Many people take no care of their money until they come nearly to the end of it, and others do just the same with their time.

— Johann von Goethe

Let’s take stock. I have encouraged you to envision life after reaching your financial goals. I have suggested both to those who want to get rich and to those itching to retire that they may want to examine their motivations, and reconsider their goals.

So what should your answer have been? What should your vision of life after meeting your goals have looked like? It’s a reasonable question, but I suspect my answer will frustrate many of you.



Living the Dream

The simple answer is, your vision for life after reaching financial independence should look a whole lot like your life looks right now. Oh, you may want to change a few relatively minor things — travel a bit more, perhaps, or work fewer hours. But in the end, your goal should be to continue to enjoy the life you already have, with the added comfort and security of financial independence.

If this is you, then congratulations! You’re living an enviable life already. Go ahead and pursue the traditional goal of building up enough passive income to cover your expenses.

If this isn’t you, though, then I hate to break it to you, but there’s a good chance your finances are not the real problem. What’s more, finding out what is the real problem may well be the key to fixing your finances. That’s right — if you think that building wealth will make your life all better, you’ve got it all backwards.

Trust me. I have a lot of personal experience to back this up.

Fixing Your Life Will Fix Your Finances, Not the Other Way Around

I have a confession to make. When I received my law degree, I had racked up well over $100,000 in student loans. I wasn’t overly concerned about it at the time. I had graduated in the top 10% of my class at one of the most prestigious law schools in the country. I figured I’d get a high paying job at a big firm, and would pay the debt off in no time.

Well I landed that coveted job at a top-tier law firm, but a funny thing happened — two years went by, and despite earning a rather embarrassingly large salary, I didn’t put the slightest dent in my student loan debt. What I did do was rack up even more debt, ruin a lot of relationships, and fall into a deep depression.

I can hardly remember those years, to be honest. 80 hours at the office was a light week. 100 was more typical. A common joke around the office was, “If you don’t come in Saturday, don’t bother coming in Sunday.” The partners had me on call 24 hours a day, 7 days a week, and exercised the privilege frequently. On one memorable occasion, I got called into the office at 11 pm on the night I proposed to my girlfriend (it was a Saturday). It came full circle a few months later when I got called in the night we broke up. (I don’t blame her — I was so stressed and exhausted all the time, I wasn’t much fun to be around.)

Hidden Costs

When you have so little time and energy left after work, you tend to have a lot of expenses you may not have otherwise. I paid plumbers, handymen, and car mechanics to fix things I could easily have taken care of myself if I’d had the time or energy. I paid for taxi rides when I worked past the last train home. Dry cleaning. Yard work. House cleaning.

What’s more, I made the classic error of turning to consumption to try to fill the emptiness in my life. Flashy cars, clothes, and dinners. Self medication with expensive wine and cocktails. And of course I had to make the most of my very brief time off with fancy vacations, preferably overseas so the partners would be less tempted to call and interrupt (not that they didn’t anyway.)

The Tipping Point

One night I was out for drinks with a friend, describing my existence in a gallows-humor sort of fashion, and she said something I’ll never forget: “That’s no way to live a life.” She was right, and I knew it. What the hell did I have to show for all my efforts over the past two years? I may have had Armani suits and an Italian leather sofa, but I was broke, and my life was in a shambles.

I walked into the partner’s office and quit the next morning, and I threw my Blackberry off the Golden Gate Bridge. (Yes, I really did.)

I had no savings to speak of, massive debts, and no plan. I set out to piece my life back together.

Stumbling Onto Enlightenment

I put my student loans in deferral, and spent a few months earning a little money here and there with freelance work and Internet projects. I sold everything I didn’t need. I lived a spartan existence, living on cheap staples purchased at the local Mexican grocery, supplemented by fish and crabs I caught myself. I gradually repaired my relationships with my friends and family. I sold my car, bought a 20-year old junker from a scrapyard for $800, and spent many enjoyable afternoons fixing it up.

I was surprised to find I didn’t feel deprived in the slightest. In fact, I had never been happier. It may have taken me until a bit later in life than I might have hoped for, but I finally realized a few things that wiser souls like Mr. Money Mustache discovered far earlier.

I couldn’t put my loans on deferral forever, however, so after a few months of this, I took an engineering job at a 50% pay cut from what I was making at the law firm. It was enjoyable work, and low stress. I held onto my new frugal habits, though, for the most part. I’d had a taste of what a frugal, but financially free life could be like, and I was hooked. I’ve slipped a little here and there — I eat out more than I should, for example, mostly at social gatherings. But by and large the changes have stuck.

That was four years ago. In that time, I’ve gone from a six figure negative net worth to six figures in positive net worth. By my calculations, I am less than four years away from complete financially independence, including a mortgage-free house. In short, taking that 50% pay cut was the best financial decision I have ever made.

Best of all, in about a week, I’m going to be marrying an incredible woman. Turns out I’m a lot more pleasant to be around when I’m happy.

Fix Your Life First

If you listen to people who have figured out how to become financially free at a young age, they’ll all tell you that the most important thing is understanding what’s truly important in life. Your family. Your relationships. Your health. Your passions.

When you get these right, it’s so much easier to free yourself from the urge to consume. You find you just don’t need much in the way of material goods to be happy. You can look around and see all sorts of things you could easily do without, and still be perfectly satisfied. And when you do that, everything else starts to fall into place.

When you’ve reached that state, you’re finally ready to pick the number that’s right for you.