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The Forest and the Trees of Financial Independence
A few days ago, I happened across a wonderful article from Erica Johnston at the Washington Post, entitled How one family is sending 13 kids to college, living debt free — and still plans to retire early.
It’s a great article about a family that’s navigated the financial challenges in front of them and been able to find success in the areas that most middle-class families hope to achieve: college education for their kids and stable retirement for themselves:
“Rob and Sam Fatzinger, lifelong residents of Bowie, Md., lead a single-income family in one of the country’s most expensive regions. Rob’s income never topped $50,000 until he was 40; he’s now 51 and earns just north of $100,000 as a software tester.
They have 13 children. Which means they require things like a seven-bedroom house and a 15-passenger van. Four children have graduated from college, three are undergrads and six are on the runway.
Yet they paid off their mortgage early four years ago. They have no debt — never have, besides mortgages. And Rob is on track to retire by 62.
This family gets the gold medal for being frugal. This family is the Einstein of economical.
These days, frugality is not about clipping coupons. It’s about rethinking your finances, and maybe your life.
Rob’s philosophy: “Spend money on what makes you truly happy and on what you enjoy. … The thing that people need to understand is that we don’t feel deprived or poor. … We pick and choose carefully.”
The Fatzingers are getting it done.
For me, that’s the key point of the article: Spend money on what makes you truly happy and on what you enjoy, and pick and choose carefully. Cut back hard on everything else. If you do that, you’ll have plenty of money for the things you deeply care about and for your long-term plans, even without a huge income.
Another section of the article really spells it out beautifully (I’ll be honest, I wanted to quote this because of the reference to Marquis de Lafayette, one of my favorite historical figures and a key person in helping America win its independence while also being a French national hero):
Frugality is hardly new. In 1789, George Washington wrote to Marquis de Lafayette, the French military officer who fought for the American Revolution: ‘Nothing but harmony, honesty, industry and frugality are necessary to make us a great and happy people.’ And we were a frugal people well into the 20th century. Then came the era of instant credit, rampant consumerism and record personal bankruptcies.
Recently, frugality has gotten a boost thanks to hundreds of personal-finance bloggers, and no thanks at all to the Great Recession of 2007-2009. Many focus on FIRE, an acronym for financial independence/retire early.
Aspirants often strive to save at least 25 percent of their take-home pay over the years, or even twice that — or more — to feel financially secure or to pursue a new career. Others yearn to quit their jobs for the long haul, even in their 30s.
One leading blogger grew up on food stamps. Others learned about money from their parents, for good or ill. The best are innovative, funny and surprisingly philosophical as they chart a course for change and places unknown.
This article really gets it.
It doesn’t matter what your background is. It doesn’t matter what the specifics of your situation are. The core principles for financial success are exactly the same.
Again, as I stated earlier, it’s a really simple core principle that works for virtually everyone: Spend money on what makes you truly happy and on what you enjoy, and pick and choose carefully. Cut back hard on everything else. If you do that, you’ll have plenty of money for the things you deeply care about and for your long-term plans, even without a huge income.
The thing is, virtually every single time I see a story like this – whether it’s the Fatzingers or someone else or my own story – I see a litany of responses from people who simply are missing the forest for the trees, to borrow that old metaphor.
They get hung up on very specific elements in the story and use that specific point, combined with their own personal preferences and experiences, to discount the overall point of the article.
Let me give you a few specific examples from that Washington Post article.
Kat in VA says: “Being frugal and not racking up debt is admirable, but I question the morality of having 13 children and then depending on handouts and free labor from family and church friends in order to make ends meet. Those same resources could have (perhaps should have) gone to someone who finds themselves in a challenging situation for reasons such as job loss or widowhood… anything other than excessive procreation.”
Yes, this family has 13 children, but that doesn’t change the core principle of the story. You can have 13 children or no children and still spend money on what makes you truly happy and what you enjoy, pick and choose carefully among those things, and cut back hard on everything else. Having 13 children doesn’t make this story impossible or irrelevant.
READR says: “They sound like lovely people, but lets get real. It takes a village to do this. The article is full of references to family members and friends giving this family handouts. And then there are the taxpayers who are helping foot the need based financial aid this family requires because of a lifestyle choice.”
