A Novel Approach is a Bestseller in Amazon.ca’s Love & Romance category

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It only launched last week but thanks to a link published in Rob Carrick’s Globe & Mail web roundup yesterday, A Novel Approach to Financial Independence was the #1 bestseller on Thursday in Amazon.ca’s Love & Romance category. Here’s the link to Amazon’s listing.

Love & Romance? What about personal finance? Well, I’ve always described the original Findependence Day as a financial love story so it’s not as out of the box as it may seem at first blush. Click on the blue link in the title above to find out more about the Romance plot that’s at the heart of the original novel.

The full book features a couple, Jamie and Sheena, who are 28 at the start and follows their ups and downs as a couple over 22 subsequent years. It takes a “life cycle” approach to personal finance and centers around Jamie’s declaration that he will become financially independent (“findependent”) by the time he turns 50.

There are numerous setbacks along the way, including business failure and betrayal, separation, children and more. As CTV Senior Financial Commentator Patricia Lovett-Reid says in the foreword to both the original book and the e-book, money troubles are often the cause of marital disharmony. You can read that foreword, by the way, for free because it’s near the start and Amazon lets you “look inside.”

e-book is a “Coles Notes” synopsis of the original book

The e-book pictured above is sort of a “Cole’s Notes” synopsis of the original book, summarizing the plot but focusing more on the content on financial independence. It’s short (15,000 words) but costs only C$3.37.

Amazon lets you designate purchases as gifts and with Christmas just around the corner, you have to admit it’s pretty cost-effective! Especially if you can change a young person’s life for the better, as we say in the ad below (also shown on the front page of Findependence.TV).

There is also a U.S. edition of the full novel available here, as well as a U.S. edition of the e-book.

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A young investor well on the road to Findependence

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Saxon Funk and wife Hailey.

I always enjoy chatting with readers of my blogs, columns and books. The other day I had an especially enjoyable dialogue with a 28 year old Winnipeg-based real estate investor named Saxon Funk. Saxon had bought the Canadian edition of Findependence Day and after a few emails introduced himself on the phone by noting he was the same age the protagonist in the book — Jamie — was when he embarked on the 22-year voyage to financial independence described in the novel.

After graduating from high school, Saxon tried door-to-door selling and selling insurance. He discovered day trading and foreign exchange trading in his early 20s but despite some success, learned that the activity was just as apt to leave him broke. Ultimately, real estate became his preferred road to financial freedom.

3-month mini-vacation in Asia

What really got my attention was the fact he had read a book featured in this blog earlier this summer: Timothy Ferriss’s The Four-Hour Workweek. Not because of my blog, I might add: Saxon read the book three years ago and actually enjoyed a three-month “mini-retirement” in Asia last year, in company with his wife.

Saxon works from home although he is still a salaried employee with one of the telecommunications giants based in the west. But he has a firm plan for achieving financial independence through various passive streams of income. Part of his search included a perusal of Ferriss’s material and Robert  Kyosaki’s Rich Dad, Poor Dad, as well as this site.

Saxon is attempting to build his passive investment income through vehicles like Warren Buffett’s Berkshire Hathaway and actively managed reasonably priced mutual funds from Mawer Investment Management. But his real play for findependence comes through real estate. He started while being frustrated in a previous job and reading various books about financial freedom. He was attracted to real estate when he discovered he could buy properties at 10% down, and he caught the Winnipeg real estate cycle at just the right time. Some properties in the city have doubled and tripled since he began buying properties.

Real estate is his main path to Findependence

He’s not a member of the Real Estate Investment Network (REIN) or its rivals but Saxon could be the poster boy for any of those educational outfits. He certainly speaks their language, speaking of the 14 “doors” he owned at one point, before selling one of his buildings (a triplex) at a tidy profit. He’s now at eight doors, as he wants the stability of lower levels of debt servicing. Similar to Jamie and Sheena in the novel, he and his wife live in one of the units of the building he still owns, renting out the rest.

He’s not implemented too much of the Ferriss material, other than absorbing the power of outsourcing and technology. So he has a 1 800 number he gives to tenants and when he’s out of the country can manage his properties by outsourcing to property managers closer to home. He’s not yet down to a four-hour workweek (neither am I!) but he does have a vision of living in places like Thailand, where you can get by comfortably on a Canadian income of $1,500 a month.

