Freedom, Start Young, Live Simply

[Andrew Michaels]

The idea of freedom vs money has always interested me. In this article I talk about reaching a point of freedom from work while still maintaining a good life.

I hope you enjoy it.

Please let me know what you think.

[Sam988]

I keep wondering how everything is upside down. How wonderful would it be if instead of getting older, we would be getting younger and younger.


Imagine if we were born as crappy 90 y.o. men (not that all old people are crappy), then have go through all school and university as still old but a bit younger. When we finish university, we are around 70 y.o. Then we get a boring job and accumulate wealth for some 30 years. By then, we will be 40 y.o., with enough knowledge, experience, and wealth to enjoy life. And we would enjoy it with a young body that can have all these great experiences. We would have our entire 30s, 20s, and teens to enjoy with wealth, experience and knowledge. Then we would be getting younger and younger, until we became a baby with a baby's mind and we would die painlessly because we wouldn't know what death was, neither would we know what it meant.

[zabmk]

The best way to enjoy freedom is when young, have enough money and leisure time. So can go anywhere without woried about anything.

[openeyes]

Originally Posted by Sam988

Then we would be getting younger and younger, until we became a baby

... and end in an orgasm (conception)

[Ilya]

Good article Michael. I like the manifesto style. And your basic idea of reducing the consumption is spot on.
What you are missing is the true power of this approach. Personal finance sites are full of this "sock away money for 30 years" stuff. You don't need it. You don't need 30 years. Just this weekend I was giving a talk about how I've become financially independent by the age of 23. It took me 3 years. Nowadays, I'd do that in 12 months. If I can do it while living in the most expensive city in the world, anyone can do it in the US. Of course if they didn't enslave themselves with debt, "necessary" things and the lifestyle they can't afford.

Of course I'd love to preach that from where I'm now, earning more money is not a problem at all. But I still remember the beginning of my journey, and I remember how hard it was to believe in abundance. No problem. One can believe in scarcity and still become free and then discover how easy making money is. I just suggest that people spend as little time in scarcity as possible. With good discipline it shouldn't take more than 5 years. Long time, but bearable.

[openeyes]

Yesterday I was going back through Timothy Ferris' The Four Hour Work Week and came across a story that reflects my general view on things on page 45. For just a snippet of the story (trying to stick with "fair use") :

"Jean-Marc had passed the point of no return, but it didn't matter [...] The most basic of foods and good friends proved to be the only real necessities, and what would seem like a disaster from the outside was the most life-affirming epiphany he'd ever experienced: The worst wasn't really that bad. To enjoy life, you don't need fancy nonsense, but you do need to control your time and realize that most things just aren't as serious as you make them out to be.

"Now 48, Jean-Marc lives in a nice home in Ontario, but could live without it. He has cash, but could fall into poverty tomorrow and it wouldn't matter. Some of his fondest memories still include nothing but friends and gruel. He is dedicated to creating special moments for himself and his family and is utterly unconcerned with retirement. He's already lived 20 years of partial retirement in perfect health.

"Don't save it all for the end. There is every reason not to."

I've found that I can lose virtually everything and still be happy. This doesn't mean that I don't plan on accumulating any possessions, though I'm apt to keep things a bit more simple than usual. Rather it means that I can enjoy things without NEEDing them.

Through my life I see myself living on a fraction of what I earn, working at a number of different pursuits, traveling, doing volunteer work (heading to New Orleans in 3 weeks), and in general engineering my life to have a multitude of different experiences.

This remains one of my favorite articles on such a lifestyle:

Lifelong Semi-retirement

[Andrew Michaels]

Originally Posted by Ilya

Good article Michael. I like the manifesto style. And your basic idea of reducing the consumption is spot on.
What you are missing is the true power of this approach. Personal finance sites are full of this "sock away money for 30 years" stuff. You don't need it. You don't need 30 years. Just this weekend I was giving a talk about how I've become financially independent by the age of 23. It took me 3 years. Nowadays, I'd do that in 12 months. If I can do it while living in the most expensive city in the world, anyone can do it in the US. Of course if they didn't enslave themselves with debt, "necessary" things and the lifestyle they can't afford.

Of course I'd love to preach that from where I'm now, earning more money is not a problem at all. But I still remember the beginning of my journey, and I remember how hard it was to believe in abundance. No problem. One can believe in scarcity and still become free and then discover how easy making money is. I just suggest that people spend as little time in scarcity as possible. With good discipline it shouldn't take more than 5 years. Long time, but bearable.

Hey Ilya. I'd love to talk to you further about this. Can you email me at DocHolliday2006@hotmail.com?

[eblight]

Very interesting thoughts and comments. Much appreciated.

[Sunnybayes]

Originally Posted by Ilya

Good article Michael. I like the manifesto style. And your basic idea of reducing the consumption is spot on.
What you are missing is the true power of this approach. Personal finance sites are full of this "sock away money for 30 years" stuff. You don't need it. You don't need 30 years. Just this weekend I was giving a talk about how I've become financially independent by the age of 23. It took me 3 years. Nowadays, I'd do that in 12 months.

That's my plan right now. I'm 21, senior in college with a decent paying job lined up for when I graduate.

I'm just planning on saving 2/3 of my income from work for about 1~3 years living in a cheap apartment, with a used car, and then just quitting and moving to some place with a low cost of living and spending a year or two developing ideas and building some business from the money I've saved. Unless I happen to really love the job and I'll just stick with it.

