16 Sep 2014, 11:18am
living intentionally personal finance reflections:
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  • Financial Independence is about more than money

    In Blighty there’s a raging debate about the subject of independence going on – Scottish independence that is. I’m not going to add to the verbiage about Scottish independence because this is a matter for the Scottish people themselves on Thursday, but I am struck by the paucity of the thinking of the No/Better together campaign.

    Independence is about self-determination, not about money. When I chose to shoot for financial independence, the reason for doing it wasn’t financial. In purely financial terms it was a disaster – dropping my income to a prospected 20% of the high-water mark 1

    The No campaign seems to have taken Bill Clinton’s adage that it’s the economy, stupid to the extreme, and focus on the alleged economic Götterdämmerung that will come to pass as a result of independence. Now there are inconsistencies in Salmond’s campaign 2 exactly what the point of independence is if Scotland continues to use the pound and retain the queen as a figurehead is hard for me to understand, but the No campaign seems to have missed the point entirely.

    It’s about more than money. It’s about time, and about self-determination

    Independence is about freedom of action and of self-determination. I was prepared to eat a 80% fall in income to win my freedom – to choose how I use my days. We often get too hung up on the how of financial independence because it is a big, challenging ask. Don’t get me wrong – if you want to get there, you need to understand the how, and some of the UK bloggers are doing a great job in doing what ERE did for the US scene with his book. Mistersquirrel has written an excellent condensed summary of how to achieve financial independence with his ebook, Monevator will set you right on the hows and whys of investing.

    The reason financial independence(FI) is a hard sell is because of the No campaign thinking – the focus is all on what you can’t do.The focus is clear and sharp, because money is measurable. The hours and years of your life aren’t so quantifiable, because unlike the Cyclops you don’t have a clear measure of the end-date. But as Gretchen Rubin highlighted 3, the days are long but the years are short.

    The Escape Artist does a good job of summarising the issues

    The flipside of this is that once you have met your reasonable financial needs, you owe it to yourself and to others to raise your sights and stop just focussing on money. In my time in the City, I used to meet plenty of people that (I’m guessing) had a net worth of £2m+, who were good at their jobs but would have been happier being a writer, tree surgeon or a school teacher. Why behave as if this one life we get is just a dress rehearsal? If you are one of those people and you carry on working in your all consuming City or Corporate job, then you are wasting your life.

    Now I didn’t work in his field, my networth is far less than £2m+, but I do have other advantages – not living in London, being a bit older for instance. So relatively I am in a similar position. And I didn’t get that wasting your life bit  – I assumed I’d carry on working to 60 (the normal retirement age at The Firm) because  er, well somewhere along the way between starting my first job and getting to my late 40s the clutch must have slipped in the why am I doing all this department. Now to be honest my job wasn’t all consuming for a long time and gave some intellectual challenge, it served me well up until the early 2000s, But then it started to go wrong, and demand too much for too little, in particular micromanagement and Digital Taylorism started to creep in and the erstwhile research facility was driven down the value chain into a jobbing shop.

    And although it took me far too long to jump to it, in the end I came to the conclusion I didn’t want to live like this, and I wanted out. That is the time when the how of financial independence matters, and I took the resources available to me and focused them with extreme prejudice on getting out. The Escape Artist was exactly right

    […and you carry on working…, then you are wasting your life.] This is more frequent than you might think. The most common motivation for this behaviour is fear – fear of change, (irrational) fear of poverty, fear of loss of status, fear of their spouse’s reaction etc. Its not enough just to make a life-changing amount of money, you still have to change your life. Don’t just load the gun, pull the trigger.

    It’s easy to get lost in the money side and paralysed by fear. It’s where the No campaign is going wrong, IMO. Independence is about more than money. Yes, having enough money is necessary, but sufficient. There are cultural differences in Scotland that have not been answered, and there is more of a feeling for the collective good. Because I personally am somewhere to the right of the Scots 4 I think they will be sorely disappointed in the promises of milk and honey offered by Salmond, but I have enough faith in their savvy that they probably suspect this too. The nation of Scotland has achieved far too much for far too long to be made up of people universally daft enough to believe him.

