No, I’m NOT Rich. But I Am Financially Free. Here’s How I Got There.

Let’s face it, the more choices we have in life, the richer and more rewarding it becomes.

Fortunately, I’m currently in that coveted sweet spot where I can do pretty much whatever the heck I please, whenever I want.

Don’t get me wrong. I’m not in a position to buy whatever I want, but I am able to take advantage of a lot of opportunities in life that are typically out of reach for the financially undisciplined crowd. So, financially speaking, I’m in a pretty good place right now.

Flexibility Is a Powerful Perk

If I want to drop everything right now and take a spur-of-the-moment vacation, or visit some friends on the other side of the country, I can do it. True, I won’t be flying first class or staying in five-star hotels, but I can do it in a financially reasonable manner, knowing that the bills will be paid in full shortly after they arrive in the mailbox.

Many of you know that not too long ago I made the biggest impulse purchase of my life, shelling out almost $2500 — from a “mad money” savings account I have — on a couple of tickets to see my hockey team play a Stanley Cup Final game.

I’m also fortunate right now to be in a position to handle unanticipated financial surprises — like when I got blindsided with a dentist bill earlier this year for $3332 to cover the cost of, among other things, having my son’s impacted wisdom teeth removed. And while that really smarted at the time, I was thankful to be able to pay the entire bill without having to take out a loan because I had a rainy day fund to handle unexpected expenses.

The Quest for Financial Freedom

Although a lot of folks would disagree with me, I’m not rich — but I am financially free. It’s important to understand that the two are not synonymous.

Believe it or not, financial freedom can be achieved no matter how much money you earn. All it takes is a lot of discipline, a little patience, and a strong commitment to spend less than you earn, which is why I constantly preach that financial freedom is a state of mind as much as it’s a state of being.

So how did I get to this point? Well, there are two big reasons:

  1. I’ve always lived well below my means. Always.
  2. I’ve kept my debt to a minimum. That’s not to say all debt is bad; it’s not. Even so, the only outstanding debt I’ve had on the books for the past eight years or so is a very manageable monthly mortgage payment. For as long as I can remember, other than our cars and the house, I’ve never bought anything unless I’ve had the money already set aside to pay for it in full.

By following that simple strategy, I’ve been able to avoid tens of thousands of dollars in interest payments over the years. That’s money I’ve been able to, for example, spend on a last-minute vacation to Hawaii in 2011 and, even more importantly, feed into my retirement, mad-money and rainy day funds.

The Moral of the Story

It’s never too late to start your quest for financial freedom.

Remember, if I can do this, you can too — even if you have a modest income and/or currently find yourself buried under a mountain of debt. Trust me; the only catch is you’ve really got to want it.

The bottom line is this: Debt limits your choices and future opportunities in life because you end up spending tomorrow’s wages today.

The good news is that by forcing — and then keeping — the red ink on your balance sheet to a minimum, you’ll not only keep more control of your life as you get older, but you’ll also gain the financial flexibility to make it richer and more rewarding too.

Photo Credit: Tata_aka_T


  1. 1


    Great wisdom, and I can vouch for it. We’re there, too, and we followed the same formula. Sadly, it took a while for us to “get it” but, on the other hand, we were fortunate enough to be able to really turbocharge our Drop Dead Money fund (which is what we called out financial freedom fund) with a third key:

    Understand the economic cycle: sell when prices are high and buy when they drop. In economic cycle big ticket things, like houses, stocks, mutual funds and rental properties all go up in price and come down again. The cycle lasts about 7-10 years, top to top or bottom to bottom.

    To us at least, that made an enormous difference, because it allowed us to exit this past recession in the best shape of our lives financially. If we hadn’t known that, we wouldn’t be where we are today.

    • 2

      Len Penzo says

      Good for you, William! I just wish I would have been more bullish at the bottom of this last economic cycle. I foresaw the last stock market crash months before it occurred and, as a result, I was able to get out in time to save my retirement savings. Unfortunately, I wasn’t aggressive enough jumping back in — I made the mistake of thinking the market was rational! lol

  2. 3


    I relate to much of your post. When you are focused and driven, it leads to results. And, financial freedom is insurance for your future. Everyone needs to invest in themselves.

