Thursday, December 12, 2013

What Could Be A Bigger Boost To Your Quality Of Life Than Financial Independence?

I've been living frugally for about four years now. I've largely eschewed the trappings of success - at least success defined by the modern day developed world. You know, stuff like a bigger house than I really need, a luxury car that somehow gets me from point A to point B "better", expensive exotic vacations, way too many clothes, more gadgets than I know what to do with and hitting the town every Friday night like a true weekend warrior. I've instead learned to not take what I already havefor granted

In the process of avoiding living above my means I've completely transformed my life. I built a six-figure portfolio of equity in high quality companies that pay rising dividends to me as a part-owner, and now this portfolio spits out well over $4,000year in completely passive income. That means that for the rest of my life I've got about 1/4 of my annual expenses covered for me - even if I never invest another dime. I've essentially guaranteed myself that I'm going to become a millionaire one day. Beyond just the financial aspects that's a huge burden lifted off my shoulders.

And this point is at the heart of the discussion today. There's many people along the way that have questioned my lifestyle. Why save well over half of my net income when I could be enjoying that money today? Why not adapt to still saving say 10% or so of my income and enjoy a better quality of life? Well, that's just it. My quality of life is actively improving with every dollar I put away. I realized a little while ago that I'm not delaying gratification at all by saving so much money, I'm actually hastening gratification. I'm getting closer and closer to all-out freedom every single day.

It's shocking to me how many people have this formula backwards. It's automatically assumed more money spent = more happiness. But studies continue to show that isn't true. Once you have your basic needs met and you can afford a few luxuries like some fancy electronics or organic food you're probably about as happy as you're ever going to get. This is because humans adapt to our surroundings - a funny phenomenon known as hedonic adaptation. Hedonic adaptation is the tendency of humans to revert back to some base happiness level after major positive or negative life events. You could win a Ferrari in a raffle tomorrow and probably be pretty stoked for about 30 minutes. After that you'd realize it has four wheels, a seat for your butt, an engine and transmission just like every other car out there. Plus, you'd be pretty bummed once you realize the costs of gas and maintenance.

So money basically has marginal utility built right in. The more you have, the less you're happiness increases. This eventually meets a point of saturation where even an infinite supply of money would have no net effect on your happiness, and perhaps would quite the opposite negatively affect your happiness level. 

But what if there was something out there that actually kept improving your quality of life every single day? I think I found exactly what that something is. And you can't buy it at a store. It's called financial independence. Essentially, I'm talking about complete and utter freedom. Freedom to do whatever you want, whenever you want - within reason, of course. With financial independence you're no longer bound to the hamster wheel where you run faster and faster but seem to never get any further along. This freedom could allow you to be exactly who you are. Whether you enjoy spending more time with family, traveling the world, tinkering on your hobbies or just vegging out on the couch with Netflix all day - it's up to you. You could essentially own all of your time. No longer would other people own your time, ensuring that you clock in and out on their schedule to pay your bills. What could possibly be a bigger boost to your quality of life than that? 

I realized a long time ago I don't like being trapped in a cave. And that's exactly the situation you're in if you're beholden to anyone else for money. If you continue to spend your money on stuff you don't need to impress neighbors you don't care about in hopes of buying happiness you're never going to end the cycle. What cycle? The cycle of exchanging your dwindling time here on Earth to an employer for money; money you use to go out and make yourself feel better for working so much, after which you need to go back to work to earn more money. We're all dying one day at a time here. Why spend it stuck in a cave? Step out into the light.

So, I ask you again: what could be a bigger boost to your quality of life than financial independence? A big house? A fancy car? Spending every weekend out on the town? A bigger television? A faster computer? There is no right answer, because there is no possible material item anywhere in the world that could possibly make you happier than being free of whatever chains currently hold you down.

If you're out there living below your means and investing for your future freedom like I am be delighted to know that you're improving your quality of life far more than others out there that may jest at your expense. Because you're the only one who can actually afford that expense. And you'll ultimately be the last one laughing anyway.

How about you? Improving your quality of life in this manner? 

Thanks for reading. 

This article was written by Dividend Mantra. If you enjoyed this article, please subscribe to my feed [RSS]

0 comments:

Post a Comment

Recent Posts From DIV-Net Members