Degrees of Findependence

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

As my parallel Financial Independence blog at 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.



One late Mega Retirement or multiple Mini-Retirements?


Photo Credit: Norman Evans,

Here’s a new concept I’d not considered until I started reading the book pictured in the adjacent photo. Last time, we talked about semi-retirement and sabbaticcals but you might want to add the term “mini-retirement” to all these concepts that (in my view) touch on financial independence.

In his book, The 4-hour Workweek, Timothy Ferriss floats the idea of periodic mini-retirements spread over a lifetime. So instead of the traditional route so many of us take – which he dubs “slave/save/retire” — Ferriss likes to work in two-month stints, then “retire” for blocks of a month or so (sometimes longer).

Death of Vacations?

Now you might argue that the traditional two-week annual vacation squeezed between 48 to 50 weeks of working is a mini retirement, or more accurately, a “Micro retirement.” But of course the very fact of you having a return ticket means a micro retirement is no retirement at all.

Even as he declares the birth of Mini-Retirements, Ferriss announces the “death of vacations.” He discovered mini-vacations after being “miserable and overworked” early in 2004. He originally planned to relax for a month in Central America but, seeing as he had only purchased a one-way ticket, extended his stay for three months and ultimately 15 months. Thus came the insight that semi-retiring baby boomers may well want to embrace: “Why not take the usual 20-30-year retirement, and redistribute it throughout life instead of saving it all for the end?”

An end, I might add, that might not be as hale and hearty as mini-retirements taken earlier. As I say in my book, the goal is to enjoy Findependence “while you’re still young enough to enjoy it.”

Alternating waves of activity and leisure

ferrissThe flipside of the mini-retirement strategy is that it also means those practicing it – many of them the oncoming wave of retiring baby boomers – will actually continue to work: as I said last time, probably well into one’s 70s, health permitting.

The difference is that this will be accomplished in alternating waves of activity and leisure. This actually also corresponds to my confession a week ago that I had a few early false alarms on my own Findependence Day. Now that I’m refining the concept, I realize that you can have multiple Findependence Days, each associated with separate and finite “Mini-Retirements.” Now that the World Cup has begun, I’m hoping to have one this summer.

Embracing the Mobile Lifestyle

A big ingredient in Ferriss’s approach is the mobile lifestyle, which is implied by the book’s subtitle: “Escape 9-5, Live Anywhere and Join the New Rich.” It’s harder for salaried 9-to-5ers to embrace this lifestyle, since it’s more suited to self-employment and a web-based mobile device culture. But even for what Ferriss terms “cubicle dwellers” there are ways to pull it off if you can negotiate it with your boss.

Next time, we’ll look at the idea of the four-hour work DAY for employees: a precursor to the four-hour work WEEK.

Editor At Large!

backyardofficeWell, here I am two weeks after becoming the Editor-at-Large for MoneySense magazine. You’ll see this title used often in the media world: typically, as in the case of Financial Post Editor-at-Large Diane Francis, this is sort of a half-way house between full-time employment and a freelance career. In Diane’s case, she still pens a weekly column running in the weekend paper.

In my case, the plan currently is that I will continue to write the Financial Independence column in the print version of the magazine, plus the Financial Independence blog at, which may (or may not) be a mirror blog of the blogs you see here at Frequency yet to be determined. As the Globe & Mail reported on May 22, I have left the editor-in-chief job at MoneySense “but will stay with the magazine as an editor-at-large, focusing more on writing and speaking.”

One young family member I briefed on the difference between the titles was under the impression “At Large” meant some kind of criminal. Not at all! Mostly, however, “at large” means working from home and skipping the two-hour commute I used to have. The photos (above and below) show external and internal views of my new home office: this is much closer to the “Findependent” lifestyle I’d envisaged when I wrote the original edition of Findependence Day in 2008, and to which this website is dedicated.

For those curious about my work methods, I often write the first draft of something outside, then edit and do web formatting inside. For those who heard Preet Banerjee’s podcast with me about the second edition of the book, this is the view of the waterfall he was referring to: I know more than a few who heard that podcast were curious about it. You can find that podcast here or under the Reviews tab elsewhere on this site.

From wealth accumulation to decumulation

jonhomeofficeI may have telegraphed this subtle change in title in the June issue of the magazine, where in the Financial Independence column I speculate on my eventual plan to start drawing down income from various sources. During his excellent talk celebrating MoneySense’s 15th anniversary in mid May, David Chilton suggested that for baby boomers on the cusp of retirement, the next big theme for older writers like myself will be about drawing down income. This theme is well articulated in Daryl Diamond’s book, Your Retirement Income Blueprint. I’ve provided an endorsement for the new edition of that book going to press, which I was happy to do because I intend to follow much of the blueprint myself as time goes by.

