take a look at my overall side-income numbers, I can get a bit discouraged. Instead of keeping up with the Jones’ I often look at keeping up with the Fieber.

    Even though I’m not producing huge amounts of side-income/dividend income, I have significantly low monthly expenses. No car loans, no student loans, and I’ll have my mortgage paid off within the next 2-3 years. I think this helps push me up on the spectrum.

    I’m only 25, and my goal to be financially independent is age 40. So I am still very low on the spectrum, but I’d rather be 1% on the spectrum than 0%!

  62. FF,

    Haha. Doing my best to keep the haters hating, I suppose. 🙂

    I’ve written before on why a large portfolio isn’t that hard or time consuming to manage and keep up with. It’s not like those that invest in the S&P 500 keep tabs on all 500 companies. I don’t have to worry about what Pepsi is up to or what Norfolk Southern is doing. Takes very little time to manage on a regular basis. Most of the time goes into the initial due diligence, before you invest in a company. Although, even if this were time consuming, I’d still do it because I enjoy it. You have to spend your time somehow. It’d be like telling someone who loves landscaping that it’d be easier to hire a neighbor kid to do your lawn.

    I view geographical independence almost as exciting and freeing as financial independence, and thus will probably never buy a house. The idea of travel is enticing, or possibly even snowbirding it. I’d be the youngest snowbird around! Being tied down to a big, expensive house even though I don’t have a job in any local area doesn’t make a lot of sense to me. Residential housing is a poor investment over the long haul while stocks typically do well. I’d rather rent the former and own the latter.

    Thanks for dropping by. And I’m glad you found some inspiration in the piece. 🙂

    Best wishes.

  63. Vivacious,

    Much like Warren Buffett, I don’t worry about interest rates. I actually don’t really worry about macroeconomic factors in general. Over the long haul, great companies will do well. Rising interest rates aren’t going to impact consumers’ decisions as to whether or not to buy Cheetos.

    Furthermore, the lesson in that video was actually that, over a long period of time, dividend stocks with higher yields tend to the best. And I’m in this for the long haul.

    I’d also note that if stocks I hold drop in price due to rising rates, that would be an opportunity to buy more. Focusing on the share price and not the dividend is what gets people in trouble.

    Cheers!

  64. Steve,

    I wouldn’t be concerned at all with keeping up with others in that manner. You’re simply replacing one race with another. This isn’t about producing the most passive income or biggest portfolio balance (a race I’d be losing by a wide margin anyway), but rather achieving balance and happiness in your life (a race I’d be proudly doing well at). 🙂

    You’re still young and have plenty of time. I didn’t even get started until I was almost 28 years old, which is why I was so desperate to get things moving. You have an incredible advantage in that you’re starting so young. And keeping a low expense base opens up your options. Keep saving and investing and I’m sure that by the time you reach my age you’ll be far ahead of where I’m currently at.

    Cheers!

  65. Really like the journey within the journey for Financial Independence and creating some freedom along the way, 10% becomes 20% and so on.

  66. There’s no question that freedom exist on a spectrum. The who FI concept is never black and white and everyone defines personal freedom differently. Some opt to work not because they have to but because they want to. They remain engaged in what they do and love it. Some of course, just want to lay on the beach and do nothing which does get boring after a while. I feel the human spirit always must be engaged in some sort of activity. The question remains is it an activity that you want to do or an activity you have to do. Personally, I have always stated that I’ll be very content if dividend income pays for 70%, 80% or 90% of my living expenses. Even if I never hit the magic 100% coverage or more I’ll know that, as you stated, I’ll be that much less reliant on “work” to cover my existence.

  67. Yes, that’s exactly right. The benefits to saving and investing start IMMEDIATELY. This is one concept a lot of people don’t seem to understand. Although it typically takes most people at least a few years before to get to where those benefits are really substantial. Certainly if you are diligent about saving, you will certainly start seeing major benefits long before retirement age. It’s most definitely worth the effort. I can’t tell you how much happier I am having achieved partial financial independence.

