I realized the other day that I’m not sharing too much about my actual thoughts regarding financial independence. As you might have noticed, my articles tend to be more stock picking or investor education focused.
This is funny, because a large part of my weekly available time in brainpower is allocated to dreaming about the day I’ll finally become financially independent.
That’s why today I would like to share a bit more about my thoughts and how financial independence could look like for me.
Although, these thoughts regularly change and kind of go with the ebb- and flow of the seasons. There’s one constant though: I really want it!
What is financial independence for me?
I must have written more often about this topic, but just in case you were wondering. Financial independence to me is the moment that my passive income in the form of dividends covers my monthly expenses.
I call this the dividends-expenses-cross-over-point.
This cross over point lies for me around the 12 years mark and I’m now 6 years down the road. Initially I calculated this to be 15 years based on a 50% savings rate, but I believe that I will continue to grow my savings rate in the upcoming years.
That’s why I aim to bring my cross-over-point 3 years forward.
Let’s see! It’s a bit aggressive, but my calculations show me that it should be possible with some additional effort.
Calculate your own dividends-expenses-cross-over-point by using my dividend investment calculator.
Why do I want to be financially independent?
This sounds a bit like a no-brainer question, but it’s probably good to remind myself about it.
Well, simply said, I just want to have more freedom.
- Freedom of choice…
- Freedom on how I spend my time…
- Freedom on where I spend my time…
- Freedom with whom I spend my time…
- Freedom of thoughts…
- Freedom in the actions I take…
- Freedom in how I spend my money…
- Freedom in … (almost everything)
That’s one of the simple reasons why I named my dividend growth portfolio my freedom fund.
What’s your reason for aspiring financial independence? Let me know in the comment section below this article.
How do I envision my life once I’m financially free?
There are actually multiple options which just wonder through my mind when thinking about this topic.
1. More of the same, but with less stress
One of the first thoughts is to just continue what I’m doing now, but with more freedom of choice and way less pressure and stress.
As an example, I truly love where I’m living and how we spend our time when we’re not at work. We live in a nice environment with a lot of forest around us and being in the forest is something I always enjoyed.
At the same time I also enjoy the work I’m doing right now as well. I work with some very talented people and the culture in our company fits me very well. I actually enjoy going to the office to meet other people.
At the same time there is sometimes quite some stress involved with work. And this is probably something I might do different once I reach the expense-cross-over-point.
At that time I just might consider switching to a 4- or 3-day work week, provided that the company agrees to that. Or I might switch some roles internally which could bring me lowered stress.
Spending a bit less time at work would create more space to work on some hobbies. As an example, I really love using my two left-hands to build some nice DIY woodwork.
Another example is blogging and creating content for YouTube. I really love analyzing stocks and sharing my knowledge with you. This is something I could definitely do more of at such a moment in time.
2. Change work and be more courageous
One thing I ask myself often is: am I courageous enough?
I give you an example: I truly love analyzing stocks and talking about them. Why am I not taking the risk and retrain myself to become eligible for a job as a stock analyst?
Or why am I not doubling down on my passion for creating content? Maybe if I just push it for a year I could earn a minimum income with it.
Truth to be told, I lack the courage for that, because my current work provides me with an upper middle-class income. Investing a large sum of that income into passive income generating dividend stocks is a very conservative approach to seek financial independence.
It gives me the cash to fall back on and I know that I will be able to retire early at a certain moment in time. The only thing I have to do is to be consistent with my investment and let the compounding do the heavy-lifting.
I’m now already in a situation where an annual 5% dividend growth for the whole portfolio equates to 7 months of additional cash deployed into the stock market.
Example: 5% growth on 5000 in dividends is 250 Euro. 250 Euro at a 3% yield on cost requires 8.333 Euro to be invested. If you are able to invest 1.250 Euro per month, then this is similar to 7 months of cash contributions.
3. Focus on giving back
Another path I could clearly see my self pursuing would be to work for free and support the underserved.
I have gathered quite some transferable skills over the last 20 years which I could easily use to help educating others. Examples are financial literacy, anything regarding the basics of IT and in some areas even advanced, how to setup a business and lately also digital marketing.
There are still a lot of kids out there with limited opportunities especially those that are living in orphanages. How cool would it be to support them in their education and to support them getting into the middle-class?
Time is the main limiting factor which is stopping me from doing that today, which shouldn’t be an issue anymore once I achieve financial freedom.
Probably this would even be one of the most satisfying and impactful things we could do by helping others.
4. Traveling around Europe and the world
A last option and definitely something that I should do is to see more from the world.
Currently I’m having 26 days of vacation a year, which is not too bad compared to people living outside of Europe. On the other hand it doesn’t allow me to make far away and longer-term trips.
This is a pity, because one of the things I aspire is to really live for few months within a community to truly get the feeling of how they live.
How cool would it be to rent an apartment for few months in the heart of Siena, Florence? It would allow me to discover the region, visit different summer festivals and just live as an Italian person for some time.
Or what about wine-tasting in Georgia? It’s not a typical region that many people think about, but I’ve heard several times from Georgian people that this is one of the things I should definitely consider.
There are just so many places to see and experience in the world and being financially independent would at least allow me to enjoy many of those!
There’s one catch though, it would need to fit family life. By that time the kids are teenagers and their schools and education will have priority.
On the other hand, I’m sure that there will be possibilities to combine things.
Where there’s a will, there’s a way.
Which option has my preference?
If you ask me now, it would probably be something like the following:
Take a year sabbatical from work to see Europe and travel around. Live in some different places across Europe to truly explore the regions and experience their cultures.
After that year I would make up my mind on what to do.
If you’d ask me today then I would probably stay at my job first, because we’re working on some pretty cool stuff right now. I might just ask the company I work for to start working less so that I would reduce the stress.
The reduction in working hours could then be an opportunity to double down on my passion for blogging and dividend investing.
Charity would probably still have to wait a little bit. I think I would want to focus on other people once I’ve got my own kids properly educated and prepared for adulthood. I can tell you, this isn’t an easy task right now and it will for sure not be an easy task in their teenage years.
But after that I would definitely consider option 3 and use my skills to help the underserved.
One thing I know for sure though: I can’t do nothing.
Life is short and there’s just so much cool stuff to do in the world.
These are my thoughts right now and I’m sure that they will be slightly changed again if you ask me a year from now.
Now that you know this, please tell me, how do you envision spending your time once you are financially free?
European Dividend Growth Investor