Guest Post: We have a guest post today from Joseph Hogue, who worked as an equity analyst and an economist before realizing being rich is no substitute for being happy. He now runs four websites and a YouTube channel on beating debt, making more money and making your money work for you. A veteran of the Marine Corps, he now makes more money than he ever did at a 9-to-5 job and loves building his work from home business.
We most often think of financial freedom as having the money to pay our bills when we’re not working. The financial analysis for how much you need to cover your expenses were laid out by Max in a prior post on guaranteed financial independence.
The article got me thinking, though, is there something more to financial freedom that we don’t think about so often?
What does that financial freedom mean beyond just the dollars and cents?
I had to think for a while about it, and it took me to back to the beginning of my own financial life…and some pretty terrible mistakes.
My First Mistake with Financial Freedom
Let me tell you a story and see if it doesn’t sound familiar. I had just started my first real job after college. I was excited to get a job in corporate finance even if it wasn’t exactly what I saw myself doing for the next three or four decades.
That enthusiasm quickly wore off and turned to absolute hatred for eight hours of my day. I hated my job, the daily grind doing the exact same thing day-after-day.
I resolved to save every penny, invest aggressively, and achieve the kind of financial freedom that would let me retire early. I worked two jobs, plus managed my own rental properties. I rarely went out and spent as little as humanly possible.
In short, I was miserable.
What followed was a bad movie that replayed every six months. I would burn out on saving everything and would go on a spending spree. I was blowing through half or more of what I would save.
It was the financial equivalent of yo-yo dieting.
Of course, I was so caught up in the promise of financial freedom that I didn’t see what was going on. It took a friend to tell me, after about a year and a half of doing this, that what I was doing wasn’t constructive. It was getting me nowhere.
I learned that financial freedom isn’t just about having lots of money and retiring early.
What Financial Freedom Means to Me
So if financial freedom isn’t necessarily about having lots of money, what else can it mean?
For me, I learned that financial independence is about the power to make money how you want and not being tied to a job you hate.
I ended up quitting that job after three years and moving to Medellin, Colombia. I knew I could work as a private consultant around the developing free trade agreement and make more than enough money for the cost-of-living.
Consulting on the FTA only lasted about a year and a half, but the seed was sown. I loved being able to work independently, growing my own business, and making as much as I wanted. I rejoined the rat race for a few years as an economist but started my website and other online assets.
I’ve worked full-time from home since 2013 and have never looked back.
The irony is that I work more hours now than I ever did in a traditional job. I’m completely immersed in my business, and I’m making twice as much as I did my last year as an economist. Financial freedom, as it turns out, wasn’t the freedom to not work but the freedom to do what I love.
My Favorite Investments for Financial Freedom
Being able to continue doing what I love means, putting aside a nest egg of support that can kick in if income from my online assets falls. The need to invest has brought another aspect of financial freedom into view; one I had never considered.
Everyone loves to talk about stocks for investing but being tied to the stock market as your sole source of investment isn’t freedom. Just ask anyone who planned on retiring in 2008.
Having that freedom to not worry about your investments means putting your money to work in other assets like real estate investing, bonds, and business partnerships. This is going to diversify your investment portfolio so that when one type of asset plunges, the others are there to smooth out your wealth.
The best part is that most of these other assets can be found in simple stock-like investments.
- Invest in real estate through real estate investment trusts (REITs), companies that manage real estate and get a special tax break for paying out most of their profits to investors.
- Invest in bonds through an exchange-traded fund (ETF) that holds hundreds or thousands of individual bonds. Bond ETFs trade like stocks but are much cheaper than buying individual bonds.
- Invest in business partnerships through Business Development Corporations (BDCs), companies that make loans or invest in startups.
Achieving financial freedom is more personal than most people realize. Your idea of independence might be far different from what others imagine, and the only way you’ll reach it is by thinking critically about what you want. Break free of the narrow view and embrace all the flexibility in imagining the perfect life. Then use that motivation to take you to wherever you want to go.
Readers, what’s your definition of financial freedom? Does it go beyond money? Do you feel you’re in a position to control your freedom story? Share your thoughts and comments below! – Max
You can call me Max…I’m a Gen-X executive planning to retire from the corporate grind by the age of 45. Although I’m already financially independent, I haven’t yet reached true financial freedom. Join me on my journey as we discuss everything from personal finance to travel and beyond.