Financial Independence: A Points/Miles Enthusiast’s Perspective
A few years ago, I achieved financial independence. Soon after, I quit my job. Why? I wanted more time – for everything. My family and I also planned to relocate. I had just turned 38.
But what is financial independence? Why should anyone care? And why on Earth am I writing about financial independence on a site primarily focused on travel, points, and miles?
What is Financial Independence?
Financial independence is the status of having enough income to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others, according to Wikipedia. Unfortunately, there’s no Merriam-Webster definition. Of course, there are many different interpretations on the specifics of financial independence, or FI, but this general definition is broadly consistent across the community.
What About FIRE?
More recently, Financial Independence Retire Early, or FIRE, has become a prevalent term for this “movement.” Many websites cover the topic and create great content. Some individuals have formal education in finance and advanced degrees. And many of these individuals’ expertise outweigh mine. But you don’t need to be a financial whiz kid to achieve financial independence. I’m living proof.
From my perspective, I focus more on the financial independence term than the FIRE acronym. Financial independence enables someone to retire early, but it can also drive an individual to accomplish so much else. Many FI individuals do not retire. Indeed, I may go back to work in the future because I want to, rather than out of financial need. Some reach financial independence to pursue another passion, which often is working in a different field. Others may reach financial independence to travel, volunteer, or spend more time with their family (all true for me). But I understand the FIRE acronym is snappy, gets the general point across, and provides a great entree to the movement. So that’s just a heads-up on why I will refer more to FI than FIRE in this and future articles.
Why You Should Care about Financial Independence
As I’ve mentioned, people strive for financial independence for a variety of reasons. However, some of you probably aren’t necessarily looking to set an overarching life goal of becoming FI. For me, financial independence involves an interest in taking more active control of my choices, time, and goals while I’m here. I think all of us aspire to at least one of those aspects. And the principles I followed to achieve FI can contribute to them. Let’s shift to those principles now.
My Guiding Principles For Reaching FI
I reached financial independence by following three major guiding principles. I’m no expert, but there is clearly some overlap between what I do and what professionals espouse. Conversely, I may briefly address other nuances of FI where others have more expertise and refer you to that content. In future articles, I plan to share resources I’ve used and continue to follow.
These are my three guiding principles to reaching FI:
- Sensible Spending
- Active Saving
- Sound Investing
How and why did I pick these three principles? Fortunately, I was raised and educated to respect plans and activities that fall under these broad categories. I followed these principles well before I knew of the FI term. Why did I order the principles this way? Quite simply, because one principle builds on the other. By spending sensibly, I’m able to actively save more, further allowing me to soundly invest. While savings and investment totals rightly play a large part, the principle of sensible spending habits, including reducing expenses, substantially drives one to reaching financial independence. We will get into that and all of the guiding principles more in future articles.
The Travel, Points, and Miles Community
I’ve long been interested in the overlapping themes of the financial independence and points/miles communities. In some ways, they seem opposite. Why would someone going after a first class seat to an opulent Maldives holiday ever want to live frugally while tending to their vegetables and spices in the backyard? Those are two exaggerated examples, but there’s no denying the differences. Similarities are also there, though.
Financial independence is broadly attainable, and points/miles fans can leverage their skills in achieving and enriching it. I’m confident about this for two reasons. First, I reached FI and continue to build upon it. Second, many similarities exist between the two communities. Here are just a few examples.
Members of each community refuse to accept the broad social norms on the given topic. FI individuals may have asked themselves: Why should I spend my time doing something I don’t enjoy? Points/miles individuals may have thought: Why do I need to spend thousands of dollars for a flight to London? Instead, each community is curious enough to look at the challenge from a different angle and simply challenge themselves to find another solution. As many late night infomercials have said, “There’s got to be a better way!”
Similarly, members of each community have identified and honed skills to achieve their goals. We each show unfailing determination to achieve the goal, however obscure the path may be. We have enthusiasm for the seemingly esoteric goals of our respective communities. Also, we thrive on sharing our experiences with one another so that we can all mutually learn and benefit.
Members of our communities actively tend to their respective assets, ensuring that they are efficiently used only after careful analysis. Sure, I’m fine with my $15-$20 monthly cell phone plan – I don’t need more than 1GB of data! Some miles/points fans might think, “I would never ‘pay’ 25,000 miles for a round trip domestic ticket – I should be able to save at least a few thousand more miles!”
This is the first of what I hope to be many articles on financial independence, points/miles, and the intersections between the two. Along the way, I plan to share parts of my journey in both of these communities that will hopefully benefit a few readers (at least). Also, I look forward to learning from you all as we talk more about these topics. It should be fun!