Reminders of why we aim for finance Independence
Last week I had a very strong reminder of why I’m aiming for financial independence and looking to do it as soon as possible.
My company announced that it intended to make several hundred roles redundant in cost cutting exercises. Fortunately the cuts are not in my department and so I won’t be affected at this stage, however many of those who are affected will have been with the company for several decades. It’s these people in their late 40s/50s who are so fearful they will be unable to find or are unsuitable for other roles having worked here for so long.
This announcement gave me a stark reminder of what I’m aiming for and why:
I don’t ever want to be in the situation where I feel I’m too old to move into another job but yet not stable enough to retire.
It must be a horrible position to be in and my heart goes out to anyone ever affected by this.
People familiar with other online blogs will know the concept of “F-You Money” whereby you are financially secure enough to quit a job you hate at any time. However more importantly to me is being financially secure enough to not stay up all night worrying about how the bills will be paid the next month if I lost my job. I know many financial bloggers dream of quitting the day job in order to write full time or travel the world or any other amazing adventure.. but for me it’s having both the freedom and security to decide my own future.
Achieving this is a combination of:
– Saving/Investing money
– Reducing Expenses
– Creating other side incomes
And it’s moments like this which gives us the further encouragement to focus on each of these areas which will combine into achieving our goals.
Saving/Investing
Eventually through choice or not, we will all stop working and in this time we will need to rely on other sources of income. The only guaranteed money therefore is money which has previously been saved and banked. Saving 25x your annual expenses in the stock market should be enough to provide an income which doesnt deplete the capital, however with good timing and combining pensions and government benefits the total figure required could be even lower.
Reducing expenses
Lower expenses means less money required to live your daily life. Saving millions of pounds has little effect if you then spend millions of pounds each year. I’m trying to keep my expenses low so that if the worst should happen, I wont drain my savings at a high rate.
Create a side income
One of the best ways to protect yourself from the financial disaster of losing your job is to have a side income source. Whether this be dividends from investments, rental income from a 2nd house or a weekend job. I haven’t worked much on creating a side income yet but it’s something I’m keen to begin.
There are many factors in this world which are beyond our control, and losing your job through no fault of your own is a massive one. It’s one of the main reasons I started my path to Early Retirement and reminds me of why I’m sacrificing today to save for tomorrow.
What reminds you of why you’re taking the journey? Have you ever lost your job and how did you recover from it? Please let me know in the comments below.
13 thoughts on “Reminders of why we aim for finance Independence”
This is the reason I left my last job after 18 years about 1 year ago. I could feel that a “your job has been eliminated” or “being labeled as redundant” was coming. I’d escaped it many times. Most of the long term employees I’d worked with over the years had not. It seems to be just how it works. You can and will be replaced at some point. Expect it.
Having your finances in order certainly helps to calm the waters and it gives you options. The option to live on less. The option to make less. The option to be ok for 3, 6, 9 or more months if needed. Very good points ERG!
Thanks Wade!
I think the main problem and saddest part is that alot of people just don’t see it coming, Especially those who have been with the company longest (and are likely to be the worst affected). If you can see it coming, or even better; avoid lifestyle inflation in the first place.. you can avoid being hit so hard if (when) it happens.
Hmm…I’m coming up to my 19th year with the company I work for. 5 years ago, when the company laid off over 100 staff, I escaped the ‘cut’. 3 years ago, I escaped it again. At some point, it’s inevitable I’ll be put in the same situation again and of course I’m trying to (belatedly) save madly while I can. However, right now, things are on the up for the company, we’re in growth mode so for the next year at least, I assume I’m ‘safe’.
Currently, I’m the only person who does the job I do, but I’m under no illusion about my job security. Eg if the company sells our part of the business to another company, well, anything could happen. The small consolation would be my minimum 19 years redundancy pay and minimum 19 years in the company’s final salary pension (see, there’s a reason why I stayed at the company…)
So, I’m saving/investing like mad but have only really started doing so this past year. I live more frugally than I used to and I have a side income via a small rental property.
If things go pear-shaped, I’d love to be in a position to retire in 10 years time when I’m 55 but 60 is probably more realistic, unless I won big with my investments!
You’re on a great path, saving early with no debts, thinking about your future. I started waaaaay later, lived like the the YOLO kids of today until I grew up. It’s not going to be easy but I’m fairly optimistic I can reach my goal.
Thank you for sharing some of the details of your story and congratulations on reaching such a long length of service! Final salary scheme are an absolute goldmine, so don’t feel too bad about sticking with them ;)
I’m glad that I started on this path from a young age. It has been very tough sometimes when surrounded by friends who all want to YOLO it up every weekend. I think anyone who starts seriously saving for the future should be applauded, no matter what age they start at.
I was one of those guys. But I did wake up when I took a minor hit. You can do a lot in a few years if you want to enough, although I had the advantage of being debt-free at the start
I’ve been following your story for a few years Ermine (although not joining in with the conversations until recently), It’s remarkable what people can achieve when they want/have to. I’ve seen major blogs like yours and MMM really take off recently so hopefully more people will get the message before they find themselves in this situation.
Potential job loss was the main reason which first started me off of this (long!) road to try and become financially independent.
Ten years ago, I thought my job was as ‘safe as houses’, even my mortgage advisor said I didn’t need redundancy cover as there was no chance of that happening (I’m a front-line NHS worker). But now, this certainly is not the case and the thought of losing my job and then my house etc has certainly scared me into action.
Unless you’re self-employed; there’s always going to be the risk that someone higher up the food chain is going to cross your name off on a bit of paper and suddenly you’re unemployed. It’s a terrible situation to be in.
It sounds like we have similar goals. We save/invest heavily and avoid debt because we don’t want to be beholden to someone else for the rest of our lives. We also want to live life the way we want- on our own terms!
Hello Holly! Yup, that’s exactly the reasoning. It’s so much of a risk to have your entire lifestyle dependent on a single income.
That is a good way to live life, aka with a plan. I don’t understand why someone in their late 40 or 50s never assumed the security aspect of working for others to last forever. Did they unplug from the world, I hear stories that companies are laying off employees’ every day. We all need a financial strategy in life, to never be too dependent on any 1 income source.
I think alot of people do have plans to being with but they get postponed or abandoned due to life events like marriage and children. By the time they’ve finished ‘pushing-back’ the retirement savings, many are into their 50s and need to make a mad sprint to the finish line. Better to live cheaply and start saving early on and try to remain on-course even during these life changing events.
Hey guy, a very poignant post for me right now is this!
I’m starting to feel expendable at my current role only very recently, which is weird because I was already thinking of looking for a new job anyway quite a while back. Maybe it’s a chicken/egg situation or maybe I could see it coming from a long way off, not sure which?
And even if I got the chop tomorrow I wouldn’t have to hit panic stations for a good while which is more than most people can say!