Most people would say that Financial Independence (FI) is when your investments reach an amount that equals 25-33 times your annual expenses. With this amount of money, you are set and you’ll never need to work again.
But, is financial independence only a number?
Let’s imagine someone who has reached financial independence (i.e they have the amount of money needed in investments). Yet, they don’t realize (or believe deep down) that they can use the financial freedom they’ve gained to improve their life.
So, is true financial independence also a feeling? Does the actual financial stability we gain need to be paired with a feeling of freedom?
To help me answer this question, I’ve invited Chris who writes at the blog Life Outside the Maze to share his story with us.
Chris has a very unique story. According to the numbers, he actually achieved FI (25x his annual expenses) in 2015. However, financial independence wasn’t yet part of his vocabulary, and he didn’t realize what was possible.
In 2017, he had a jarring interaction with a very wealthy (and very miserable) venture capitalist. This inspired him to begin looking into the connection between money and happiness. One thing led to another, he discovered FI and realized he’d already reached this milestone.
As you’ll see in this Slow FI interview, Chris refers to a moment when he “claimed his financial independence.”
This was when he realized that he could start making decisions differently.
Someone could be financially independent according to the numbers. But, to get the full benefits, we need to claim our financial independence.
Let’s get into the interview.
1. Tell me about you.
This may be the hardest question of them all.
Who am I?
In my life, I have been a musician, an investor, an engineer, a world traveler, a director, a startup founder and CEO, a father, an inventor, and a curious maniac at large.
A couple of years ago, I realized that I was at a point where I could stop working for other people to get financial independence and start working for myself to build happiness. This has been a huge focus of mine over the past couple of years.
This approach also tells you something about the binary way that I once thought about focusing on money and career as opposed to focusing on being content and the best version of myself.
2. Why did you decide to pursue financial independence in the first place?
When I was in high school, there was a stupid rule in the library. The rule was that only 4 people could sit at each table, and you couldn’t talk to people at other tables.
If a fifth friend came over to say hi, the librarian would yell at you. If you had a group project to work on with more than 4 people, you had to break into 2 tables and could not talk between them.
I ran for student council on the sole issue of eliminating this stupid rule, and I won. I was even nominated student council class president.
As class president, I set up a comment box in the library and pushed to have the student council be a real voice for student needs in setting policy.
When I tried to change the 4-to-a-table rule, I was told that the student council doesn’t do that kind of stuff. We got to vote on colors for the prom. The administration removed the comment box from the library.
From this experience, I learned that the systems that we live in are sometimes stupid, and you need some power to be able to change them or do something different.
As I got older, I told myself that I would live a different sort of life than working at a corporation and living in the suburbs.
Growing up, it just seemed to me that everyone was living similar lives when there are so many other options out there. I could travel, live in different countries, maybe even invent something that would change the world.
Like my student council experience, I realized that I needed the power to do something different. Knowledge, skills, and hard work can create money. These 4 things combined result in personal power.
When I came out of college and started my career, I knew that I wanted to get ahead and give myself options. I knew that I was racing, but I didn’t know that I was racing to FI. That idea didn’t exist yet in my vocabulary.
At some point, I saved up enough to travel around the world. Then, I just kept saving more.
After years of this trying to get ahead, financial independence hit me like a revelation. It may soon be appropriate to start to change my decision-making criteria. All of those habits, hustles, and choices had compounded over time.
Rather than making choices based on “getting ahead,” I could now make choices because I was ahead.
I had been building personal power so that I could live the life that I wanted to and be the person that I wanted to be. I wondered, when can I start focusing on that? When do I make it a bigger priority than accumulating more success and money?
A lot of research indicates that we will always feel like we need more. Even the ultra-wealthy with an average net worth of $78 million feel like they would just be okay if they had 25% more money. That seems absurd.
I had to rewire my way of thinking rather than try to satisfy some insatiable thirst for more.
Moreover, I had already cultivated a view of enjoyment and happiness that rarely involved expensive things. Hence, continuing to climb the corporate ladder wasn’t for me.
When I started to write about this, I found the financial independence movement, and it put a voice to many similar ideas that I had been operating under.
3. How did you approach your FI journey?
In hindsight, many of the things that I thought would make me wealthy were only marginally effective. The boring stuff was way more impactful.
For example, we both worked in startups. We put in 60-80 hour weeks hoping for a big exit that never came. However, investing our take-home salaries from those same jobs into a broadly diversified basket of stocks has been hugely impactful.
For this question, I actually went back and looked at my finances to calculate the order in which different strategies affected our journey.
By far, the most important lever was to invest the surplus between our earnings and spending rather than leaving it in a bank account. We started doing this immediately after college.
In order to do this, we needed to have a high enough income and low enough expenses to have a surplus.
On the income side, we both went into lucrative fields and pursued aggressive raises. I tripled my take-home pay in the first 9 years of working. This was an average increase of 22% of my salary each year. For me, this was possible through always working together with my boss on what it would take to get that next raise. I then committed to working and learning as fast as I could.