  68. I think this is the most important post you have ever wrote.Its 100% correct and should show everybody why building a passive income matters.Mine now makes around 23% of my expenses but i also own my property outright.I left work and set up my own business due to knowing i could at least eat.Im now saving more than i did when working for an employer.
    My aim is of course 100% expenses but anything inbetween where i am now and that is still fantastic.I knew a guy who always wanted to climb Everest.He didnt make the summit.I said you must be upset.He said not at all,i climbed Everest and every step was a step up.I just didnt reach the top but i got higher than 99.9999% of mankind ever has.
    Get to 50% you might have to work 3 days,but it gives you 4 to enjoy your hobbies/dreams.

  69. Freedom for me is making cash moneys, passively, and doing stuff I love to do. Also having people around me who I love or at least don’t annoy me that much.

  70. Good Job Div Mantra. You’re working hard to earn your freedom cause freedom isn’t free. You know that. freedom is thebiggest thing you can have but the problem is when other people want to take it from you. Looks like you got a good plan and your working hard to get there but I’m gonna warn you to watch out. Right now in this country theres lots of people who want to take that from you. Leeches who want to tax the money that you earned and take it for themselves. Our freedom isn’t safe with Obummer in the White House. first, it was Obamacare and then its more taxes on us earners to pay for the freeloaders. And our guns arent safe neither. Let people make money and then keep it instead of trying to take it from hard workers like you and me. Let people defend themselvs. I glad you wrote this about freedom and I see that theres’ more people like you and me than theres leeches. AL

  71. Good points & investment philosophy. Separately, I haven’t modeled out, but to enhance your yield on cost, have you considered purchasing more shares of dividend stocks on margin? Similar to buying a house with a mortgage, your dividend yield could now be enhanced because you have more shares owned and leverage. Additionally, you could potentially sell out-of-the-money call options, which would give you more dividend income. Another strategy could be borrowing on a credit line of 2.0% (against the value of your home) and investing it at 5%+ on dividend stocks. The reason I say all this is because – in my mind, given your strategy, your own limitation is your portfolio base of $180K. If you could “get more” out of your base, that would be hugely beneficial to getting more dividend income.

  72. Steven,

    Absolutely. Just like climbing stairs. Each stair climbed gets you higher and higher. Just because you’re not at the top doesn’t mean you’re not already high enough to gain some benefit. 🙂

    Have a great weekend.

    Cheers!

  73. DivHut,

    I don’t know. I could just hang out at the beach for a while… 🙂

    But you’re right in that the key is wanting to work vs. needing to work. Big difference. I’d say few people are lucky enough to have a job they truly enjoy which also pays a substantial income, but having a good chunk of your expenses covered via passive income means it doesn’t really matter. You can take on opportunities irrespective of pay. And that opens up a whole new world.

    Thanks for dropping by!

    Best regards.

  74. Nice post Jason. I am with you on this subject. However, as I have been building my passive income, my desire to work a day job has come to a screaching halt, but since I had children a little later in life, my expenses are the highest they have ever been. Because almost all the dividends are in IRA accounts, they really are not income for me now even though I considered it as income.

    When I was 17, I had plans to be retired by 38. I never once considered the kids and the expenses that go along with them. So for now, the work continues. Hopefully, I can bring myself to keep working and possibly seeing with my kids some of this fantastic world we live in.

    Good luck with your endeavors and keep the writing coming.

    Keep cranking,

    Robert the DividendDreamer

  75. John,

    Thank you so much. Glad you enjoyed the post. 🙂

    That’s a great analogy there with your friend. I think sometimes we get obsessed with end goals and absolute numbers, not looking at the relative progress/success. Even if you get to the point of covering half of your expenses via passive income and for some reason have to stop, that’s an incredible load off of your shoulders potentially for the rest of your life.

    Appreciate you sharing. Keep climbing, but keep in mind that you also are already further along than almost everyone else out there!

    Cheers.

