Financial Freedom Is Making Me Rethink My Life

It was last April, a year ago now, that I really suffered the worst of my financial meltdown, and I finally woke up to the realization that I needed to make some drastic changes in the way I spent my money. I cut a ton of fat out of my spending, paid off all of my credit cards, paid off my vehicle, put thousands away in an emergency fund, and started this website.

In March of this year, I actually managed to spend less than 50% of my take-home after-tax income. I used the rest of that money to make a large payment on my student loan debt, do some investing, save for a home down payment, and build up my emergency fund even more. In April, I won’t quite get there because of an income tax payment (which I was able to simply write a check for without blinking), but if you eliminate that tax payment, I could have possibly been under 40% of my take-home spent.

The end result of this is that I’m undergoing a profound change in how I perceive the requirements of my life. This has manifested itself in a ton of ways, some simple and some profound. Here are some examples of what I’m talking about.

More lifestyle choices Last night when my wife and I were taking a serious look at our financial state and we realized that a lot of doors are now open to us that were simply not even worth considering before. It is now realistic for my wife to quit her job and become a stay-at-home mom; we could not have done that before. It’s even somewhat realistic for me to quit my job and become a stay-at-home dad.

Less insecurity about employment Because of that financial freedom, I no longer have to be constantly stressed out about work. I don’t have to go to work and walk on eggshells to make sure I don’t get “downsized” or “outsourced.” I no longer nod my head in agreement and keep my mouth shut during meetings when something doesn’t make sense – I find out what the real story is. Instead of simply following protocols, doing what I’m told, and twiddling my thumbs otherwise, I dig in and fix interesting and worthwhile problems. My work identity is transforming rapidly – and to my benefit. Even more interesting, I recently flat-out told my boss why the change occurred and he was completely dumbfounded.

Less stress about life I’m no longer worried about any bills, nor does the thought of a financial crisis really worry me. I used to have a hard time sleeping at night because of the financial stress, and my temper was also much shorter than it has been as of late. The sole difference is in my personal stress level, and that stress was mostly fueled by a feeling of being trapped and of hopelessness about my financial state. It’s gone now, and I’m much better for it.

Discovering and rediscovering the things that make me happy When I come home at night, I spend maybe an hour doing stuff I have to do, like housework and such, and the rest of the evening is spent doing what I want to do. With the biggest stresses gone from my life (work stress and financial stress), I realize how many interesting things I really want to spend my time on. I’ve rediscovered my love for writing (and you’re reading some of the output of that), been reading like a madman, been spending hours with my son (especially taking him to the park), been teaching myself how to play the piano (using one freely available to me), and basically doing stuff that seems enjoyable to me. What do all of these have in common? They cost very little money and bring me a lot of personal enjoyment.

So, the question to ask yourself is whether or not the stuff you spend your money on is worth sacrificing this type of freedom. Is splurging for a new Lexus versus driving your Caprice for a few more years really worth what you truly give up for it? For me, I will never go back to spending anywhere near all of my income in a given month, at least not until retirement. The freedom from spending money is an incredible freedom.

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  1. Tyler says:

    Amen! Yes! Well said! You hit the nail right on with this article! I am 24 and my wife 26 and we are also on the stress-free path like you are. It’s good to know that the rest of my long life is going to be free from financial issues. Thanks for this blog and congrats on your efforts!

  2. Matt says:

    This is great to hear and a good source of motivation for me. I’m in college working full time to pay for living expenses, school and currently saving for retirement and a retirement fund. It is sometimes hard to keep on this track while I watch friends and roomates not work and party all the time thanks to either mommy and daddy, student loans and/or credit cards. But I know I will be much better off when I graduate in a few weeks compared them when they get hit with their huge student loan and credit card bills.

  3. Right on! That’s the main reason why I want to achieve financial independence: Freedom.

    I don’t want to buy expensive crap, I just want to know that I can do whatever makes me happy.

