The Truth About Financial Independence

FIRECracker
Follow me

FIRECracker

FIRECracker is Canada's youngest retiree. She used to live in one of the most expensive cities in Canada, but instead of drowning in debt, she rejected home ownership. What resulted was a 7-figure portfolio, which has allowed her and her husband to retire at 31 and travel the world. Their story has been featured on CBC, the Huffington Post, CNBC, BNN, Business Insider, and Yahoo Finance. To date, it is the most shared story in CBC history and their viral video on CBC's On the Money has garnered 4.5 Million views.
FIRECracker
Follow me

The other day an email landed in my inbox, reading:

Could I please pay you $200 USD for a private Skype coaching session?

I did a double-take. Someone wants to pay us even though we do reader cases for free?!

Having grown up poor, I was taught to never waste money. That meant never paying for something when you could get it for free. So when I got this in my inbox I was shocked.

But as I read the rest of the e-mail I realized that this person was in a bit of a bind, and urgently wanted to talk to someone. So rather than wait in our Reader Case queue, why not throw money at the problem and get it solved quicker? Makes sense (sort of).

But, as I got to the numbers and details, I realized there’s no way I would feel comfortable accepting this reader’s money. I mean, as flattering as it would’ve been to get paid to do something I love to do anyway, my conscience wouldn’t let me.

The reason? He was stuck in a crappy job, wanted to retire now, but didn’t have nearly enough to retire. Essentially, he was looking for a short-cut, a magic bullet that would let him get out of the stressful job situation he couldn’t stand anymore. Was there a quick way for him to get there?

I hate bullshitting with the heat of a thousand suns. So even though I knew this was going to be hard to hear, and it would’ve been way easier for me to sugar-coat everything and take the money, I decided to give it to him straight.

I told him there was no realistic investment that would grow his savings instantly to allow him to retire now. Hell, it took us almost a decade to get here, and it wasn’t easy nor was it stress-free. I’m not going to pretend there’s a magic bullet, because there isn’t. Becoming financially independent takes dedication, patience, and above all—time.

This train of thought led me to realize something about FI. Something I hadn’t thought about until this point:

Financial Independence isn’t about “getting”; it’s about “becoming”.

What do I mean by that?

Well, let me tell you a story.

There’s a guy I know— let’s call him “Dan”. Unlike me, Dan grew up rich. He lived in a mansion, had a nanny and a maid, and his dad had a job paying him $500,000 a year. But even with a 1%’ers salary, his Dad still got into massive amounts of debt. In fact, at one point, the family even owned a private jet—just the cost of maintaining it every month was a whopping $5000.

But during Dan’s final year of high school, everything came crashing down.

Dan’s dad lost his job.

The tuition money that Dan had depended on suddenly vanished into thin air. All that was left was a mountain of debt.

Dan now had no choice but to fend for himself. So he booked a meeting with his school guidance counsellor to figure out his options. First he learned how to take out a loan. Then he researched and found out which degrees actually yielded a good return on his investment (now that he had to earn that tuition money, he valued every penny). And finally he got a part time job so he could work to pay for his living expenses during school.

When he graduated 4 years later, he found a job right away with decent pay. Using the budgeting skills he learned while in college, he scrimped and saved and managed to pay off his student loan in only 2 years.

Now, after working 10 years in his field, he has enough to retire overseas and never work again.

His dad? Still up to his eyeballs in debt, despite getting another well-paying job since the layoff.

But Dan isn’t bitter at all. As he told me his story while we sipped drinks on the beach, he said having the bank of Dad close on him was the best thing that ever happened to him. Had the money just fallen into his lap, he would’ve squandered it and never become FI.

The moral of the story?

What you GET by achieving your goals is not as important as what you BECOME by achieving your goals.

In the words of philosopher Henry David Thoreau, in order to succeed you need to play the long game. It’s not about what you accomplish, but who you become when you get there.

Which is why, according to the National Endowment for Financial Education, 70% of Lottery winners go broke a few years after winning the lottery. 70 percent! That’s nuts! Why? Because they didn’t BECOME the type of person who could handle the money. They lost it all because they didn’t work for it. When you don’t become the type of person who’s good with money, you can easily blow through millions of dollars a year.