  76. dzogen,

    Definitely. It’s all about being happy and living life on your terms. I can tell you from firsthand experience that it is all it’s cracked up to be. 🙂

    Have a great weekend!

    Take care.

  77. Al,

    Well, that’s all just part of living in a first world country. We could take away all forms of social safety nets and have people living in the streets everywhere, but I don’t see any good coming from that. I’ve seen people take advantage of those systems firsthand with my own mother. She used to take food stamps and have me go into stores with them and buy Bazooka bubblegum so she would get 95 cents back in cash for every $1 food stamp (this was back in the day). Benefits and drawbacks with everything. But I’d rather live in the US than pretty much anywhere else in the world.

    Take care.

  78. Vivacious,

    It’s unnecessary to add on undue risk like that. I don’t really have any limitations at all. I’m actually ahead of pace, meaning that I think my dividend income will likely cover my expenses even before I’m 40. If one can do that with a moderate income, no leverage, doing what they love along the way, and keeping things simple, then why add risk and possibly tilt the boat?

    Those who want to invest on margin are more than welcome to. But it’s not a risk I’d be willing to take. The conservative road may be slower, but it’s more sure.

    Cheers!

  79. Robert,

    I can see how children complicate matters. I decided a long time ago that having children probably wasn’t in the cards for me. But that also kind of worked out with what I’m doing, as I can imagine my plans would be delayed by a couple of years or so.

    But I’m sure the benefits of having children FAR outweigh the drawbacks.

    You’ll find your balance with everything. 🙂

    Cheers!

  80. I love this post; it definitely is about the journey for us as well as the destination. But freedom is also about choices, being able to do what you want, rather than having to rely on others to give you that freedom. I cannot wait until I’m in charge of my own future. But, the journey along the way will make us who we want to be, and there’ll be a lot of challenges along the way no doubt. But, we’re up for that challenge!

  81. Haha I wrote a article similar about Financial Independence a few days ago, just not as detailed as yours.

    It is a constantly changing, twisting and turning road. I’m still in the beginning stages, and figuring out that balance of what can be set aside from the paychecks for living expenses for 2 weeks at a time and investments. The wife and I have a budget of $250 each for a 2 week period. That is for us for gas/food, whatever we might decide to use it on. The bills, diapers and all that still come first, then we “pay” ourselves, and then the rest goes into investments.

    My question is, what kinds of twists and turns can a new DGI expect after mastering the budget juggling act?

  82. Great article Jason…congrats again for removing those chains and successfully making the switch to doing something you love. Having a percentage of your passive income cover your expenses is definitely go great measure of risk and help you find out if you are ready (or at least willing) to take that leap of faith. One thing I will add is that everyone’s circumstance are different, the more variables (dependents and/or debt) the higher the percentage will likely need to be. I must admit that being a family of 4 with two toddlers to feed and cloth, the thought of leaving a secure job is certainly more daunting. I’m just glad that we are a family of 4…not sure how larger families would manage. 🙂

    Thanks for sharing this thought provoking article. Look forward to reading the next one! AFFJ

  83. This is a very good post… I like the concept of rising passive income as a higher and higher net. Personally, I probably focus way too much about how far the fall is(the change of going from current work income + passive to only passive) and not enough about how high the net really is. I guess I’ll need to get that straight before I can step off the edge.

  84. Wonderful post, Jason. This is my favorite one yet!

    I get caught up in the mentality of “save, invest, reinvest” that sometimes I forget that I could actually spend my dividends, if I really wanted to. I suppose that contributes to the feeling that freedom is all or nothing, since it feels like I can’t use the dividends until it completely covers all of my expenses.

    I guess I just have to look down and realize that there’s a safety net at the bottom!

  85. Nicola,

    Thanks for stopping by.

    You’re right in that freedom is all about choice and doing what you want. And the good news is that freedom isn’t all or nothing. You don’t need to be able to cover all of your expenses via passive income to have some degree of freedom. And sometimes, a significant degree is more than enough to make the necessary changes in your life. 🙂

    Cheers!

