I have had the privilege of being a software developer professionally for over 6 years now. It’s no secret that developers make a very good living. I’m lucky to be one of the few people who figured out what they wanted to do at a young age, found it fun and interesting, pursued it and can make a good living at it. Even better, my wife is extremely supportive of my pursuits to become financially independent.
Financial independence is the concept of being able to pursue your passions as a result of being financially secure. As a software developer living in a low cost of living area, this is an easier “sacrifice” to make. However, it still isn’t easy. In a world of immediate gratification, it’s easier than ever to chase “wants” in life. New sports car? Bigger house? Nice New York Strip every Friday (this was a habit of mine at one point!)?
At a very high level, as you have bound to have heard already, personal finance is about making more than you spend. This includes gains on investments. It is, however, significantly easier to cut spending than it is to increase your income. As a result, I look to be efficient with the money we earn. We’ve taken up cooking over eating out all the time, our home is modest, we drive base model cars, Netflix over cable, these are the kinds of things that everybody can do.
I won’t get on a high horse about what I consider improper use of ones money, because that’s just not helpful. I will, however, urge you to take the time to look at where their money is going. Simply taking the time to know how you spend your money can help your financial well being.
Most would look at our habits as extreme, but considering the goal is to be able to support our passions without fear of being unable to pay the bills, it seems worth it. My wife, for instance, would like to go back for her masters. This would mean working and going to school at the same time, but with a savings goal in mind, she could potentially quit her job to focus on completing her masters in a year. Double our mortgage payment, and this likely becomes out of reach.
One of my favorite bloggers, Mr. Money Mustache, has an article about the numbers behind retiring early. My wife and I achieve about 55% savings rate per month, meaning we can retire fully in 14.5 years. That puts us at about 45 years old, without having to have a job to maintain our current spending!
While my goal is to reach this point to retire without a job, there’s another point in savings that the people in the Financial Independence community call “Fuck you money” (excuse the language). This term is for those moments where your boss says “we require 75 hour weeks over the holidays to meet deadlines” or you’re told you have to write Java again. If I had to choose between being frugal and being forced to work in stressful or boring situations, I’d gladly take frugal.
Ultimately, the reason I am pursuing financial independence is a little bit of the above, but mostly because I’d love to be able to pivot into another career. I enjoy teaching and sharing what I have learned in life with others. I have a passion for software, am good at personal finance, and am willing to talk about both openly. These skills are ones that I think others could benefit from, but teaching is rather time consuming.
I also want this for my wife. She’s discussed wanting to find a volunteer opportunity for her to devote herself to. When we reach a point where our investments can support our lifestyle, this becomes a no-brainer. Even potentially before if I’m willing to sacrifice on my timeline.
For me, this process started with small steps. I started using Mint, set goals such as maxing out IRAs, reading and learning about finances, and then continuously improving on the process. Taking small steps to improve your financial life, even if it is for reasons other than above, can make a huge difference when considering compounding gains. I am always willing to share tips & tricks, so please feel free to reach out at any time!
Here are some great resources:
The Shockingly Simple Math Behind Early Retirement
Here at Mr. Money Mustache, we talk about all sorts of fancy stuff like investment fundamentals, lifestyle changes that…
Mint: Money, Bill Pay, Credit Score & Investing
Manage your money, pay your bills and track your credit score with Mint. Now that's being good with your money. Sign up…
Word of warning about Mint: it requires your credentials to your banking institutions. I regularly update passwords and utilize two-factor authentication where I can to protect myself from fraud. https://www.youneedabudget.com/ is a great alternative.