July 5, 2008

Financial Independence

Posted in Inspiration, personal finances, Perspective tagged , , at 4:17 am by otherdeb

Patrick from CashMoneyLife, Mrs. Micah from MrsMicah.com, ffb from Free from Broke, and others have been pondering what financial independence means to them.

Seems like a reasonable subject for this blog, too, so let’s see what I can reason out.

For one thing, I am not poor. Pete from Bible Money Matters recently posted a link to Global Rich List. I put my annual salary into their calculator and found that I am, if this is correct, the 674,568,733rd richest person in the world. Now that may not seem like a lot, but that puts me into the top 11.24% of earners in the world. (The site notes that if you make over $47,000/ann., you are in the top 1%.) Yeah, I know, that and $2.00 will get me on the bus, at least until the MTA raises the fare again. Still, it’s kind of humbling to realize how well-off I am in comparison to much of the world.

To me, financial independence would be to not be in debt to anyone. Not to Marc, not to a credit card company, not to my Landlord, not to Nelnet (my student loans). It means that the money I earn would go into supporting me both on a daily basis and for the long haul, and constantly and consistently making choices that support those goals. It means not having to feel I can’t afford to pursue something important to me. It means having the money to not have to use a dental clinic provided by my union where I am poorly treated because what I need is more than what the clinic’s practitioners who are mostly just out of dental school, are capable of handling. It means being able to follow the career paths I want to (writing and other creative pursuits) rather than having to take a low-level job that is exceedingly stressful. It means not having to put up with a roommate who has no desire to manage her finances.

The steps I am taking toward financial independence are not sacrifices. I’ve noted elsewhere that I don’t believe I am making sacrifices, but choices that will give me opportunities to make a wider variety of choices in the future.

In short, while financial independence is a goal, it is primarily a stepping stone to achieving other goals, and to me that is the thing to keep in mind along this road.

What does financial independence mean to you?



  1. You’ve got some fantastic ideals when it comes to Financial Independance. One of the things financial advisors and motivational mentors ask is, “How much is that?” When you consider Financial Freedom how much money would you need in the bank (or to earn to pay off all your debt and be comfortable)? What is that figure? Is it 100,000? 500,000? 1 million? 10 million? What is your financial freedom figure?

    The next step of course is to work out what sacrifices and steps you need to make to get that much money. How much of your income should you set aside to reach it? What else can you do to earn it? etc. Visualize it and strive toward it.

    I hope you find Financial Independance and Freedom soon!

  2. otherdeb said,

    @ Rebecca Lafar-Smith: I don’t have one specific financial freedom figure at the moment. I would like an emergency fund of about $5,000, and it would take about $45,000 to get totally out of debt. Then I need to decide whether to rent or to buy a home. However, it’s more that I want my credit report to be clear enough that Landlords won’t reject me because of it, and that my FICO score is not so hideous that I can’t buy a house, assuming I ever want to do that.

    What I can do to get there is to stop sitting on my tush, and start writing here, and to start writing articles and submitting them to magazines. Then I can snowflake the extra income to my debts.

    And again, let me stress that I do not see any of the steps or choices to get to where I want to be as sacrifices. They are just decisions I get to make to get where I want to go.

  3. Patrick said,

    I love the way you state you terms for financial independence… It’s much like my own. I don’t have a specific dollar figure in mind for my financial independence either, but more a goal of not owing anyone anything, and being able to work on my terms doing what I want to do. Creativity is something I need in my life as well, so I would love to be able to continue doing something creative. It’s a noble goal and one I continue to work toward. Good luck with your goal of financial freedom! 🙂

  4. otherdeb said,

    @ Patrick: Thank you for your kind words, and for writing the post that sparked the discussions.

    I think that people sometimes forget that making a goal tangible does not necessarily involve setting a number, Yes, numbers often help, especially when working with things like money and debts, but what I’m trying to do or myself is reframe the whole argument into terms of what is important, and my goals are not necessarily monetary ones, although there are some monetary goals on the way to achieving them.

    It’s not a “right way/wrong way” thing either. It’s what works for each person, and while there will be overlap in that, there will also be great differences.

  5. Pete said,

    Thanks for linking to my article.. I really enjoyed reading your article because it talks about just how lucky we are in some respects, but at the same time, we really need to set goals, and look towards the future. Without having a positive vision of what is to come it can be hard to make any positive progress. You can get overwhelmed with the negative.

    Keep on keepin on! When you reach that point of financial freedom, it is very sweet! We paid off our last car loan last year, and now the only debt we have is the house. It is very freeing!

  6. otherdeb said,

    @ Pete: Always great to hear from you! Thanks for the link to the richness calculator. As an American, I know that I’m better off than many people, but knowing it in general and seeing exactly how much more I have is truly humbling.

    And, yes, i will keep on heading toward my goals. The funny thing is that most of my life I’ve been content to go where life leads, and I thought I wanted a whole lot of different things (some of them material), but now I’m more interested in stripping away all the clutter, and hitting what is the bedrock of my life.

  7. freefrombroke said,

    It’s always interesting putting finances in perspective isn’t it? Maybe compared to the local “Jonses” we may not be where we want but compared to the world at large we’re pretty fortunate.

    I like how you state your financial step not as sacrifices but as stepping stones!

  8. otherdeb said,

    @ freefrombroke:

    It is interesting. I was truly blown away when I saw exactly how much better off I am than others.

    Thank you. That’s exactly how I see them. If I saw them as sacrifices that had to be made, I think I would have been so overwhelmed that I never would have started. It was only when I realized that I had gotten into the hole by making choices that were bad for me and that I could get out by changing the choices I made that I was able to get unstuck and start moving toward my goal.

    How did you get untuck and start moving forward?

  9. […] life, personal finances at 12:05 am by otherdeb I was answering a comment from fivecentnickel here, and it got me thinking. I noted that until I saw what needed to be done in terms of making better […]

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