Do you know what you can do when you have no debt and the freedom to choose how you spend your time?
The things that matter most to you.
We’re Dusty and Cecily Breeding and since 2011 we’ve been working together toward a big goal: Financial Independence.
FINANCIAL INDEPENDENCE means different things to different people, but to us it means
having enough money saved and invested, so that the income from those investments covers all our living and giving expenses.
Let’s break this down a little further:
Regardless of whether you make $30,000 annually, $300,000 annually, or $3 million annually, your household finances follow the same basic model: income and expenses. Income is the amount of cash flowing in from places like your paycheck and investments. Expenses is the amount of cash flowing out to cover things like food, rent, education, credit card payments, and so forth. Everyone who participates in a modern economy (i.e. uses money to acquire the things they need) operates their household finances this way, whether they realize it or not.
So in the simplest possible terms:
YOUR INCOME - YOUR EXPENSES
PICTURE THIS SCENARIO
WHEN YOUR EXPENSES OUTWEIGH YOUR INCOME, you can’t afford to pay all your bills. You are tempted to rely on credit cards and debt to cover your expenses. Month after month you fall behind. This is what we call the Standard American Lifestyle (SAL). According to a 2017 survey published by CareerBuilder, a leading job site, 78% of U.S. workers were living paycheck to paycheck. The SAL is, unfortunately, normal.
NOW PICTURE THIS SCENARIO
WHEN YOUR INCOME OUTWEIGHS YOUR EXPENSES, you have money left over once you’ve covered your expenses. You are then free to save that money to cover future, unforeseen expenses, and to invest it in ways that generate money for you on an ongoing basis. Month after month, your savings and investments grow.
Eventually you will have enough money saved and invested that the income generated by the investments covers your expenses without depleting the amount invested. When this happens, you have attained Financial Independence.
Figuring out how much money you need to attain Financial Independence can be done using a simple equation, called the 4% rule (explained below).
The 4% rule
It's a rule of thumb that says you can withdraw 4% of your portfolio value each year in retirement without incurring a substantial risk of running out of money. Using this rule, for every $100,000 you have, you'd withdraw $4,000 a year.
Stated in FIRE terms, one would be considered Financially Independent when one’s annual expenses are equal (or less than) 4% of the total amount saved. An easy way to calculate this is: figure out your annual expenses and multiply that number by 25. That’s how much money you need saved up in order to be Financially Independent using the 4% rule.
You can see that even the method of calculating Financial Independence relies on the two key variables mentioned previously: income and expenses.
When most Americans (living the SAL) think about retirement and wealth building, they default to a “I need to make more money” mindset. And they’re not wrong… but they’re only half right. They also need to spend less. More on that below.
Winning with money is done one (or both) of two ways:
1) Make more, or
2) Spend less.
We (the Breedings) are all for making more money. Go get that second job. Ask for the raise. Get really clear and bold and honest about the value of your work. Yes. Hooray!
BUT.
As Dave Ramsey says, “You can’t out-earn your stupidity.” If you’re addicted to spending money, earning more of it will not bring you Financial Independence because you will spend every cent you earn. No conversation about Financial Independence would be complete without a stern exoneration about expenses.
You. Have to. Spend less. Now. Start today.
The SAL is oriented toward spending as much as (and sometimes more than) you earn. Why? Because the materialist American economy is designed to do one thing: move money around from person to person. The only way that works is if everyone buys goods and services.
You will not (and we did not) attain Financial Independence by simply making more money. It is absolutely essential to curb your spending. You cannot measure your financial wellbeing by your income. You have to take an honest look at what’s left over after you cover your expenses.
Financial Independence is not a specific savings amount. It’s an equation.
When we retire early, we’re predicting there will be a lot of people with questions.
Questions about how we did it, why we did it, and what steps we took along the way. Our goal is to attain Financial Independence by Dusty’s 40th birthday (October 8, 2025). At that point, we won’t necessarily retire from the work force, but our life will be time-rich and work-optional.
TIME-RICH
As far as we can tell, time is the only nonrenewable resource. When you’re out, you’re out, and you can’t get it back. Time-rich, to us, means that we are free to choose what we do with our time today, what we do on weekdays and weekends next week, and we are untethered from a particular Monday through Friday schedule or “two weeks of vacation per year” allotment.
WORK-OPTIONAL
Generally speaking, most people work to afford their lifestyles (we talked at length about this above… income goes toward expenses). But when income is generated by investments, not by hours worked, suddenly work becomes optional. We’re not saying we’ll stop working altogether. We’re saying that we won’t need to work. And when you don’t need to work, you get to work on whatever projects, hobbies, outlets, and pursuits bring you joy.
Sounds ideal right? We totally agree.
“What did I miss??”
If there’s anything we’ve learned from the social media world, it’s that a square photo and a short caption are no way to get the complete story about someone’s life. That’s because either (1) the storyteller withholds the complete story, or (2) you haven’t been paying attention the whole time.
Have you ever arrived to a movie theater late, just when the action is getting good, and you whisper to your neighbor, “What did I miss??,” and everyone on the row shushes you? When we attain Financial Independence and our work and lifestyle looks noticeably different from the Standard American Lifestyle, we are predicting that our peers, friends, neighbors, and even strangers might ask, “What did we miss??” Only instead of shushing you, we'll invite you to read our whole story here.
We’re documenting our Financial Independence story on this blog, including the why, the how, the what, the numbers, the lessons, and the pitfalls, because we believe that anyone can do this. Financial Independence is not a zero-sum game. There aren’t a finite number of seats at the Financially Independent table. Just as there aren’t a finite number of seats at the “fit” table, or the “great marriage” table. Anyone can work toward and achieve these things. It takes education, it takes time, and most of all, it takes discipline. And if there’s anything we’ve learned from this FIRE journey, it’s that discipline leads to freedom.
Please follow along as we share our story and if you still have a “What did I miss?” moment… please shoot us an email. We promise we won’t shush you.
RESOURCES
Here are the guides whose wisdom we have relied on along the way: