We read an article recently that was cleverly timed with the July 4th holiday, and might sound gimmicky to some due to the nature of the title, but we got a lot out of it and wanted to share with our readers. Richard Eisenberg wrote an article for Forbes that described the monumental day he refers to in each consumers’ life where they become “Financially Independent.”
Eisenberg encouraged readers to think about what this means to them, especially given that this week we celebrate the independence of our country. He stated that some people consider this term to mean being free from debt, while others define it as being able to retire early, or have enough saved up for an emergency. Eisenberg pointed out that consumers need to be financially independent to retire, but just because they are financially independent doesn’t mean that they necessarily want to stop working. It’s that beautiful time when you realize you have the choice, and if you enjoy working than power to you.
At FinanceSpectrum.com, we had never heard of this stage exactly described like this—financial independence, or “findependent,” as the article states—but the more we think about it, the more it makes a lot of sense. And we think it’s okay to have several milestones set up for yourself: the first could be paying down credit card debt, then student loan debt, then your mortgage, and so on until you are 100% financially independent—owing money to no one, with enough saved to never again have to work a day in your life if you don’t want to.
It’s obviously a target that can take years, decades, sometimes a full lifetime to reach. But when you do, boy, will it be worth it. So next time you find yourself planning for retirement, sit down and ask yourself what you need to accomplish to become financially independent, and use that as your benchmark.