Welcome to the future. Welcome to the 20’s. This could be the decade that changes everything. I am rationally optimistic that the changes will be for the better.
Imagine a future where cities become greener with more trees and parks. With more people choosing to cycle and walk and an expansion of pedestrian and cycle infrastructure. Cities across the globe with clean air.
We could see 100% renewable electricity production and EV’s making use of all the free energy that our local star provides:
If we reduce the carbon dioxide and other greenhouse gases we’re putting into the atmosphere, we can avoid the worst effects of man-made climate change.
With the media’s focus on short-term bad-news stories it’s easy to think things are getting worse rather than heading towards a brighter future.
Positive Progress
If we look back in history and look at global trends we can see there is a case for rational optimism:
Life expectancy across the globe has doubled since 1800 and real income (accounting for inflation) is nine times higher.
Some of the amazing trends happening right now are counter-intuitive (again mostly due to the media focus on the individual bad-news stories rather than the trend):
In other cases there is progress we may not have heard about:
Instant improvements for the world
There are simple things we can do that provide instant improvements for the world as well as for our own health and wealth:
The future is here. We get to decide what we want it to look like. Having a clear view of the progress being made helps us to see where and how we can continue to make improvements. The positive trends are already in motion and each of us can make simple changes that will instantly improve the world.
The following books tell the story of these (often surprising) positive trends beautifully:
When I started on the path to financial independence I had one goal: to retire early (FIRE). I didn’t realise at the time there would be a sequence of other benefits along the way. These are the milestones of FIRE.
The day you decide to head towards financial independence you reach the first milestone:
A chain reaction begins that leads you to evaluate all the things you’ve previously bought and simplify your life – clearing out anything that no longer provides fulfilment.
The word frugality gets a bad rap. People think frugality means lack or self-denial. One of the surprises I found is that the path to FI is nothing like that at all. You only need to cut out the waste: the spending that gives you no pleasure, no value, and no fulfilment.
Life gets better as you focus your days on the things that truly give you pleasure (and these are often free).
The things and experiences that remain in your life are the very best, the most fulfilling, the most exhilarating, the most valuable, and the most satisfying – and each and every one of them is fully appreciated and fully enjoyed.
2. Debt freedom
As you reduce spending the amount you can save each month increases dramatically.
You can use this money to pay off any non-mortgage debts.
You will also look at purchases in a different way. No longer will that new car be only $500 per month (representative 25% APR – terms and conditions apply). It will be $40,000 and if you don’t have that in cash, or you don’t fancy spending all that cash on a car, you won’t buy it.
At this point I realised I could have all the important features of a new car in a pre-owned car bought for $4000 in cash. With the added benefit of not being so precious about it – so attached – less owned by the object.
When you take on debt you become a slave to your past self’s decisions. They got the pleasure of the purchase and you’re left working for years to pay for it.
Debt freedom gives the first peace-of-mind milestone. You will feel a deep calm settle within you.
With no more debt payments your savings will accelerate. The snowball of your wealth will start to grow bigger and roll faster.
3. One month’s grace
Next up, you’ll soon have one month’s spending saved up. Seeing your FI fund grow provides the motivation to look for additional efficiency improvements and cut ever more waste from your spending.
Every $1 you cut from your annual spending reduces the FI fund you need by $25 or $33 (depending on the safe withdrawal rate you choose). Small improvements make a big difference.
4. One year’s grace
Now you’ve got options. Reaching the point where you have a whole year’s spending covered gives you additional peace of mind. All those common fears begin to fade as you have bought yourself plenty of time to change direction, change career, or start something new.
5. Mortgage freedom
Congratulations you’ve just cleared one of your biggest expenses and given yourself additional options. You could rent out your house for additional income while you travel the world. You could downsize to a smaller house if you wanted to, giving you another safety net.
Every time you pay off some of your mortgage it is equivalent to saving at the mortgage interest rate tax-free. When you overpay you reduce both the remaining time and the total amount you’ll have to repay.
In some places it makes financial sense to rent rather than buy. If this is your situation you also benefit from the freedom to easily move to a better value area or country to lower your annual spending.
