Stages of Financial Independence

Will Pritchett
November 03, 2023

It occurs to me that too many things in life are posed as “start-journey-finish” cycles where we focus only on the “finish”. Like “birth, life and death”, the juice is in the middle.

Well that got dark…

Much like fitness, we cannot just set a goal and then stop when we get there because we have arrived. We have to learn to love the process and work to stay fit.

Finances are much the same.

A financial fad diet can get you some big wins but they won’t be sustainable. Finding a sustainable method will be more powerful AND will be something you can stick to until FI and beyond.

“Financially dependent on employment” is the normal starting point in our personal finance journey. The goal may be FI or Financial Independence but the journey there cannot be so austere as to not enjoy life along the way. Find ways to enjoy the journey!

I recommend we find ways to celebrate the milestones along the way to FI. Maybe we set a series of goals like paying off a car, paying off a student loan, reducing our family expenses by 500 dollars per month, etc. We should celebrate each of these accomplishments to keep our motivation high for the rest of the journey.

For me, step one was being able to not work overtime on the weeks my son was with us (he has two families).

I was working every third day already for 24 hour shifts on the weeks we had him and missing any more time with him was not something I was willing to do any longer. We celebrated this point in our journey even though we were still far from our goal.

I could have worked overtime all of those weeks and gotten to FI sooner but it would have been a sacrifice that didn’t align with why we were doing this in the first place.

The overtime I worked when he was away was used to save for down payments on rental houses.

The next milestone was funding rentals from private money and only working overtime on the weeks my son wasn’t with us AND the money was only “play money”, to fund travel.

This was a tradeoff that we felt was in line with our values while we plowed ahead toward our financial goal. Going to work to fund a trip to Hawaii was way easier than going to work to pay for an expensive vehicle or a sloppy budget.

Finally, I was able to turn down all overtime offerings and spend my time with family and building a business that didn’t need the overtime checks to grow as much as it needed me to grow.

This meant work from home while the kids were at school on my days off but being home every night other than my regular shift work.

Ultimately we both retired from traditional employment which was great but is not our financial “death”.

We now have new dreams and we still build and celebrate the wins along the way.

We used to celebrate every single real estate closing with a dinner out as a family. Then we got busy and quit doing that. Don’t quit celebrating the wins!

I suggest creating a family tradition of how you celebrate these financial milestones to keep everyone motivated and engaged as you move towards the next objective.

Some more milestones you might consider celebrating:

Completing weekly budget meetings over mint, or whatever software you like, for three months straight.
Saving an emergency fund of $1000 dollars.
Taking lunch to work four days a week for a month.
Cancelling subscriptions that shave $100 dollars off the family budget.
Saving $5000 dollars towards you next down payment
Reducing taxable income through strategies that align with your goals (there are more options that just retirement accounts)
Side hustling/overtime earnings of $5000 dollars towards the next objective
Trading a car with a payment for a cash car

We closed on a house purchase yesterday and then got busy with life.

This weekend we ARE going to go eat Thai food to get back in the habit of celebrating the wins.

Go set a benchmark and tell your partners/family about it and how you are going to celebrate when you get there and then you can have the next goal ready to announce over some Pad Thai…or whatever you enjoy.

Have fun along the journey, it’s worth it!!