For the past month, my entire life seems to have revolved around repairs and maintenance on the new house.
Some days, I'm the one doing the work: shoveling level ground for a planned writing shed, crawling under the house to check for leaks, pruning the overgrown hedges. Most days, however, I'm meeting with other folks: roofing contractors, siding contractors, HVAC contractors, plumbing contractors, pest control contractors. For the past thirty days, this has almost been a full-time job!
"You know, you're lucky," a friend said to me a few days ago.
Note from J.D.
Last October, I had a chance to read an advance copy of Grant Sabatier's new book, Financial Freedom, which was just released this morning. I liked it. I loved parts of it. In fact, the second chapter of Financial Freedom inspired my article about how time is more valuable than money.
Today, I'm pleased to present a (heavily edited) excerpt from that second chapter. Here's Sabatier on why time is more valuable than money -- and why you can and should retire early. (Links and photos are from me. Everything else is from the book. Note, however, I've heavily edited this chapter in order to abridge it and to make it more readable in blog format.)
If some ninety-year-old rich dude offered you $100 million to trade places with him, would you do it? Of course not. Why? Because time is more valuable than money.
The average person has approximately 25,000 days to live in their adult life. If you’re reading this, you likely need to trade your time for money in order to live a life that is safe, healthy, and happy. But if you didn’t have to work to make money, you’d be able to spend that time however you wanted.
No one cares about your time as much as you do. People will try to take your time and fill it up with meetings and calls and more meetings. But it’s your time. Your only time. Financial Freedom is designed to help you make the most of it. Make money buy time.
My goal is to help you retire as early as possible. When I say retire, I don’t mean that you'll never work again, only that you’ll have enough money so that you never have to work again. This is complete financial freedom — the ability to do whatever you want with your time.
Traditional Retirement Advice Doesn't Work
I don’t ever plan to retire in the traditional sense of the word, but you could say that I’m “retired” now because I have enough money and freedom to spend my time doing whatever I want. I no longer have to work for money, but I still enjoy making money, and it’s attached to many of the things I enjoy doing. I love working and challenging myself and hopefully always will, so checking out to a life of leisure just isn’t my vibe.
If you want to “retire” sooner rather than later, you need to rethink everything you’ve been taught about retirement and probably most of what you’ve been taught about money. As a society, we have collectively adopted one approach to retiring: get a job, set aside a certain portion of your income in a 401(k) or other retirement account, and in 40+ years you’ll have enough money saved that you can stop working for good.
This approach is designed to get you to retire in your sixties or seventies, which explains why pretty much every advertisement about retirement shows silver-haired grandmas and grandpas (typically on a golf course or walking along the beach).
There are three major problems with this approach:
- It doesn’t work for most people.
- You end up spending the most valuable years of your life working for money.
- It’s not designed to help you “retire” as quickly as possible.
The first major problem with traditional retirement advice is that even if you follow it perfectly (and most people usually don’t), you still might not have enough to live on when you are in your sixties.
The popular advice to save 5% to 10% of your income isn't enough. You should be saving as much money as early and often as you can. If you want to be sure you'll be able to retire at 65, you need to start (and keep) saving at least 20% of your income from the age of 30.
Here’s how big a difference it makes.
Howdy! I'm Spencer, an active-duty Air Force officer investing for financial independence by age 40. Since 2016, my wife and I have saved half of my active-duty paycheck into our financial independence accounts. I started writing in 2012 about achieving FI in the military on my website Military Money Manual.
Because J.D. has no experience with the military, for Veterans Day he asked me to share the lessons I think every servicemember needs to know about getting rich slowly. These are the concepts I wish someone had explained to me as a newly-commissioned officer in 2010. (These lessons are just as applicable to the enlisted side of the house.)
I've split this article into two sections.
First, I'll cover some basic lessons for beginners: taking care of yourself, emergency funds, military friendly banks, tracking your money, and TSP investing.
Next, I'll cover some advanced topics: investing for financial independence, military deployment, travel, and military credit-card perks.
Let's start with the basics.
One of the harshest life lessons you must learn early in your military career is this: "No one is looking out for you except you.”
You must take responsibility to educate yourself about saving, investing, spending, and achieving financial independence. If you have a really good supervisor or commander in the military, they may explain the Thrift Savings Plan (TSP) to you, but that's probably it.
If you want to achieve financial independence in the military, you need to learn how to do it yourself. There are many resources available to learn about money, including:
- /r/MilitaryFinance on Reddit
- /r/personalfinance on Reddit
- The military finances page at the Bogleheads wiki
- Any of the books on my recommended reading list (or J.D.'s list)
I believe it's important to always be learning, to always be asking questions. If you have questions about your military pay, benefits, or personal finance, type them into Google. Ask your supervisor. Ask your buddies (but don't always take their advice haha).