He doesn’t consider himself findependent yet, but notes that if he were 65 (or 67), the combination of being debt-free, rental income and the usual government sources of retirement income (CPP, OAS), he would be able to enjoy the kind of lifestyle championed by Ferriss et al.

“I could be. We would still have food on table. I don’t worry about getting fired or let go; the main property we live in covers all our bills and puts money in our pocket. If I were 65 and qualified for CPP and OAS,  yes we would be more than free but since we still have another 40 years to go; most of our money goes to giving, investing and trips. So we’re at the point where our money is all play money.”

Despite being a member of the generation that has grown up with the Internet, Saxon views himself as “an old soul” who is not totally sold by the promises of web-based freedom. He does have the beginnings of a website at www.saxonfunk.com but has yet to pursue the blogging that would be part of it.

Another millennial’s dream of Findependence

For another story of a millennial inspired by Findependence Day, read about Sean Cooper’s plan to be findependent, or at least mortgage free, by age 31. You can find it here at the new Financial Independence Hub (which was launched a week ago). And you can read a new post there about how there seems to be a trend developing here.

 

 

 

FinancialIndependenceHub.com and Findependence.TV launched

HubLogoJerryOn November 7th, 2014 my associates and I launched two new web sites, both devoted to the topic of Financial Independence.

The philosophy behind the new site was explained in the previous post about reframing the “Retirement” discussion as the emerging alternative paradigm of “Financial Independence.” That blog featured two prominent U.S.-based financial planners, Michael Kitces and Roger Wohlner (aka The Chicago Financial Planner.)

Click here to find the introductory post for what we’re calling “The Hub.” In addition to www.financialindependencehub.com there is a mirror site, www.findependencehub.com. They are the same but the latter takes fewer syllables to verbalize and fewer keystrokes to enter into your browser. Another reason to adopt the term “Findependence,” right?

There is also a new sister site devoted to audio and video content about financial independence. It’s at www.findependence.tv.

And yes, there will be discussion forums, five of them to correspond to the life cycle approach to investing contained in the two Findependence Day books and now the two new companion Kindle ebooks described earlier this week in this space.

This site will continue to exist

To clarify, the existing site will continue to exist, but chiefly as a vehicle to sell the two existing Findependence Day books, the new e-books and any other spin-off products that may be developed over the years. The new sites attempt to look at the entire topic of Financial Independence from a North American perspective, so will (hopefully) range far beyond the particular books featured on this site.

A prominent feature of the new site will be reviews of other books on Financial Independence, both by me and by guest reviewers I would love to hear from. It will also feature all the other blogs out there on the topic, even those that still bill themselves as personal finance, frugality or retirement blogs. We started with the list of Plutus award-winners that Roger Wohlner featured on his site recently.

We will also have a monthly email newsletter free to anyone who enters their email on the home page of the new site. Better get over there now, and thanks for reading!

Introducing new e-books on Financial Independence

jonchevreau_cover-2On Tuesday, Amazon Kindle Digital Publishing released the first of my two new e-books, entitled A Novel Approach to Financial Independence.

These are not brand new projects but are short (15,000 words) summaries of Findependence Day (the financial novels shown on the right) and priced accordingly. First out is the U.S. e-book. A Canadian edition will be available next Thursday, Nov. 13 (date moved up from Nov. 24) but can be preordered now. Amazon’s “Look Inside” feature lets you read the forward, my new introduction and the first two chapters free.

Companion guide serves as teaching tools to full novel

The purpose of the new e-books is to act as a teaching tool or companion guide to accompany the full novels. Thus, they are aimed primarily at three groups: financial advisers working with individual investors; teachers of personal finance or financial literacy who work with students; and finally parents, who may want to use the full-length book to teach their children or relatives the basic principles of financial literacy or findependence.

The ebooks are priced at US$2.99 or C$3.37 (the minimum amount you can charge at Amazon and still qualify for maximum author royalties). (Note the Kindle version of the full U.S. edition costs $7.09 but sells for less on other e-book platforms, primarily through Trafford.com, Amazon.com and Barnes & Noble.com.)

Financial focus, but includes short plot summaries

The focus of the e-books is less on the story or novel, and more on the underlying financial principles. However, it does include short plot summaries of each chapter. It also summarizes in bullet point form the financial lessons associated with each chapter. (These end-of-chapter recaps already appear in the full U.S. edition and e-book but not in the original Canadian edition.)

