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The Importance of Finding your Why

After reading my Steps to FIRE series, maybe you thought it was too much work, too many steps and too many changes. That it requires too much discipline. Many will say that we need to live in the moment and think about the consequences later.

If you feel the need to make excuses, then perhaps I have overlooked an important aspect of the process in my articles.

Before you make major changes in life, you need to have a reason to do so. Of course, I’m talking about reaching FI and maybe even retire early. But what about it? Why such a goal? Why go so far off the beaten path?

In order to make important changes and take such a path, you have to know what it means exactly for yourself. Once you understand what it would really be like in your life, you’ll be ready to go.

Why Financial Independence

I believe that FI does not necessarily mean the same thing for everyone. So it’s important to establish what it really means to us specifically.

For my part, I am a very passionate person. I’ve always said it: I’m incapable of enjoying something casually. When I like something, I love it. That’s all I can think about. I have an insatiable thirst for more and I learn everything I can about it. On the flip side, I tend to move on once I’ve covered everything. While the interest remains, it’s at a much lower level.

You see the conundrum? I don’t see how I could possibly do something I could be passionate about (and that is profitable enough) for 35 years.

Unfortunately, life typically works that way. You have to decide what you want to do for the rest of your life, at an age where judgment is not your strong suit. And I don’t know about you, but my interests have changed a million times since age 16.

Then you go to school based on that questionable choice. You start working, you climb the ladder, you overspecialize until you find yourself with fewer options than ever. But you have good  employee benefits and seniority, yay!

And that’s without talking about the opportunities that pass us up when we’re stuck in our gilded cage. Not taking a trip because our time off was not approved. Or only travelling for short periods of time because we don’t have more vacation time. Or not going to work elsewhere because the employee benefits are not as good. Damn you, DB pension plan!

Some will argue that self-employed workers have more freedom. They can afford this kind of thing, since they are their own boss. Wrong. Their clients are ultimately the bosses. Even the self-employed are accountable. If on top of that, they live above their means, then they’re equally stuck in the rat race.

When I see my uncle working 70-80 hours/week for his own company, I can see it’s not because it makes him happy. It’s all about paying the bills and affording a short vacation in Cuba once a year.

I’ve always felt like I didn’t fit into the mold.

I like to learn about anything and everything, for my own personal growth, not to get a good grade or to make a 9 to 5 job out of it. Doing the same thing until age 65 has never appealed to me. Switching careers every ten years is also not an option.

I want to be able to travel whenever I want, not when my boss says I can. I want to be able to work on what is important to me, not on what is most profitable. I want to have the time to do what I want to do when I want to do it.

I want to stop feeling guilty when I’m not being productive or feel like I’m running out of time (because a two-day weekend sure flies by). I want to stop wasting my time in meetings that should have been an email.

So for me, FI means having enough investments to pay for my lifestyle without having to be accountable to someone else. It means freedom. It means being able to use my time as I see fit.

Why Early Retirement

Personally, I have no problem with the notion of early retirement. I know that’s not the case for everyone. Many bloggers prefer to dissociate themselves from that notion. Many don’t see themselves stopping work completely. I completely understand. Some still want to have a sense of accomplishment and want to continue to “contribute to society”, so to speak.

Of course, I wouldn’t say that I intend to stop working forever. After all, I am young, smart and resourceful.

However, what 2020 has shown me is that I really enjoy the simple pleasures.

As you can imagine, I enjoy reading (very much), and learning about new things. I like to drink good coffee, cook and eat scrumptious meals, ride a bike, take walks, listen to podcasts and music, watch Netflix (especially Star Trek), knit, travel, lie in the sun, spend time with my family, etc. More recently, I discovered that I really love writing for this blog.

You probably noticed that these are all hobbies that are not very profitable. But it makes me happy! Ultimately, that’s what it’s all about?

Besides, if I feel the desire to “contribute to society” after a few months of indulging in the little things, then why not? The advantage will be that I’ll be able to do what I want, when I want and spend as much time as I desire. My monetary needs will already be taken care of.

Moreover, it’s important to remember that feeling fulfilled does not necessarily imply doing paid work. I could feel fulfilled by doing volunteer work or even simply by writing this blog. There are various ways to contribute to society besides paid work.