Never be afraid to ask questions. Keep yourself educated about money.
Could you pay your mortgage, groceries, rent, insurance, medical expenses, and other bills on $2000/month? If you could, what kind of lifestyle might you lead?
Millions of retirees across America live it every day.
The Social Security Administration reports that 50% of elderly married beneficiaries and 70% of singles rely on Social Security for more than half of their monthly income. Considering that the average Social Security check is around $1361/month, this is a really tough place to be in for so many of these retirees.
And I’ve met them. Many of them.
Every year at my insurance agency, we meet thousands of baby boomers aging into Medicare at 65. We often see their shock, dismay, and confusion when they realize that the cost of their healthcare in retirement will easily eat up at least 20% to 30% of that Social Security check every month.
No matter how you slice it, even the best of the retiree budgeters out there are likely to have trouble making ends meet on Social Security income alone.
Sometimes when it comes to personal finance, budgeting isn’t the problem.
Sometimes income is the problem.
Fortunately, there's good news on that front, because we live in an age where there are more opportunities to earn extra money than ever before. Our digital world has made this possible, and it couldn’t have come at a better time.
When you're on a fixed income and struggling to make ends meet, a side hustle that pays you even a few hundred dollars a month can be a tremendous help.
At Boomer Benefits, we polled our Facebook fans – largely baby boomers and seniors - to ask what kind of side-hustles they are rocking out there in the real world. What we learned is that there's a wide array of ways in which creative retirees are supplementing their Social Security income.
Today, I’ll share a few of their stories to give you some ideas for your own possible side-hustle that could potentially help to reduce financial worry and afford you a better lifestyle in retirement.
In their classic Your Money or Your Life, Joe Dominguez and Vicki Robin argue that the relationship between spending and happiness is non-linear.
More spending brings more fulfillment — up to a point. But spending too much can actually have a negative impact on your quality of life. The authors suggest that personal fulfillment — that is, contentment — can be graphed on a curve that looks like this:
Beyond the peak, Stuff starts to take control of your life. Buying a sofa made you happy, so you buy recliners to match. Your DVD collection grows from 20 titles to 200, and you drink expensive hot chocolate made from Peruvian cocoa beans. Soon your house is so full of Stuff that you have to buy a bigger home — and rent a storage unit. But none of this makes you any happier. In fact, all of your things become a burden. Rather than adding to your fulfillment, buying new Stuff actually detracts from it.
The sweet spot on the Fulfillment Curve is in the Luxuries section, where money gives you the most happiness: You've provided for your survival needs, you have some creature comforts, and you even have a few luxuries. Life is grand. Your spending and your happiness are perfectly balanced. You have Enough.
According to Dominguez and Robin, your goal should be to achieve Financial Independence, the condition of having Enough for the rest of your life. "Financial Independence has nothing to do with rich," they write. "Financial Independence is the experience of having enough -- and then some." This is achieved when your savings has reached a level that will sustain you at the peak of the Fulfillment Curve indefinitely.
As many Get Rich Slowly readers have discovered over the years, the exercises and advice in Your Money or Your Life can transform your relationship with money, helping to break your dependency on Stuff. It's a great book for learning how to align your spending with your values. It provides a roadmap to Financial Independence.
Where Your Money or Your Life is less good, however, is providing advice for what to do after you've reached this goal. What happens when you achieve Financial Independence? What happens when you have enough — and then some? Many people reach this place only to find themselves wondering, "What next?" It's an important question, one that's often tough to answer.
Financial independence and early retirement continue to attract mainstream attention. This is a good thing. Check that, this is a great thing. Of course, with this attention there are more naysayers and critics than ever.
One of the main criticisms of the FIRE movement -- and of frugality, in general -- is that those who seek FIRE are depriving themselves. Or leading lives of deprivation. On the surface, these two arguments may sound like the same thing but they're not. There's a big difference between "deprive" and "deprivation".
Here are the definitions of these two words:
- Deprive (verb) — Prevent (a person or place) from having or using something.
- Deprivation (noun) — The lack or denial of something considered to be a necessity. The damaging lack of material benefits considered to be basic necessities in a society.
That's all very academic, isn't it? Let's take a deeper dive into the difference between deprivation and depriving yourself -- and explore why one is actually a good thing.
The Difference Between Deprivation and Depriving Yourself
Life is full of choices, from the important to the mundane. Whenever you make a choice, you are by definition depriving yourself of the thing you didn't choose. When you choose to purchase a townhouse, you deprive yourself of a single-family home. When you choose to buy vanilla ice cream, you've deprived yourself of chocolate. When you enter one door, you leave another unopened.