The new e-books also include the glossary and bibliography from the full U.S. edition, and a new introduction by myself. The U.S. edition includes a forward written by certified financial planner Sheryl Garrett, and the Canadian edition again features a forward by CTV News senior financial commentator Patricia Lovett-Reid.CdnEBookCover2

While the ebooks are for the Kindle, you don’t need a Kindle to read them:  Amazon provides a free Kindle reader app that lets users of iPhones, iPads and other devices read Kindle ebooks. Amazon customers can also access the Kindle Cloud Reader, which you can find here.

Astute observers may note that the title of the ebook inverts the wording of the full U.S. book. My reasoning was that while the term “Findependence” may slowly be catching on in Canada, where the book was first published in 2008, the term is less familiar in the U.S., so the main title focuses on the more well-known phrase Financial Independence.

The ebook also includes live links to two new web sites on financial independence that are in the process of being launched in a matter of days.

Extended Vacation as Mini-Retirement or Rehearsal for Retirement?

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Ballooning in Cappadocia, Turkey. Photo by Helen Chevreau.

Half way through a three-week vacation in Turkey, I’ve been experimenting with the idea of integrating a little work with the travel. As my daughter has noted after a long summer of independent travel, everyone has SmartPhones these days and it’s not hard to find places with wireless: all hotels and most good restaurants have them, and many other places as well.

Roaming charges from North American telecom suppliers are prohibitive so we do what the student travelers do and leave the devices permanently in Airplane mode. That means enforced SmartPhone vacations from email and social media during times between wireless access but hey, it’s a vacation too, right?  And anyway, who wants to be connected all the time?

Endless Summer

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They’re still swimming in Bodrum. Photo by Jonathan Chevreau.

In blogs earlier this summer (a summer that for me has extended through a lovely September in Toronto and now an even sunnier continued summer in Turkey), I described Tim Ferris’s idea of mini-retirements, described more fully in his best-selling book, The Four-Hour Workweek.

For me, the longest vacation I’ve had until now was two weeks long: my honeymoon in 1989, and two subsequent fortnights (as the British call them) in Europe and Scandinavia. So three weeks is a record but I can see how those of us from colder climates might eventually want to arrange their “Findependence” to include stints of eight or ten weeks in a row nicely timed to avoid January, February and the first half of March. (the depths of winter in Canada and the northern United States).

I’ve referred before to the American folksinger Phil Ochs and his (I believe) last album, entitled Rehearsals for Retirement. I won’t rehash my usual distinction here between traditional Retirement and Financial Independence but suffice it to say that a longer-than-the-normal two-week vacation can be considered either a Mini-Retirement or a Rehearsal for Retirement (or both?).

You can “work” during Mini-Retirements

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When in Turkey …. Turkish baths. Photo by Jonathan Chevreau.

Since my notion of Findependence sees a continued role for work and creativity well into one’s 60s and 70s, a Mini-Retirement or Retirement Rehearsal simply means travel along the lines this Turkey trip has gone but more so.

As you can see by reading these words, I felt moved to write this blog while still abroad, if only because I need to have some words to surround the photos that accompany it. I’ve been posting such photos to my Twitter and Facebook feeds all along but not without the context a longer blog can provide.

As was the case when I was blogging from home this summer, I’m composing the first draft of this on my laptop outside. As I sit on the second-floor balcony of the Su Hotel in Bodrum, Turkey, the sun is hitting my feet but the rest of me is in shade. Below and in front of me I can see a long lap pool that at night is lit up in my favorite shades of blue and green. Even at mid-day you can still hear the odd rooster crowing, though nothing like they do around dawn. Later, during a final edit and with lunch beckoning with the family, I’m sipping a glass of local red wine.

The longer the Mini-Retirement, the more work may play a role

 

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Underground caves of Cappadoccia. Photo J. Chevreau

Thus far, this vacation has resembled the one-week and two-week versions: nice accommodation, meals out, guided tours etc. Not what I’d term guerrilla frugality! In the future, if and when we attempt a ten-week stay somewhere like France or Italy to get away from winter, I can see ratcheting down expenses considerably from these levels. Probably, we would rent a house or villa for several weeks, shop for groceries and wine locally, and prepare our own food in our temporary home, just as we would do at home in Long Branch, Ontario. We would have full Internet access and all the gadgets that accompanied us on this shorter vacation: Kindles, iPhones, Blackberries, iPads and laptop computers.

Even during this Turkey trip – wireless permitting – I’ve surprised myself by staying on top of the news as much as I have and similarly monitoring and posting to various social media. The quantity is no doubt much reduced, perhaps to the relief of all concerned. But this trip has confirmed in my own mind that it is indeed possible to combine business and travel to some extent, even if the pleasure/work ratio is slanted heavily to the Pleasure side. For the curious, we do have a family member who is keeping the home fires burning: that means the cat is getting fed and orders for the Findependence Day book are being fulfilled with no delay. The cloud accounting software I described some weeks ago can be accessed remotely, as can our bank accounts and discount brokerage accounts.

While I’ve only made a stab here of testing the idea, I suspect that the longer the mini-retirement (or extended vacation) and the more you settle in one particular spot, the more “work” would play a role — defining “work” as something that creates invoices or at least moves forward long-term creative projects that might one day bring in revenue.

In short, the rhythms of life continue. In many respects, it’s the best of all worlds and I look forward to trying an extended “Mini Retirement” as early as January of 2016 (plus of course shorter vacations in the meantime).

Catch the Wave: Cloud-based accounting

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Cloud-based accounting means the end of shoebox accounting

The book The E-Myth Revisited makes some amusing points about small business owners. Almost to a man (or woman), they loathe accounting. They may enjoy marketing or creating new products or services, but keeping track of expenses, invoicing and the like? It’s the last thing they really want to do, which leads to the usual habit of procrastinating by shoving paper receipts into the proverbial shoe box, then presenting the whole shooting match to their accountant once a year.

But no accountant I know will accept such an arrangement, or if they do they’d have to charge a prohibitively high rate for the service. In practice — and I base this on running a personal corporation since 1999 — you at least have to put all the receipts and paperwork into folders representing the major expense categories, then summarize it all on a spreadsheet so the accountant can make some sense of it.

At one point, I experimented with shrink-wrapped accounting software, which typically cost a few hundred dollars. But I was never comfortable with it so stuck to the shoebox-and-spreadsheet routine. Until this summer, when courtesy of the very helpful folks at Knightsbridge, I discovered Accounting by Wave.

This software has several good things going for it. First, it’s free. Second, it’s cloud-based, so you can store all your info on “the cloud” and access it from whatever computer you have access to: there’s even an iPhone app. Third, it’s Canadian. And fourth, it’s relatively intuitive and easy to use. What more do you want?

Not surprisingly, the software has 1.5 million happy users, most of them the small businesses, consultants and freelancers the company has targeted. And wouldn’t you know it, right off the topic they promise “shoebox accounting stops now.”

Integrated with your business bank account

The software lets you input your corporate bank account information so right off the bat payments to your account and disbursements from it are automatically recorded. You’ll have to spend some time reconciliation expenses incurred via credit cards, cash disbursements and the like but an hour spent every week or two should suffice for most home-office setups like mine. And it sure beats dreading the annual spreadsheet ritual!

The software is quite proficient at keeping track of customers and invoicing, and it generates various reports on demand that show the current expenses, payments and accounts receivable. And yes, it lets you add HST. Again, there’s an element of garbage in, garbage out here, so the reports will only be meaningful if you’re staying on top of all the transactions and properly categorizing them.

How does this relate to Findependence Day?

Glad you asked! If you’ve followed this blog since May, you’ll know I believe in creating multiple streams of income, whether you’re gainfully employed, semi-retired or even fully retired. Part of that is Internet-based: refer to Robert Allen’s book, Multiple Streams of Internet Income, or any of the three books by Scott Fox. (His site is here, and latest book here).

But the other piece of the equation is running your own business and keeping track of all the moving pieces. As I’ve come to appreciate, a traditional “job” really comes down to serving and satisfying a single client, which in practice means “your boss.” The traditional corporate or government job largely shields the employee from accounting: all you need to worry about is submitting the annual T-4 slip with your annual tax return, claim the usual deductions and hope for a tax refund at the end of it.