Case in point. A few years ago, in Thailand, while we were in the Canadian embassy getting a certified copy of our passport, we met a guy there, whom we’ll call “Dave”. Dave had lost all his money and was looking for a way for the Canadian government to bail him out and fly him home.

At first, I thought he was a chronic gambler, but then after talking to him for a bit (and some extensive googling), I found out he was actually one of the pioneers of P2P file sharing technology and had, at one time, been in the “top 40 under 40 list” in Forbes magazine! It was only a few short years ago that he was worth 20 Million dollars!

And yet, it only took him a few years to lose it all on speculative business ventures. Now, instead of drinking champagne in 5-star hotels in Silicon Valley, he was broke and stranded in Thailand.

Because Dave never learned how to manage his money and didn’t know what it took to become financially independent, he lost it all.

Two weeks after we met him, he managed to convince an angel investor to front him $20,000 for yet another business venture. (He even asked us if we wanted to code his “brilliant” app, but we told him we were busy). He was pretty convinced of his own genius and all the “good juju” that was going to come his way.

Because Dave simply “GOT” rich instead of “BECAME” rich, he continued gambling his money away on hare-brained start-ups, oscillating between millionaire and broke, never figuring out how money works.

Dave didn’t realize that in order to STAY rich, he need to BECOME the type of person that was good with money, not the type of person who simply “GETS” money.

Becoming is more important than getting.

I found this is true in my own life as well,

Back in 2008, when I wanted to GET published, I didn’t succeed because I hadn’t BECOME a writer yet. I simply wanted the publishing deal without the “becoming a writer” part. Only after I’d spent years crawling through the writing trenches, getting pummelled over and over again with rejections, and wanting to quit so many times I lost count, did I develop the battle scars that MADE me a writer. Only then did I BECOME publishable—7 whole years later.

When I tried to GET a co-op/internship job after my first year of university, I failed miserably. I couldn’t GET a job because I hadn’t BECOME employable yet. I didn’t have any skills or experience to make an employer want to hire me. But after doing some volunteer work for the first half of my co-op term, I beefed up my resume and got hired for the second half. Instead of trying to “GET” a job, I “BECAME” employable instead.

Which is why, in order to STAY financially independent, you need to BECOME financially independent.

You need to become someone who:

1) Values money and uses it effectively as a tool rather than as an ego boost or something scary to run from.
2) Learns how to invest and won’t panic-sell during a bear market.
3) Won’t quit even when things get hard.
4) Won’t quit when everyone else seems to be going in the opposite direction and tells you you’re wrong.
5) Chooses to play the long game rather than look for a “magical” quick fix

FI’ers don’t look for a quick fix to “GET to” FI. We “BECOME” FI.

By the time we reach Financial Independence, we’ve become the right type of person to keep it.

And this is why I had to tell our reader the truth. There is no magic bullet that will “get” him to FI. He needs to “become” FI. And in order to do that, he needs to switch to another more manageable job or scale back the hours he’s working in his current job. Regardless of what his friends are doing, stay the course, and don’t be distracted by criticism or “FOMO” (Fear of Missing Out). Keep saving and investing for the long haul until his passive income equals his expenses.

Only then will someone truly “become” FI. It’s not going to be easy, but your future FI self will thank you. Because it’s more important to become that person than to find a quick fix to get there.

What do you think? Do you think it’s better to “Get FI” or “Become FI”?

Update: Reader Jesse noticed that the NEFE statistic quoted by Time Magazine that 70% of people lose their lottery winnings wasn’t actually vetted by NEFE. So please be aware this statistic has not been verified. 



FREE MONEY:
Want free money to go travelling? Check out how we get credit card and banking sign-up bonuses here!


INVEST:
Want to learn how to replicate our retirement portfolio? Check out our FREE Investment Workshop!


TRAVEL:
Want to travel the world like us?


  • Airbnb helped us save over $18K/year! Click here to get $40USD off your first booking.

  • Click here to find out why you need travel insurance (it saved us $3000 in a family emergency!) and to get a quote.



Full disclosure: the above links are affiliate links so I may get a commission if you apply.