  86. Steve,

    The journey definitely isn’t linear. Just like anything else in life, there are ups and downs. But I’ve found far more ups than downs.

    If you have your budget under control and you’re saving a healthy chunk of your expenses (relative to how fast you want to achieve FI or how free you want to be), then the twists and turns won’t really be all that dramatic. There will be investments that won’t work out, one-time expenses that hit you here and there, but the snowball, in my experience, continues to roll downhill and become more and more impervious as time goes on. 🙂

    Take care!

  87. AFFJ,

    I hear you there. Everyone’s situation is different. As such, the amount of passive income one would need to either be completely free or free enough to make some kind of switch that might better their lives varies. But I think it’s true nonetheless that some is better than none. And that “some” grows and grows until the net becomes so high, it’s highly unlikely that you’d fail anyhow.

    The key is that you’re walking that path that makes you most happy, regardless of savings rates, passive income, work, or anything else. That’s really all that matters. 🙂

    Thanks for dropping in!

    Best regards.

  88. pacer45,

    Glad you enjoyed it. Hope you found some value in it. 🙂

    The goal of ever-rising passive income and portfolio balances is admirable, but only in the sense that you’re still enjoying what you’re doing. I did’t like going into the dealership every day, so it made no sense to me to not try that leap. Especially with the knowledge that failure was highly unlikely. Once you have a good chunk of your expenses covered, it’s not very difficult to find a way to make a little money and have fun. Even better if you can do something you enjoy and continue to save and invest.

    Best wishes!

  89. Seraph,

    Thanks so much! I’m really glad that this one was enjoyable. 🙂

    I don’t disagree that it’s important to be 100% focused and possibly even a little extreme at the beginning. One needs to do what they have to to get the snowball rolling. And I certainly don’t regret any of my actions. But having a singular focus like that for your entire life may cause more harm than good.

    Really comes down to what makes you most happy. Money won’t do it. That just buys you time and freedom. But never taking advantage of all that saving and investing seems like a waste, in my view. I’m not out to save and invest just for the fun of it, though it is fun in itself. Money has a utility. And I always planned on taking advantage of that. How quickly you can do so really depends on your situation and what you’re comfortable with. But I’d argue that most people have many more opportunities than they might think they do with a hundred grand or so sitting in the bank, assuming they’re already living fairly frugally.

    Have a great weekend!

    Best regards.

  90. I think that one of the things I’ve noticed for myself along the journey is that the further along you are the more you realize it’s less about money and more about quality of life. Having more money just happens to make it easier to focus on the life aspect more than the money aspect of things.

    I think somewhere along the way when I realized I had enough money saved where I no longer wanted to put up with things that made me really unhappy. If something wasn’t right at work I was less afraid to speak up about it because if worst came to worst then I could afford to leave that job and I would not starve for at least a handful of years before I really had to worry about it. It’s not that I wanted to quit, it’s just that I didn’t want to put up with certain things and having that change in mindset gave me more power to actually do something about it. And you know what, from my experiences most people agreed with my views and things changed when I spoke up.

    So many people feel like they have no power because they are chained to a paycheck so they don’t speak up for fear of losing that paycheck. It’s terrible to feel trapped, but like you said, once you have 30% or 40% of your freedom then you can take more chances.

    -Zee

  91. This is a really great post. I like that you have had some very good philosophical/mindset posts this year. I think even though I am just beginning my journey to Financial Independence, having the free mindset has already made me enjoy my days more. Living even more frugal has empowered me, and is helping me achieve goals quickly. I have been reading your blog for quite awhile now and am very influenced by your mindset. I may be using other investment methods in combination with stocks to achieve FI, but all that matters is that the fundamentals are the same. Live below your means, have little or no debt, invest in your future self, and enjoy life at all stages of your journey. Someday, I hope you will follow my blog too. – Richard C. “FInance Bard”

  92. Zee,

    I definitely agree. It’s ultimately about being happy. But it’s often necessary to have freedom in order to truly be happy. Being chained to a desk as a wage slave can sap away your quality of life. But viewing the quest for financial independence as one for only for more money/passive income is a big mistake. Just like money won’t buy you happiness in terms of buying stuff, money won’t buy you happiness if you’re only after a bigger bank account.

