The-not-so-obvious-reasons-why-people-want-to-achieve-financial-independence
00:00:00.000 | Hello everybody, it's Sam from Financial Samurai, and in this episode we're going to talk about
00:00:04.240 | the not-so-obvious reasons why people want to achieve financial independence and retire early.
00:00:10.080 | So the fire movement is hot, no doubt. With the bull market since 2009, many people in America
00:00:16.880 | and around the world have gotten wealthy by owning stocks, real estate, and other assets.
00:00:22.960 | And as a result of our massive increase in wealth during a relatively short time period,
00:00:27.520 | many people are warming up to the fire movement, where they retire in their 30s,
00:00:31.680 | 40s, or 50s to live a pretty good life supported by their investments. And that's my definition of
00:00:38.000 | being fire, by the way, to have enough investment income to cover your best life's living expenses.
00:00:45.440 | So some people go the lean fire route by living relatively frugally. Jacob from Early Retirement
00:00:52.480 | Extreme, who helped start the fire movement in 2007, at least the modern day fire movement,
00:00:58.000 | did that while living in a trailer and living off less than $10,000 a year. And he did that for
00:01:03.680 | several years until he decided it was no longer good for him, so he actually went back to work
00:01:08.800 | as a quant trader at a big money management firm in around 2010 or 2011. And then other folks are
00:01:15.280 | trying to pursue the fat fire route because of their desire to live it up, or because they want
00:01:20.160 | to stay and raise a family in a high cost of living area. And that's me and my family. We're
00:01:26.560 | still about $50,000 short in passive income to feel completely independent financially. Now,
00:01:32.720 | I know we're maybe a little bit too conservative or we're a little too aggressive, but hey,
00:01:37.360 | that's what happens when you have kids. Therefore, our fire journey continues.
00:01:41.280 | So I thought instead of glorifying financial independence and those who are financially
00:01:46.800 | independent, let's have a more difficult conversation. Let's talk about why some people
00:01:53.920 | want to pursue financial independence. And the reasons aren't actually as nice as you would think.
00:01:59.600 | So not all is sunshine and summerized swords in the land of fire. In fact, I would argue that
00:02:05.120 | most fire folks are just simply maladjusted misfits who've never been able to fit in.
00:02:11.040 | So here are 10 not so obvious reasons why people want to achieve fire. One, can't find the right
00:02:18.320 | job. Look, nobody quits a job they love, but only truly fortunate people can find such jobs. Most
00:02:24.480 | of us are not smart enough. We're not talented enough. We're not connected enough or attractive
00:02:29.520 | enough to work at a dream job. Instead, we toil around doing something we dislike or we're just
00:02:36.160 | disengaged in simply for the money aching to escape reality. Look, I really enjoyed my finance
00:02:43.360 | job for the first like, I don't know, eight to nine years. It was pretty exciting traveling the
00:02:48.240 | world, going to Asia, visiting new companies, taking private companies public. But after a
00:02:53.440 | while it started getting boring. And then I had to deal with office politics. Then I got passed
00:02:57.920 | over for a promotion and a raise. It just didn't feel good. But if I loved my job, if they paid me
00:03:05.200 | commensurately with what I was doing, if they respected me as to the level that I thought I
00:03:10.400 | deserved, I probably would just continue to stay. And if I could work like, I don't know, 25 hours
00:03:15.280 | a week, of course I'd stay. So one, that's the main thing. People just can't find the right job.
00:03:20.560 | That's why they want to retire early. Two, it's an easier way out. Instead of grinding for decades
00:03:26.480 | at a job we hate, it's easier to just give up and quit. Why keep on going as a cancer research
00:03:32.240 | scientist after not coming remotely close to finding a cure after 15 years? 20 years? 25 years?
00:03:38.560 | I mean, how much have we spent on cancer research? And it just doesn't seem like we're making any
00:03:42.720 | progress. I don't know what's up with that. That would be kind of demoralizing after a while.
00:03:46.400 | You know, we might even love our jobs, like I said just now, you know, for the beginning
00:03:51.680 | years. But after years of no recognition, that love wears out. So quitting, way easier.
00:03:58.720 | Three, the desire for instant gratification. We're in a now, now, now society. Instead of putting in
00:04:04.640 | our dues to get into the corner office, we want to be the big boss right now. I blame social media,
00:04:11.120 | the internet, right? Everybody's posting how they're just instant successes. We
00:04:15.200 | hear about people's successes much more frequently now. And people are getting richer and wealthier
00:04:22.720 | or quicker because of technology. And that just creates a lot of anxiety for us. And it creates
00:04:28.880 | a lot of desire to just make it real quick. But as you know, it often takes 10 years or
00:04:35.040 | 10,000 hours to make true progress. Four, an excuse for being unemployed.
00:04:41.120 | So look, during the last downturn, a large number of people began to write about location-independent
00:04:46.400 | lifestyles, right? Like digital nomad lifestyles that enabled them to break free from the nine to
00:04:51.600 | five grind and do what they really want. But the reality is, many of these folks just got fired.