60 thoughts on “The Truth About Financial Independence”

  1. Nice article!
    Getting seems good at the beginning, but ends with bitterness and sting.
    Becoming seems painful, dreadful, not fun at the beginning but ends with peace and joy and contentment.

  2. Testify. This reminds me of a childhood friend of my wife who worked his ass off on a side venture after high school; homeboy ended up with an eight-figure buyout deal a few years later. He still has his nose to the grindstone as an executive with an established online company. He brags about his $15 haircut place… and at his wedding, his new father-in-law joked that “maybe someday he’ll understand that he can afford to fly business class.”

    If a fluke banking accident wiped out his net worth tomorrow he’d be back on his feet in no time. His goal and trajectory differ radically from my own, and I’d aspire to that kind of drive if I weren’t so dang content with what I have. 🙂

    1. Wow, your homeboy rocks! So impressed with that type of mentality. It’s also the reason why Bill Gates still has a shitty haircut 🙂 He’s definitely retained his down-to-earthness.

  3. Fantastic article as always FIREcracker. This really resonated with me because for the longest time I was always looking for the quick win, and the easier way. But being a bit older and (hopefully wiser) I see now its more about the journey and becoming the people we want to be when we FIRE. As a result I no longer look for the quick win and instead have focused on maintaining a high savings rate, a consistent investment strategy and living the life we want when we FIRE, which is probably in about 4 years from now. And instead of hating every day I have to work, I’m actually enjoy it because I know I’m moving one step closer to where we want to be.

    1. Well, done, Shane! 4 years from FIRE isn’t that far away. And especially now that you know it’s about BECOMING FI, it’s easier to enjoy the journey. Nice!

  4. How kind of you to not take his money and yet tell him exactly what he needed to hear. A perfect example of the quality person you have become! It is so true that the people that have generated wealth are the kind of people that are careful with those resources. I used to work for a man who was on the Forbes 400 Richest Americans list. His favorite restaurant was a Golden Corral, a very inexpensive all you can eat buffet. The idea of getting as much food as he wanted for less than ten bucks just astounded him even though he was worth billions. He started out dead broke and by the end employed thousands of people in good jobs. Great post, always impresses me when someone I consider very young is much wiser than not at all young me!

    1. Nice! Your story reminds me of the Warren Buffett documentary where he only spends $3 for breakfast if the markets are up. Otherwise, it’s only $1.99 breakfasts. This despite, having donated millions to charity. It’s all about the person, not the accomplishments at the end of the day. Very cool that you got to work for someone like that!

  5. I love the quote – What you GET by achieving your goals is not as important as what you BECOME by achieving your goals.
    That’s so true. You need to go through some hardship to appreciate your good fortune. Easy come easy go, right? When you earned something, you hold on to it much harder.
    You’re a great writer now. Good job for working hard on it.

  6. This is such a good post. As with anything worth in this life, becoming FI also requires a lot of hard work and patience. I’m new to FIRE and due to some decisions made in the last year, I still have some financial struggles of my own which will get cleared only by the end of next year. Although I have a 401k which is maxed out, my main savings toward FIRE will only start after everything’s paid off. I would lo-uh-ve to retire right this second. But I know that’s impossible and so I’m taking this whole thing one day at a time(I’m trying to become the person who can handle being FI).

    Preparing and saving towards FIRE is not easy and can sometimes be quite depressing. Instant gratification is not something you get when preparing to be FI since you dont become FI overnight. Learning to fight the urge to buy that cute top or must have (bah ha ha) shoes is a life style changing experience. So what you said is absolutely right. Becoming is more important than getting since people don’t change over night. It’s a long and winding road to FI. But reading the articles and reader cases help a lot. Seeing people just like me achieve FI is very encouraging. Hopefully in another 10 years, I’ll get my happily ever after. Until then, please keep those posts coming.

    1. “I’m trying to become the person who can handle being FI.”

      Yup! You get it. Keep moving forward on your FI journey. Every step, no matter how small, changes you for the better.

      I’m so glad the reader cases have been helpful!

  7. Great article as per usual! I think that life itself is a process of becoming, and working towards financial independence is definitely a process rather than a quick fix or magical bullet for most of us. It’s incredibly important to figure out the “personal” part of personal finance, finding the right mix of budgeting, cost consciousness, frugality, maximizing earnings, investing and all the rest… and hopefully also becoming a little wiser and more self aware along the way.

