Freedom, Rules, and Financial Independence

It’s interesting how many paradoxes there are in life. This is especially true in the area of personal finance: people who don’t like their job and need more money often waste a lot of money, you can beat a paid professional at their own game by index investing, and the best thing to do when it seems like the whole financial world is crumbling is nothing. At the heart of these paradoxes lie deep truths about how money, risk, and human emotion work. By understanding them and some of the factors that drive them, you can open up a world of possibility.

Things you can’t get by looking for them

I’m a fan of CS Lewis’s writing, and the quote below might be my favorite thing I’ve ever ready by him:

In religion, as in war and everything else, comfort is the one thing you cannot get by looking for it. If you look for truth, you may find comfort in the end: if you look for comfort you will not get either comfort or truth — only soft soap and wishful thinking to begin with and, in the end, despair.

Most people with even a little bit of life experience can attest to this phenomenon. I think freedom, including financial freedom, works the same way.

What is freedom?

I’d guess the most common answer to this question would be the ability to do whatever you want, whenever you want to do it. Indeed, a quick Google search of the above question will lead to a definition that says just that. But also of note is the one of the alternate definitions:

the state of not being imprisoned or enslaved.

And therein lies the problem. You see, the act of giving yourself whatever you want whenever you want ultimately creates a type of slavery. You become enslaved to your desires–you must satisfy them to function. The more extreme manifestation of this phenomenon is addiction, but even before it reaches that level it can be damaging. At first, giving yourself whatever you want or doing whatever you want might seem fun. But eventually the thrill wears off, and we realize a much deeper want that isn’t being satisfied at all: the desire to live a purposeful life. Unfortunately, just pursuing our wants all the time doesn’t really give us a sense of purpose or meaning.

Is all hope lost?

No! There is an antidote. I think GK Chesterton describes it best:

We might fancy some children playing on the flat grassy top of some tall island in the sea. So long as there was a wall round the cliff’s edge they could fling themselves into every frantic game and make the place the noisiest of nurseries. But the walls were knocked down, leaving the naked peril of the precipice. They did not fall over; but when their friends returned to them they were all huddled in terror in the centre of the island; and their song had ceased.

Chesterton was a Christian apologist, and here he is arguing that the “rules” of Christianity, often seen as imprisoning walls, are really more like the walls of a playground. Indeed, having some rules in our lives, far from imprisoning us, really allows us to be free. We can see this at work in many areas of our life. From what guides our morality to buying tools and owning credit cards to how training for a race is more enjoyable than just casually running whenever you feel like it: “structure isn’t something that binds us and oppresses us, but rather it’s the framework within which we’re able to thrive, test our limits and make sense of the world.” This naturally begs the question:

Why pursue financial independence?

If pursuing freedom for its own sake doesn’t work, how is pursuing financial independence any different? In short, because I believe setting your own rules creates a better life than simply following some else’s. (Not to mention the sense of security, no need for most types of insurance, ability to help others with money, etc :)). Fear not–in either case there will be rules, or structure, or discomfort. That’s life! And this is what most angry internet commentors and complaining co-workers get wrong about the “FIRE1Financial Independence Retire Early Movement”. It’s not about laziness or lack of discipline or a desire to do nothing2Great post on this topic here.. It’s simply the ability to pursue your own passions, create your own set of rules, and then have enough discipline to follow them! That’s why embracing a little discomfort by using less heat, riding a bicycle, or grocery shopping intentionally aren’t just ways to get rich quickly3though that will happen. They’re also ways of adding some self-imposed structure and discipline in your life. Because in the end, that’s what independence is all about.

4 response to "Freedom, Rules, and Financial Independence"

  1. By: Trevisan Posted: December 15, 2018

    Good article

    • By: Joey Posted: December 15, 2018

      Thanks 🙂

  2. By: Spencer Posted: January 10, 2019

    I really enjoyed this article! Great job! In regards to perusing financial independence, I noticed in you monthly budget posts that you have a “$ to financial independence” that is 300x your monthly expenses. Do you have an existing post that explains that number? Keep up the good work!

    • By: Joey Posted: January 11, 2019

      Spencer! Good to hear from you and sorry for the slow reply. That’s based on the 4% rule, which I mentioned initially here:

      However, your comment makes me realize that I’ve never really talked about this in depth, so I’ll do a post about it in a couple of weeks. For now, here’s a quick answer. The 4% rule says that you can take out 4% of your portfolio per year (with annual increases to keep up with inflation) and never run out of money. This is based on an assumed return of 7%, with a 3% inflation rate. It’s been backtested for every 30 year time period (e.g. 1940-1970, 1941-1971, etc) for the last 80+ years.

      So, 4% is 1/25th of your money. So to get the amount needed to be financially independent you need to multiply your annual expenses by 25. Or, your monthly expenses by 12 x 25 = 300. Which is where the rule of 300 comes from. Hope that helps!

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