6. The plateau
At some point on your FI journey you will have almost fully-optimised your spending (there is always room for improvement, but with diminishing returns).
Life is good but you’re not financially independent yet. You have to keep heading to work, selling your time for money, while your FI pot grows.
You are becoming wealthy. There may be no externally visible sign that this is the case – but it is true nonetheless.
It is best to put your focus elsewhere for this bit. Build the lifestyle you would like to live post FI:
Focus on learning, creative pursuits, improving skills, health, fitness, exploring the beautiful world, and spending time with those you love.
The plateau can be a few years long. Stay the course. This is what it feels like to become rich enough.
7. Ten to Twenty year’s grace
One day you find you have ten to twenty years annual spending invested!
You’re still not FI, but this feels very good. This is FU money. You will begin to live life on your terms. Personally important things take precedence.
8. Base FI
At some point on the way to an FI pot of 25x annual spending (4% safe withdrawal rate) to 33x annual spending (3% safe withdrawal rate), you will realise that you’ve reached what we’ll call Base FI.
Base FI is the point where all your core spending (on water, food, shelter, heating, energy) is completely covered for life by the passive income from your FI pot.
Beyond this point, you will be adding each of the good things from your current lifestyle back into your post-early-retirement lifestyle.
It’s like a TV game show:
“Now you’ve won …”
one-book-per-month for life
music streaming
movie-streaming
the car
one week’s vacation per year
a month of travelling
…
All covered for life by the passive income from your FI funds.
9. Part-time option
There is a point where you can choose to reduce your hours and begin to work part-time. While this will impact how long it takes to reach financial independence, it gives a possible cross-over route into retiring early. You gain additional free time in your life. You get to trial some of your post FIRE plans.
10. FI (current lifestyle)
This is it. The big one. You know the lifestyle that you love, the one that includes all the things you value, all the things that provide fulfilment. You can now live that way for the rest of your life, without ever swapping your time for money again.
You can choose how you spend the rest of your life. You can choose creative projects without the need for them to generate income.
You have bought yourself freedom.
You might decide to retire early as soon as you hit your number, but even if you continue to work towards some of the levels beyond, everything will have changed. Once you reach FI, you are completely free in your mind.
11. FI+ (safety margin)
After reaching 25x annual spending invested in your FI investments (based on a 4% safe withdrawal rate) you might want to carry on and aim for 33x (3% safe withdrawal rate).
Any extra invested savings give you a safety margin. A way of handling changes in the future. These additional savings can mitigate the sequence-of-return risk coming from a bad first decade of stock market performance or high inflation.
Each month you go beyond FI into FI+ builds your financial strength.
12. FIRE
You have retired early. You have built financial independence and now you are free.
At this point you get to choose what to do with the rest of your life:
You could travel the world, or learn guitar, be more present for your family, or begin to teach something you love, finish the house, or build something new, sail away into the open ocean, or climb a mountain, go diving on a reef, or learn to paint, you could become fluent in a foreign language, or focus on your fitness, you could start a business, or spend more time on your hobbies, you could volunteer, or plant some trees, you could create art, or write a book, take award winning photos, or learn to fly …
Or you could do all of these things and more.
The choice is yours but you now have the conn.
Through hard work and discipline you’ve stepped off the well-worn path and into the unknown.
A short time later the plant was eaten by a sea creature and the energy was stored in its body.
1 month ago that energy was pumped from deep underground, where immense time and pressure had converted it into oil.
This incredibly useful (and finite) base material could then be used to make chemicals and plastics (found in nearly every product we use).
This particular batch was refined into gasoline.
I think you know where this is going…
A tank full of fossils
Last week you filled up the fuel tank of your car.
This morning you converted that 400 million-year-old energy into enough kinetic energy (with some waste heat, sound, and light) to push you and an average of 2 tons of car on your commute.
Throughout the year this habit will cost you over a month of work (based on average running costs and earnings). Plus potentially over a year of work to buy the car (if new and bought with finance).
It is likely some extra energy (and money) was wasted due to all the other people, in the way, in their 2 ton vehicles.
Some of these journeys were necessary and some were not. Some of the people in that queue could have chosen to cycle instead.