The good thing about self-employment is that (hopefully) you don’t have any boss but yourself and instead of one huge mega-client, you have many smaller clients. You may lose one from time to time but the others can keep the ship afloat until another replaces it.  Seen that way, a “job” is the opposite of diversification: you have all your eggs in one basket and if your boss decides to smash that basket, you’ve got trouble.

This cloud-based software is a real boon to keeping on top of your business. Hopefully, all your earned income from multiple clients or products or services constitute a major part of your revenue stream. Of course, you should also have investment income, emergency savings and pension income (depending on your age), so that your “Findependence” isn’t riding on any one of these.

 

 

 

 

 

 

 

 

5 myths of Findependence

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The end of another tough “Findependent” day in Long Branch

Now that a few months have passed since my “Findependence Day” arrived in May, I’ve gotten more clarity about some misconceptions some may have about this concept. I may even have harboured some of these myself at one point in my full-time career. Here are five myths I’ve become aware of: this is not necessarily a definitive list and may be revisited in the future.

Myth 1 After you’re findependent, you’ll play golf all day, or bridge, or read, or travel.

I doubt this will happen for many unless you really burned out in your career. Depending on the degree of your findependence (see my recent MoneySense blog on this) and how much work you wish to do, you’ll soon settle into a routine. Most of your tasks may be self imposed, but impose them you will! Between 2004 and 2011 or so, while still working full time at the Financial Post, I devoted many nights and weekends playing to online bridge. Oddly, now that I have more time, I no longer play online bridge,  although I do make a point of religiously reading Paul Thurston’s bridge column every day on the “Diversions” page of the National Post. Even with no time lost in a downtown office and getting to and from it, I still don’t have time for online bridge. I may resume once I’m “fully retired” later in my 60s but I can’t seem to find the time for it in semi-retirement!

Myth 2: There’s no distinction between weeks and weekends.

For me, at least, the week and weekend routine still operates at most levels. If you’re familiar with my concept of the 4-hour day (normally practiced from Monday to Friday), then on weekends I do not feel obligated to put in either a four-hour or even just one two-hour stint on money-making or creative activities. Of course, you could redirect at least two hours per weekend from money making to creative fun long term projects you’ve always wanted to accomplish. Because at the end of the weekend, once the workweek resumes for everyone else, longer term projects tend to get crowded out by more imminent matters and deadlines. That said, it’s also true that – at least if you work from home – you tend to attend to some errands like shopping in the workweek lunch hour, if only as a break and a way to get out of the house. So instead of a large weekend grocery shop, I tend to run two or three times a week on specific shopping missions, but add in a few items I know we’ll need soon. The grocery bills tend to be lower on any given shop but of course you’ll have plenty more of them.

Myth 3: Findependence is an all-or-nothing proposition involving a certain “Big Number.”

Ah, big numbers. Lee Eisenberg wrote a bestseller on that called The Number. If your initial Number was $X million or $Y100 thousand, you may find you continue to push even once it’s achieved. It may become 2X or 3Y. The moment you can declare findependence may be a moving target, depending on financial markets, employers, health and many other considerations. You need to be flexible.

Myth 4:  The government won’t be there for me (or employer pensions).

I think whether in Canada or the US that the boomer generation can count on the promised social programs and probably the same will hold for succeeding generations. Benefits may not be as generous, may not be inflation hedged, may become means-tested and so on. And yes, these days, it’s hard to count on any one employer pension plan, be it Defined Benefit or newer hybrids that expose workers to some market risk. The whole point of findependence is to establish multiple income streams, which may include part-time earned income or consulting work. That’s a major point Wes Moss makes in his excellent book: You Can Retire Sooner Than You Think.

Government pensions is one basket and an employer pension is a second one but you know what they say about putting all your eggs into any one of them. If I were counting 100% on Social Security or OAS/CPP in Canada then I’d be apprehensive about this. And Moss finds the unhappiest retirees are those who can count on only a single source of income.

But as a single potential flow of income that might account for 20 to 60% of the total, the more you have alternatives, the better. RRSPs/IRAs and other savings are one other vehicle, as are taxable accounts and TFSAs/Roth IRAs. But there are also book or music royalties, real estate investment properties, part-time work and finally the subject we wrote about here last week: Internet marketing and entrepreneurship. The Internet has so much potential for creating multiple streams of findependence income that I almost envy the young people now who would far rather become laptop millionaires than salaried employees.

