Early retirement was probably the stupidest financial decision I've ever made.
Had I not retired, continued to work, and struggled through the challenges I was facing, I would have been a millionaire by now, thanks in part to the Corona Dip.
But — as I must say — it was worth it, because I get to write this article sharing with you what I've learned so that you may stand on my shoulders.
And, life isn't all about money, as you know. That's not one of today's lessons though. If it were, I would have to rename this article.
So without further ado, here are four things retirement taught me about money.
1. Money is a tool
That's all it is. It's very simple, yet we struggle with understanding money at its very core. Ask someone, "Hey, what's money?" and you'll often feel that you've asked them to explain the ultimate reality or who God is. People will give all kinds of different answers.
I developed different definitions of money as I went through life because my relationship with and understanding of money changed. When I was young, I thought it was something very elusive that you would be lucky to come by. When I stared working, I thought it was something made to keep people stuck in the matrix.
It's just a tool. Like a hammer. But to too many, as it once was to me, money is a solution to all problems; Money is god.
Here's a quick gut-check you can use when you find yourself longing for more money: Replace "money" with "hammers" and see if your thought still makes sense. What would you do with a bunch more hammers? Would more hammers by themselves make life any better?
2. Enough Money is an Illusion
"What's your number?" is the most common inquiry in the growing FIRE community. It's not a request for your contact information, but how big your investment portfolio needs to be for you to never have to work another day in your life.
The question presupposes that whatever you're currently doing is simply a means to an end, and that you wouldn't be doing it if you had enough money. I definitely applied this reasoning to my life, often thinking to myself, "As soon as I get enough, so long, suckers! I'm off to something better." Even people who say they love what they do would leave it if they had "enough" money.
The idea that I was a mind-controlled wage slave stuck in a big, bad, ugly machine designed to make the rich richer off of my sweat equity really got solidified in my head. "The only reason to get up is to go to work. The only reason to go to work is to pay rent, expenses, and buy escape mechanisms and painkillers so that I can continue working." The idea of having enough was very motivating because it would allow me to escape the rat race. Only when I tried to escape did I realize that the cage moved with me.
We all have these grand ideas of what we would do if we have unlimited, or just enough money for our scenario. I've been asking this question in my surveys and the answers are amazing, but the words "pie in the sky" come to mind, because the survey contains another question that serves as a reality check, and so far none of the responses have passed aligned.
If you want to find out what you'd do if you had unlimited money today, simply record what you find yourself doing in your free time. That's what you'd do.
3. Quantity of Money has NOTHING to do with Financial Freedom
Wait, what? How can that be?
Try answering the opposite question: "What DOES quantity of money have to do with financial freedom?" You'd answer: "Well, it means you have enough money to ... Oh, wait... lesson 2..." Then you remember lesson 1 and ask yourself, "What does quantity of HAMMERS have to do with financial freedom?"
The reason good financial professionals start by asking, "What does financial freedom/an ideal retirement/wealth mean to YOU?" is because financial freedom/an ideal retirement/wealth are not reachable destinations. They don't exist because they are just ideas that have been planted in our fertile minds. Often, we don't even know what we mean when we say we want financial freedom, an ideal retirement, or wealth, just like we don't really understand what money is. But once you define it, it becomes something tangible that can be reached. Once drawn, the outline can be colored in.
If someone were to define financial freedom as the ability to pay all bills and service all debts on time, that's as valid an outline as someone defining it as having the dividends from their investment portfolio cover all of their necessary expenses. We tend to think that financial freedom is only the latter, but there are no right answers here.
So, here's what you can do today: define what financial freedom means to you, forgetting about what you've heard about it and how others define it. You could write down what an ideal day would look like. Once you do that, start creating it. Revisit your definition every so often and rewrite it if you feel it's necessary. You will see that financial freedom is closer than you think.
4. Work is Not for Money
So many of us are trapped in the illusion that we work primarily to make money. While money is a byproduct of work, it is not the reason for it. As long as your living expenses are covered by the money you have or make, the kind of work you do does not really matter.
The first job I took coming out of retirement was a 100% commission-based job. It was to be my major source of income. My entire motivation for taking the job was to make boatloads of money. Nothing else. I did not care about the product; I didn't believe it was making the world a better place. People said that it was important to believe in what you're selling, but I thought that if I just played my part, did what others did, and said what I was told to say, I would make lots of money. Didn't work!
The thing I realized was that money itself was not motivating. The potential was there. There was no upper limit to how much I could earn. I could work zero and make zero, grind to the bone and make millions, or anything in between. Every week, there was a new monetary or material performance incentive. "Hit this target and you get $1000! These sweet kicks! A shiny new hammer!" I started feeling like a con man: "Am I really helping people or just trying to get stuff for myself?" If the why is strong enough, you don't need a bunch of extrinsic motivators to keep you going. Turns out that money is a shitty why.
I ended up in a bad place because I put money as my ends. We are not motivated by money, because we know that at the end of the day, money, by itself, is meaningless. We are motivated by what we will be able to do with money.
It's Hammer Time
Think deeply about why you want financial freedom. To find the real answer, you must get to know yourself and look within. You won't find it through a Google search, and no one can give it to you.
It wasn't until very recently that I was able to identify my real reason for embarking on my FIRE journey six years ago now. It took that long for me to find the real answer.
I wanted financial freedom so I could separate myself financially from my parents. My parents divorced before my second birthday, and money was a big point of contention. Both parents played the victim: my father because he got stuck paying a big child support bill every month for 18 years; my mother because of the horrible things she went through that caused her to run away with me. I felt that I was the cause of every argument between them.
I was often berated for being a waste of money because of my deadpan attitude towards life and lack of regard for the wonderful worldly things I was constantly given on a silver platter – things that "poor kids around the world would die for," as was the common saying. I didn't want to be seen as a waste of money in my father's eyes, so I naturally I thought that if I had enough of my own money, we could have a relationship without money getting in the way.
There were things that I wanted to tell my father, but my mother told me not to because it might make him angry. And if he got angry, he might stop paying for my college, not give me money in the future if I needed it, or even write me out of his will. It never felt right to me that I should act a certain way or (not) say certain things to keep the cash flowing and reserves available. If I had financial freedom, I could be honest with my father because I wouldn't ever need to call upon him for money. He had enough people coming after him for that!
Well, as you can infer from the lessons in this article, money did not solve these problems. But catching the green dragon allowed me to see what was really in the way, which I was previously blind to because I was so focused on money being the issue.
So, what does financial freedom mean to you?