Instant improvements
Imagine if everyone who could, woke up tomorrow and decided to cycle to work.
Roads would be instantly clear for those journeys that had to be made: by ambulance, car, van, or truck (most of which are electric and self-driving … in this Utopian future of course).
Benefits for you and for the world
For those who had chosen to cycle: their fitness levels and overall health would begin to improve immediately.
As would their mental health as they reconnected with nature and the changing seasons.
A feeling of well-being would flood through them, as the exercise triggered endorphin production.
Their sleep would improve immediately as well.
The honking horns, impatience, and road rage that come from constantly being stuck in traffic are replaced by smiles exchanged with oncoming cyclists on the bike tracks.
This catalytic change of habit, leads to a cascade of benefits:
You appreciate nature more when you spend time in it
And pay attention to the amounts and types of packaging the things they buy have.
The money we spend has an almost instant impact on what gets created and how it gets created.
You don’t have to wait for someone else to change the world for the better.
You really can be the change you want to see.
Choose how you spend your money. Be the inspiration for those around you. Change the world.
A beautiful future
There is a beautiful future ahead of us. This future includes all that is good from humanity’s progress. Just without the unnecessary waste.
A future where we look after the only planet we have (for now). Where we live in balance with nature. Where we realise where the true value lies and we appreciate the abundance.
The moment you step onto the path that leads you to grow rich enough, you make the immediate changes that improve the world.
Martin Stewart, director of the financial advice firm London Money, told the Daily Telegraph in September. “Sure, save half your salary, eat the roadkill, bin-dip, raid the charity shops, recycle everything, just stay in and actually read the T&Cs of things rather than waste money going out. From this you will create lots of savings, but sadly very few memories.”
I disagree 🙂
Memories need time more than they need money. Memories are free.
I took all of the photos above over the last five years. During the same period, I reduced spending from ~50% of my income in the first year to spending ~25% of income this year.
Vacations and travel can, as with most categories, cost wildly different amounts of money and be wildly different in terms of the fulfillment, happiness, and memories they provide.
Our approach is to spend as little as possible on the necessary costs of getting to the new places, but once there, we live much as we do at home.
In this way we have visited some incredible places in the world whilst spending a fraction of what could be spent on a single week’s holiday.
We like outdoor sports so spend our time exploring the world and hiking, cycling, kayaking, swimming, climbing, or skiing. Once you have the equipment these activities cost very little but have a massive positive return in terms of fulfillment.
We have incredible memories from the last five years including:
Touring as a family through six countries in Europe in a camper-van
Exploring India with friends
Twice yearly trips to the mountains
Kayaking in the ocean
Ice-climbing in Norway
Climbing in the Swiss, Italian, and French Alps
We’ve also been on city breaks, skiing trips, hiking trips, and beach vacations – at the same time as massively reducing our yearly spending.
Good memories come from having adventures together and exploring the beautiful world whether it is on your doorstep or on another continent. They come from spending quality time together as a family, and with friends, wherever you are.
Breaking the link between spending money and having a good time will be one of the most strengthening things you do.
I would argue that you create better moments, better memories, and have better experiences when you take spending out of each day. You’ll find yourself in fewer queues and fewer traffic jams.
Instead you’ll find you have the empty mountain trails all to yourself.
You’ll feel like the whole world is yours to experience and enjoy.
You can benefit today from taking a step towards financial independence (FI). The greatest benefits come way before you have plenty of money and can retire early (FIRE).
Some of the biggest benefits come the moment you step onto the path to freedom … meaning they can be yours today … right now.
So settle in and let me tell you my story in the hope that something in there helps you in your life.
Five years ago I took my first deliberate steps towards FI and began a process of change that resulted in improvements in every single area of my life:
I gained more happiness, health, time, and wealth
Became calmer and more at peace
Noticed the beauty of the world more
Became increasingly creative
My relationships improved
I felt stronger and better able to choose my response to events in life
All of this from a fairly simple change of habits and a fairly major change in outlook on what is important in life.
This change began in January 2014 after I had spent the Christmas break reading Your Money or Your Life by Vicki Robin & Joe Dominguez and then happened upon some of the early FI blogs.