Could you share a basic outilne of what you did?

[Ilya]

Originally Posted by openeyes

I've found that I can lose virtually everything and still be happy. This doesn't mean that I don't plan on accumulating any possessions, though I'm apt to keep things a bit more simple than usual. Rather it means that I can enjoy things without NEEDing them.

Great words, openeyes, I've stumbled upon the same idea. Well, at some point I had to acquire this attitude to survive, but I didn't perceive my forced frugality as a problem, but rather as a great opportunity. Served me well.

The funny thing is that having this attitude does not prevent from being wealthy in a more traditional sense. I'd say it only helps.

"Lifelong semi-retirement"

Oh, that how my lifestyle is called.

[Ilya]

Originally Posted by Sunnybayes

That's my plan right now. I'm 21, senior in college with a decent paying job lined up for when I graduate.

Could you share a basic outilne of what you did?

Sure.

It all started with Kiyosaki. I know that there is a probability that he is a fraud, but the basic principles he writes about are universal.
In 2000 two events happened in my life. First - I've got my first job. In terms of creativity and self expression it was a dream job. In terms of money it wasn't. The week after my friend gave me "Cashflow Quadrant". I loved it. For the first time I saw the principles of wealth laid down in front of me. And for the first time I said to myself - "I could do it". Of course, it also said "never work for money" . Well, I broke that rule, somewhat. I did have a job, but I didn't have a career. I refused to spend more time than necessary on my job if it could end in a promotion and a raise. I did it until I was absolutely sure that I will be able to manage the additional money wisely - invest and not increase my spending.

So my basic strategy was to earn money, save ruthlessly, and invest whatever was saved. Rinse and repeat until I reach the point of financial independence (monthly passive income equals or greater than my monthly spending). Piece of cake.

The devil, as always, is in the details. I had to learn about investing and be wise about it. The scary truth is to reach the goal you have to accumulate quite a capital. The size of it depends on the return on investment (ROI) you can get. If you have just 10% ROI you have to accumulate 120 dollars for every dollar of your monthly spending. I was lucky to live in a country where I could get between 24% to 30% on my investments on average. So I was aiming at a capital 50 times my monthly spending.
I had two ways - to increase my earnings (and I did it later on) and to cut my spending. When I was talking about saving ruthlessly, I was not exaggerating.
Most personal finance books advise to give 10% to charity, to invest 20% and to spend 70%. This way your road to wealth will be comfortable (and, I must add, painfully long).

I was in a hurry and my freedom meant to me more than my comfort. So I've invested 90% of my income and lived off the remaining 10%.
Now, that is not for everyone. To take it from ruthless to extreme I'll tell you that when I've started my journey, my monthly pay was... $300. Yep, you've read that right - three hundred bucks. And if you do the math, you'll know that back then I was spending 1 dollar a day.

In the year 2000 Moscow was not the most expensive city in the world, but it was not the cheapest either. I was living in poverty, no doubt about it. But the difference between me and the other poor people at that time was that I lived in poverty by choice. Still, I was able to satisfy my basic needs - food, utility bills, transportation, phone bills, clothing.

If you do the math again, you will see, that I needed just $1500 to become financially independent. Saving 270 bucks per month I'd need less then 6 months to achieve that goal. And I did. I had the capital in under six months. Unfortunately, at that time I did no know how to invest them. I was sitting on the money that could set me free, but gained zero passive income from them. They were in dollars, and it was raising then, so I was protected from two digit inflation, but other from that I was moving nowhere.

The rates for deposits were laughable, I knew nothing of stock market, mutual funds. I could not afford real estate and was afraid to start my own business.
I did not see the opportunities. So the cash was just lying there.

To make story short, I did a few bad calls, was scammed out of my money and ended up 3000 dollars in debt (luckily it was a personal debt and I didn't have to pay interest for that). Payed off the debt, have built the capital from scratch again, at the time of weakness allowed myself to increase my spending a little bit. At the same time I was learning like hell. Finally I've started to see the investment opportunities and taking advantage of them. So I've finally reached the level of financial independence in the beginning of 2003, three years after I set out to reach that goal.

Since then, my capital has increased, and my monthly spending would not be unusual for anyone in US or Europe. Still I'm being frugal, because nowadays in Moscow you can spend any amount of money with great ease. But Moscow being the most expensive city in the world is a good thing to know. If I can be financially independent here, I can be financially independent anywhere in world.

Being financially free is nice by itself. But it turned out that it leads to strange effects. For example after I've reached my goal, my non-passive income has tripled within a couple of months. Being self-sufficient has given me huge boost of energy and self-confidence. And it shows in every part of my life. Since I'm not in need of any money, it gives me a great negotiation position. So if someone wants me to do something for money, they are forced to make the money very good. I think that is where the "making money is easy" belief comes from. It is shared by most people that are already successful. I'm not sure that it is the belief that has made them successful. In my case it didn't.

Well, that was a brief outline. No really. It is not difficult to tell what I did. Telling why I did exactly that is a whole different story. I might be able to tell it when I finally start my blog.

My final thought is this. What I did is within the reach of any person out there. My situation was favorable is some aspects and it was unfavorable in other aspects. Your situation will be different. But if you want to break free, and ready to make the necessary effort - your freedom is just a few years if not months away. Go get it!

[Sunnybayes]

This is gold. I'll give this a closer view in a few more days, and I could go on about how thankful I am, maybe I will later, but simply... thanks!

[Bene]

thanks for your helpful last post Ilya.