Although money is an infinite resource, let’s not forget that time is limited. In retirement, no one will be able to dictate how I get to spend every precious minute of my time.

Delaying Gratification

I understand very well how people advocate living in the moment. We don’t know what the future holds.

I have a friend who watched her brother die of skin cancer when he was only in his thirties. For her, maxing out her RRSPs is out of the question. She says she prefers to travel many times a year and live what her brother was unable to live during his short time on this earth. The rest of the time, her expenses are so high she can’t save for anything besides her next trip.

I get where she’s coming from.

In fact, I could have the very same attitude. My father died at 49 from an aggressive form of gallbladder cancer. He worked all his life and never got to enjoy life in retirement. In his name, I could say I’ll do everything I can to live in the moment, just in case genetics plays a trick on me.

However, the obituary section in the newspaper clearly shows life expectancy is only increasing. Nowadays, you have a better much chance of retiring than dying at 30.

I understand that I’m not immune to bad luck, but I’m an optimist. I prefer to think that I’ll live to be 110 years old and that it will have cost me only six years of intense savings, before enjoying the rest of my life. 🙂

And what if I were to die at 49, like my father? Well, I’ll have had 14 years to enjoy retirement! Much better than my dad! 🙂

The Expensive Instant Gratification

On the other hand, someone who’s lived in the moment and spent every dollar earned (and even more, thanks to credit!), will have a lot of catching up to do. It’s no fun realizing that you don’t have any savings, but you’re still perfectly healthy! Damn, cancer didn’t come looking for me, what do we do now?

Let’s see how much a person has to save to make up for lost time.

Let’s compare my situation to my friend’s, using hypothetical numbers. Just so we’re comparing apples to apples, we’ll take FI and withdrawals and out of the equation.

Let’s say I’ll save $5,000 a year from ages 20 to 35. My friend will do the same thing, but from ages 35 to 50. That’ll be a total of $75,000 saved over 15 years in both cases. Add to that 7% return.

AgeMeFriend
20$5,000$0
21$10,700$0
22$16,799$0
23$23,325$0
24$30,308$0
25$37,779$0
26$45,774$0
27$54,328$0
28$63,481$0
29$73,275$0
30$83,754$0
31$94,967$0
32$106,964$0
33$119,802$0
34$133,538$0
35$142,885$5,000
36$152,887$10,700
37$163,590$16,799
38$175,041$23,325
39$187,294$30,308
40$200,404$37,779
41$214,432$45,774
42$229,443$54,328
43$254,504$63,481
44$262,689$73,275
45$281,077$83,754
46$300,753$94,967
47$321,805$106,964
48$344,332$119,802
49$368,435$133,538
50$394,225$142,885
51$421,821$152,887
52$451,349$163,590
53$482,943$175,041
54$516,749$187,294
55$552,922$200,404
56$591,626214 432 $
57$633,040$229,443
58$677,353$245,504
59$724,767$262,689
60$775,501$281,077
61$829,786$300,753
62$887,871$321,805
63$950,022$344,332
64$1,016,524$368,435
65$1,087,680$394,225

See the magic of compound interest working at warp speed when you start saving early? I’ll have about three times my friend’s savings at age 65, even though we saved the same amount.

If my friend wants to reach the same amount I have, starting 15 years later, she’ll actually have to invest almost $200,000 over 15 years. That’s $125,000 more than I had to save.

Long story short, it’s really expensive to put off saving for later. It means more money, but also more time.

Enjoying the Journey

I would like to emphasize that it’s not necessary to reach FI to start reaping the benefits.

On the path to FI, we lower expenses, increase income, save and invest considerable amounts of money. Which means?

Financial security.

Personally, I’m about a third of the way to my FI number right now. What does that mean? I have accumulated about 8 times my annual expenses. It may not be enough to quit forever, but it gives me choices.

  • The choice not to put up with a crappy boss;
  • The choice to travel more often or for longer periods of time;
  • The choice to work fewer hours;
  • The choice to seize opportunities;
  • The choice to not care.

And the list goes on.

Disaster happens? No problem, I have enough to get through the storm. Social programs notwithstanding, I have accumulated 8 years of freedom.

Can the average Canadian say the same? I don’t think so.

