11–20 of 27 posts
FU money is being able to quit without worrying about expenses before finding another means of living.
Financial freedom is reaching retirement threshold (financial escape velocity): having enough money to not work anymore based on your desired expenses. That means having enough money invested in index funds such that you could withdraw the annualized return each year and live on that for the rest of your life (typically 4%).
In my personal experience, I have found that waiting for “enough to do x” never really pans out how I thought it would anyway so just go for it, back yourself and figure it out on the way down.
Since you claim to be very risk averse, then you need to consider how robust your consulting firm income is and the effects of inflation on your savings. But no job is guaranteed either. Sometimes you have to go with your gut. Analysis paralysis can lead to worse outcomes.
Then obviously yes...
On my book, sufficient money to quit the rat race is: I own a place to live. Renting/mortgage is my biggest expense. As long as I don't own a place to live, I need to continue working.
The better way is to look at your big picture finances. You will always have costs associated with housing - make sure you account for that in your withdrawal rate.
Said that, despite working in a cool organizations, I think I might need sometime for myself. Also said that, I have family, so I need to keep going because things are getting insanely expensive and my FU money which was suppose to be worth a decade, is not worth it about 5 years.
The "6%" inflation is terrible because as we all noticed, nothing has increased only 6%.
This is the case in the country I am from. It is like that since I was a kid, every 10 years everything got at least 5x more expensive, including buying a house and food.
Now I moved somewhere else and the situation here is about the same. I used to spend 30 per week in groceries now I spend almost 60. Electricity bills went up about 80% when compared to previous year. The rent in the place I lived before raised about 30% but I ended up living somewhere closer to the office so it is even higher.
In summary, I am not filling the FU pot as fast as I want and expenses are increasing much higher than I expect.
All this situation of layoffs and etc make it worse. At least I had a conversation some days ago with some friends that work more close to the guys with money and they are already preparing the pockets for hiring again.
I have 2 buckets for my FU money One is a reservation for serious emergencies that should remain untouched while I have other resources. Then I have my true FU bucket which I hold in an investment easy to get it back. Unfortunately, I pay for liquidity with low ROI, but I feel safer this way so I consider it as taxes for my own sanity.