The Simple Secret to Financial Freedom

As you’re reading this, I imagine you’re pondering the the incredible sense of control which financial freedom will grant you (or perhaps already has). But how the blazes do you get there before your pension kicks in? Well, in our own long, dragon-battling quest to discover the same thing, we’ve un-earthed a simple secret to how it is done, and here we will share that secret with you, free of charge:

Change who you think you are. 

This single statement underpins how normal people (as opposed to entrepreneurs, which most of us aren’t) go from being perpetually in need of the next monthly salary payment, to never having the need to work again. It appears time and again as I think about our own path to freedom, and as I study how others have done it. It explains some of the mysteries around why others, those with apparent means to get the job done, don’t get the job done. But OK, I admit it’s an opaque little statement on its own, so here’s what I’m really talking about:

People who are financially free have usually broken the link between how people expect them to behave with money, and how they actually behave. 

Let’s take a couple of engineers as an example. These two ladies are identical in terms of their skills, salary, and the fact they have no kids:

  • Engineer #1 hasn’t broken the link. She lives in a 4 bed detached house with her husband. She works hard and plays hard. She and her husband buy new cars every two years, have gym membership, they use a cleaner and pay for someone to come and redecorate the house every few years. Engineer #1 looks, to the outside world, like she is a very successful person, which she enjoys (and why shouldn’t she?). She is also perpetually skint.
  • Engineer #2 has broken the link, she has changed who she thinks she is. Engineer #2 lives in a single bedroom apartment with her husband (which they feel is easily big enough), and has sold most of her unused possessions to do so. The apartment is on a bus route, so the couple only have one car, which is second hand and replaced once every ten years. The apartment being small means that Engineer #2 can quickly clean or redecorate the place with her husband. Engineer #2 looks, from the outside world, much less successful than Engineer #1. And her income is spiralling upwards.

And yet (assuming she invests correctly) Engineer #2 will achieve financial freedom decades quicker than Engineer #1. She’s stopped thinking “I am a successful engineer and I can reward myself by buying this stuff” and started thinking “I am a successful engineer and I can get financially free all the quicker because of it, stuff what the world thinks”.

This also has the HUGE benefit, by the way, of making ‘retirement’ feel luxurious, rather than a lifestyle dead-end.

In my last job I drove to the big corporate office in a ten year old Smart Car, which attracted a fair few jokes. I drank the freebie coffee from the vending machines rather than £1-a-go coffee from the canteen. This also attracted a few jokes. I took my own breakfast and lunch. More jokes. I wore old shirts and trousers. No-one joked about this, but this was in IT and I don’t think anyone noticed. While a colleague of mine showed off a 5 bed detached house he was about to buy, Ju and I were living in a 2 bed rented semi (which felt huge to us).

I’d altered the way I thought, and with it, the want went, and the freedom landed, with a resounding BOOM.

I no longer saw myself as an ‘IT Project Manager’ but as someone chasing down a goal to be financially-free. I ignored the jibes and focused on the prize of freedom. It wasn’t as hard as you might imagine. As soon as I’d shifted my mindset (Ju did this way before me, by the way) it became all-but-inevitable that we’d be ‘retiring’ early. I simply no longer wanted the stuff. I saw a gleaming motorbike and my thought process went something like this:

  • Bloody hell, that’s a beautiful bike.
  • But if getting and keeping it means I lose my freedom, then I might want it, but not that much.

And that went for pretty much everything, which drove more and more money into our Spiralling Wealth Machines, and inevitably, eventually, set us free. And the weirdest thing of all: we now have enough cash knocking about to buy and run that shiny bike, but nah, I’m still not fussed.

If you’re after more real-world (albeit from the USA) examples of how this works, I can highly recommend The Millionaire Next Door – a study of how Americans got rich by thinking differently to their neighbours. Or if you don’t want to shell out a tenner for the book, just read the Wikipedia summary here.

Cheers, Jay

5 thoughts on “The Simple Secret to Financial Freedom

  • May 10, 2017 at 10:22 pm
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    So true! Great new blog. We have been saving every penny and getting rid of ‘stuff’ for a while now. We bought one big thing, a motorhome, nearly 2 years ago. My hubby ‘retired’ last week and it is my turn tomorrow. By tea time tomorrow we will have officially achieved FIRE, 17 years early, and boy does it feel good. We have followed your adventures for a long time now, inspirational stuff, thank you for sharing and inspiring others. Maybe one day we will see you on the road…

    Reply
    • May 11, 2017 at 9:17 am
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      17 years early, go, go go! Yep – hope to bump into you – always a great thing to chat with fellow early escapees. Cheers, Jay

      Reply
  • May 11, 2017 at 2:07 pm
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    Living to the expectations of the FIRE crowd (and trying to be engineer #2) can be as silly as trying to live to the expectations of the mainstream (and trying to be engineer #1). I’d say try to define your own expectations and create your own picture of what success is.
    I am closer to engineer #2: I’ve had my 20-year-old car for 14 years, and live in a 2-bed 1-bath duplex (renting out the other half), but I do spend money is things others would think are silly. I don’t care, I do my own thing.
    When I worked, my car was the oldest in the lot, brought my lunch most days (yes, there were jokes) made my own coffee, etc. My wardrobe surely looked cheap compared to others. The jokers are still working and I am gone….

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    • May 11, 2017 at 8:52 pm
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      I’m not fussed what people spend their money on. It’s their money, they earned it. I’m only interested in trying to help folks make financial and lifestyle decisions on purpose. Folks die without living the life they deserve, guided that way through generalisations and social pressure. That’s what I’m trying to avoid. I’m not selling early retirement; since I’m not retired. Cheers, Jay

      Reply
  • May 13, 2017 at 1:25 pm
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    I like where you’re going with this blog. I’m currently FI and will FIRE in the next few months. While we’ve achieved it a little differently I’m sure a lot of the quantitative themes are similar:
    – Spend well less than you earn. This is what you highlight in this post. I do this largely by focusing on quality of life rather than standard of living. My net savings rate in 2016 was 87%.
    – Earn more before FIRE. I understand you went contracting. I stayed permanent but focused on climbing the greasy corporate pole as fast as possible.
    – Invested in a diversified portfolio of assets via mainly index trackers.
    – Minimise expenses by using trackers and cost effective Trading/ISA/SIPP wrappers. My total annual expenses are currently 0.22%.
    – Minimise taxes.
    – Rebalance at appropriate intervals.

    Psychologically it was then starting, staying determined, never becoming a victim, not being afraid of making mistakes (I made plenty as running against the herd means it’s you who is doing all the learning learning), using the power of AND plus tracking progress.

    I achieved FI in 8.7 years. I think from memory you managed it faster than me.

    Reply

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