Of course, as I also wrote in the retirement section of the “Best Tips Ever” package, I also believe that the longer you delay collecting pensions (like CPP), the better. I’ve also come to the realization that while I may want to have more flexibility on how I spend my time, and spend less time in transit and meetings, it’s likely I’ll continue to write, edit, speak and consult for the lion’s share of my 60s, and the more revenue coming from those sources, the less traditional retirement income sources need to be tapped.

In any case, I have a 5-year plan that includes the writing of several more books and a few twists and turns in my career that I’ll reveal in this space at the appropriate time. In the meantime, I look forward to being “at large” on various MoneySense assignments and eventually for other media outlets and possibly corporate clients.

Findependence — while you’re still young enough to enjoy it

I’d like to think this will be the best of all worlds, which is what the concept of Findependence is really all about. Remember that the subtitle of the US edition is “How to achieve financial independence …while you’re still young enough to enjoy it.” At 61, I’m no spring chicken but I believe most members of our generation will live to 90 or more, and probably work — at least part-time in “semi-retirement” — until well past 70. See for example the book, The New Retirementality. (Nice title, wish I’d thought of it first!)

When I updated my resume, I was shocked to realize I’ve now been a professional journalist and author for 35 years. Since I’ve always practiced the principles espoused in my columns and the book, I’d hope that young people can be assured that this stuff really works if you stick to the program!

You can also expect me to be updating this blog a little more often than has been the case the last two years. See you in June!

Yes, Millennials, you really can get rich … but slowly!

Today’s blog headline (minus the suffix I added) is also the subtitle of a free new investing booklet titled If You Can by William J. Bernstein. This is a terrific and short (16 pages) document that I wholeheartedly recommend be read and absorbed by today’s millennial generation. For that matter, it should be read by just about any investor at any age.

But a warning: if you’re in the financial services industry, you’re not going to like the content. The author is a neurosurgeon who learned the hard way how to invest his own money, and has written a few books along the way. If you’re not in the financial services industry, you may be merely amused by his depiction of most full-service stock brokerages and mutual fund salespeople as the equivalent of “hardened criminals” or “self-deluded monsters.”

At the outset, Bernstein promises to lay out an investment strategy that any 7 year-old could understand and will take just 15 minutes of work per year. Yet he promises it will beat 90% of finance professionals in the long run, but still make you a millionaire over time. The formula will be no surprise to MoneySense readers familiar with the Couch Potato approach to investing in index funds or ETFs. Simply, Bernstein advocates saving 15% of one’s salary starting no later than age 25 into tax-sheltered savings plans (IRA or 401(k) in the U.S., RRSPs or Registered Pension Plans in Canada), and divvying up the money into just three mutual funds: a U.S. total stock market index fund, an international stock market index fund and a U.S. total bond market index fund.

Bernstein a big fan of Vanguard and John Bogle
In Bernstein’s view, the index funds should be supplied by the only financial services company he seems to trust: the Vanguard Group (which sells both index mutual funds and ETFs).

Bernstein is addressing young Americans just embarking on their working careers but the basic idea would apply to Canadian millennials too. Judging by recent Portfolio Makeovers we’ve run showing ETF-based Couch Potato portfolios, the equivalent mix would be 20% each of Canadian, U.S. and international equity index funds or ETFs, and 40% of a bond ETF. And as I’ve written before, don’t even wait till age 25: if you can get your parents to match your savings starting at age 18, the TFSA is the place to put in place these bedrock principals of investing.

And the 15 minutes of work? That would be an annual rebalancing exercise to get the proportions of the three or four funds back to their starting levels.

Millennials can’t count on employer pension plans
Despite this, Bernstein warns younger people that they’ll have a hard go of it because the traditional defined benefit employer pensions of previous generations probably won’t be around much longer. This is pretty much what I wrote in the Editor’s Note for the April issue of MoneySense: that we’re all forced to be our own pension managers these days.

Bernstein says the operative word in his booklet’s title is “If,” because following his simple recipe for wealth (I’d call it financial independence of course) involves a very big “if.” He lays out five hurdles. Number one is excessive spending, second is understanding the basic principles of finance and investing, third is learning and applying market history, fourth is overcoming yourself: the biggest enemy being your face in the mirror; and hurdle five is the conflicted financial industry that is supposedly there to help you with your financial goals. He goes so far as to declare, “The financial services industry wants to make you poor and stupid.” Fighting words, indeed! I might not go that far but it’s certainly a way of looking at the world.