00:04:58.640 | And they just really wanted a good job and to be accepted by society. But instead, you know what?
00:05:04.320 | They made lemonade. So props to them for trying to make the best out of a bad situation. You saw
00:05:10.400 | the graduate school applications for business school, for example, surged by 30 to 50% year
00:05:15.760 | over year for at least two years during the last financial crisis. And that was an interesting
00:05:20.240 | dynamic because that means, ironically, that the people graduated like in, I don't know, 2010, 11,
00:05:29.760 | 12, were actually the people probably who weren't able to hold on to their jobs during the financial
00:05:35.200 | crisis. Something to think about. Next, five, an inability to get along with others.
00:05:41.360 | When you have a difficult time conforming to the rules and being told what to do,
00:05:45.440 | it's much harder to stay employed, let alone be happily employed. I think fire seekers tend not
00:05:50.960 | to be very good at collaboration. Most are also introverts and are very awkward socially. I've
00:05:56.480 | been to several conferences. And you know, people are nice and all that, but they're not.
00:06:01.120 | They're just not extroverted. They don't have a charisma that I notice working in day to day
00:06:08.960 | life. It's just a little bit of different type of personality or skill set. I don't know. Those
00:06:14.560 | with excellent social skills, I've noticed, derive energy from being part of a group. I think that's
00:06:18.880 | by definition what being an extrovert is. And the desire for independence from other people
00:06:24.400 | simply isn't top of mind. Instead of wanting to read a book for four hours on a Saturday evening,
00:06:29.600 | they'll want to go out and hang out with folks. Six, there's a realization that time is precious.
00:06:34.800 | With a median life expectancy hovering around 80 years old, you only have 15 years of retirement
00:06:42.400 | life to enjoy if you retire at 65. And if you go through some kind of mishap, or you see friends
00:06:50.720 | dying, or your parents just miserable, you just kind of become more aware. You have a heightened
00:06:58.080 | awareness of time. And therefore, you do everything possible to make sure you're financially stable
00:07:04.160 | sooner rather than later. When I was 13, my friend who was 15 died in a car accident.
00:07:11.360 | And that incident really, really is the catalyst for the reason why I wanted to retire early,
00:07:18.480 | because it was like a hedge. Just in case, you know, something were to happen to me,
00:07:22.480 | I want to retire early so I can live my life to the fullest. And it's kind of sad, right?
00:07:26.080 | And don't think that I didn't do some cool stuff while I was working. But I just really wanted to
00:07:31.680 | get rid of work altogether to be free as soon as possible. Seven, you're tired of making other
00:07:37.920 | people richer, right? Uber went public, the CEO is going to make $50 million. He has a $17 million
00:07:44.800 | house. Funny, he bought the house from a guy I used to play tennis with. And Uber drivers are
00:07:51.200 | making like minimum wage or close to minimum wage. You know, I gave over 500 rides back in 2016,
00:07:57.120 | I believe. And it was an interesting experience. But it was rough after a while. So I just quit.
00:08:03.920 | So I think people realize that kind of the workplace dynamics and pay structure is really
00:08:09.440 | out of whack. You know, when your CEO is making 1000 times or more than the average employee,
00:08:13.760 | I mean, I think that's messed up. Do you really need to pay that person that much?
00:08:18.560 | I could bet you whatever that many of us could just assume the CEO role position at like a large
00:08:27.440 | Fortune 500 company, and nothing really would happen. The company would go on about its business
00:08:32.720 | as it would because there's a big team out there. All right, eight, declining physical and mental
00:08:37.920 | health. That's similar to the realization that time is precious. You know, roughly 1 billion
00:08:44.800 | people in the world or 15% have some sort of disability. And for some their disability will
00:08:49.520 | get worse over time. As a result, more people are feeling the necessity to live their best lives now.
00:08:54.960 | And I really want to highlight this point about over 1 billion people in the world have a
00:08:59.360 | disability. This is the largest minority group in the world that I don't think gets enough
00:09:04.640 | recognition, we need to pay more attention to those who have disabilities, and to be more
00:09:10.320 | accommodating and to be more understanding. Because when you have a disability, it's oftentimes no
00:09:17.520 | part of your fault of your own, you just are born with it. So let's just be more empathetic and
00:09:21.600 | aware of this folks. Nine young children. Man, I really I really didn't realize this until after
00:09:28.240 | I became a father in 2017. But I'm glad I realized this now. Well, I'm glad I thought to realize this
00:09:35.280 | before I had a son. You know, it's bad enough if you already dislike your job. But life gets even
00:09:42.080 | worse if you have to leave the people you care about the most behind and pay strangers to take
00:09:47.520 | care of your kids. So you can work in a place you despise, right? That that is just horrible.
