Financial Freedom's Two Enemies

In our effort to achieve financial freedom, there are two enemies which, if we are not vigilant against, will always cause us to fail. It might not be what you think. Many people are worried about a catastrophic illness, or losing their jobs. But there are two other enemies that we must face and overcome each and every day if we wish to secure our freedom. Here is the first: 

Comfort.

Gasp...I shudder just to hear the word, because I know it is mercilessly clawing away at my freedom! Comfort is never satisfied. There's always a bigger car, a bigger chair, a bigger television out there begging to coddle us. There's always a nicer hotel room, a beach with whiter sand, and a fancier restaurant calling us to relax longer and more luxuriously while we are served. Comfort can even keep us from getting out of bed in the morning to make it out to earn our living. 

Comfort, in and of itself, is not a bad thing. In fact, without any comfort, we would be unable to rest and sleep, and we would quickly die.We would freeze in the cold and melt in the heat. So comfort is essential for survival. But where do we draw the line? If we go back to what science has proven through hedonistic adaptation, after our basic needs are met, any more or less comfort has no bearing on our personal happiness. True, there will always be moments of bliss in situations where our comfort exceeds our normal levels. But for whatever level of comfort we are accustomed to, it is that much easier to enter that blissful state. A man who sleeps on a bale of hay in a barn would find bliss on a futon inside a warm house. But a man who has all the wealth he could ever dream of must search the world and spend extravagant amounts of money to achieve that same feeling as the other man. In reality, it is a beautiful thing that in every country on our planet, the poorest man can be just as happy as the richest man.

This brings up our next foe, one that has a stranglehold on our society:

Convenience.

A quick trip to 7-Eleven is all one needs to see the price of convenience. And if you look around, people are more than happy to pay twice what they would in the grocery store across the street. But every trip to the restaurant, every phone call to the handyman, every time we drop off our cars to be fixed, our freedom is being drained for the price of convenience. We absolutely have to have cell phones on us at all times in case we need to make or receive a call. And even that's not enough because we also must have the internet available as well! We need laptops and tablets so that we can conveniently experience media in the comfort of our couch. 

Convenience keeps us from learning things on our own. It keeps us from making mistakes and learning to do things the hard way on our own.

In reality, if we had no desire for comfort or convenience, financial freedom could easily be attained in under 10 years. One could easily live on $7,000/yr and have all of their needs met. In reality, if you were extreme enough, you could live for free by the sweat of your own brow. At the other end of the spectrum, we have those that are so focused on their careers and earning money that they are able to outsource everything and put all of their effort into learning how to increase their income. This gives them the ability to hire personal trainers, even have people clean and cook for them. Both of these examples are extremes that most of us will not relate to and could not see ourselves doing.
But which method is better for us? Why not work our tails off so that we can live the ultimate life of comfort and convenience? I obviously am partial to the first scenario. The most obvious reason is because money, comfort, and convenience will never make us happy, but overcoming challenges and being able to conquer our own problems will add to a sense of fulfillment in our lives. But I think that there are also more rational reasons for leaning towards frugality instead of towards having the ability to pay everyone to do all of the things that you don't want to do. For one, the less money that you need in order to meet your basic needs, the earlier you are able to become financially free, because the amount of money that you have to save in order to live off the interest will be significantly smaller. Also, the more you are able to do things on your own, the more likely you are to be able to endure a great financial collapse, which is a possibility fresh on the minds of almost every American right now. For me, the most important reason for aiming towards the life of frugality is my desire to be free. I don't want to be stuck in the job I'm in just because I need the money. I want the freedom to pursue the work that I choose. I want the peace of mind to know that if LeAnn or I lose our jobs that we have plenty of time to recover and find something else.

What do you want? Are you more interested in comfort and convenience, or, like me, do you wish to be free? 

Riding into Riches

Ah, it's the post that you've all been waiting for. 

I know you've been waiting for this one because if there's one thing that has people looking at me cross-eyed more than anything else, it's my decision to commute via bicycle to work every day. I've eagerly awaited this post as well because I'm about to blow your mind once you realize how foolish you've been driving your car to work!

OK, ok, so maybe that won't happen today. But I've honestly come to the point where when I reflect on the pros and cons of riding to work, I smack myself in the head for even considering sliding into that comfy seat and lazily driving to work. Seriously, it's as easy to decide on whether I should ride or drive as it is if I should brush my teeth or not every day. 