    It’s a perfectly reasonable call to accept some degree of economic poverty for greater freedom of action. In the big picture, it isn’t all the economy, stupid. Money is crystallised power, it is a claim on future human work or resources that displace the same. It is an enabling component of a life well lived, in the same way as your car needs four wheels to run, three won’t do. But five, six or three hundred aren’t needed. When success starts to look to you like a yacht then it may be worth asking yourself if you haven’t strayed onto the motorway to consumerism hell. In general, if success starts to look to you like Things and Wants then you may want to consider that Maslow’s hierarchy of needs has at its pinnacle

    “morality, creativity, spontaneity, problem-solving, lack of prejudice, acceptance of facts”

    Not so much Stuff in there, eh? I don’t know about morality and lack of prejudice, but I would go along with that getting better at being myself, expressing myself, and individuation are the primary wins of early retirement, and the main enabler is that I own my own time. It really doesn’t matter how rich your are or how many of your yachts are in the harbour if you are still owned by The Man and have to be somewhere and do something for a lot of your day to keep things that way. Obviously if you are truly of independent means then more is better, but there is a long sliding scale between the amount of your life that you give to The Man and the amount of wealth that you accumulate.

    I am poorer, but I have far more self-determination than when I was working

    Let me take an example. The Ermine household was out in Wales this last week – Mrs Ermine was attending a community-supported agriculture shindig, and I went along for the ride to go look at things like this

    prehistoric site in Wales

    easy to get to prehistoric site in Wales

    as well as searching for less easy to find sites, going round in circles because Cadw are poor at signage and rights of way are also poorly maintained in Wales I am a  crap hiker because I only do it to get to interesting stuff, rather than the the whole personal challenge/because it’s there thing. Cadw are erratic at signage and I did find one place where some toe-rag had extended his front lawn over the erstwhile footpath and removed all signage to the stone stile, but it’s still no excuse for wandering aimlessly on a rocky outcrop, and I could learn to get that right, and have learned that blaming others for stuff I could fix isn’t a way to long-term success. I am a unreconstructed map and handheld GPS 5 when it comes to hiking, but it struck me that what I want is a GPS that shows a moving OS map. It’s been a long time coming because of the technical challenges and ridiculous Gollum-esque licensing restrictions of the Ordnance Survey, but I can go out and buy such a thing now.

    Oy vey – £350. Now when I was working I would have dropped the £350 on this just like that. Because this was going to change my life and make it easier to find things in the open.

    Err, no. For starters, all but five weeks of my time was sold to The Man, and much interesting stuff like this is left lying around in places far away from people. It takes time and effort to get to. I now take some time in places, to look and to listen, be it some urban nexus or a prehistoric site or something else.

    A colleague at work did me a great favour in highlighting the contradictions and lack of intentional living of those expensive, fast and furious holidays while working. It was when he told me that his wife got on the internet as soon as they came back from their summer holiday to book the next year’s one. And I thought to myself  “I do not want to live in the future like that, flushing away 50 weeks of my time like that for two weeks of respite”

    I stopped going on holidays then, for three years, so that I could maximise my savings rate. Yes, I was living in the future for those three years. But my future is now. And I have far more freedom of action. If I wanted to I could spend more time looking at prehistoric stones, indeed I considered a period as a peripatetic photographer. You can never travel with anybody else if you want to make money take decent pictures outdoors, because you need to be out at the times of day when most people are eating or sleeping because the light is better then, rather than the harsh light of the middle of the day. It’s just too antisocial. I can consider that – because I own my own time, so it wouldn’t be robbed from our collective couple of weeks of freedom. Three or four weeks a year just wouldn’t cut it. But then I wouldn’t want to try and be creative or make the money because The Man would be paying to own the remaining time, and time away from The Man is more about recovery than about creativity, spontaneity, problem-solving 6.

    Consumerism attacks you at the third and fourth levels particularly

    In particular the need for respect… It’s all the buy this to make yourself look better, set you above the Jones, etc. The Joneses don’t give a shit about what you have, they are bothered about what they don’t have. They don’t respect the people that have what they don’t, indeed they hardly think about the people, it’s the stuff – it is the feeling of the missing eyes from their own peacock tail that exercises them. I know because I’ve been there – consumerism gets you to project part of your self image on stuff and lifestyles – can you even remember much about the beautiful people who were the clothes-horses for the lifestyle in the ads?

