As I explained in my last post, when I started work, I had a vision of life after work. I developed a plan to take a different path from friends and colleagues. The plan to achieve my vision gave me the motivation to take the actions necessary to achieve it.
This was an essential component of my success in achieving financial independence. Having a vision and a plan helped me every time I had to make a decision about spending money. Do I buy the nice shirt that’s not on sale? Do I order the more expensive dish when out at a restaurant? I remember soon after starting to work meeting a classmate from university who was bragging about the Saab that he had just bought. It was used, but being able to buy a spiffy car was clearly important to him. For me, squirrelling away my money was more important.
It can be hard to forego current consumption for the future, especially when friends and colleagues are buying nice cars, taking expensive vacations, splashing out on expensive clothes and entertainment. I don’t want to suggest that I lived like a monk. Travel is important to me, so I made sure that there was always money for travel. And fortunately, I am happy to travel in a modest style. I continued to stay in youth hostels for a while after I started working, before graduating to inexpensive hotels, and then VRBO.com, and now there’s Airbnb. The glitzy hotels do not appeal to me.
Some degree of lifestyle inflation is going to happen to most people. For me, a key thing was to make sure that it lagged my income growth. I continued living as a student when I started working. As my income grew, I allowed myself more of an entry-level lifestyle, and so on. Living in downtown areas meant never having to buy and operate a car. I think that the savings from that more than offset the additional housing costs that come with downtown living. In early retirement discussions, this is known as “living below your means”.
There has been some discussion in recent years about how millennials having been “living above their means”, i.e., accumulating debt during their mid-to-late twenties in order to get all of the toys when they start working with the plan to pay for them later. I don’t know if this is at all true. The millennials I work with seem to be pretty level-headed people.
Now that I am at the end of my path, I do wonder what it would have been like if I had set a more aggressive goal. I aimed for financial independence at 52, and will make it at 50. What if I had aimed for 48? Would I have achieved that? Would I have over achieved at finished work at 46? I’ll never know, and I’m not going to stress over it because there is nothing I can do about it now. I am happy with how my career has gone, and finishing work at 50 is something to be pretty happy about too. I hope to have 15 years of active living and travelling before I start to slow down, and then another 10 years of good health before I start to seriously slow down. Who knows – without the stress of work and with more time to devote to exercise and healthy eating, maybe Spouse and I will be one of those annoying enviable couples who are still living on their own at 85 and power-walking around the neighbourhood every morning.
In the next post, I will discuss my investing style. Thank you for reading. Comments are welcome.