Yes, this family lives in a community that offers a lot of support for one another – that’s pretty clear from the article. There are strong hints that this family is part of a strong religious community, perhaps centered around a church. That’s wonderful for them, but it doesn’t change the core principle of the story. You can live in a supportive social community or you can be very isolated and you can still spend money on what makes you truly happy and what you enjoy, pick and choose carefully among those things, and cut back hard on everything else. Living in a tight-knit and supportive social community doesn’t make that principle impossible or irrelevant.
Also, the primary mention of financial aid in this story comes from the financial aid received by the children as they attend college, which is a standard benefit that any middle-class child will receive as they attend school. It doesn’t change the core principle of the story.
Black Sunshine says: “‘I would go with Grandma and buy any cute clothes I wanted.’ I think we cracked their code.”
We often provide basic things for our children. After that, our parents – our children’s grandparents – often jump in and spoil them with extra stuff. That’s what grandparents do in many families – mine certainly included. There’s no indication that the parents are depriving the children of basic needs; they’re just not buying them designer clothes, which is a pattern that we also follow. I suppose that if buying designer clothes for your children is one of the two or three things in life that brings you true personal happiness and everything else is secondary, then you could go buy them for your own children.
However, whether you buy your children designer clothes or not, you can still spend money on what makes you truly happy and what you enjoy, pick and choose carefully among those things, and cut back hard on everything else. Having grandparents that spoil your kids doesn’t make that principle impossible or irrelevant.
mnsombat says: “A guy I know has 7 kids, works for a public entity and has the gall to be about as right-wing as anyone I know. His kids get subsidized food at school, subsidized musical instruments, and subsidized just about everything else. They will get more financial aid in college due to family size and income. In general, everyone who has two kids or fewer is paying not only their own way but that of people with big families like this as well.”
Anyone who is in the public school system is subsidized. The reason for public schools is to ensure that children are theoretically well-educated and well-trained enough to become productive members of society, keeping the ball rolling when we’re old and retired. Paying for public schooling seems like an investment in my own personal future, at least to me.
Regardless, whether or not you have 13 children or seven children or three children or no children, you can still spend money on what makes you truly happy and what you enjoy, pick and choose carefully among those things, and cut back hard on everything else. The number of your children doesn’t make that principle impossible or irrelevant.
Similarly, whether or not you’re “right wing” or “left wing,” you can still spend money on what makes you truly happy and what you enjoy, pick and choose carefully among those things, and cut back hard on everything else. Your political stance doesn’t make that principle impossible or irrelevant.
All of this really boils down to two key things that every single person needs to recognize when it comes to personal finance.
The Forest: Regardless of Your Situation, There Are a Few Key Principles That Will Help You Have the Things You Care About
You might be a single person of color living in a small apartment who drives a Honda Civic on its last legs. You might be a married white guy living in a small town with three young children who deals with being partially deaf and partially blind. You might be a grandparent who has chosen to take in two grandchildren after the unexpected death of your daughter and is trying to figure out how to make it all work.
There are three hundred million different situations in America. There are over seven billion different situations in the world. They all have their nuances, their advantages, their disadvantages.
We all have our own stories. But within those stories are some common truths.
We all want some level of security in our future and in the future of those we care about the most.
We all have passions and interests that we want to devote some of our time and energy and even money to.
We all are susceptible to the siren’s call of marketing and popular culture, even indirectly, and that generates temptations regarding ways to spend our money and time and energy.
The core principles of personal finance address those things, and they’re actually summarized pretty well in this article.
Spend less than you earn. If you make $30,000 a year, spend less than that. If you make $80,000 a year, spend less than that. If you can’t figure out how, you need to cut some of your bigger expenses.
Separate needs from wants. There really aren’t many things in life that you actually need, but there are a lot of things that are wants that people elevate to the point of treating them as though they were actual needs. Think of a cell phone bill, for instance; it’s far from a need, but many people treat it that way.
That’s important, because many people really don’t appreciate how many of their wants in life are fulfilled. They have cell phones and cable and internet access and a decent place to live and quality foods and nice clothes and lots of sources of entertainment. All of those things are wants. They’re not needs. Many people treat them as needs, however.