    If you want out of this rat race then refuse to run with rats. Focus on what you think about your stuff, not what other people do. If your stuff displeases you, then change it. If it serves you okay but isn’t the latest smartphone/gizmo/whatever then so what?

    Another thing that helps you with consumerism is that when you own your own time you can work out what you want of your stuff and how to use it right. F’rinstance, I discovered  that I could use the existing iPod I have with a CoPilot bluetooth GPS I got from ebay ages ago for a project, and then make it work with Viewranger which can download individual tiles of OS maps for a price. Smartphone aficionados will of course say they can do all this but one thing the last week did teach me is that mobile data coverage is non-existent in the parts of the UK where interesting stuff is often to be found – I had thought it would be a useful fallback data network for researching but it’s useless – run and gun WiFi is far more reliable because at least you know where to find it  at centre of habitation. With a bit of experimentation I can find out if a GPS showing OS maps is useful to me for about £20 using gear I already have. If it is I may consider the Garmin product – but I will do so knowing what questions to ask and how I use this in the field, rather than having to sport the £350 up-front just to find out if it works for me and take the risk of there being some subtle gotcha or yet another gadget that promises much but fails to deliver on the essentials – let’s hear it for the smart watch with less than 24 hours of battery life and which doesn’t tell the time at a glance as a case in point of getting the 20% gimmickry right and losing the 80% essentials.

    The Scottish referendum highlights that it isn’t all about the money, and it’s the same with financial independence.

    To paraphrase Bill Clinton, It’s the freedom, stupid. Financial independence isn’t a notch on the bedpost, it has no meaning in and of itself. Even in the midst of trying to find a way out, I understood this, because I was driven by wanting options, to win a way out from having other people be able to tell me what to do with my time. It’s important to first answer the question why, before addressing the how.

    Savings. Yes, there’s a lot to be said for them. Most people save in order to buy something. That’s good, particularly is the alternative is to use credit. Though the most common reason for saving, it isn’t the only one.

    I save to buy power and freedom – the freedom to walk tall […] – modern ads for savings accounts emphasise saving up for something like a house, or the advantageous interest rate. I have never seen a modern ad advocating saving to buy yourself independence of thought and action. Wage slavery is too ingrained in our culture, and we have surrendered to Illich’s modernized poverty.

    What’s your reason for wanting to be financially independent? After all, many, many people in Britain live happy and fulfilling lives enjoying the fruits of consumerism and living paycheque to paycheque, and good for them. I have no quarrel either with the YOLO set who ram themselves up the eyeballs in debt, as long as they don’t then turn round and demand I pay to bail them out without getting a slice of the YOLO fun 😉 There are choices to be made in life, in general you can do anything you want 7 if you want it hard enough, but not everything you want.

    So it is for Scotland on Thursday. It is freedom to live in the way they want, albeit in probably straitened circumstances 8. It’s not about the money. It’s about freedom and self-determination. These are things that it’s sometime worth making sacrifices for.

    Notes:

    1. There are many, many distorting factors that make this a lowball estimate and it being less of a hit than the headline fall, but 80% was the drop I was prepared to eat
    2. Alex Salmond worked as an economist in MAFF in the late 1970s – I presume he is fully aware of the consequences of being in a currency area with a bunch of guys who are carrying on in a way so opposed to the way your area wants to live that you want to get shot of them, but if he has forgotten that, the Euro area is a good object lesson in why you don’t want to be the 60lb gorilla next to the 600lb one in a currency union
    3. warning – extremely cheesy child-centric crap, but says a truth all the same. You may or may not need a sick bucket and/or end up in hyperglycaemia shock due to the saccharine schmaltziness
    4. more from the point of view that “if you aren’t a socialist when you are young you have no heart and if you are when you are older you have no head” rather than a deep Ayn-Randian philosophy or being a dedicated follower of Hayek’s Austrian school
    5. with a mechanical compass to back it up, but I don’t normally use this
    6. Not everyone working for The Man needs the recovery time – I know a few people who choose to work some jobs that pay modestly but aren’t particularly consuming precisely to have a better lifestyle. They do enjoy their time off much better, and it’s a perfectly reasonable alternative the the financial independence/retire early approach, albeit with the inherent risks of depending on the availability of that type of job, which seems to be falling over time, or at least paying less well
    7. bearing in mind you are in a rich first-world economy, assuming you are of above average aptitude in something that can enhance the lives of your fellow men and that you are capable of understanding that your actions have consequences
    8. I don’t believe the milk and honey promises, though I don’t believe the hell on earth the No campaign are selling. And I find it more admirable when someone chooses freedom over the chimera of economic comfort through slavery anyway, it’s what this blog is about 🙂