00:09:52.400 | That's a horrible situation. So the desire to fire before kids actually is kind of selfish in
00:09:58.000 | comparison. Parental guilt grows internally, especially when you observe some households
00:10:04.400 | with a stay at home parent, you know, everything is relative. If everybody, you know, had two
00:10:09.520 | working spouses, and you know, drop their kids off to a nanny all day, you know, that'd be one
00:10:16.000 | thing, but it's not really the case. And they only grow up once. And then pretty soon they're
00:10:20.880 | off to school, you know, at age three for preschool or two, and then kindergarten for sure, at age five
00:10:27.040 | or six, if you're following the education laws, United States. And then finally, fire FOMO,
00:10:33.520 | fire FOMO, fear of missing out. The more people who have achieved fire and write about fire,
00:10:39.600 | the more people will become aware of this alternative lifestyle. Big media coverage
00:10:44.800 | about fire has exploded, folks. I get pinged at least once a week by someone from the local
00:10:52.560 | newspaper or, you know, a national syndication news. I even just got a email and a call from
00:11:00.400 | someone in GQ London, who wants to cover the fire lifestyle. So that might be interesting.
00:11:05.840 | But the more you see people do it, the more you naturally want to do it. A lot of people,
00:11:10.000 | they just don't really know what they want until they hear someone do it. And they think, oh,
00:11:14.640 | that sounds pretty good to me. It's kind of like why staging a house is so effective,
00:11:21.600 | because a lot of people don't have that imagination when they see the staging.
00:11:24.960 | They're like, oh, that makes sense. That's a good, good idea. So what was once thought possible only
00:11:31.360 | for the rich now seems possible for any working soldier with the right financial framework and
00:11:37.680 | mindset. So there's one final idiosyncrasy of fire that I didn't really realize until right now.
00:11:45.840 | So as I strive to fulfill my goal of firing a second time around at the end of this year, 2019,
00:11:51.920 | or definitely by 2020, I've come to the realization I've been constantly chasing a
00:11:57.120 | moving financial target. In 2012, at the age of 34, my goal was to achieve $100,000 in retirement
00:12:03.840 | income within three years post work. And then after my wife left her job in 2015,
00:12:10.720 | I increased our retirement income goal to 200,000. Then after our son was born in 2017,
00:12:16.240 | our retirement income goal jumped to 300,000. So that's why we're $50,000 short or thereabouts.
00:12:23.040 | So does this mean if we are blessed, praise be with a second child, our retirement income target
00:12:28.560 | would now jump to 400,000? I mean, if so, that's crazy. I'm never going to be able to relax and
00:12:33.520 | smell the roses because generating 400,000 in non 401k and non IRA income is a Herculean task.
00:12:41.840 | And I can't even pick up my boy sometimes without feeling soreness in my back.
00:12:46.480 | What the heck am I going to do? So this desire to build an ever greater financial buffer and fire
00:12:53.280 | is one of the biggest inconsistencies and peculiarities I've experienced since leaving
00:12:58.560 | corporate America. Maybe wanting more is just a part of the human condition. Or maybe this desire
00:13:05.760 | to provide is is the inherent part of the primary breadwinner's desire to provide and that's me.
00:13:14.160 | Or perhaps I'm just simply too afraid to let my family down because I just can't imagine
00:13:19.040 | having my wife have to go back to work, especially if we have a second kid.
00:13:24.000 | And I can't imagine myself having to be forced to go back to work, which is why my investments
00:13:29.280 | are quite diverse and conservative. So this is something interesting to know. Once you get to
00:13:34.400 | financial independence, and once you get the guts to leave your day job and live off your retirement
00:13:39.440 | income, you might not be satisfied with what you have over time if your life changes. And I think
00:13:45.760 | that biggest x factor is providing for kids and taking care of your aging parents. So that's about
00:13:52.880 | it, folks. Just be aware that not everything is as amazing as it seems. You know, life is complicated.
00:14:00.160 | Nothing is ever straight in line. There are always little twists and turns that you're probably not
00:14:06.800 | going to be aware of until you experience it for yourself. This is why I'm trying to
00:14:10.880 | give you guys as real of a perspective as possible. Now, do I regret leaving work at 34?
00:14:18.640 | I don't regret it. I don't regret it. I think I would have regretted it if I left at 40 and if I
00:14:24.640 | never had my son, because I had him really late when I was 39 and almost 40. So I don't regret it.
00:14:31.200 | And I don't think you will regret living a fire lifestyle too if you can save aggressively,
00:14:36.320 | invest properly, and figure out some alternative income streams. There's not a day that goes by
00:14:43.120 | that I'm not thankful for having Financial Samurai and having this community to interact with.
00:14:48.960 | I mean, it gives me something intellectually to do every single morning. And then I get to spend
00:14:53.680 | time with my family and, you know, go exercise and just do random life things. There's really
00:15:00.080 | only one life to live. So you just want to make sure you're living it purposefully,
00:15:04.000 | as purposeful as possible, and really try to plan ahead and don't don't put up with crap.
00:15:12.240 | If you're not happy, because I think you're going to look back. And if you didn't stand up for
00:15:17.360 | yourself, or if you had to put up with crap longer than you thought you you'll regret that inaction.
00:15:23.680 | Take action. Keep on listening. Keep on learning. And I wish you guys good luck. Thanks.