If you’re joining us from the “Why I Negotiated For A Pay Cut” essay, the above was my response to my aforementioned employer. (If you haven’t read that piece, I’d recommend quickly backtracking to get caught up.) In other words, I fired my boss.
A lot of people in the financial independence community talk about the “one more year syndrome.” Actually, it doesn’t even have to be finance related, as this idea could apply to nearly anything. The basic concept is that you presently have enough, but you continue on aspiring for more. “Sure, $1 million might fund my retirement, but doesn’t $1.1 million sound a whole lot better?”
On the surface the concept is reasonable – why not provide yourself with a little extra cushion – yet be conscious of the risks involved; the trade-offs that result.
My journey is more along the lines of what I like to call the “one less year syndrome.”
See the thing is – depending on how the assumptions are formulated – I conservatively have about 10 years of expenses covered in the form of net assets. Now assuredly my expenses are minimal in comparison to the average. Moreover, anything can happen in short or long-term. So it’s not retirement. I still have to “do something” in order to provide income before jetting off to a lifetime of golf, beach and paddle boarding (or whatever the latest retirement commercial has you doing).
And it’s not Financial Independence really. I would assert that it’s something new, something different. To be frank I think it’s something the future is going to have quite a bit more of.
Some might call it a “gap year,” or I suppose in this case a “gap decade.” Blogger jlcollinsnh would call it “f-you” money – the financial wherewithal to do what you please for a while. Call it what you want, but I just think about it in terms of “what’s the deal?” Here’s my thought process:
“Ok, I could sit on my keister for the next 10 years, that’s 3,653 days, and still be just fine. In the more likely scenario whereby I actually do something, that will last me longer than a decade. Say I write a finance article and earn $50, that’s 8 more Chipotle (CMG) burrito bowls or a week’s worth of groceries.”
Finance 101 is creating a gap between what you make and what you spend. But Finance 102 should be how to best utilize that gap – the discretionary time that comes with the process. Most just tell you that you need a larger and larger gap, or on the opposite end of the spectrum that you need to buy more and more stuff to be happy (thus reducing said gap). Yet few focus on the mechanics – the benefits and sacrifices – of either. We trade time for money and money back for time, hardly realizing that our lives are what we make them.
I don’t have all of the answers. But personally, trading extra money in exchange for more time was the smaller sacrifice. Or in Jason Fieber’s sentiment: “you could earn more money… and you could get more oxygen by increasing your breathing, but I have all I need.”
I knew that I’d regret it if I hadn’t given it a shot.
Plus it helps to think about the downside; not a “worst case,” but a bad case looks something like this:
I wake up financially “broke” in 10 years – still better off than a quarter of the world’s richest nation.
In a more likely scenario – call it a year or two – I would suppose that I might recognize a downward spiraling trend and work to right the ship sooner rather than later. Even then I would probably have an excellent shot of retiring “comfortably” in due time.
It can be all too easy to forget how fortunate we already are.
For instance, it’s estimated that billions of people live on less than $2 a day. Expanding that a bit, the average income for the bottom 80% of the world is approximated at $3,900 – roughly $8,000 in purchasing power.
Not feeling so bad about that missed trip to Hawaii or your mid-level sedan huh?
The truth is we already make scores more than the majority of world’s population; and not just now, but in all mankind. Some make in a week what others make in a year. Yet for some reason they aren’t 52 times as happy. Imagine that.
To sum up using Ben Franklin’s words: “when you’re finished changing, you’re finished.” I’m not finished changing and neither is this website. Stick around for updates, insights and awareness as we continue to spin on this rock together.