On the expenses side, we kept our spending in check. When we came out of college in the early 2000s, the dot com bubble had just burst like an economic bomb. We were looking for tech jobs in Denver and competing with 13,000 experienced tech workers that had been laid off. It took me several months to finally find a job.
This experience forged our already minimal spending habits into a steely frugality. Once we started making money, we just kept spending the way we did when we didn’t have jobs yet.
In this respect, I think of those entering the workforce right now in the time of COVID. Hang in there and hone your habits. Things will get better.
Another thing that helped us to achieve financial independence was real estate. After the real estate bubble burst in 2010, I read half a dozen books from the library, so I could analyze properties. I started buying single-family homes. I’d rehab them during the evenings and weekends so that we could rent them out. Over time, this became a lucrative side hustle for me.
Lastly, when I look back at my financial journey, I was careful (and perhaps lucky) to minimize mistakes and take advantage of opportunities.
We never bought expensive cars, didn’t have any giant investment gaffs, and never carried a credit card balance. We took advantage of every employer benefit that we could, bought a home at a good value in a desirable area that appreciated, and were always on the lookout to save more or get better value. While those decisions each made a smaller difference in our journey, they added up over time.
4. When did you reach FI? Was that timeline different than you originally thought?
Looking back, I hit a net worth of 25 times my annual expenses back in 2015. Based on numbers alone, I could have made this transition earlier in my life if I had had the awareness of FI.
However, it wasn’t until two years ago that I claimed my financial independence (after working professionally for almost 15 years). I have been fun-employed in various ways since.
In retrospect, claiming financial independence for myself was less about hitting a number and more about a shift in mindset. I needed to realize that I could make decisions differently and start to focus on all of the things that I told myself that I would do one day.
One thing that helped me was reading a lot of research on the relationship between money and happiness. It opened my eyes to the fact that humans are wired for accumulation and driven by fear. While these instincts helped our ancestors thrive, they no longer serve me, as someone who had reached financial independence.
5. Was there anything that happened along your journey that shifted your perspective about FI?
About two and a half years ago, I was raising money for a round at my startup and meeting with possible investors. I met with one venture capitalist who had created several successful companies and sat on boards for many more. He had a net worth in the 9-figures and seemed miserable.
He lamented that his money was a burden and had created all kinds of issues with his family. In the meeting, he paused and said, “Remember this time. This is the happiest that you will ever be.”
It blew my mind because I was feeling overworked and miserable. If this is as good as it gets on this path then I better change my path, I thought.
This was the impetus for me claiming my financial independence and changing my decision making. After that conversation, I wrote a 30-page manifesto that explored the interplay between money and happiness. It became the basis for “Life Outside The Maze.”
6. Is there anything you regret about taking such a fast journey to FI?
I am generally pretty grateful and optimistic so regret may be too strong. However, there was certainly something that I didn’t understand about relationships early on the journey to FI.
While we were building our careers aggressively and starting a family, my partner and I didn’t think that much about our relationship. We were lucky to find each other early in life and always seemed to be on the same wavelength. I used our relationship as a source of strength and leaned on it for support. I almost thought of it as immutable.
What I have learned is that you need to build your relationship like you build a career or an investment portfolio with similar compounding through attention over time. My girlfriend in college was very different from the woman that I traveled around the world with who was very different from the mother of my kids….and they are all the same person.
We both have changed over time. Without communication around this change, we sometimes make assumptions about our partners based on who they once were and what they wanted then. This can create distance and even resentment.
We have worked hard at uncovering what some of those things were for us. Over time, this has meant lots of discussions. It can sometimes feel frustrating to slow down a conversation when you feel like you already know what the other person is thinking. Yet, we’ve realized so often that those assumptions were simply wrong.
Slowing down during difficult discussions and asking more questions (rather than assuming we know things already) have been useful skills to focus on.
We have a good relationship today. We also do not take it for granted and recognize that it is always a work in progress. We try to lean into it rather than on it.
7. If you knew then what you know now, what would you have done differently?
I have thought a lot about this question. The answer is that I don’t know that I could have done things much differently.
In my 20’s, I was an extremely goal-driven maniac with quite a bit of ADD. I don’t know that I could have slowed him down.
However, if I could go back and talk to myself like Biff in Back To The Future, I would tell young me that it was ok to work super hard but to also understand that some of that work matters more than other work.
I think of all of those nights that I drove straight from a 10-hour workday to a rental property that I was rehabbing. I worked late into the night because I wanted an extra $1800 in rent by getting tenants in by the 1st. However, the big decision of choosing the right property had a much higher impact (in the six-figures) than the sleepless nights (for $1,800).
I think about all of the tough projects that I took on in my career. Some were instrumental in getting me steady raises, and others were probably not necessary. For example, in a previous job I spent a week per month in Tijuana. I worked on issues with our manufacturer during a war between rival cartels while I had a newborn at home. Did I have to do this? Would it have affected my career to pass on those trips? I now realize the answer is probably not.
