From saving for the sake of it…
The first time Mr Lyn mentioned the concept of Financial Independence I saw it as an utopy. He talked about Frugal Woods, Mr Money Moustache and many others that had already reached FI. They had retired in their 30s or early 40s and they were living from their investments.
I’d told Mr Lyn “that sounds wonderful but we cannot do it”
Mr Lyn said that we could. He showed me his excel models and explained the basic concepts. The key was spend less and invest our savings wisely.
The issue was that I was not ready for the lifestyle Mr Lyn was proposing. Don´t misunderstand me, I was not planning on a luxurious life. But neither on a very frugal one. I didn´t see the reason why our life target had to be to save as much as possible. On top, I was not comfortable with the idea of investing our savings in funds.
Mr Lyn wouldn´t give up. He brought the excel once more and he started with the 4% rule. He showed the important of having a low spending and played with different scenarios of when we would reach FI depending on our level of expenses. Being honest, I was only seeing savings and sacrifice and I discared the idea.
…to have our dream life at risk
In parallel to these conversations about FI our life continued.
We are both excel lovers and control our finances every month. But more than anything, WE LOVE TO TALK ABOUT THE FUTURE. We´ve been doing it for years and we do it more and more as the time goes by.
The MBA was a big push for those convesations. Quiting the work force to go back to school is a very good reset excercise. You stop and reflect. Many opportunities open up for you so it is the perfect time to think about what you like and try to get a job that helps you reach your goals.
And so much conversation had its fruits, which in our case is a defined medium-term goal: 10 years from now, move to Galicia so that our children can grow there.That was the starting point. A clear and common goal: to return to Galicia to raise our family there.
Then Mr Lyn proposed to me to see the numbers, to re-examine our financial plan and make projections.
We needed initial information, but thanks to our excel we already had almost everything:
- What are our current annual expenses?
- How much are our current savings?
- How much would it cost to live in Galicia?
- How much could we earn in Galicia?
- What buffer should we build to move to Galicia without financial pressures until we get our life sorted there?
The results were a shock to me. Mr Lyn had already done the numbers and he was aware of it but I was not. In my mind we were well-off. But that was not reality.
At the current spending, in 10 years we would not have the financial security we wanted to be able to go to Galicia without work for a season or with a considerable salary reduction.
Opening the eyes
With that exercise I opened my eyes and saw how easy it is to go with the flow and that your standard of living rise with your salary. And I do not mean radical things, we continue to have a normal life on a day to day basis, but it is very easy to spend more if you have the money.
Because you can really afford it, and it’s hard to say that you do not have a compelling reason. But when you look at what you spend per year on certain items, it scares you. Almost even what you spend per month.
In my case, my weak point is travel. I adore traveling. Throughout my life, I always saved to travel. In my mind, traveling is never throwing money away. You meet new people, new places, learn things. You grow as a person.
But of course, to a certain extent. Everything has a limit. And when we reviewed our travel expenses for the last two years … we had this conversation:
– Mrs Lyn, if you’re told three years ago that you’re going to India, what would you say?
– India? We should have a good excuse to make that trip, it is not something that normally would have crossed our minds. A trip to a place so far and so expensive for me was something that you booked for the honeymoon or a special occasion. (Note: in 2015 we had never left Europe).
To which Mr Lyn replied:
– Well now reflect: in October 2016 we went to Japan, in spring of 2017 to USA, in January 2018 to Panama and in March 2018 to India. Do not you think it’s getting out of hand?
And I could only agree.
The importance of having a goal
Then all those ideas of saving, investing, etc took another perspective. They were necessary steps to achieve an important goal: to live as we wanted to live.
That change of perspective was key for me. Understand that it was not “saving for saving” but that we were investing in our future. Now all the cuttings and sacrifice did make sense.
And that’s how we decided to start the path to Financial Independence.
What made me change then? The numbers. The indisputable and overwhelming numbers. We had a clear objective and we realized that if we continued as we could not reach now.
Financial Independence is not a smooth and flat road. Each one adapts it to their circumstances and objectives. We are looking for the way that fits for us.
We continue making our plans to 5 years, to 10, and to 20 years. And we hope that the path we have just begun will help us reach them.