Most people will never grasp the idea of financial independence. In fact, most of us were taught the exact opposite of financial independence. We were taught to get good grades in school, go to college, get a high-paying job, get married and have kids, and live a happy life. Your job is your lifeline to a successful, happy life. Sadly, we were lied to.
Before I go into the basics of financial independence, I want to tell the story of two very hard-working gentlemen. They are twin brothers and they both attended the same high school and college. From there their lives diverge. They both finish their lives as successful family men. You will have to choose which life you find more attractive. Their names are Water and Fire. Let’s take a look at their lives and discuss what the key differences were.
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Water graduated from college at age 21 and went directly to medical school. By age 30, he was a fully certified Doctor, working at a hospital in San Diego, Ca. He consistently brought home $150,000 a year. At age 35 he marries Salt, who is 32. Together they have two children. By age 40, they are bringing in $250,000. They are doing amazing at work and in their personal lives together. Their expenses are roughly $200,000, which includes saving for their kid’s college. At age 45, Water starts his own practice. The practice does extremely well, earning the family $400,000 a year. However, Water is either working, or on call, all the time. His family life has suffered a little, but they are both doing very well. Water and Salt buy a nice home in San Diego, along with two nice cars, a boat, and an RV. When Water does have time, he enjoys spending it with family. Eventually, both kids go off to college and get married. Water means to take time off, but his practice depends on him. As his kids go off to college, get married, and have grandchildren, he is only able to see them on major holidays. Finally, at age 70, Water and Salt are able to fully retire. They live off of their 401k with a paid-off home in San Diego. His children are 35 and 32 and he has grandkids ages 10, 8, and 6. From age 70 through age 80 he enjoys travelings to see his family. At age 80, he and Salt slow down and reflect on a life well spent. Eventually, they leave a home in San Diego worth $3 million and another $3 million in investments.
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Fire graduates college at age 21 and immediately goes into the Human Resources field. At age 25, he meets his wife, Bon. Bon grew up with parents that were financially free. She learned a lot from her parents and Fire was very eager to learn the ways of being financially independent. At age 30 they make a plan to be financially independent by age 45. Also, at age 30, they have twins. They decide that Bon should stay home to raise the twins. They live in Pensacola, Florida, so the cost of living is not very high. They are very deliberate with money and save as much of their income as possible. They also increase their income through real estate. Bon starts a baby blog and YouTube video from home. At age 45, they reach their financial independence number of $7,000 a month of passive income from investments. Fire is able to retire from his HR job. Fire immediately starts a home-based HR consulting business, where he only has to work 15 hours a week. They are able to enjoy the years with their kids. The kids stay local for college and are able to come home every weekend. As the kids grow up, one of the twins takes over Fire’s HR consultant firm and the other starts a property management firm to run the family’s real estate portfolio. When Fire and Bon eventually have grandkids, they decide to become the daycare for the grandkids. Between them and tutors, the kids are homeschooled and also taught financial independence at a very early age. From age 45-90, Fire and Bon dedicate their lives to being with family and building a cohesive family unit. When they pass, they leave $10 million in real estate, $5 million in businesses, and $20 million in investments.
Which story did you choose? They both ended up spending time with family and leaving the family in an excellent financial position. No one can say one family did it better than the other. It is literally a choice each person has to make for themselves. Let’s take a deep dive into the differences between the two brothers.
Time: Fire bought his freedom and was able to retire at age 45. Even though he was still working, he had control of his money and time. Water had to keep working to pay the bills.
Work: Water choose to start his own practice, but he was the centerpiece of it. He could not choose the time that he needed to work. His clients choose the time. Fire started a consulting business that allowed him to choose his clients and what times he was available. Also, since he was already financially independent, he did not have to take any clients at all, if he so choose.
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Family: Fire was able to spend unlimited time with his family. Also, since he worked with his children to start their own businesses, they stayed close to him. Water worked very hard, but could not spend as much time with family as he wanted. His children left home to become like him.
Education: Both brothers were educated. However, since Fire was able to spend more time with his kids and grandkids, he was able to educate them on being financially independent. This is perhaps the most important education one can receive, outside of relationship education.
Consumerism: Water bought big houses, boats, cars, and RVs. These things come at a price, your time.
Finances: Both brothers were able to leave sizable estates to their families. Fire lived a more humble life but was able to pass on more by letting his money work for him. Buying assets early and becoming independent allowed for his investments to grow exponentially more than any 401k could.
In the end, each life has purpose and meaning. Both brothers spent time with their family. Only you can choose which life is better suited for your situation. A warning, becoming financially independent takes financial education- education that we were not taught in school. The Financial Indepencade Retire Early (FIRE) movement is based on people who choose to be self-starters. Becoming FIRE will take education on budgeting, business, investments, and real estate. I find the FIRE route to be extremely entertaining and fulfilling. I love working hand in hand with my wife as we accomplish things we would have never thought were possible. The first time that we saved $6,000 innone month, we were over the moon. A year earlier we would have laughed at anyone if they would of said we could save $1,000 in one month, let alone one week. We are already preparing for a more fruitful 2021. I am ever more excited to pass this information on to my children. The employment landscape is not the same as when I was growing up. In my opinion, it is OUR duty to ensure that are children are set up for success in relationships and finance. No one else can teach our children better than us. We have to get educated, set the example, and share this knowledge. Please be on the lookout for the next posts in the Financial Independence 101 series. We will be talking about some of the terms of the FIRE movement, how to get started, and how to lead a life that is FIRE. Thanks for reading. Please consider reading more articles from Military Family Investing and sharing with your friends and family.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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