    Grinding it out in the trenches can take all you have some days, which is why I am sure a good many of your readers – including myself – sincerely appreciate having a real life example to aspire to.

    1. “It’s incredibly important to figure out the “personal” part of personal finance…”

      Well said. It’s about becoming the right person, not quick fixes. So glad having real life examples have been helpful!

  8. I’ve always said that the world’s money flows to those who do intelligent and responsible things with it. Like magnetism.

    This seems very similar to what you’re talking about FIRECracker. You have to become the kind of person that knows how to handle money responsibly and THEN the money starts to flow your way.

    Not before, but *after*. And you’re right, you have to be stubborn as hell sometimes. The world can disagree with you for a very very long time and then one day realize you’re dead right.

    I’ve had investments that dropped nearly 100% in a couple of months. That sucked, but I (stubbornly) believed in what I was doing. Then, in less than 2 years I was up over 700%.

    Some people might call that crazy, but to me it was an incredibly sane decision.

    1. Yup. The trick is to be humble open to criticism when it makes sense and stick to your guns when you know it doesn’t. Gotta be able to distinguish between a hater and someone you can learn from. Glad the investment worked out for you!

  9. Give a fish, he eats for a day, teach him to fish, he will sustain himself.

    Reader, if your listening, take this as an opportunity, nobody is going to hand you anything, you need to learn how to play the game. We have all done shit jobs, I fixed photocopiers for 5 years, and hated every minute of it, but I still did it. All the while studying computer technology, and upgrading. It took me 30 years to get where I am today.

    But it took work, lots of work, and study. I am still working at it refining, reading, learning. And most of all, being able to let shit go. Yes, nobody likes a shit heel, and it took me a long time to figure that out.

    Earth was not built in a day… it took 6…

    cheers

  10. Great post! FIRE is not something that you can give or teach easily. You need to learn it yourself as you move along the FIRE journey. And everyone will learn their own lessons on their FIRE journey.

  11. This is one of your best articles yet. So simple, so true, but so over looked. Thanks for writing it. Great reminder to stay the course, learn the skills and become who you need to be!!

    1. Thanks, Kent! As we like to say in my writer’s circle: just keep swimming. To become an author, you need to become a good writer. To become FI, you need to learn to be good with money. Stay the course!

  12. A thousand high fives for this post, and to you for continuing to tell it like it is – $200 can’t buy integrity, that’s for sure!

    Playing the long game is one of my greatest strengths. I’m expecting a call from my future husband, Leonardo DiCaprio, any day now.

    In all seriousness – thank you for such a great reminder about the payoff of staying the course!

    1. “I’m expecting a call from my future husband, Leonardo DiCaprio, any day now.”

      LOL. Leo IS a dreamboat. I was watching “Who’s Eating Gilbert Grape” the other day, just for old time sake, and I can’t believe how talented that man is.

  13. I think a big problem with the mainstream sensational “I retired early” stories is they really gloss over the setup years and make it sound like it happened more or less overnight (or within a year or two). People want a winning lotto ticket, not a long focused road to success.

    1. Sad but true. It’s much easier to sell a quick win than a long term goal. Which is exactly why everyone at my last family gathering talked about bitcoin and pot stocks and no one cared about index investing. But everyone who’s been through the journey, whether it’s writing, investing, early retirement, etc, knows it’s about the long game.

  14. I love this post. You’re a talented writer! This post is very encouraging, I love it so much (I have to say this twice!) I always felt like I was in a hopeless situation comparing myself to other wealthy people around me.