A simple change of habit
The simple, subtle, but powerful change in habit was just to be aware of how the money I spent made me feel.
As I went through each day, I paid attention to how much fulfillment I was getting for each expenditure of money.
I did this by noting down each thing I spent money on, but you could do it just by paying attention as you spend.
The other thing to bear in mind is how much each purchase is costing you in terms of the amount of time you have to work to buy that thing.
Your real hourly wage
Work out what your real net hourly wage is:
money that comes into your bank account each time you get paid / the number of hours you work over that time (including commute time).
This number can always be in your mind and will help you reset what a reasonable amount of money to spend on things is.
What you think of as a small amount of money can easily creep up, as you earn more over the years or when you use debt to buy things.
Towards a more fulfilling life
These small changes in habit lead to a slow but profound change in outlook.
I gradually realised that the things that made me happiest, the most fulfilling uses of my time, cost nothing at all:
Some key habits changed that had massive positive impacts on every area of my life (health, fulfillment, happiness, wealth) …
I started to commute by cycle regardless of the season. To begin with this was a significant challenge as the route is a 30 mile round-trip and fairly hilly (over 1500ft of climbing).
I soon found this was the most satisfying part of my day, as it gave me physical exercise, meditation time, time in nature, that all added up to a massive improvement to my life.
Old habits
The other thing I noticed was the craziness of my old habits:
Whenever I drove to work I could feel the frustration at being stuck in traffic. I was aware that this habit was robbing me of my fitness, health, money, and polluting the air around me.
I looked around me at all the other unhappy looking people stuck in their over-size metal boxes and the inefficiency was apparent.
Some of these people were stuck in traffic, to reach a job they were working, to pay for the debt they had taken on, to pay for the car that was trapping them there.
All the while cyclists darted past on their faster and healthier journeys.
After a while it became clear we only needed one car for our family of four and I sold my car. This was one of the biggest improvements in my spending, freeing up thousands that could be invested each year.
Happiness increases as you spend less
Most of the benefit of the FI path comes from the realisation that your happiness and fulfillment actually increase as you spend less.
At least as important as the increasingly large FI fund you build up, is the knowledge that you can be happy while spending a fraction of what you used to.
Almost as a side-effect of the focus on an efficient and joyful life you can end up saving 75% of your income (which could mean you are less then 10 years away from financial independence and retirement if you choose).
Everything good gets to stay
You really don’t miss out on anything either. The approach leads to the removal of waste (of time and money) but everything of value in your life, everything worthwhile, is still there.
Vacations are taken, good times had, delicious healthy food eaten, beautiful places and moments fully enjoyed, music from the world’s best musicians streams into the house via high quality speakers, ideas from the world’s best thinkers available on the bookcase or the super computer in your pocket. Being rich enough is a truly wonderful place to be.
Stepping out of the game
One of the unexpected benefits that came early on the road to FI was the dropping away of envy. A good example of this was with our home. We had moved from our tiny two bedroom starter home to a bigger four bedroom home in the country.
We had followed the usual path of maxing out our borrowing as we earned more money and fully expected to continue to move up to bigger and bigger houses as we could afford the payments on the bigger mortgages.
When we realised what truly made us happy in life though, we realised we already had more than enough house. When family or friends moved into bigger houses we could be truly happy for them without envy.
We had stepped out of the game of conspicuous consumption and it felt really good to be free.
Becoming Rich Enough
Becoming rich enough is choosing true wealth over the appearance of wealth and that is what Grow Rich Enough will help you achieve.
Stepping onto the path to becoming rich enough, you will end up with more:
Time
Health
Happiness
Freedom
Wealth
A simple step to take today …
Pay attention to everything you spend your money on and notice how it makes you feel and for how long.
The Grow Rich Enough book will help you make the positive changes in your life to get you to financial independence (FI), to freedom, and to early retirement.
You will find instant benefits as soon as you step onto the path.
This book will show you how you can…
~ Retire early ~ Increase your happiness ~ Increase your wealth ~ Feel calm and fulfilled ~ Find freedom
In short, it will show you how you can become Rich Enough.
You can benefit today from taking a step towards financial independence (FI). The greatest benefits come way before you have plenty of money and can retire early (FIRE).