  4. Mitch says:

    Conversely, sometimes rethinking your life can help you get closer to financial freedom. Changing environment at work–> introspection–> finally opening an online savings account and putting away 40% of the take-home pay–> being able to pick up and go to another job, another town, back to school. As a grad student I’m making about as much working half time as I was working full time, and I’m excited about the future. I have to say it’s a bit like the transtheoretical model of behavior change… moving from contemplation to preparation and action.

  5. This is the most inspirational post I’ve read–anywhere–recently. It’s an excellent reminder that there’s a difference between the power to buy what we want and the power to have and enjoy what we want–especially those intangibles like a restful night’s sleep.

  6. Really great that you learned this all when you are young and have little kids. You will all be the better for it, and you will be grounded when the peer pressure hits your kids.
    The most helpful book I’ve read about the habits of those with a surplus is The Millionaire Next Door. Stanley is an academic who studies frugal rich people and documents their spending habits. Up until then my assumptions about how affluent people spend money was based on observing big spenders, not the frugal rich, since by definition they don’t stand out. My husband’s grandmother had an aphorism: From the rich you learn how to save!

  7. UncleOxidant says:

    Being debt free and having a good bit of savings means you don’t have to worry as much about losing your job, as you say. The paradox is that when you aren’t desperate to keep your job (for fear of losing that income you need to service all that debt) you actually do a better job.

    We’ve been completely debt free since 2000 when we paid off our mortgage. Then the .com bubble burst and hit us pretty hard, but since we had no debt and a good amount of savings it wasn’t too bad. Now I’m working on rebuilding the savings that we spent during those lean years to prepare for the next downturn. But the great thing is that at this point if I decided I didn’t like my job anymore I could walk into my boss’ office and quit and I’d have about six months to find another job before we’d start feeling the lack of money. It’s that feeling of control that, paradoxically, makes me a better worker than I was back when I was afraid to lose my job.

  8. Lisa says:

    You hear things like “living a life of quiet desperation” “selling out for a paycheck” and other depressing quotes and it doesn’t have to be that way. There is another way. I am glad you are living it and writing about it for others to read. You get to be an authentic you because you are on the road to Financial Freedom. Yes!

  9. Cheeseburger says:

    Very nice post. This sounds alot like the end state you are supposed to have after finishing the program detailed in “Your money or your life.” Have you read that one by any chance?

  10. Elaine says:

    Well said! I totally agree. Since I’ve stopped chasing the consumerist lifestyle my life has totally changed. I’m still paying off all those fancy dinners and expensive cocktails from those trendy restaurants and clubs I *had* to go to in my early 20s, but that debt is steadily disappearing and with it a lot of unnecessary stress. Frugality has mellowed me out and made me more environmentally conscious. It’s made me appreciate what I have instead of coveting more. I wish I could share my joy with one of my best friends, but he’s still caught up in that lifestyle and he’s as crabby as ever!

  11. Minimum Wage says:

    Financial bondage is making me rethink my life.

    I played by the rules, worked hard, stayed in school, got good grades, went to college [thereby blowing tend of thousands of dollars plus several years of my time], honestly reported self-employment income, and all I got out of it was student loan debt, a tax lien, and a minimum wage income.

    If I had it to do over again, I’m not sure I would have stayed straight and narrow.

  12. Mardee says:

    I’m curious as to why you paid off a large chunk of your student loan debt – is it for psychological reasons? Financially speaking, you’re better off keeping that debt for awhile. My SL debt has an extremely low interest rate, which is deductible. Furthermore, if you use the money you would apply to the debt and invest it at even 5-6%, which doesn’t take much these days, you’re making money.

    That, coupled with the fact that your student loan debt goes away if you die (unlike credit card debt), makes it seem worthwhile to hang on to the debt until your income is high enough so that you can’t deduct the interest anymore (of course, maybe you’re already at that point).