    Being an immigrant kid with parents talented but have been working not-so-great jobs in Canada since we got here… but I never was ashamed of them, I’m always proud of them. I came across your website a few weeks after I had to give out the most of my savings to my parents for some family matter – few months before that, I just paid off my massive student loan while working minimum wage jobs for 7 years, sometimes working 1-2 part-time jobs. Sometimes I had to work 3 jobs in 1 day. It was difficult and I felt like I was never reaching where I wanted to be. So I felt devastated looking at my bank account with only few thousands. Not sure how I ended up on your website, but I read and learned about investing and I opened TFSA and RRSP account on Questrade few weeks later and since then I’ve been saving like crazy. I’ve learned how to budget and it’s actually really fun! I’m very frugal and sometimes it drives some people crazy but it feels amazing to have a financial goal actually written down. I don’t have great salary but now I’m planning better for my future career – even just thinking about it is a huge improvement since I tend to be more of a settler type of a person who doesn’t like changes. With my modest salary working in an admin field, I’m a bit far away to become FIRE but I know I can get there with my frugal habit and investing with my savings (50% of my salary). I love what I ‘became’ in last 6 months. I’m in my early 30s so I felt like I was a bit late than others with saving and investing, but I have to remember not to compare myself with others and everyone has different financial journeys. So thank you to both of you for all your hard work!

    1. Wow, you’re amazing! Thanks so much for sharing your story. The fact that you worked multiple minimum wage jobs, managed to pay off your loan, AND take care of your parents/family is astounding! Would you like to write in for a reader case? I’d love to hear more about your badassity!

      1. Haha thank you FIRECracker! I’m blushing right now, what you said means a lot to me because I never thought I was a badass. I’m not sure that I did well last several years – I had no idea how to manage my personal finance until I hit 31 this year and it took me 7 years to pay off 50k student loan even with my multiple jobs. I helped my parents with rent money along the way since I started working so it slowed me down a bit but I wasn’t so smart about how to manage what I’ve earned and trying to find better paying jobs. Just saving in my accounts, that was all. However, if my case can be helpful to anyone… I may share my story. 🙂

  15. Great Post!
    This is why my father is FI. But in his case FINR(Financial Independence but Never Retire)…
    He loves his company, his work, investing.
    It is about long term planning, sensible spending and Become the person who can handle money. You are totally right.

    I can relate to your example as my dad gave up on having $40 haircut each month and trimming it himself to save that money 😆 being stingy helps!

    1. “FINR(Financial Independence but Never Retire)”

      Ha ha love it! Proof that the RE part of FIRE is optional but FI part is mandatory.

      Kiddos to your Dad for working hard, getting so far, and still keeping it real!

  16. I absolutely love the distinction between “get” and “become”. Definitely something that feels like most people wouldn’t understand. So many of us are just focused on today that we can’t see who we are becoming. Thanks for pointing this out!

    1. I was clueless about that distinction as well until I started writing. It’s much easier to see the whole picture when you’re on the other side of the fence 🙂 Thanks for reading and the kind words, Matt!

  17. Sure wish I could force-feed this article to several people in my life, but they have to find their own enlightenment.
    I’ve never commented on a blog before, but I wanted to tell you how I appreciate yours. A great mix of education, entertainment, and insight. I didn’t really think about how good your writing was until comparing it with some other blogs. Poor writing stands out, even if I still like reading the message, but in your case it’s good writing combined with a message I like to read.

    1. Aww! Thanks for reading and the kind words, Doug 🙂 My writing was pretty horrific 7 years ago so it did take me a while to become a writer! It’s all about practice, improving, and “becoming” instead of “getting”.

      1. My oldest is trying hard to get an SW Engineering COOP, his first ever. I have been helping him with his interview skills. He told me yesterday, after his 6th interview and refusal, “Dad, I am actually getting better at this, thanks for your help””If I don’t get a COOP, at least I will be really good at interviews…”

        He is starting to get the game, never ever give up your goal, it just takes time and practice, and a desire to succeed.

        FC, your a very good writer now, in future you will be a great writer, I look forward to reading some of your works.

        cheers

        1. Wow, so impressed with your son’s positive attitude! He’s definitely an outlier that’s for sure. I can attest to the improvement you get from COOP in interview skills over time. When we graduated, we’d failed so many times and learned so many things from countless interviews. Finding a job was pretty easy after that.

          And thanks for the kind words and encouragement!

      2. You are a good writer, Firecracker, but I think you meant to say “counselor” instead of “councillor”. But I love this piece in any case!

  18. The path to FI is simple, but it isn’t easy. Its all about growing, progressing, and changing. If you can’t change your mindset, spending habits, or save-ability skills, FI will be difficult to attain. But if you can change them, FI will stick.

