I used to just be interested. Now I’m obsessed with financial independence. As Queercents readers probably know, financial independence does not equate with wealth. At least not wealth the way it is normally imagined. It simply means the personal economic state of equilibrium whereby your income from passive sources meets or exceeds your expenses. Or more simply put, financial independence = freedom.

This state of blissful equilibrium is unique to each individual or family but the broad strategies for attaining it are universal:

1.    Earn more money than you need right now and invest wisely
2.    Continually track and reduce expenses where possible
3.    Cultivate patience and persistence unless that lottery thing works out for you

I’m so obsessed in fact that I have three different budgets, which I regularly refine, that correspond with three lifestyles. The first, our current lifestyle, is the most desirable. Amassing sufficient passive income to live as we are now without the requirement of employment is my ultimate goal. The second reflects a scaled down version of our current standard of living that would be acceptable but would mean downsizing (from 900 square feet) to a studio or one bedroom and selling quite a few of our already modest possessions. Finally, I have a budget estimate for life in our small RV. We’ve done this before so I have some basis for this estimate. This is less than ideal as it would mean a fairly radical lifestyle adjustment. It is also the most attainable and we may in fact actually be there now. I hedge with “may” because I’m still working on strategy 2 above and building confidence in the accuracy of my budgeting.

The mere fact that we could be financially independent if we chose to live in our RV is more liberating that I can possibly describe and is a fact that fuels my ongoing obsession. It also, of course, means that we have some passive income and while we strive to actively earn enough to meet our current expenses and then some (see strategy 1 above), we do not need to be employed full time to do so and therefore have achieved a certain degree of freedom already.

This obsession does not mean I don’t want to contribute in a meaningful way to the betterment of my community nor does it mean I want to only do volunteer work. Rather I envision that upon achieving financial independence with our basic needs met, any additional income we choose to earn funds additional travel, an expanded charitable contribution, a digital camcorder for my wife, another dinner or two out per month, etc…I don’t even know, exactly, what I will do with my new found freedom. I do know that the current state of our economy has taught me that relying on employment to meet our most basic needs is RISKY and somewhat uncivilized. You could rightly argue that relying on passive income has its own risks and I would agree. I just believe that those risks are more within my sphere of influence than reliance upon employment.

Further Reading on the Topic:

Trent at the Simple Dollar has his own 3 versions of Financial Independence.

J.D. at Get Rich Slowly talks about financial independence as the final stage of money management in his five part series. He is also a fan of Your Money or Your Life, a seminal book in the financial independence movement.

Jacob at Early Retirement Extreme asked a better question in a post a while back titled How little do you need to retire?

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