Yes, sometimes the journey can seem difficult and mostly long. However, we must stop for a moment and be grateful for the progress and the benefits.

Dangle the Carrot

Ultimately, it’s all about finding your why and really want to work for it. Make it your carrot at the end of the stick and run for it. Having a clear goal in mind makes it easier to make the effort.

Remember, it’s not about money. Money is only the tool to reach your goal. I’m not here to teach you about saving money to become rich. Rather, I want you to become as free as possible.

Personally, once I understood that it was mathematically possible to become free in six years, I couldn’t go back. Six years of effort in order to be free until I’m 110 (minimum) is a good deal to me. Really, it makes perfect sense. In fact, I don’t see how I could want to do otherwise, now that I know it’s within my reach.

So what motivates you to pursue financial independence? Do you feel stuck in your 9 to 5? Are you tired of being accountable to a boss? Are you tired of those damn meetings that should have been an email? Do you want to pursue projects that aren’t necessarily profitable, but that sparks joy? Would you like to spend more time with your children? Would you like to spend more time with your parents? Do you want to do volunteer work? Would you like to travel around the world? Don’t hesitate to let me know! 🙂

Whatever your motivation is, the important thing is to have one. Find your why. Then the rest will fall into places naturally.

On the Road to Financial Independence

Why financial independence, you’ll ask me. And I’ll answer: why not? Do you like to work like a madman all year-round just to be able to afford a few weeks of vacation? Spending those few weeks completely burned out, unable to stop thinking about work? Trying to do everything we’d like to do in this ridiculously short period of rest and then go back to the office, burned out… from our vacations? Then, what do we do? We do it all over again! Rinse and repeat until age 65!

Do you like having to depend on an employer to pay the bills? Bills that are often directly related to the costs of working? We pay for the car, gas, insurance, maintenance, to get to work. We buy clean clothes to look professional (yes, yes, even with video conferences!) You buy a house or rent an apartment near your place of work to save time, but it costs more money. Or we move farther away to save money, but we waste time in traffic (and ultimately, time is money!)

Tell me seriously that this is your dream life.

Choose a job you love, and you will never have to work a day in your life.

Yeah, right. It’s a nice saying, but it’s far from practical from a financial standpoint. Doing what you love rarely makes it easy to support your financial needs, present and future, nor does it ensure a comfortable future. For example, I love knitting. However, I know for a fact that if I traded my current job as an insurance analyst to open an Etsy store and sell slippers, I would not have the same financial comfort. At least, not by doing things in that order.

Of course, we all aspire to financial independence in one way or another. However, what I am aiming for will not happen in 35 years. In fact, it’s more possible that it’s going to happen at 35. At that time, once my financial future is secured, I’ll knit my phentex slippers.

Utopian, you might say? So what can be done to achieve this goal that seems unattainable for the majority of people? What can be done to leave the 9 to 5, the rat race, to be able to enjoy life and fully grow?

Here is a very simplified approach, but one that sums up the essentials:

  1. Lower your expenses
  2. Increase your income
  3. Save the balance
  4. Invest your savings
  5. Live off passive income

Much better qualified people than I have explained (and successfully applied!) these basic principles.

Notably, a recent segment on L’indice McSween was touching on the subject. You can watch the segment here (French only). Pierre-Yves McSween also wrote a book on the subject, Liberté 45, which will go on sale on October 7, 2020. I am particularly looking forward to having his opinion on the subject, as an accountant from Quebec. It’s going to be enlightening, for sure!

In addition, I strongly recommend that you read the following books:

To me, those are the most complete books on the subjet. Of course, there are plenty other interesting books and I recommend them here. In a frugal mindset, I recommend you get them at your nearest library. 🙂

I want to make a special mention for the first book on the list. To say that just a few weeks ago, I could not even have recommended a Quebec book on the subject! Fortunately, since September 16, we now have our own Quebec reference on financial independence and early retirement. Thank you, Jean-Sebastien, for sharing your journey towards retirement at the wise age of 39! 😉

It’s here for an excerpt (French only). Gets you dreaming, right? Of course, Jean-Sebastien has not reinvented the wheel. He applied the right principles with an iron discipline and achieved his goals. What I find particularly exciting is seeing someone from our province do it. It doesn’t just happen to others.

But it’s all well and good, a couple of steps to follow, but what does it look like, in practical terms? How can the steps mentioned above actually get someone to financial independence at such a young age?

I will try to give you concrete examples of how I apply these steps to my personal situation in a series of upcoming posts. The process has been gradual in the last three years and remains a work in progress. Like my aunt would say: “We have a lifetime to work on ourselves.” However, I follow the basic principles with discipline and I always seek out to do more and better, always to get closer to my goal.

In the next posts on the subject, I will, of course, include the numbers accordingly, so that you can see in concrete terms the impact that the various steps towards financial independence can have.

How about you? Have you ever thought about financial independence before the “normal” retirement age? I guess if you came across my blog, it’s not by pure coincidence. The beginning of a reflection, at least, must have begun. If so, I urge you to stay tuned for my next tickets. Maybe these will encourage you to do some calculations, some changes… to realize that financial independence is more within your reach than you thought.

As always, feel free to leave me a comment. It will be my pleasure to interact with people who share my interest in personal finances and financial independence.

Until next time!

Introduction

Hello!

Whoever you are, I’m extremely grateful that you’re taking some of your precious time to read these lines. This probably means that you have an interest in personal finances, or even more precisely financial independence! If so, welcome to my blog. We will certainly have a lot of fun together. If not, stay, please! Maybe you’ll get something positive out of it? Maybe give your financial situation a little boost? That, or you’ll just come out of it confused. What an idea, associating Star Trek and finances in a blog name, you’ll ask yourself. My apologies. I couldn’t resist, the pun was too good to pass up.

So, welcome to my personal blog which will aim to report on my path to financial independence. On this blog, I do not intend to sell dreams (or any other bullshit) to anyone, or to dissect notions of finance that have already been dissected ad nauseam by other smarter people. For these important concepts, I will try to guide you to the best possible resources. For the rest, I will try to lead by example.

By financial independence, I mean having enough assets to provide me with passive income that will cover all my expenses and thereby make work optional. I don’t necessarily mean that I aim to never work again in my life. What I do mean is that working will never again be an obligation to provide for my financial needs. I want the freedom to do what I want, when I want, no matter if a paycheck is coming or not.

Thus, this blog will feel quite self-centred (and even a little exhibitionist) because in addition to finding details about my progress, you will also have access to what we are really interested in: numbers. I’ve been to countless blogs about personal finances and financial independence. People not sharing their numbers always left me hungry for more. I understand very well that this is something that tends to make people uncomfortable, especially in my dear province of Quebec, where having money is practically shameful. However, for a pointed-eared millennial like me, this is frustrating. How do I know if I’m on the right track, if I can’t compare my numbers to others?

So, perhaps by laying bare my financial situation, I will encourage others towards the pursuit of financial independence. Because in the end, it’s not rocket science and you will realize that you need a lot less than you thought once you see my numbers, including my income, expenses, savings rate, net worth, investments, etc.

I am aware that I may be exposed to many judgments (who is not, on the internet?). In order to somewhat protect me, my identity will remain secret for the time being. That, I think, will make it easier to share sensitive information like my numbers. Also, I do not want those around me to be aware of my unconventional endeavour at this time. My boss, in particular, doesn’t need to know that my retirement is much closer than hers.

I also hope to add something to the Quebec scene of financial independence blogs: I am a single woman without children. My goals will certainly be very different from couples, with or without children. Of course, I don’t expect to stay single for the rest of my life, but I want to keep my financial goals individual only. So even if a Mr. Save Long and Prosper were to meddle with my life, I will continue to update my numbers as a single person. I have never mixed love and money, and I have no intention of starting now. As far as children are concerned, I just do not want any, so that will never be considered in my calculations as well. Thus, any number you see here will be for a single person without children.

Finally, this blog will hold me accountable, even if it’s only to myself, and help me stay the course. In order to have something to tell, I will have the obligation to take concrete actions on a regular basis in order to achieve my goal. It may not always be big things, but every little thing counts towards my goal.

So that’s me. If this little introduction to financial independence has caught your attention, do not hesitate to leave a comment, to which I will happily respond. Thank you for taking the time to read me and see you soon!