    Reminds me of when I was in Cambodia and was working with a young boy who had cerebral palsy. I spent an hour with his mother educating her on stretches and exercises that she could do to help him walk. At the end, I came to find out that all she wanted was a “magic pill” to make him better. Unfortunately, she didn’t want to put in the effort, only wanting the easy route and unfortunately the child won’t get any better because of this. You gotta put in the effort to buy into the process. The same goes for so many aspects of life: losing weight, learning a new skill, developing relationships, etc.

    1. Great story! I agree with you that this philosophy goes for many aspects of life. It’s painful and challenging to go through it, but it’s the only way to make it stick.

  19. having a bite of the sh’t sandwich for a couple of years is great for perspective. once you then find some success you have that memory and will take the steps not to go back. i also heard a wise person say “get rich once.”

      1. I posted the link for the National Endowment for Financial Education’s disclaimer clarifying that they have issued no such statistic, but that it is constantly being recycled by numerous media outlets.

        “In 2001, NEFE conducted a think tank of experts from several industries including psychology, financial planning and other fields, to discuss life-changing events and the psychology around them. One topic discussed was the impact of financial windfalls on individuals, where it is believed that a participant stated the 70 percent statistic. This statement was made independently and without verification from NEFE.”

        Here it is again, from the source: https://www.nefe.org/Press-Room/News/Research-Statistic-on-Financial-Windfalls-and-Bankruptcy

        Just trying to keep things accurate in this world of Fake News 🙂

        1. Wow, very surprising! I would’ve thought TIME magazine would be a reliable source. Thanks, I’ve updated the article with the correction.

      2. I’ve also used that 70% statistic in a personal finance presentation I gave. Oops. Just a reminder you can’t trust the mainstream media! I should know better since I’m always preaching how untrustworthy the mainstream media is 🙁

  20. It’s not completely impossible to retire in a single year. I’ll admit it is very close to impossible though.

    Before May of 2017 I was worth roughly $-70,000. My net worth on May 1st of 2018 was $730,000. I worked as a degreed engineer and my plan was to spend nothing and save everything to retire by 2030.

    I, like Dan, was not a big fan of the idea of doing something I don’t really like for a long time. I made a list of ideas which had a chance of unusual returns on my investment.

    I’m sure everyone could guess that I started dabbling in cryptocurrency. However, investing during a giant bullrun is still extremely far from enough to turn a couple thousand into a 7 figure sum pretax.

    There is no moral of the story. I was in the right place at the right time AND I unearthed a talent for trading which allowed me to achieve one of the highest returns on the planet in the year of 2017. I’m writing this anecdotal story merely for you to consider the usage of word “impossible”. The general advice you tend to offer about not dabbling in cryptocurrency is very much correct for 99% of your readers.

    The 1% has to have near infinite patience, sky high emotional strength, and enormous risk tolerance together with enough brain cells to pick out speculative projects to invest in with some actual potential.

    The “cryptocurrency of 2018” are Chinese IPOs. If you want to try your hand at quick wealth accumulation, go look at the likes of IQ, HUYA, Uxin, Xiaomi, SenseTime, etc.

  21. One of your best posts, Firecracker! As an old Boomer, it is hard for me to admit that a Millennial can have such insight. You are not just a great writer but have a unique perspective on our modern world. You and Wanderer make a great team. Keep up the fantastic work!

    P.S. I’m about JL Collins age, which proves once again we CAN all get along!

    1. That means you’re a Rebel Boomer, just like JLCollins 🙂

      Thanks for the kind words! They mean a lot, coming from a Rebel Boomer!

  22. This is, by far, one of the best posts in this blog. Thank you for continuing to inspire and motivate us, your readers.

  23. Excellent post FC. You are wise beyond your years by quoting those famous words about “becoming” versus “getting”. Becoming involves reflection, hard work, soul-searching, resilience amidst failure and all the hard stuff that simply “getting” doesn’t involve. Well said. Good examples in both the article and comments.

Leave a Reply

Your email address will not be published. Required fields are marked *

Social Media Auto Publish Powered By : XYZScripts.com
Want to join 30,000 monthly readers and get new posts in your inbox?