Figure out which few wants make you truly happy, and don’t hesitate to spend some money – and especially time – on those things. I care about my family and closest friends. I care about books, reading, and learning. I care about writing, too. I care about tabletop games. I spend money on those things. I have a few other lesser hobbies, too, but I don’t spend much on them at all. Everything else? I cut it back – hard. I wear inexpensive clothes and wear them until they’re worn out. I drive a 13-year-old SUV that I bought off of Craigslist. I live in a pretty modest home. We shop at Fareway, a local discount grocer, and mostly eat at home. We buy lots of store brand stuff and stock up when it’s on sale.
Use the money you’re now not spending on that stuff to escape from debt and then save seriously for retirement, possibly even early retirement. Imagine walking away from work while maintaining roughly your current income at age 65. Age 60? Age 55? Even earlier? Imagine doing that with zero debt. Following that recipe of managing needs and wants – and using some smart tactics that build around that core idea – enables those kinds of results.
I speak from firsthand experience here. I went from being unable to pay my bills a decade ago to being completely debt-free – without even a mortgage or a car payment or a student loan or anything – and designs on retiring before age 55. It all boils down to those principles.
That’s the forest. The problem is that people tend to be unable to see the forest for the trees.
The Trees: There Are Nuances and Specific Advantages and Disadvantages in Every Single Person’s Story. That Fact Doesn’t Invalidate the Core Principles.
My story is going to be a little different than yours, at least in terms of specifics. I have a college education. I’m male. I live in the upper Midwest. I’m white. I’m deaf in one ear. I’m blind in one eye. I have a weird thyroid condition that I’ve had since birth. I am self-employed. I have three children. Both of my parents are retired, but still living. I’m a homeowner.
Those things, all together, are going to make my story different than almost anyone else alive. There may be one or two people you could find who would match it, but that would be pretty rare.
You could take any one of those factors and use it as a reason to say that our stories are different and that the success I’ve seen is due to that difference, not due to the simple strategies I’ve applied above.
That’s an excuse, though. People of all different genders, races, ages, employment histories, family structures, skills, and so on have used the core principles of personal finance to succeed.
Because they work.
If you look at a story like that of the Fatzingers, or my own story, and see only relative advantages that we might have over you, you’re looking at the trees and not the forest. You’re looking at details and not the bigger pattern.
You’re looking for excuses not to actually try your best.
The reality is this: Financial change is never easy for anyone. If it were, everyone would be in great financial shape and stories like my own and that of the Fatzingers would be the norm, not the exception. It’s not easy to fix things.
When things are challenging, it’s easy to look for excuses, and differences between people’s individual stories are really convenient. You might point at some factor in the Fatzingers lives – the community they live in, for example, or the fact that they have supportive extended family – as evidence that they had an “unfair” advantage and that you couldn’t pull it off. You could do the same with me – my education, for example, or my gender – and call it an “unfair” advantage.
There are two problems with that, though.
First, you likely have some “unfair” advantages over me. The statistical likelihood is that you’re not blind in one eye, as I am, or deaf in one ear, as I am. The statistical likelihood is that you have fewer dependents to be financially responsible for. You might be younger. You might have more skills in some areas than I do. You might have some more experience in some areas than I do.
Those are all advantages that, if I were looking for a reason why I couldn’t succeed as well as you, I could use as an excuse to not even try. The system is rigged for you. It’s rigged against me.
Second, the presence or absence of these “unfair” advantages has nothing whatsoever to do with the key principles here, with have to do with internal choices and personal behaviors.
Nothing in that long list of attributes keeps you or me from spending less than we earn.
Nothing in that long list of attributes keeps you or me from separating our needs from our wants.
Nothing in that long list of attributes keeps you or me from deciding on the one or two wants that really matter and focusing on those.
Nothing in that long list of attributes keeps you or me from cutting back hard on all of the other non-necessities that we waste our money on.
Nothing in that long list of attributes keeps you or me from putting money aside for the future, money that we now have thanks to the other steps.
If you spend all of your time looking at the trees, you’ll never see the forest.
The core principles of personal finance work for everyone. They work for me. They work for you.
When you spend your time focusing on the “advantages” someone else has that enables them to find personal finance success, you’re making two mistakes. One, you’re excusing yourself from taking on that challenge, one that you can most definitely succeed at if you try. Two, you overlook your own “advantages,” of which there are plenty.
I’ll be the last person to say that turning around one’s financial situation is easy, but it is possible. It’s possible for everyone, regardless of their relative advantages or disadvantages.
It’s up to you. It has nothing to do with anyone else.
Are you up to that challenge?