Bernstein’s homework assignments
Bernstein assigns some “homework” to his young readers. They have to read his document twice and read a few books, starting with Thomas Stanley and William Danko’s The Millionaire Next Door and John Bogle’s Common Sense on Mutual Funds. He’s too shrewd to plug his own books but I’ll name one on his behalf that I’ve reviewed positively in the past: The Four Pillars of Investing.

The fact that Bernstein has gone out of his way to give away the booklet should tell you a lot. You can find the link for a PDF here. If you act quickly (today, May 5) you may also be able to get the Kindle version free rather than the 99 cents normally would charge.

To parents of millennials, I’d urge you to download and print this document and hand it over to your kids, perhaps after highlighting the passages you feel to be most relevant. You could give them the link but you know how distracted they tend to be with all the social media noise that abounds these days. Sure, they may say they want to get rich some day but to paraphrase the old saying, “We all want to go to heaven, but no one wants to die first to get there.” For millennials, saving 15% of salary is the financial equivalent of dying, which is why Bernstein titles his document “IF you can.”

Part 2 of Money on Trees Q&A on Financial Independence

Part 2 of the question-and-answer session with Money on Trees has been posted, here.

Part 1 went up last week, here.

In both cases, the focus is heavily on young people getting started in the working world and how they can establish early the habits that will lead to ultimate “findependence.”

Financial Independence Q&A with Money on Trees

Here’s a Q&A about Financial Independence conducted with Money on Trees. The first part of the interview was posted Thursday morning here, with the second part scheduled for next Tuesday.

Note that I’ll be giving a similar talk about Findependence, real estate and personal finance tonight in Brampton (Pearson Convention Center) for the Real Estate Investment Network (REIN). REIN members attending will receive an e-book version of the MoneySense Beginner’s Guide to Personal Finance, plus the just-published April issue of the magazine, and possibly a copy of Findependence Day.

The new American dream: Living debt-free and attaining findependence

bookwithelecsignConventionally, the American dream refers to a well-paid job, a family of two or three children and a new home along with a sturdy retirement nest egg. However, the impact of the economic meltdown as well as over trillion dollar student loan debt has left many to reconsider that dream. They are now introspecting a lot about the reasons for their own financial plight. Moreover, they are looking for ways to resolve the issues that plague their financial independence or “findependence.”

A new survey by and GfK Custom Research found 25% of respondents defined their version of the American dream as being able to lead a debt-free life. Such a response comes second only to the definition of becoming financially stable by the time one reaches the age of 65.

This answer came mostly from the group who belong to the retirement age of 65 or above. In addition, 18% of the survey participants have responded that they dream to buy a house of their own, while 7% want to opt for higher studies and pay off their education loans.

Despite the continuous grim economic outlook, people are positive regarding their ability to fulfill their customized American dream. Another survey by has revealed that 54% have a belief they are about to fulfill their dream, while another 24% declared they have already attained it. This summed up to a total of 78% who were affirmative about their retirement prospects.

The advantages of being findependent

Post the the Great Recession of 2008, Americans have chosen a path that is not wrought with underwater-mortgages, overwhelming credit card balances, tedious car loans and multiple lines of student loans.

Instead, their new road leads them to a life that is debt-free – where they’re no longer burdened with an exhausting budget, a dreadful mailbox and life that’s controlled by the debt collectors and spiralling interest rates.

There are numerous benefits to living debt-free that would entice anyone living on the edge of bankruptcy to start following a debt management  strategy to get rid of his or her financial woes. Some are as follows:

Reduced interest charges – has said that, on an average, rate of interest on credit cards is 14.95%. The average credit card debt for the consumer carrying a balance is almost $5,000. So, a lot of interest is paid by people that is also weighing down their monthly budgets. However, these are just the averages. For people with bad credit histories, the rate of interest could be several notches higher. Hence, being debt-free allows you to steer clear of wasting your hard-earned money on interests that would leave little tangible benefit for you to use at a later stage.

Increased retirement fund – According to a combined statistical data compiled by the Federal Reserve, the U.S Census Bureau and the Internal Revenue Service (IRS) of 2012, 25% of American households do not have any savings whatsoever. What’s more surprising is the average retirement fund is only $35,000. Indeed, avoiding sky-high interest debts could leave these people with more disposable income. It isn’t difficult to understand there are numerous ways to dodge long-term debt.