Myth 5: The act of declaring Findependence is irrevocable.

If you’ve left a job or sold a business, you may think the act of declaring your Findependence is irrevocable. It’s not. The truth is you can rejoin the workforce if you wish, though most of the “findependent” people I know who got there before me show not the slightest inclination for returning to another stint on the 9-to-5 treadmill. Lately, I’ve been listening to a Valdy song, Coming Home, which contains the lyric, “I’m going back to places that I couldn’t wait to leave.” When the odd notion comes into my head that it might be fun being full time again in magazines or newspapers, that lyric can’t help but run through my mental iPod.

So those are 5 myths. I’ll revisit this list periodically and probably add to them. Reader input always welcome. Email me at jonathan@findependenceday

 

Reimagining Retirement

reimagine-your-retirementThe book pictured I picked up at the recent Write Canada 2014 writer’s conference in Guelph, Ont., the third time in five years I attended that event.

Joyce Li is a project manager and motivational speaker, originally from Hong Kong, now living with her family in Brampton, Ont.  Reimagine Your Retirement is published by Word Alive Press, and is what you might expect from a publisher focused on spiritual writing. Li’s perspective on Retirement is not at all the traditional  “full stop retirement” we think of when we see the ads from the banks and fund companies.

Instead, she views Retirement as a sort of spiritual/vocational halfway house between one’s working years and eternity.  This is not dissimilar to my own view of Findependence or Semi Retirement. In fact, she credits Rick Warren’s The Purpose Driven Life for inspiring her almost a decade ago: she gave six family members copies of Warren’s book, with personalized inscriptions.

Are you haunted by “nagging dreams”?

Li spends time a good chunk of time talking about ”nagging dreams “ that have yet to come true. And who among us does not harbour dreams we’ve not yet been able to manifest in this harsh workaday world and its seeming financial constraints? Li doesn’t make light of the financial side of retirement but seeks a way to reconcile it. And she’s not shy about confessing her own youthful dreams of becoming either a movie star or a pop star.

Spiced liberally with biblical quotes, Li is all about planning: plan the work, work the plan.

In the opening chapters, she reminds us the concept of retirement was non existent in biblical times and throughout most of history.  And whether retirement is  voluntary, involuntary, or delayed, Li doesn’t shy away from the financial side of it. One reality is that “Retirement requires financial support for an unknown time.”

And did you know the bible  has at least 250 verses that discuss money? Interestingly, she says the Bible has “no direct reference to retirement or retirement planning,”  except for one passage in  Numbers 8:23-26.  (“at the age of 50, they must retire from their regular service and work no longer.”)

While she  acknowledges that some plan never to retire, some will partially do so, and some will fully retire to disengage from the workworld altogether, Li’s personal orientation seems strongly oriented to reinvention or reimagination, as the book’s title suggests. This may entail going back to school, or  embarking on a brand new vocation.

The book will find few readers among atheists and agnostics, but will be thought provoking for those who see a spiritual dimension to life, no matter what particular religious affiliation.

A book for writing in

I wouldn’t suggest obtaining a library or ebook version of this book, as Li provides plenty of blanks she encourages one to fill in, with multiple exercises to put self discovery and concrete planning into practice.  She’s all about discovering one’s skills, life gifts, spiritual gifts and passions, then encapsuating what you’re discovered into a personal mission statement that will chart your 20 to 30 years of a reimagined retirement.  She’s a strong believer in the power of visualization, which of course is exactly what I suggest in my own book: drawing a line in the sand and declaring it your Findependence Day, even if it turns out ultimately to be a moving target.

 

 

 

 

Degrees of Findependence

Long Branch section of Lake Ontario. Photo by J. Chevreau

As my parallel Financial Independence blog at MoneySense.ca shows here, there are degrees of financial independence. For one-stop-shopping purposes for users of this site, I’ve included the blog below:

Degrees of Financial Independence

In researching the web for content clarifying the differences between Retirement and Financial Independence, I came across this May 8, 2014 post by J.D. Roth, of the Get Rich Slowly site.