    What’s your reason for wanting to be financially independent? – Like you; Freedom. When I was traveling across Australia, I could get up when I wanted.. do what I wanted.. go where I wanted. To go back to that freedom but with the security of knowing it’s permanent would be my dream, and it’s a dream I believe to be achievable.

    Interesting point about all the saving account adverts being for saving towards something specific. I’d never really noticed before but thinking about it; should have been obvious!

    Good luck to the Scots this week, whichever way they decide.

    Ermine – many thanks for the article and the link…it felt like an unexpected honour from the First Minister of UK Financial Independence!

    Everyone else – Just to clarify, I’m wasn’t saying you need £2m+ to pull the trigger on FI…you can do it on much less!

    Like you it’s freedom that I value. I lived just inside the M25 and was commuting into central London. I wanted out.

    p.s. I bought a Garmin GPS with UK wide OS mapping and haven’t regretted doing so. It’s nice not getting lost. I went for the GPSMAP series as it’s designed with more durability and ruggedness than the Oregon.

    You right about the ridiculous licensing restrictions of the Ordnance Survey. This summer a map of Denmark from Garmin that uses data from the Danish OS equivelant was only £70.

    My brother initially told me I shouldn’t have bought it and used a smart phone instead. Since then he has not been able to download tiles due no phone coverage and has had to replace a smartphone as he dropped it and the screen broke. Unlike my GPS his smart phone wasn’t on a lanyard.

    I think you have hit the nail on the head. I left a very well paying job when I realised (1) I didn’t like it very much anymore, (2) I didn’t need the money they were paying me, and (3) there are so many goals and dreams I hadn’t tried to achieve because I was running flat out in the rat race. Being the master of your own destiny is worth a lot more than money, and it’s something my ex work colleagues mostly find very difficult to understand. I think because even though they had similarly well paying jobs they didn’t save (or invest) a dime! All of that said I hope the Scots don’t go!

    @EarlyRetirementGuy freedom from the tyranny of the alarm clock is indeed a wondrous thing, and I still wonder than for 40 years or more it ran things. I don’t actually get up that much later, though it’s good to be able to go late into the night and not have to worry if it’s a school night 🙂

    Something I never anticipated was the much greater ability to respond to opportunities that arise, both for travel partly on other people’s dime and being able to insert a small sharp burst of energy to get somebody’s project over a hump.

    And yes, all the best to the Scots, and that the outcome reflects the considered will of the people!

    @TheEscapeArtist I think you’re doing a great job particularly on the why of FI!
    “because there’s more to life than consumer goods” 🙂

    Good point of the The Number for FI – there’s a long thread on MSE that seems to run along the £1M mark. But a lot of these guys live in London, and probably a lot of that is housing.

    London is a great place, but if you are FI and need the fix of the city lights every so often you can travel in and get a lot of city breaks for the extra housing costs, certainly where you live after FI doesn’t have to be where you lived to earn the money to get there.

    @Bruce damn, I’m tempted by the unit you linked 😉 I am surprised Landranger maps are usable on a 160 240 screen.

    The smartphone seems a daring option to take. The value of a smartphone is it does many things tolerably well, but nothing really well – be it as a phone, a GPS, a camera or an MP3 player. In town that’s great. As a connection between you and getting home that seems risky.

    I’ll still take my Garmin Vista even if I make the iPod work as a moving OS map. The one thing a regular GPS does well under pressure is the “take me back the way I have come” command which anyone can understand.

