If you’ve been reading the blog so far, you know that when I first discovered the FIRE (financial independence, retire early) movement around 7 years ago, the whole “retire early” part didn’t really resonate with me. At the time, I was just starting a postdoctoral fellowship and had dreams of being a big-time professor. I was still on the hamster wheel, and I had no intention of slowing down anytime soon.
However, after reading The Simple Path to Wealth by JL Collins, the concept of having F-You Money DID resonate with me, specifically these words:
It’s a big beautiful world out there. Money is a small part of it. But F-You Money buys you the freedom, resources and time to explore it on your own terms. Retired or not. Enjoy your journey.
JL Collins, The Simple Path to Wealth
The definition of F-You money really depends on each person’s unique situation, but I think of it as having enough saved (and having a healthy emergency fund) such that you have the power to rid yourself of a toxic job or situation, or take advance of an opportunity that presents itself.
I loved the idea of F-You Money providing freedom, especially freedom from having to work to make money based on someone else’s rules (aka, your boss):
There are many things money can buy, but the most valuable of all is freedom. Freedom to do what you want and to work for whom you respect.
JL Collins, The Simple Path to Wealth
Starting to invest
In his book The Simple Path to Wealth, JL also made investing, something I had always thought of as “scary,” seem totally doable.
I read his book right around the start of my postdoctoral fellowship, which was also the first time in my life I had access to an employer-sponsored retirement plan. Good timing!
So, I plunged in and began my investment journey. My goal at that time was to have F-You money and continue saving in investments toward my financial independence number, knowing that I’d hit it some day. But, I was in no big rush because I “loved” working and never wanted to stop.
But wait…what is a financial independence number?
Right about now, I’m betting some of you may be asking yourselves: how do I know what my financial independence number is?
The first step is knowing how much you spend on a yearly basis (or even more specifically, if you know it, what your annual spending will be when you are no longer making money). Then, you multiply that number by 25. That’s it! That is the number you would need in your investment accounts to be able to withdraw 4% annually and (very likely) have that money last throughout your retirement years.
Quick sidenote: If you’re like me and like to keep things simple, that’s the basics of what you need to know about your financial independence number. More likely, however, you want to dive deeper, especially if you’re new to the concept. Luckily, there is TONS of great content out there on financial independence and how to calculate your number, so there’s no need to reinvent the wheel. In addition to all of the resources I have linked throughout this post, some of my other favorites include The Mad Fientist’s Resource page and JL Collin’s Calculators page.
Happy researching! Ok, now back to my goals.
New career trajectory, new goals
If you’ve read my story, you know that eventually I did get the dream professor job. But, you also know that, shocker, it didn’t turn out to be the dream job after all.
The short version is that I ended up quitting the “dream” professor job, took a huge paycut to work as an editor, ended up working less than I ever had in my life, and realized there was so much more to this beautiful life than just working all the time (or spending all of the time that I wasn’t working thinking about work).
Without realizing it, my identity had been separated from my job, and it was liberating.
In this new stage of life, I now found myself wanting to get to financial independence faster than ever. But alas, reaching financial independence doesn’t happen overnight. On top of that, the thought of working full-time for 10+ years to reach financial independence now felt daunting.
Slow FI
Lucky for me, I ended up hearing Jessica from The Fioneers on a podcast talking about Slow FI, a term she and her husband coined. Here’s how they define the term on their website:
When someone utilizes the incremental financial freedom they gain along the journey to financial independence to live happier and healthier lives, do better work, and build strong relationships.
The Fioneers
The more I learned about Slow FI, the more it resonated with me.
My mindset started to shift such that I wondered if I could start to make changes to live at least part of my best life now, while I was still working. I do enjoy the work that I do. I’m good at it, I make good money, and I can do it remotely/from anywhere with an internet connection. I was just realizing that I didn’t want to work so much. I wanted more time outside of work to live my life, and Slow FI got me thinking about how I could achieve this.
Coast FI
Listening to that podcast led me to The Fioneers blog, where I stumbled across Coast FI. This type of financial independence really made my jaw drop:
Coast FI is the point at which you no longer need to save any money to have a comfortable traditional retirement. [In other words], Coast FI is when you already have enough saved in your retirement accounts that, if left to grow until traditional retirement age, you will have enough to live on comfortably.
The Fioneers
Sidenote: If you’re curious what your Coast FI number is, I highly encourage you to check out this Fioneers post and calculate the numbers for yourself!
While I loved the options that Coast FI gives you (and, at the time, I was actually very close to this number, which was super exciting), the idea is that your investments will grow in the background so that you hit your FI number by traditional retirement age, 65. That was cool and all (and very comforting), but I didn’t want to wait until 65 to retire. Although I liked working and saw myself continuing to work in some capacity for a while, in my case, a while meant into my 40s, MAYBE 50. Not 65.
But, of course, Coast FI can still be a goal along the way, and discovering Slow FI and Coast FI got my wheels turning.
Flamingo FI – juuuuust right
From The Fioneers blog, I then wandered over to Money Flamingo, where I discovered the concept of Flamingo FI, which is the point at which you’ve accumulated half of your financial independence number. Once this number doubles, you’ll be financially independent. And assuming an inflation-adjusted investment return of 7% per year (on average), you can expect to be financially independent in 10 years after hitting Flamingo FI.
So, hypothetically, if I hit Flamingo FI at age 40, and I didn’t add another dollar to my investment portfolio (meaning I was only covering my annual expenses and no longer saving toward retirement), I could expect to hit financial independence at 50.
This type of FI resonated with me for a few reasons. 1) It would give me LOTS of options. For example, once I hit Flamingo FI (half my financial independence number), I could go part time at my current job, I could start freelancing again, or I could choose a new job that didn’t pay as well, to name a few. 2) If I got to Flamingo FI, I could likely retire sooner than the traditional age 65. 3) It gave me a nice buffer since my husband and I currently have separate finances and we don’t plan to change that. However, we are in a partnership after all, and I like to account for having money to take care of him in addition to myself, so Flamingo FI feels like a nice buffer in this sense.
And the best part is that since I’ve been saving money my whole life, even when I made $21,000 per year as a graduate student, I have no doubt that I’d still be able to save some money even if I downshifted my work/career after reaching Flamingo FI. In other words, I’m confident I’d be able to still save some money toward retirement as long as I’m working, and potentially reach financial independence even faster than 10 years. But again, the real takeaway for me here with Flamingo FI is that it gives me so many options. All. The. Options!
A quick sidenote on mine and my husband’s finances: We’ve kept our finances mostly separate since we first got together, and it currently still works for us. We talk about money ALL of the time, and if we ever felt the need or it made sense to combine finances, we totally would. I’m happy to go into more detail on this later on, but I’m a huge advocate of doing whatever works for you when it comes to relationships and money – there’s no one right way!
So there you have it – my current financial independence goal: to reach Flamingo FI. Stay tuned next week to read about what I currently plan to do once I reach Flamingo FI.
If any of these alternatives to traditional financial independence I’ve discussed today resonate with you and you want to know more, I highly recommend you check out some of the great resources on blogs like The Fioneers and Money Flamingo. In particular, this worksheet had the most impact on me: Meaningful FI Metrics Calculator.
I’d love to hear more about you and your financial independence journey! Feel free to drop a comment here or shoot me an email through the contact page.
Happy saving!