Young me took care of his physical health with exercise, eating, and sleep. However, I took my mental health for granted. If I could give my younger self advice it would be that it’s ok and even admirable to push yourself. However, use some discretion around when and don’t beat yourself up. Be kind to yourself with your inner monologue. Sleep more soundly and relax a bit more; you are crushing it.
8. Is early retirement everything you thought it was cracked up to be? Were there things you didn’t expect?
I don’t think of myself as retired. I am currently working for myself focused on objectives broader than money. Prior to my financial independence transition, I still held to some vague notion that more money or success would make me feel safer, happier, and more respected.
Once I reached some undefined level of financial and personal success, then I could also focus more on me. I could meditate, write more music, and strengthen the meaningful relationships in my life.
I am beyond that binary way of thinking now. Why did I ever wait to do those things?
Financial independence is a continuation of all of the habits that you’ve built over time. It’s not an end to anything.
It is certainly not an end to applying yourself. In some ways, I have applied myself more with clearer motivations. Many of these things generate a financial return that I did not factor into my numbers. I started teaching as an adjunct professor at a local university which I didn’t expect. I continue to do real estate on the side. My lady has continued to work for reasons other than money. All of this adds a buffer to that original FI number.
Everything is more fun when it is clearly by choice rather than necessity.
9. What advice do you have for others following a similar path?
If you are on a similar path (working your ass off to get ahead without a clear goal), I would advocate for putting more intention behind it.
Financial independence is not a finish line.
All of the habits that you build will continue seamlessly through FI and beyond.
One question I had after claiming financial independence was whether it’s possible to get the benefits of financial independence before reaching a particular number?
In other words, if I had a plan and was 100% confident that I would get there, could I have shifted my mindset incrementally? Could I have recognized more empowerment and independence along the way as opposed to only allowing myself to claim it once I had reached an arbitrary number?
After being part of the FI community, I have met several people who are doing just that. I am impressed because this takes next-level discipline to know that your plan is solid, know that you will not falter, and then to let go of fear.
When I see people pursuing a Slow FI lifestyle, I see it as a form of discipline that allows for more freedom earlier. The trade-off is not a slower path to FI so that one can splurge like a hyper-consumer along the way. It’s slower so that you can accumulate more independence along the way.
Thank you Chris for sharing your story so honestly with us!
As foreshadowed in the introduction, I love the idea of “claiming your financial independence.” For Chris, the important moment was not when he actually hit his FI number. Instead, it was when he decided that he could radically shift his decision-making and life trajectory.
“Rather than making choices based on ‘getting ahead,’ I could not make choices because I was ahead.”
This is such a powerful statement.
Many people pursue financial stability or financial independence because they have a fear of scarcity. This was certainly true for me.
Corey and I started our careers in 2009 after the recession with very low incomes, and we were barely making ends meet. We put our heads down and focused on advancing in our careers so that we’d never be in the same position as we were in 2009.
We got on autopilot, and we forgot to “pull up” and survey the landscape. We had gotten ourselves in a better position and hadn’t realized it.
This is exactly why I stayed in a toxic job for years too long. I was operating under the mindset that I needed to “get ahead.” I didn’t realize that I had built a foundation that I could use to get myself out of that situation. Instead, I felt stuck and like I had no options.
In the interview, Chris asks an equally thought-provoking question, “whether it’s possible to get the benefits of financial independence before reaching a particular number?”
I think Chris hit the nail on the head that one reason why people don’t claim financial freedom earlier is because of fear.
I had the fear that if I left my toxic job, I’d be back in the same uncertain situation that I was in 2009.
For me, figuring out how to overcome that fear was the most important step that has allowed me to begin designing my life now. To overcome the fear, I had to truly understand the numbers and what they meant for my life today.
I realized that having a 9-month emergency fund didn’t just mean that we would be okay if I lost my job. It actually meant that we’d be okay for 9 months if we BOTH lost our jobs and didn’t have any other income.
I learned that being 30% of the way toward FI didn’t just mean that I was 30% of the way toward full freedom. It also meant that I had reached Coast FI.
Coast FI is when you’ve already saved enough in your retirement accounts that if left to grow, they will provide you with a comfortable traditional retirement. To follow the logic, being Coast FI means I no longer need to save additional money for retirement. This means I could take my foot off the gas. I could make less money doing something I enjoy more!
Figuring out what the numbers actually mean has allowed me to let go of my fear and start to claim financial independence before reaching full financial independence.
To be completely honest, I’m not 100% confident in my plan. However, I do have 100% confidence that if this plan doesn’t work, I’ll figure out a different (and probably better) plan. I’ll reach FI eventually, and I’m going to make the journey as remarkable as the destination.
I hope the same for you!
If you would like to follow Chris’ journey, you can find him in the following places:
- Blog: Life Outside the Maze
- Twitter: @OutsideMaze