    @Matt DB – Snap – indeed one of my regrets is that I hadn’t jumped to this earlier and went for FI as a positive move towards what I wanted to do rather trying to nut what I didn’t want. It took time to recover from that, and it’s generally better all round to run towards the light than to curse the darkness!

    I assume you’ve seen this excellent OS mapping site:

    http://maps.the-hug.net/

    Useful for looking up where you’re going before you leave….but not so good when you’re lost with no wifi!

    On my smartphone I use a GPS app called NavFree. The maps come with the app and it places you via the gps in your phone meaning you don’t suffer through a loss of 3G signal or acquired data charges. I’ve not used it off road but it does everything you need from a car sat nav. It may work for you walking too?

    As a citizen of a former UK colony, I find the whole Scotish Independence issue fascinating. It probably says more about the prospects of a truly unified EU than anything else; but however it falls out, the result will propogate ripples into the future.

    Personally, I look forward to the day when I can emulate Mel portraying William Wallace. I will paint my face with woad and swap my benighted suit and tie for some comfy kakhis and a polo shirt and cry full-throatedly “Freedom. Freedom!” Then I will sleep without regard to the damned alarm clock.

    16 Sep 2014, 8:29pm
    by grey gym sock

    reply

    i’ve agree the “no” campaign seems somewhat misdirected. it almost makes it sounds like they concede the principle that independence would be nice, but just think it’s far too difficult. in reality, scotland is easily rich enough and big enough to be an independent country – if that’s what they want. there are perhaps more difficulties with independence; definitely more uncertainties. it should be a question of principle.

    i’m not encouraging scotland to leave the UK; just stating what i think the issues are.

    i’m still smart-phone-free. but i would be more tempted by android than by a specific maps/GPS device. i’m more interested in something you can customize / play with.

    Betfair have already paid out on ‘No’ bets already…do they know something we don’t?

    17 Sep 2014, 2:58pm
    by Rowan Tree

    reply

    You only had missing footpaths, and were wandering lost on a rocky outcrop? You were lucky! Wales usually also provides spiky gorse, belligerent cattle and impenetrable bogs to those of us who seek the Stones! Nothing wrong with being lost temporarily directionally confused in Wales, it’s a small country. Definitely providing opportunities for “creativity, spontaneity and problem solving”!
    I do find using technology slows down my landscape awareness, route finding skills, mental maps. And the landscape was important to them that built the Stones. So I’ll carry on with paper maps and old books in my searches, but won’t turn my nose up at using the internet for the Megalithic Portal, or OS Getamap subscription. It’s one of the pleasures I’m looking forward to in my newly acquired retirement from the evil overlord I worked for. And Scotland – I haven’t even begun to visit Scotland’s Stones!

    Radio intercom dialogue from recent motorbike holiday –
    SIL (on lead bike) “The Garmin’s lost the road, I don’t know which exit to take”
    Us (oldies on 2nd bike) “The road sign in front of you say’s Calais’s to the left”
    Having said that, lessons from SIL on using intercoms, radios and Garmin has made touring Europe a doddle! Thank you, youngsters!

    @UTMT – thanks for the heads up to NavFree, as I was also considering something like TomTom. I played around with Wazu and NF before going with CoPilot, currently free but ptrobaly needs a £20 upgrade to be useful. Basically because I will not be advertised to nor will I report/upload my travels to The Man, sometimes you gotta pay for freedom 😉

    Nothign connected works out in the sticks – the one thing that messing about with a 3G dongle taught me is that a smartphone would not help me here – coverage, even near to habitation in Anglesey is patchy and unusable in the field…

    @Maus here’s to freedom 🙂 Slate has what looks to me like a good summary of the issues in Scotland, I hadn’t really thought of it like that but there’s much in what they say!

    @GGS – Like you I see no fundamental reason why Scotland can’t be an independent country, and although any campaign to defend the status quo will tend to focus on the risks a more positive take would have been nice.

    I’m not sure whether it’s the Luddite in me but the smartphone seems to be the classic jack of all trades and master of none – it disappoints every time I try and use somebody’s phone ot take a picture or record something. If I want a camera I want a decent one much of the time, a sound recorder I want something that records in stereo and from external mics and allows monitoring. And in a handheld GPS I want one with good performance in tree cover.

