Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t, pays it.
– Albert Einstein
As the majority of us wake up this morning and prepare ourselves to go to work, a very small percentage of people will have the choice to decide on “what they want to do today”. They may have a job or not. They may choose to volunteer or pursue a hobby but ultimately, it’s their choice. We’re not talking about people that are retired or people that are on vacation, we’re talking about people that are Financially Independent (FI).
As we all tend to follow what has been ingrained in us from a young age, many of us will never question, “why do I need to work 40+ years before I can retire?”, or “why do I have a 30 year mortgage?”. These were questions we asked ourselves in our late 20’s after having a mortgage and well paying jobs. We put a “why” in all aspects of our lives and decided we didn’t want to just follow what was considered the societal norm or the script that everyone else seems to follow blindly.
The “norm” that we knew was: moving up in the corporate ladder, having a nicely appointed furnished apartment/house, new shiny car/s, the best of the best that money can afford. All of this is great and achievable living in Australia however what we have to give up in order to keep all of this was “time”. Time to explore, learn, travel and appreciate life for what it is. Life is short and the idea of living to work just didn’t resonate well with us. Something was completely off. The idea of working up to 70 years old should be demoralising to us all, yet most of us will do just that!
When we were working in our jobs we found ourselves making the same lifestyle choices as everyone else. Everyone else was on the same wheel, the same routine. Eventually, this means getting into debt to fund the “norm” way of living and getting stuck at the daily grind, work, eat, sleep, repeat – day in and day out. We chose to question our own life decisions and figure out how we can escape from the norm. We decided to deviate, to be different than everyone else so we make changes and eventually become FI.
Do not save what is left after spending, but spend what is left after saving.
– Warren Buffett
Being FI may be different from person to person. Our definition of FI is to be completely debt free, meaning we can choose to do what we want when we want and work as little or as much as we want. Being free from commitments enables more options and the freedom to live life “our way” not what is expected by society.
As we are currently travelling for four months in South East Asia, we remember comments from people back home “I wish I could do more travelling” or “I hope one day I can buy my own place”. The real question should have been, “what am I doing today to allow me to travel more?” and “what do I need to do to be able to buy my own place?”. It all comes down to rewiring the way we think and actually doing something about it rather than wishing and hoping.
Knowledge isn’t power until it is applied.
– Dale Carnegie
Having the opportunity to be mortgage free and debt free didn’t happen overnight. Opportunity exists when an action is taken. Fortunately enough both of us happen to be on the same page when it comes to money. We plan, discuss and execute all money decisions as we believe in order for us to achieve FI we need to both be accountable to our actions and work together as a team.
As we meet people on our trip, the two things that we advise younger people is to stay away from consumer debt as it will minimise your choices in life and to learn as much as you can about personal finances.
Unfortunately, these aren’t taught as part of our educational curriculum. We believe this as one of the most important life lessons we taught ourselves, that is “Financial Literacy”.
So, what will you be asking yourself today? Will you be making a move or will you be staring in the horizon, wishful thinking?