Heads up: The latter phase of your path to Financial independence is pretty boring

2014 and 2015 have been extremely exciting for me in terms of financial independence goals. I’ve created this blog to hold myself accountable, and worked on reducing our family’s expenses on as many levels as possible: no car, cheap phone plan, we pay attention to our electricity bill, to our grocery expenses, we reduced our entertainment budget, our “eat out” budget, and much more. I even blogged about crazy stuff we do to save money, and added a section on this blog dedicated to frugal food. I also cranked up the work on my side gig to increase my revenue in addition to reduce our expenses.

The result is that we went from a respectable 30% (post tax) savings rate in 2014 to a mind-blowing 60% in 2015.

This was exciting, but now, we’re cruising. As other frugalites have experienced, we’re pretty much optimized now. We could surely increase our saving rates by making some strong sacrifices, but those would have a direct negative impact on how we enjoy life at this point. Some of these could also backfire and turn to be not-so-great deals (e.g. we could move to a lower cost area to rent a cheaper condo, but that would most likely mean we’d have to get a car… urgh…)

Where we are today, unfortunately, our expenses can only go up (with inflation, mistakes…), not down. At best, we’ll have a saving rates similar to what we did last year, unless I get an unexpected promotion. Boooriiiing. The excitement of the early days of frugality is gone. I’m sure I could still find gems in minimalism or frugal cooking, but really, the bulk of the strategy is in place, and now we wait.

Boring Presentation --- Image by © Corbis

Boring Presentation — Image by © Corbis

Many personal finance bloggers talk about various phases they’ve gone through as they went on their path to Early retirement and Financial independence (see Mr Tako’s great article on the topic recently), I’d like to go through mine so far:

1. The blissful ignorance days

Some of us get in an insane amount of debt during their early years. I was reasonably frugal, married a very frugal wife, and more generally, I was pretty lucky. I didn’t care (at all) about finances, one could say I was pretty much financially illiterate, but I didn’t have any debt, made a reasonable salary, spent less than what I was making because this is how I had been raised to deal with money. Most of my investment strategy consisted in having money on my savings account in Japan with a return of 0%, except for some stock from my company which happened to do fairly well. At some point, I invested in Schwab’s SCHB stock because a colleague of mine told me “I don’t know anything about investing, but I went with that stuff from Schwab that has the lowest cost they can provide”. I was clueless, so I started to move money in there too. I also did a few bad financial choices, such as investing a significant portion of my savings into a bad life insurance product for a few years.

A mix of bad an good, but overall I ended up pretty wealthy, without realizing it. The fact that this was happening without me knowing about it was the beauty of it. I envy the people who never care about their money until one day they realize they are actually financially independent. How cool would this be, that the very first time you ask yourself “hmm, my job is kind of boring now, I’m wondering how much money I’d need to never have to work again?”, you happen to have that money already?

This period of blissful ignorance, accumulating money without really thinking about it, lasted for about 6 years for me, from 2008 to 2014

2. Hey I’m actually doing pretty well, I wonder how much money one needs to never work ever again

From 2012 to 2013 I had been looking into ways to invest my money “properly” (as in: not on the 0% return Japanese bank account). My wife and I had looked into it. We had our first kid in 2011, and that had triggered a bunch of “we need some life insurance, we need savings for the kid’s college, we need this and that” discussions. Both of us were really, really bad at anything finance related in those days, which is around the time we made a couple bad investment decisions (life insurances, individual stock picking…), and a couple good ones (the SCHB thing).

At the beginning of 2014, things changed for me at work. I was not enjoying my role anymore, and my manager left the company. Which sucked because I liked the guy, and instead I inherited a manger who clearly did not care about the team. To confirm it, he actually dismantled our team a few months after the other manager had left.

The growing pain in my work was happening in parallel with me realizing, through discussions with friends, that I was pretty well-off financially. I had assumed until then that most friends making roughly the same amount as I did had to have roughly the same kind of wealth, but it wasn’t the case. I clearly remember a discussion where one of us told us his wife had roughly $200’000 in savings, invested “properly”. Everybody in the room whistled, one of us asked “why do you even work, clearly your wife is better than you at generating money”. At the time I already owned more than that, so I kept my mouth shut. People asked me about my company stock and how well it was doing, I downplayed the numbers by a factor of 10. I was already feeling the need to stay in “stealth wealth”. Misery loves company, and I like my friends, I didn’t want to create some weird situation there.

But as the pain at work grew, this got me into asking myself how much one would really need to be financially independent. although at the time I didn’t know that term. I remember looking on google for terms such as “how much do I need to retire”, only to find stupid generic articles saying one would need to spend 80% of what they make yearly, and stuff like that. With no other understanding of basic investing, my math went from 1% return to 7% return, assuming I’d have to spend 80% of my salary…

In general the numbers I came up with where quite depressing, going into crazy numbers I would never be able to achieve. But ultimately I found about early retirement extreme, then MMM, which to me was the perfect enlightenment. It was all about understanding one’s budget, realizing we didn’t need as much as we thought we did, and the “target” was going down to much more reasonable levels.

3. Holy crap there’s a bunch of people doing it, let’s do it too! (The exciting phase)

The more I dug into sites such as MrMoneyMustache (mostly MrMoneyMustache!) the more I realized it was all about reducing our expenses, gaining confidence in the future, accepting some amount of controlled risk while setting up safety nets.

We started reducing our expenses, looking for ways to make a bit more money on the side, keeping a budget (my wife had been keeping a budget for years, but I basically took over, while she had never convinced me to even want to look at it before), and throughout 2015 the “FI” target went from  “sometime around 2025” down to “wow, we could achieve it in 2016”. Just by changing some of our lifestyle and adapting my perception of what constitutes financial security, the new goal became achievable in a couple of years rather than 10. (It is now much more likely that we will reach pseudo FI – a huge chunk of our income will still come from my side gig – by 2017)

This was a really fun bit, and it lasted for more than a year. Almost every week we found new ways to cut down on our budget, or a fun way to make some tiny additional income (this is how I found out about bing rewards). Progress was visible on a monthly basis in our budget.

4. Cruise control boredom

Here we are now in 2016. The stock market hasn’t been super friendly this year (although it’s getting better), and we’ve done pretty much everything we could last year to improve our savings rates, as I described above. We’re now sailing reasonably smoothly to the FI destination, and it feels slow and a bit boring.

I’ve learned a lot on the way, but I kind of wish I had stayed in phase 1 forever, until I would realize one day I was financially independent and didn’t have to “work” for it 🙂

What do/did your phases of financial independence look like?


  1. Mr. Tako @ Mr. Tako Escapes
  2. amber tree
  3. Jim @ Route To Retire
  4. Mrs. Groovy
  5. Thias @It Pays Dividends
  6. Mike H.
  7. Fritz
  8. Financial Slacker
  9. RetireJapan
  10. TheMoneyMine

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