More, they could even find out the ways to direct their income as well as increase their savings at the end of it all. The bottom line is the absence of monthly bills with exorbitant interest lets you save all the more aggressively for retirement, home purchase, college and even build up an emergency fund.

Finally, that one benefit sought by everyone is complete solace and peace of mind. Hence, being debt free and attaining financial independence would translate into a life with less worries. These are a few of the advantages of findependence that you cannot support with a survey report or reflect through statistics.

 This blog was written by Zindaida Grace, a financial writer and researcher associated with the Oak View Law Group.  



Findependence Day for Teens

I’ve not previously given this site over to guest bloggers before but I really liked the concept of Findependence Day for Teens, so I’m happy to run this piece by Dave Landry Jr., a debt relief counsellor who recently has begun to blog. Over to you, Dave!


Findpendence Day for Teens

By Dave Landry Jr.

It’s doubtful many teenagers think about financial independence. After all, middle age, not to mention old age, is as far away as it can be and the idea of saving for the future when you have so much of it in front of you doesn’t seem like a priority. Of course, this doesn’t mean that many teenagers don’t plan their financial futures, but it does mean that all of them should. The reasoning is the same for a teenager as it is for an adult: Namely, the sooner you begin planning for your findependence day, the sooner you can achieve it. And believe it or not there are many things that most teenagers can start doing right away to ensure that their financial independence comes sooner rather than later.

1.) Stay out of debt. Since it’s doubtful you’ll have the income to put down a payment on a house, what we’re talking about here is consumer debt; most specifically, credit cards. If you do take out credit cards, pay off your minimum balances each month and plan ahead for spending in large amounts. Should one fall into debt’s way, there are services available that can assist in managing the situation and ease the transition of filing for bankruptcy or consolidating.

Of course, even if you are forced to make a large purchase on a credit card that you cannot pay back immediately or maybe you even wish to bump your credit score up by maintaining a balance for a short period then you can still stay out of debt by planning ahead. Just make sure you give yourself the shortest period of time to pay it off. You may realize what an interest rate is, but make sure you understand the implications of one and how it alters the repayment period of your temporary loan.

2.) Begin building your cash cushion. Keep some of your money in a savings account that you don’t touch except to make deposits. At this point, you may not think you’ll save a lot but you’d be surprised how money can accumulate once you plan ahead. You may want to go with a traditional savings account for this but do remember that there are alternatives. A certificate of deposit (CD in the USA) or Guaranteed Investment Certificate (GIC in Canada) won’t let you touch your money for a period of time but if you don’t need access to it then this is a safe and easy way to let your money start making money for you.

Mostly though, developing the practice of saving money in any form is what you’re after. Make sure you try doing it as a percentage of your income instead of a lump dollar amount. This will ensure that when you work jobs with higher income in the future, your savings rate will remain similar in your mind but the total amount saved will be significantly larger.

3.) Invest if you can. If you have extra money and want to begin investing, then there is a lot to consider. The safest bets might be with government bonds, municipal bonds, and even corporate bonds. Each one has its own sets of risks and rewards, so doing your homework is important. Also, consider mutual funds. There is tremendous diversity with mutual funds and what’s better they can begin exposing you to the stock market. This means that you can begin building small cash surpluses while you learn what to do with them in the future.

4.) Account for college. Take your future school costs into consideration now before you take out student loans. By understanding what taking out a loan entails and by utilizing a budget before you ever go to school you can avoid the burden of significant student loan debt and the lack of a plan to repay it. More than anything, what you’re building in your teenage years are good habits. And just as this is true in social settings, professional settings, and educational settings, it can also be true of you financial future.


Dave Landry Jr. is a personal finance manager and debt relief counselor who has only recently started blogging to share his expertise on those matters and more. He hopes that you enjoy this article.


Toginet Radio interview with Steve Jorgenson

togonet_logo.jpgHere is a 15-minute Internet interview about Findependence Day with Toginet Radio’s Steve Jorgenson, which aired this morning (Sunday, August 18th).

It you have difficulty accessing the clip, just go to and check the schedule for Sunday, August 18th: the 11 am time slot. It’s under Recent Shows over to the right.

The clip contains interviews with three authors: the Findependence Day interview with me is the second of three, and you can go directly to about the 19.48 minute mark on iTunes if you don’t have time to listen to them all.

The host does a nice job in teasing out where the name Findependence came from, to explain what the expression “Freedom, Not Stuff” means, the need for financial literacy, the difference between retirement and findependence and other things.

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