    It sounds like you’ve experienced plenty of benefits long before the journey is completed. Having more confidence/freedom at work is one of those benefits. Like I mentioned in the article, you might not be in the light yet, but not being completely chained to a wall means you can take some risks like speaking up at work. Little benefits like that really add up. 🙂

    Thanks for sharing!

    Best regards.

  93. thefibard,

    Thanks for dropping by!

    Living below your means is definitely empowering. And not just in the sense that you’re saving and investing more, building up your passive income, but also in the sense that you’re free from a lot of the temptation for stuff that won’t really increase your happiness any.

    There are many roads that lead to Rome. Dividend income is just but one of many types of passive income, though the passivity of, say, rental income is probably a bit different. That said, you’ve gotta do what works best for you. 🙂

    Best of luck as you march toward FI.

    Cheers.

  94. Jason,

    Amen. This article felt like I could have wrote it. I’m in 100% agreement (and am executing on those attitudes).

    I too leveraged the freedom I did have back in 2013 and I’m still reaping the benefits. Like you said, it’s not just about absolute wealth, it’s about happiness.

    It was so great getting to talk about all this stuff with you in person last month. So great to have a friend who understands you.

    Talk soon my friend,

    Kraig

  95. Kraig,

    You and I are kindred spirits, my friend. 🙂

    It was definitely great hanging out with you as well. It’s a shame that FinCon won’t be up in Minnesota this year. Would have been awesome to hang out up there. But I’m sure I’ll make it up there one of these days!

    Hope all is well.

    Best regards.

  96. One of the most inspiring post I’ve read in a while! Inspiring because it looks so true to me! Especially with that RV trip coming along so quickly! I feel the stress, but it also makes me move faster into FI. Being in the gray spectrum makes me evolve and think differently. Still, when I look back, I couldn’t be more proud of what has been done so far. And when I look ahead I can see more freedom coming. 😀

  97. DivGuy,

    Glad you enjoyed the post! 🙂

    Best of luck with the transition to the RV trip. Sounds like a lot of fun. I know that life has become much better as I’ve traveled further up the spectrum. You don’t need to be completely free to not be chained. We’re freer than we think we are.

    Best regards!

  98. Thx Jason,
    I never thought of using frugal concepts or minimalism to reach financial independence prior to my RV project. In fact, I was pretty much elsewhere on the freedom spectrum. I’ve experienced a relatively high income (between 100K and 175K) at a relatively young age (28). It was a mix of “chained” and freedom at the same time; you can’t quit your job but as long as you work, you can do pretty much whatever you want. That’s is a form of freedom but you kind of get bored of buying stuff!

    It would be an interesting year when I sell everything and trade my stuff for pure freedom. Cheers,
    Mike.

  99. Hi Jason,

    I could not agree more. I am actually quite surprised at the amount of people who actually stick to the formula of working for X years in a job they probably don’t like all that much and then going straight from chains to the light in one step. It has only taken me ~2 years to work out that I am already partially free and have negotiated a 33% cut in hours at my employer. It will make the full jump to FI take longer but I want some of those benefits up front. Waiting 10-15 years to enjoy those benefits is one form on delayed gratification I don’t see the point in!

    Cheers

  100. thefirestarter,

    Couldn’t agree more. I’ve read a lot of cases where people are unhappy after retiring, and people take that to mean that there’s profound happiness and purpose in working. I don’t look at it that way at all. I just see it as people that are used up and have been so brainwashed into doing one thing their whole life, that they don’t know what else to do. And just when they finally have time to themselves, their capabilities are naturally declining. It’s a shame, but there’s another way. I left that cave and the chains therein, and I’ve seen the light. It’s beautiful. 🙂

    Best wishes!

Leave a Reply