Thoughts on Financial Freedom

by Scott on November 5, 2013

Financial freedomEvery once in a while I think about my retirement plan.  My 401k statement comes in the mail, I look at it, and something inside me (maybe fear) says I should invest more in the fund.  Then, this other voice comes along (maybe hope) that says I should invest more in myself.

I get it.  I should be disciplined and set aside a certain amount of money for my future.  But what should I sacrifice along the way?

There must be others facing this inner struggle.  Do you play it safe and patiently await your turn to live life on your terms?  Or, do you invest in opportunities that are available to you today?

The first option is almost guaranteed.  Invest $X dollars for Y years in a tax sheltered retirement plan and you will have $Z when you’re 60.

The second option is not guaranteed.  Invest in your “idea” and it might not work out.

There’s nothing wrong with either option.  Either way you’ll reach financial freedom at some point in your life.

But before you commit the rest of your life to a retirement goal, why not ask yourself why?

Why do you want to retire in the first place?

Maybe you want to spend more time at the beach or with your grandkids.  Maybe you’re tired of working for “the man” and you want to call the shots.

Most likely, you just want more freedom – to live life as you please.

I have a hard time accepting the idea that a person must wait until the end of life to live on their terms.  But that’s the deal society sells us.  Trade us forty years of your life for a retirement income so you can enjoy the last ten.  That’s why I struggle with my retirement account.  I believe I will get a better return if I invest the money – right now – in myself.

I adopted a rule a while back to pay myself first – with both my money and time.   I deposit a percentage of every paycheck into my savings account before I pay my bills and before I pay Vanguard.  I also spend the first hour of every day on myself to work on projects that are important to me.  Someday, those hours and dollars will add up to something much more valuable than my 401k. That’s my bet.

How about you?

How’s your retirement plan coming along?

I’d love to hear from you in the comment section below.

-Scott

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Update:  In January, I’ll be launching the Life Planning Kit: Build, Believe, Become to help you tackle big questions like these.   Stay tuned.


{ 8 comments… read them below or add one }

Shelley J November 5, 2013 at 10:27 am

Scott,

I always struggle with the “financial Freedom” aspect of life. I do hate working for “the Man” seeing how organizations lack leadership. It leaves me want to do more meaningful things in life. Like volunteering for a childerns facility. I too contribute to my 401K and when the statements come in I am made to feel as if even with my contributions I will never have enough to retire even when I reach retirement age. There has to be a very small % that have a full grasp on financial freedom and is it becasue they designed or created something that society buys ( Apple, Microsoft, etc.)

With that thought I still try to find a balance in my life of learning something new that I feel will pull me towards my life goal and that is to make a difference in others lives.

Interesting thing I was currently working on a lesson plan for school and it was based on Contract and Comparison and a paragraph example it used was reactive and proactive people. So the question for others in life is to get to that place of financial freedom, will you be reactive or proactive? I prefer the latter.

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Scott November 7, 2013 at 8:15 am

Hi Shelley, being proactive is definitely importanty. Most people just wait for things to happen. Not you! Thanks for the comment.

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Warren BEHLAU November 6, 2013 at 8:04 pm

Good challenge of conventional “wisdom”. If we all take a moment and understand our objective, I’d bet very few say we exist to make the company rich. But most of us behave that way. Think of what we can achieve with daily development and compound the value like an investment. other results will follow making the company successful because you have become better at what you do. Sounds like everyone wins. Starting today, I am investing in my own development every day. I am a worthy investment.

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Scott November 7, 2013 at 8:16 am

Hi Warren! We like to challenge conventional wisdom around here : ) Thanks for the comment.

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Cheryl Larsen November 9, 2013 at 10:58 am

Scott,

What a great discussion point! Any financial advisor will recommend that one have a balanced portfolio so as to protect your assets from future changes in the market. I think a balanced “portfolio of life” is the way to approach your personal development to protect yourself from the potential obstacles or changes in your life. You offer a good model in being prepared for financial and personal challenges by paying yourself first in both time and money. I look forward to hearing more on this topic.

Cheryl

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Scott November 9, 2013 at 12:04 pm

Hey Auntie Cheryl! Thanks for stopping by. I appreciate the comment.

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Pat November 9, 2013 at 2:18 pm

Hey Scott,
This article brought to mind an issue that relates to finances as well as many other areas of life. It reminded me of how oftentimes what is popular or “good for you” is really not and with a little bit of questioning and research one can discover this and make better decisions.

My job is in baseball – playing and coaching – and during my career I sought out the best info and coaches I could find to help my pitching. For baseball skills, I found the best pitching coach out there. Much of what he taught went directly against what most pitching coaches taught. What followed was the same training in the areas of physical training, nutrition and mental training. All of my coaches had methods that were not accepted by the larger population. What it took was my competitive nature to seek out the best info.

What it also took was questioning of what is accepted by most in these areas. So, Scott, your fear and hope expressed with your 401(k) and your life and finances in general are the same that I felt about looking for a better way to pitch. And you are questioning these issues now.

The first question of the post whether to put more in the fund or invest in yourself brought two thoughts to mind. First, it’s a given to invest in yourself with time and personal growth (which is the subject of Margin of Excellence). As far as where to park one’s money, that’s a personal decision for everyone.

Second, this post brought to my mind questioning of even the most accepted ideas of how to do things. As I learned more and examine in more depth the area of money, I found that much of what is accepted as the best way to go is often the best way to go for whoever is SELLING it to you.

Take the 401(k) – I found an article about the history of the program and if I had one, I would get my money out of it and to a better place. I know of much better places to park your money, but I am not a salesman of these things.

The article I read is from PBS.org and is a bit long. Here’s a couple quotes:

“The plea from larger corporations to the Internal Revenue Service was: “Please give us a way to let our higher-paid employees save on top of the traditional plan for their retirement. Let us deduct their pay, tax-free, and let them pay taxes later after the accumulation.”

“It became popularized with lots of advertising money and a lot of congressional protection that other kinds of financial products and other kinds of products in general didn’t have.

For instance, the 401(k) manager, or mutual fund, is one of the only products that Americans buy that they don’t know the price of it. It’s also one of the products that Americans buy that they don’t even know its quality or know how to judge its quality. It’s one of the products that Americans buy that they don’t know its danger, and it’s because the mutual fund industry had been able to protect themselves against regulation that would expose the danger and price of their products.”

The author (an economist) writes “And I wondered what this new forum was. So in the early ’90s, I just told the news media and everybody about the fact that these 401(k) vehicles seemed to be a way that companies just got out of contributing to their workers’ savings plans.”

There’s more if you want to question your decision to park your money in a 401(k). Read the full article here:

http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/retirement-gamble/teresa-ghilarducci-why-the-401k-is-a-failed-experiment/

My point in commenting on your post was not to throw the 401(k) under the bus (there are way better retirement alternatives), but to comment on how your article reminded me to be competitive, question conventional wisdom, look for the best alternatives and be open to changing even what you have believed to be right for so long. Surely these qualities are also why I read your posts, Scott. Good work.

Thank you,
Pat

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Scott November 10, 2013 at 5:13 pm

Hi Pat, thanks so much for the detailed comment. To be successful at something – whether it’s baseball, investing, or whatever – you can’t do what everyone else is doing. You learned this going through the ranks in your baseball career. You had to seek out coaches who saw things differently that could give you an edge. Life is a bell curve. Most people end up somewhere in the middle. Our goal here is to help people get to the side where very few ever go. In order to do that you must invest in yourself and your ideas.

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