So where's the disconnect? If it's so obvious how we should be getting ourselves to work, why isn't everyone doing it? It's because we've all been BRAINWASHED!! Part of the American Dream is making life as convenient as possible. Almost everything that we're marketed is supposed to make our lives easier and more comfortable. We've been wired this way so well by society that even the thought of riding a bicycle to work is repulsive to almost anyone I come in contact with. When I tell people I ride a bicycle to work I almost feel like I just told them I'm a believer in Scientology  They'll smile and make a friendly comment about it, but inside they're thinking, "What is wrong with this guy??"

So let's get down to the brass tacks. First, we'll explore why I should not ride my bike to work. Because obviously, there are some serious hurdles to jump over before making the commitment.

1. Riding your bicycle is NOT SAFE!!!! There is definite truth to this statement  Although I've never been hit in the ~2,000 miles I've spent on the road, I once was cut off and had to stop so suddenly that I flew over my handlebars at about 18 mph. Although I received a nasty bruise, I didn't miss a day of riding. I also learned from another guy who passed me every morning that I wasn't that visible in the dark, so I've added a lot more reflective gear and haven't had any other problems since. One interesting thing to note about the safety issue is that there is a very small chance that I will get seriously injured or killed while riding my bike, and yet there is a very great probability that riding my bike will actually ADD years onto my life. And I believe with the proper safety gear and lighting the risks can be greatly minimized.

2. Riding your bide takes MORE TIME. This is the only other reason that holds any weight in the argument for me. I usually have to get to bed at 10 p.m. so I can be up a little before 5 a.m. to get ready for my morning ride. The ride really only takes me about 15 more minutes than a car would, but when I get to work I like to take a shower. I also try to leave wiggle room in case I get a flat tire, and traffic progressively gets worse the later I get out the door. I hate the fact that I have to give up an hour of time with my wife every night so that I can get enough sleep.

3. Riding a bike is HARD WORK. As I've come to believe, this argument should actually be on the pro side of the list, because one of the best things about riding a bike is that it provides me with a daily challenge that I have to overcome. There are times when it's rainy and cold, and times when the wind is blowing so hard in my face that I feel like I can hardly move forward. There are times when people honk their horns and yell at me as they ride by. Then there was this morning when I woke up sick with a cold*, and the last thing I wanted to do was exert the energy on my bike to get to work. But an awesome thing happens when you decide to bite the bullet and do something you believe in even when everything in you is crying, saying: "BUT I DON'T WANNA!! WAHH!!" (I kid you not, there are mornings when I mope around the house with a little temper tantrum complaining to myself how I don't want to ride to work that day.) For one, riding my bike to work has gotten progressively easier. I can remember the first day that I rode to work and I felt like my legs were about to fall off. There are times now that I'm almost disappointed at how easy the ride was. So things that are hard when we first get started get easier and easier. Secondly, overcoming obstacles and challenges always adds a measure of fulfillment in our lives, and it give us a greater confidence that we will be able to tackle bigger and better challenges that arrive. It should be also noted that it really blows when you get a flat tire in the middle of a busy street, and some simple bike maintenance (putting air in your tires and greasing your chain) needs to be done almost daily. But even with this there is a great feeling of accomplishment maintaining something with your own hands and not relying on somebody else.

Alright, I think that pretty much covers the negative aspects (at least for me), of riding a bike. Now let's see why I think it's a no-brainer to make the choice EVERY DAY** to hop on my bike and pedal off to work.

1. Riding a bike SAVES MONEY. Duh!! That's what this blog is all about, and really this is the one thing that consistently gets me back on my bike every day. How much money does it really save me? Probably more than you'd expect. Let's look at the bare minimum of what it actually costs to drive a car: The government puts the costs of fuel, maintenance, and depreciation on a vehicle at about $0.50/mile. Let's say we drive a more affordable and efficient car and end up at around $0.35/mile. My commute is about 20 miles round trip, so I'd spend about $7/day, $35/week, $140/month, $1750/year. On top of that, LeAnn and I share a car, so we save about $60/month on car insurance, or $720 year. We also avoid the dreaded personal property tax on that vehicle, which we'll say would be a reasonable $150/year. So, in general, we save about $200/month and about $2500/year. That doesn't even take into account the initial cost of buying a car, which we'll say is about $10,000 for an economic, low-mileage car that will last us for 10 years. What would happen if we instead decided to invest all that car money into our financial freedom? Well, if we take the initial investment of $10,000 and sock it away in a retirement/investment account, and then continue to make $200/month contributions to the account and we get a conservative 7% return on the money, we could have $55,000 after ten years, or $110,000 if you let that money sit and grow for another 10 years after that! Ride your bike for ten years and invest that saved money until you retire 40 years later and you'll have yourself a half million dollars! And you can add on top of these financial benefits the reduced health costs associated with a lifestyle of frequent exercise. As I said before, this is a conservative estimate. If you're able to buy a new truck every 5 years and you make the change to riding a bike you can probably triple those 3 previous amounts according to the amount of money you're able to invest.