In his “coming to terms” post, Roth finds the traditional word Retirement carries too much baggage, so he prefers the term I also like: Financial Independence. That’s a fairly common stance among the semi-retired and early retirees who write about this topic: the only difference is few have (as yet) adopted my contraction of Financial Independence: Findependence. The reason I invented that term is that I felt if we are to have a catchy popular alternative to the word Retirement, it should be shorter than the two-word seven-syllable mouthful called Financial Independence. Retirement is one word and three syllables; Findependence is also one word and has only four syllables.

A continuum of financial freedom

But whatever the term you prefer, it’s important to realize there are degrees of Findependence/Retirement, or a continuum. This is a point Roth makes in the article flagged above.  He talks about four types of retirement: the traditional full-stop version that begins (usually) at age 65, Early Retirement (launched usually in one’s mid 50s or early 60s, although there is a genre of Extreme Early Retirement that supposedly begins in one’s 20s or 30s). And finally there’s the concept of multiple Mini-Retirements championed by Tim Ferriss in The 4-Hour Workweek, and which I blogged on earlier this summer.

If you reframe the Retirement discussion as being about Findependence, it’s also possible to describe a similar continuum, just as it’s possible to describe different degrees of financial freedom. Roth notes we all begin life completely dependent on our parents, including financially. At some point, children leave the nest but will depend on an employer and/or financial institutions. Once free of consumer debt, a greater degree of financial freedom is achieved, and this freedom expands once you own a home free and clear: which is why I say the foundation of Financial Independence is a paid-for home. At that point, you are no longer paying a mortgage or paying rent to a landlord, although of course you will still have to pay municipal property taxes and if you’re a condo owner you may be on the hook for ongoing maintenance fees. Beyond that, you’ll still need external sources of income for heating, hydro, roof repairs and all the other expenses that home owners incur. And finally, true Findependence arrives (I call this Findependence Day), when enough money is coming in from multiple passive sources of income (Pensions, investments, etc.) that you no longer need to rely soley on income derived from the single source called an “employer.”

Cadillac vs Chevy retirements

But even then, there’s low-level Findependence and high-level Findependence. You may have saved enough not to have to go to work five days a week but may not be so flush that you can eat in fancy restaurants and travel the world 365 days a year. Most people on the Findependence continuum will be somewhere between the latter luxury Findependence and a barebones one that requires eating in most days and restricting exotic travel to a few weeks a year. If the latter, it’s perfectly logical to continue to work on projects or part-time to fund a few more luxuries and the occasional mega-trip.

 

 

Second Acts … and beyond

SecondActsAs this blog says ad nauseum, Findependence is not synonymous with full-stop retirement.  Au contraire, financial independence merely sets the stage for entering another chapter of one’s life story.

The illustration is from the cover of Stephen Pollan’s 2003 book, Second Acts, which I got from the local library. (Frugality guerrillas may like my tip here: download a free sample from Kindle, read the intro, then place a hold on the web site of your local library. This way you get a bit of instant gratification, but you also save money.)

Sidebars of famous Second Acts

One of the nice features of this book is dozens of sidebars where the authors (Mark Levine is also credited) highlights such famous second acts as Ray Kroc, Jimmy Carter, Paul Gauguin, Ronald Reagan, J.K. Rowling and many more.

Pollan himself has had a major second act as a life coach, following a stressful corporate career which ended with the good news that he had tuberculosis. Yes, good news, because the alternative diagnosis was lung cancer.

A focus of the book is written exercises designed to help readers uncover the life of their dreams, putting that dream into words, developing a “second act mindset” and identifying the blockages (or “closed doors”) that prevented actualizing dreams during the long “first act” so many have settled for.

Chief among the doors that have to be pushed open are age and money. Many convince  themselves they are “too old” to embark on a second act, or that they require staggering sums of money to pull it off. Another concern is often “duration.” If the prelude to a second act is going back to school or otherwise paying your dues in a profession like acting, then the number of years it will take to make the transition can weigh on those who are already approaching their golden years.

In some cases, we are own worst enemies: for some, fear of success prevents people from pursuing their dreams, for others it’s the opposite: fear of failure. Sometimes, we convince ourselves that we can’t proceed without the consent of close family members.  Pollan and Levine also devote a chapter to physical health and appearance, urging readers to do whatever it takes to realize their dreams: if that means losing 50 pounds, then get out there and diet and exercise; if it takes cosmetic surgery to enter a field that puts a premium on youth and beauty, then do it.

 

 

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