What Financial Independence Means To Me

July 03, 2018

As we celebrate our Nation’s Independence, I find myself reflecting on the notion of financial independence. I want to share some of my personal journey to financial independence, not to define financial independence, but to share my personal feelings on what it means to me.

A journey, not a destination

Several years ago, I found myself at a crossroads. While I was making decent money as a financial planner, I found myself struggling to support my growing family. We were living check-to-check, not saving for retirement (or any other financial goals), and using credit cards to pay for routine expenses like food and gas.

Not exactly a model of how to manage money, which is not a good place for a financial planner to find themselves! I knew I had to take control of my finances and live the strategies I educated others about. While this is still evolving as our goals and life changes, I remember very clearly declaring financial independence in the spring of 2013!

The changes I made

Financial Independence looks different for everyone, but I laid out several goals that I considered essential to claim my own financial freedom.

  • Adopt AND stick to a budget (aka spending plan) – Understanding where we were spending our money was the first step for me. That allowed us to sit down and decide where we could cut back, make sure we were saving into our emergency fund, retirement accounts, and paying off credit card debt as aggressively as possible. We still use a spending plan (and will forever) because it is the most valuable tool to make sure we live below our means. Everything else builds off the idea of spending less than we bring in!
  • Build an emergency fund – By living below our means each month, we could build 6 months of expenses into a savings account. These two accomplishments got us off the cycle of living check-to-check. Seeing that account grow over time encouraged us that we were on the right track – and the confidence to keep going.
  • Save for retirement – We started contributing to our retirement accounts. To start, we did enough to make sure we received the full match for our employers. We had to tweak our budget to do this, but found the things we cut back on were not essential and it was easier than we expected.
  • Pay off credit card debt – This was my personal nemesis! I could never feel like I was financially independent if I owed a lot of money to credit card companies. After making minimum payments for several years and paying insane amounts of interest, we began to attack the highest interest card first with every extra dollar we could find. This only happened because our spending plan allowed us to make sure we stopped using the credit cards first. Once the highest balance was paid off, we shifted to the next higher rate with even more zeal. In 32 months, we were totally out of credit card debt. The day we made that last credit card payment was an awesome day!

It’s important to see the connection your goals share – especially recognizing how the spending plan is the foundation for taking control of your finances. Living below our means was the first step in our journey to financial independence.

If I can do it, you can too (I promise)

Once I started this journey, real change happened quickly. I quickly noticed my attitude shifted from feeling like I was destined to be in debt forever and never be in control, to a determination I could live within a budget and become financially independent. This mindset is important if you feel like you are “bad with money” or just not meant to get ahead. Recognize that financial independence is intentional, and has very little to do with how much money you make. We can all decide to live with our means – which is the most important step!

Maybe the 4th of July is the day you decide to start your own journey to financial independence. Believe you can get there, then take small steps to start your journey. Before long, you will be on your way. When you reach your goal, celebrate your success and use that to renew your conviction.

I’m not saying it will be easy, but I promise you it is worth it!