2. Riding a bike adds to my QUALITY OF LIFE. You don't have to be a brain surgeon to know that strenuous exercise has immense benefits for our well-being. Since I've been consistently riding my bike again, I get comments all the time about how I'm slimming down. I also have more energy for life in general, and my overall outlook on life is consistently happier. I get sick less, and when I do get sick it's not as bad. I also get to enjoy more delicious food because my body actually needs the calories I'm eating. Riding my bike also provides me with many opportunities to see stars, beautiful sunrises, feel the warmth of the sun, and feel crisp air in my lungs. It also provides me precious time to clear my head and think.

3. Riding a bike makes me DIFFERENT. It may sound strange, but I love doing things that I know are smart that everyone else thinks is stupid. I love to challenge people's mindsets on what is possible. I love that what is  "normal" to me is absolutely nuts to most people around me. I've always enjoyed challenging the status quo.

In the future, when I get a more affordable bike and a trailer, I'd like to start running most of my errands with a bicycle instead of using a car. Things like going to the bank and going shopping are easily within riding distance, I just don't feel comfortable taking my bike to those public places.

*It wasn't actually THIS morning, but it was this morning when I first started writing this :)
**There is one condition that I won't ride my bike in- thunderstorms. In the middle of the summer Jaden is off of school and I drive the car to work the days when storms are probable. I've still had some scary moments riding into/through storms though!!

Wrapping up 2012 - When the Stars Align

It's been a fantastic financial season for the Simmons' household. I started this blog just two months ago and the first mountain we had to scale was our Timeshare debt. At that time we owed $16,000 on that ugliness, and I was able to make the last payment on it the final day of the year. What a reason to celebrate!

And, on an even more positive note, my career at the shipyard has taken another amazing turn: I just got a promotion! I'm working on a new boat with another coworker of mine who was also promoted to supervisor. I'll be working for him as his work leader on the project. I couldn't be happier because this guy works like crazy, takes care of his people, and is a blast to be around.

I've worked hard for the past four years. I graduated near the top of my class and have also had exemplary attendance. But I still know a lot of people that could work circles around me at the yard, and I consider myself just an average guy who tries to do the best he can. And at every place I've worked it's been the same thing: it's not always the most skilled people who get things, it's often the ones who have the best attitude and who continuously strive to improve and better themselves. It's the ones that decide to love their jobs and the people they work with regardless of the negative pressures to do otherwise.

And it's the same way with money too. Most rich people in the world aren't the richest because they have the highest paying jobs. They're the richest because they have consistently made wise decisions with their finances. They consistently were able to separate wants from needs, and they knew that ultimately "things" and "stuff" wouldn't make them happy. And you'll find time after time that it's these people who most feel like "the stars aligned" for them and they ended up rich. But I believe the stars align for the people who are ready for it, the ones that have day after day put in the work and believed that anything was possible if they gave their best.

That's the fantastic thing about being in America. You and me, just average Joe's making an average living, have the opportunity to die incredibly wealthy if we just choose to do so. We can leave a legacy for our future generations, and prepare them to have it even better than we did. Or, we can follow the majority of our peers and live as slaves to debt and consumerism for the rest of our lives, living our final years dining on Spam and off of the pittance of Social Security we hope will still be around.

One of the things I've been working on is my optimism. By nature, I tend to be pessimistic (or, as we like to call it, "realistic"), and pessimism can never take you as far as optimism can. That's why I started this thing off saying, "I am rich", because I know now that financial freedom is not only going to come through hard work and discipline, but also through a mindset that believes it is an inevitable result of one who optimistically hopes for the best for themselves. See, hard work and discipline can only take you so far in money, but optimism has the ability to positively effect every aspect of your life: your work, your family, and even your own personal well-being.

So, what's up for 2013? I'm super excited because this will be the first year that we are able to seriously begin accumulating wealth. The first thing we plan on doing is maximizing out input into my TSP fund (the government’s version of a 401K), which is $17,500 for the 2013 fiscal year. In order to do so, I figured out that I will have to contribute 28% of each paycheck into the fund. After I do this, we need to build up our emergency fund again because I drained it paying off the Timeshare. Then, I have to determine if I want to invest our extra money into our mortgage so that it will be easier to move in a few years , or if we will start buying index funds to build our portfolio, or doing a combination of both. I have to redo all of our numbers after I see what my paycheck will look like after the new TSP deductions.

Most of the country is worrying about the fiscal cliff, but for those of us who are learning the value of money, 2013 can be our most profitable year yet! Let's go!