Depriving yourself of something isn't necessarily bad. It's something we all do every day in the little choices we make. (As J.D. has noted, opportunity cost is what we give up in order to have the thing we choose.) Deprivation, on the other hand, is a different matter.
Look at the definition of deprivation again: The lack or denial of something considered to be a necessity.
To live in deprivation is to be lacking a need, not a want. Chocolate ice cream is not a need. You can deprive yourself of it, but that doesn't mean you're living in deprivation. (Although I'm sure someone out there who loves it may disagree.)
Clothing, food, and shelter are needs. To go without them is to be in a state of deprivation. But besides those, there aren't that many needs in life. By "needs" I mean needs in the strictest sense — those things we need to survive and continue breathing as human beings.
You might include access to medical care and access to transportation as needs. After that, though, it gets grey very quickly. Even transportation is a bit questionable as a need. You can live in a dense city all your life and walk to get food, clothing, and everything you need. I'm sure many do.
If you've traveled a bit outside of the first world, you quickly see how microwaves, dishwashers, TVs, and computers are just wants. Sure, some of these things might fall closer to needs on a spectrum of wants, but they're still luxury items.
Here's the curious thing (and the whole point of this article): By depriving yourself of things you want, you can protect yourself from a life of deprivation, a life where you lack the things you need. A little self-sacrifice in the short term can lead to prosperity in the long term.
It's been two years since I last looked at my overall financial situation to determine whether I have the resources to meet my goals. In those two years, much has changed.
I sold my condo and bought a home in the country. I repurchased Get Rich Slowly. I invested in not one but three other businesses. The stock market has bounced around, I've begun part-time work at the family business, and I've made many other minor adjustments to my daily life.
With all of these fluctuations, I'm naturally left to wonder: Am I still financially independent?
As I've mentioned many times, financial freedom exists along a continuum. For the sake of this article, I'm discussing the fifth stage of FI, the point at which investment income supports standard of living.
At the end of 2016, I was FI (but only just). What about at the end of 2018? Do I still have enough saved to fund my future indefinitely? Let's find out.
It's a GRS tradition! Each year on Halloween, I publish a story about planning for death. Usually these are general articles about estate planning. This year's story is personal.
When my best friend died in 2009, one of my biggest regrets was that I hadn't made time to travel with him.
Sparky had previously asked me to join him on trips to Burning Man (in 1996) and southeast Asia (in 1998) and Mexico (in 2003). I'd declined each invitation, in part because I was deep in debt but also because I thought there'd be plenty of time to do that sort of thing in the future.
Turns out, there wasn't plenty of time to do that sort of thing in the future.
After Sparky died, I resolved to make the most of opportunities like this. Being in a better financial position helped. Having ample savings gives me the flexibility to join friends on short adventures or to explore the U.S. by RV for fifteen months without money worries. (Yes, I realize that's a fortunate position to be in.)
Here's an example. In 2012, my cousin Duane asked me to join him for a three-week trip to Turkey. Remembering my vow after Sparky's death (and remembering the power of yes), I agreed. That trip to Turkey is one of the highlights of my life so far. I'm glad I did it. It was worth every penny.
The Best Laid Plans
Early in 2017, Duane contacted me. "This fall will be the five-year anniversary of our trip to Turkey," he said. "Want to have another big adventure?"
"Sure!" I said. So, we started planning.
We bought books, watched videos, and browsed websites. We invited Kim to join us. Over the course of several months, our plans crystalized. We'd fly to Paris, rent a car, then spend three or four weeks driving around France and Spain and Portugal, enjoying festivals, experiencing the grape harvest, and exploring ruins. (Duane loves ruins!)
In June of last year, I sent Duane an email. "I'm going to buy plane tickets tomorrow. Do you want me to buy yours?"
"Hold up," he responded. "We need to talk." He called me on the phone.
"What's going on?" I asked.
"Well, J.D., it's like this," he said. "I have cancer. I've been having problems with my throat for a few months, but I thought that was because of indigestion or something. It's not indigestion. I have throat cancer."
I've been blogging since before "blog" was even a word. (I wrote my first blog post twenty-one years ago last Thursday!) I've had a financial blog for a dozen years now. In that time, things have changed in a variety of ways. For instance:
- Blogging has become more business-like and less personal. A decade ago, most blogs -- even money blogs -- were rooted in the author's individual experience. Nowadays, most big financial blogs have a minimal editorial voice. They're much like money magazines used to be.
- Audience interaction is limited. In the mid-2000s, it wasn't unusual for blog articles to get dozens (or hundreds) of comments. This site has old articles with over 1000 comments. Nowadays, many blogs have removed reader comments...because they receive so few reader comments. And when blogs do allow comments (as here at GRS), they're scarcer than they used to be.