  13. Andamom says:

    You make a lot of sense… and I would be following suit were it not for the fact that I have to pay for daycare ($1,500+/month), braces for my older daughter, and other stuff for them. There are probably things we could cut out of our expenses –like some of our restaurant or take-out meals, the birthday party expenses, the trips down to see family– most of the things we spend our money on now is part of the lifestyle that we have elected. We are constantly talking about how we’ll eventually need to relocate out of NYC to buy property and lower our overall cost of living –. Parenting isn’t cheap –not just for the expenses –but for the opportunity costs that also accompany it.

  14. HappyRock says:

    I am glad that you are reaping the benefits of your hard work. I can concur on all of your points. For me, I feel the biggest change is the freedom I feel to pursue my big dreams in life.

    Mardee,

    The school of thought in paying off SL include a few things off the top of my head – 1. Psychological 2. Freedom from bills 3. Stress removal 4. Risk

    For me the freedom gained from knowing that I am not bound to payments allows me to pursue my dreams with vigor and without the stress of having to bring home the proverbial bacon. I think differently and more clearly without debt.

  15. Eric says:

    Thanks for the post – enjoyed. Neat to see such a major turnaround in such a short time. Although I really don’t experience financial stress – I do desire that sense of freesom to pursue what I want. But truthfully – trying to figure out what I want and how I want to spend my time is something I need to ponder.

  16. GMoney says:

    The hardest part for me is figuring out when to live a little. You mentioned retirement, but that’s about 30 years out for me. At what point should one stop being so concerned about the budget? I mean I set a goal to be debt-free and then I achieved it. Next I set a goal to build up my saivings account to be at least 4 months of my salary and then I started investing 15% of my salary into retirement … I’m at point to where I’m constantly looking for what to do next. I’m afraid that I’m going to miss out on enjoying the wealth that I’ve built.

  17. tanyetta says:

    Entry for the book giveaway–
    I’m writing a response to: http://www.thesimpledollar.com/2007/04/24/financial-freedom-is-making-me-rethink-my-life/

    I never thought we would be able to survive on one income. Two years ago my husband and I sat down and discussed having more kids and that I would be the one to stay home for four years. It was the best and most frightening decision we made. It’s been 2 1/2 years and now that we’ve paid off a great deal of our debt, (we still have a mortgage and car note) *sigh* —we’re now trying to figure out a game plan for saving more aggressively and looking into investment options. I really enjoy reading your blog, it’s making me think and re-think my family financial situation. Tha

  18. rob in Madrid says:

    I have to agree with Andamom how do you break out of living pay cheque to pay cheque cycle when your first starting out. If the car breaks down or someone gets sick, the kids need new clothes etc. You end up putting everything on Credit Cards which then you have to use any spare cash to make payments which means the next bill goes on the credit card, it’s a vicious cycle which is hard to break.

    Rob in Madrid

  19. Adam says:

    Rob, the way to get a break is to be ruthless about being frugal. The really hard part is that there is no single big “hey I’m saving money” decision. Instead there are a ton of little things that add up. Are you bringing lunch to work? Picking up a snack when you stop at the gas station? Going out to eat? Throwing food out instead of coming up with creative leftovers? All of those are places where you can potentially save money, and that is just with food.

    The point is that you have to always ask yourself this question: “Would I rather have X, or financial freedom?”. Yes, it is a false dilemma. Obviously a dollar for a twix bar at a gas station is not going to break you, but you have to look at these things long term, and in the long term three dollars a week for a year is 156 dollars. What else could that pay for? The hard part, the really hard part, is that you have to treat a harmless decision to spend a little bit of money as though it is going to happen ten times, or fifty, or two hundred. A lot of the time we spend money without thinking much about how much or what the value of our purchase really is. Most of the time just making the savings in places you didn’t think of before is enough to get the ball rolling.

  20. vandana arora says:

    hi Trent,

    I am at the same stage where u were before starting this site.

    I really want to consult somethings with you.I am in the process of deciding whether to start a site,as this is the only option for me which i can continue while working.

    But i really want to think about pros and cons.

    I will be pleased if i receive a reply of this comment to discuss further.

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