    Smartphones seem to perform most of these functions adequately if you’re in centres of habitation and taking first person narrative, which is what most people want, it’s when you push the envelope that the limitations show. And it appears to do a entirely satisfactory version of the car satnav function, because all the power issues go away.

    @weenie – that’s really creepy – either they are pulling the most amazing publicity stunt ever with a decent gamble on the side or there’s something very dodgy going on!

    @Rowan Tree the cows were friendly, although horned and huge

    I salute your old-skool map and compass skills!

    17 Sep 2014, 8:28pm
    by marine_life

    reply

    Interesting read and of course I agree.

    I am now less that 40 days away from a big decision point. Well….actually a big holiday followed by a big decision and the worst thing is when you know the “other side” is so close, all you can think about is what it looks like. Its like a high wall where you jump up and down but cant quite see over the other side….and all of a sudden you find a door and like alice in wonderland step through to the other side.

    I think i see a door.

    @marine_life taking a big decision chilled sounds like a great way to do it, well done!

    I’m coming to the conclusion that one of the things missing from the UK PF scene is the description of what it’s like to live life when you own your own time. There are still times when it’s hard to believe it really happened, and also times when I kick myself for not taking control earlier.

    While the balance is different for different people, I think The Escape Artist hit the nail absolutely on the head that

    Why behave as if this one life we get is just a dress rehearsal? […]Don’t just load the gun, pull the trigger.

    I don’t regret pulling the trigger. But I sure as hell regret taking too long to load the gun 😉

    Apparently life expectancy is about 80 now, so it does seem that they’ve been making a little bit more time since we were born. I reckon 40 to 45 would have been a good time to retire for me, given my valuation of Stuff. For others it’ll be different, but even if you’re earning well and living high on the hog 65 is too old, whatever Iain Duncan-Smith has to say on the subject.

    Your gun is primed – and you have time to consider the right point at which to pull the trigger. That is something only you can know – all the best for your holiday and the measured consideration of your options!

    Thanks for the link to the Slate article on Scotland. I think were I in Scotland I might also take the bold leap into the future and sod the consequences and financial Jeremiahs. Most interesting was that independence might (and should) make those of us South of the border with a vestige of socialist leanings wake up and question the cosy financial/ political narrative that at times seems to hold us in fear and bondage. Ok, my Braveheart moment but damn it politics in this country needs something more to invigorate it than an obsession with Europe.

    @Hamzah It’s one of those odd things that it’s easier to get balance from foreign media than our own, which seems partisan, boorish and uncivil on this particular issue whichever side they are on 😉

    Shirley Williams made the case in the Graun that whatever happens, the result could be a more federal UK/rUK but I’m not holding my breath 😉

    For instance as a really coarse generalisation Scotland is generally more left wing than England, which one would have thought would imply higher income taxation and better public services as a result. This was entirely permitted to Holyrood at the moment, but it was never implemented for some reason.

    A Pembleton has three wheels, and is still usable….. for about three weeks in July, but great fun.

    http://img.webme.com/pic/p/pembleton-archives/sf02.jpg

    (Sorry)

    @Hamzah- I’m with you on this one. Just woke up to the news that Scotland have voted No. While as an Englander I’m pleased, I’m a bit disappointed also because of the change in status quo it would have brought. (I don’t believe the change hype whatever the result from any of the political parties.)
    Ah well..same old same old…..:-)

    “one would have thought would imply higher income taxation and better public services as a result”: talk about a non sequitur.

    Fair point about agency versus money for a person. Not so true for a country, though, especially a small one linked inextricably to much bigger markets and trading partners.

    Scottish independence is a bit of an illusion and would probably lead to fewer Scots achieving financial independence.

    Long time reader here – just wanted to say this is a fantastic post.

    but it is about *money*, being a neutral mechanism to transfer experience, goods, services, property, trust, and whatnot – what it wasn’t about was *currency*

    the whole debate was poor on both sides, the nasty racism and jingoism of the Yes, and the lazy “we’re bigger than you” of the No.

    In the margins of this poor quality debate obviously lurks the shadows of evil, viz UKIP with their sweet poisons, the shape-shifting Murdoch (which Sun is he favouring at the moment?)

    I’m glad it was No.

     

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