- Today, most bloggers want to make money. In fact, that's their primary goal. When I started blogging in 1997, there was no way to make money from it. When I launched this site in 2006, my primary goal was to get out of debt. My secondary goal was to help others get out of debt. Yes, I wanted to make money -- but that was only my third aim. It was almost an after-thought. (This was, in part, because it was more difficult to make money blogging in 2006.)
Most of the changes in the world of blogging are neutral. They're neither good nor bad. They just are. But I think the move to a more money-centric approach often does a disservice to readers -- to people like you.
How I Became a Blogging Cynic
Twelve years ago, if I read something on a financial blog, I generally accepted it at face value. If somebody recommended a book, I trusted their sincerity. If they wrote about the best bank accounts, I believed they were telling me about the best bank accounts. If they raved about a company or service they liked, I had no reason to doubt them.
Today, I'm much more skeptical. Why? Because most of my friends are bloggers, and I know what they think and say in private.
Now, these folks are not bad people -- I love them! -- but, like most of us, they'll sometimes put profit ahead of, well, truth. Honesty. Objectivity.
- Today, for instance, I saw an article from a colleague I respect. He was raving about a financial service. The problem? I'm damn sure he's never used the service himself and the only reason he's recommending it is he gets a commission on it. With his huge audience, he can make big bucks by promoting this company.
- Or there was the time I overheard another colleague talking with her partner about an advertiser who had just cancelled their affiliate program. (An affiliate program is, essentially, a commission program. You provide a sale or a lead to a company, and you get a kickback.) "If they're not going to offer an affiliate program," my colleague told her partner, "we're not going to promote them. We need to go back and change articles to feature a company that does offer an affiliate program."
I wanted to call out my colleague on that last one but I didn't. I bit my tongue. I think her actions were shady, but I realize that not everyone shares the same values. What isn't right for me and my business might be perfectly fine for her. What's perfectly fine for me and my business might seem shady to somebody else.
I'm not willing to criticize other financial bloggers for what they do. I'm not in their shoes. Their business is not my business. They're free to make choices that adhere to their personal ethics. (My hope is that they're at least considering ethics when they make these choices.)
But I have to say: The stuff I hear and see behind the scenes has made me cynical. I've become skeptical of the stuff I read on other money blogs. (Not on all money blogs -- I'll recommend some I trust later -- but on many of them.)
The older I get, the more I'm convinced that time is money (and money is time). We're commonly taught that money is a "store of value". But what does "store of value" actually mean? It's a repository of past effort that can be applied to future purchases. Really, money is a store of time. (Well, a store of productive time, anyhow.)
Now, having made this argument, I'll admit that time and money aren't exactly the same thing. Money is a store of time, sure, but the two concepts have some differences too.
For instance, time is linear. After one minute or one day has passed, it's irretrievable. You cannot reclaim it. If you waste an hour, it's gone forever. If you waste (or lose) a dollar, however, it's always possible to earn another dollar. Time marches forward but money has no "direction".
More importantly, time is finite. Money is not. Theoretically, your income and wealth have no upper bound. On the other hand, each of us has about seventy (maybe eighty) years on this earth. If you're lucky, you'll live for 1000 months. Only a very few of us will live 5000 weeks. Most of us will live between 25,000 and 30,000 days.
I've always loved this representation of a "life in weeks" of a typical American from the blog Wait But Why:
If you allow yourself to conduct a thought experiment in which time and money are interchangeable, you can reach some startling conclusions.
Wealth and Work
When I began to fully grasp the relationship between money and time, my first big insight was that wealth isn't necessarily an abundance of money -- it's an abundance of time. Or potential time. When you accumulate a lot of money, you actually accumulate a large store of time to use however you please.
And, in fact, this seems to be one of the primary reasons the Financial Independence movement is gaining popularity. Financial Independence -- having saved enough that you're no longer required to work for money -- provides the promise that you can use your time in whichever way you choose. When I attend FI gatherings, I ask folks what motivates them. Almost everyone offers some variation on the theme: "I want to be able to do what I want, when I want."
To me, one of the huge ironies of modern society is that so many people spend so much time to accumulate so much Stuff -- yet never manage to set aside anything for the future. Why is this?
In an article on Wealth and Work, Thomas J. Elpel explores the complicated relationship between our ever-increasing standard of living and the effort required to achieve that level of comfort.
Ultimately you are significantly wealthier than before, but you are also working harder too. Nobody said you had to pay for oil lamps and oil or books and freshly laundered clothes, but you would feel deprived if you didn't, so you work a little harder to give your family all the good things that life has to offer.
It's a catch-22. You work more to have more money to buy more Stuff...but because you have so much Stuff, you need more money, which means you have to work more. It's almost as if the more physical things you possess, the less time you have.
How do you escape this vicious cycle? There are two ways, actually.