  3. 4


    Totally agreed! Leaving below your means, regardless of income, is the key to early financial freedom. You would also seriously want to be financially independent. Without desire, there is no drive to achieve it.

  4. 5

    Spedie says

    You forgot to mention that you have a wonderful spouse you can trust. I was, once, free, but not now…you know the story Len!

    • 6

      Len Penzo says

      That certainly helps a great deal, Spedie. If we weren’t on the same page, things would be a lot more difficult.

      By the way, I’d be honored if you ever decide to send me a guest post detailing your story. Let me know when — and if — you ever feel like taking a leap and sharing it. (And if not, I understand!)

      But it’s an extremely valuable lesson everyone should learn.

  5. 7


    We are trying our best to live below our means after a year of being out of college and having “real income”. The party time is over. I also agree with Spedie, having a partner who values what you value (and even keeps you on track at times) is priceless :)

    • 8

      Len Penzo says

      My first year out of college was probably my most tempting period, Lauren. Suddenly you’ve got some real decent income coming in and not a lot of obligations, so it is easy to spend at a level that is at least on par with your income.

      Hang in there! It’s all about being disciplined!

  6. 9

    mc says

    “Believe it or not, financial freedom can be achieved no matter how much money you earn.”

    I don’t think so.

    I suppose you can define financial freedom however you want in order to make this statement true, but for how most people would think of it, that isn’t true. Unless you are sitting on a big wad o’ cash, if you earn too little, you simply will hit a point in which you are tightly financially constrained–anything but “free”–despite all the best personal finances wisdom in the world.

    The older I get, the more I see how earnings just creams savings in wealth accumulation. I didn’t grok this point as a younger person, and I’m paying for it now.

    • 10

      Len Penzo says

      I see your point, mc. Like you said, I think it is all depends on our definitions of the terms.

      For me, I’d say “financial independence” is tough to achieve on small incomes, but not “financial freedom.”

      How do I define “financial independence”? That would be having enough in the bank to do whatever I want for the rest of my life without having to work ever again.

      On the other hand, I define “financial freedom” as being able to pay for all my bills and other obligations (retirement, insurance, etc.) and still have enough free cash at my disposal each month to stake advantage of financial opportunities (within reason, whether it’s splurging on wants, or making investments) under the constraints of my current income.

      In my view, one can still have debt and be financially free. I know a lot of people would disagree with me on that last point.

      But those are my definitions, of course.

  7. 11


    Len, you are touching on two very important points here: one, that to become financially free it doean’t matter how much one earns but it is a matter of balance; and two, that being financially free is not only about how much money one has (the material) but also a matter of mentality. Good post!

  8. 13


    About affording the expensive hotel, and your article:

    The difference between $10 millions and $1 million is not much. But the difference between $0 and $1000 is infinite.

  9. 15


    I always think that “rich” is someone else! Despite that, I am quite comfortable because of financial independence. I am able to do work I enjoy without thinking about the pay scale. I know I have enough in my retirement savings to support my wife and I in a very comfortable way.

    • 16

      Len Penzo says

      You are in a really good place, Larry. I’m financially free, but I wouldn’t be able to do what I am doing now for long if I lost my main source of income. That’s not to say I couldn’t live for quite awhile without additional income — I could. But I wouldn’t have as many opportunities to do what I’d like to do, when I wanted to do it.

  10. 17


    Great advice, Len. That you’re able to do these things is great, and a testament to making sound decisions over many years it seems.

    I tend to look at things in terms of financial freedom and flexibility as well. For me, it’s about thinking in terms of not wanting to work until I’m super old and physically less able to do so. Better to pay dues now, by working and saving. When young, we’re working for our current needs AND the needs of the ancient version of ourselves :)

  11. 18


    Fantastic post. Two principles have always struck me as the easiest way to achieve financial independence. 1) Spend money like your Depression era grandparents (read: only if absolutely necessary) and 2) Work your ass off to earn your money. Very simple. I’m not financially out of the woods yet, still have a little debt, but making great strides and know I will get there in the near future. Thanks Len!

  12. 19

    Tony says

    That is great Len. I wish to achieve the same one day. My problem is that on paper I can make ends meet (just!)However as the month passes it never feels like there is just enough to spread around. How can I get there? Is there a map?

  13. 20

    Http:// says

    I was just thinking about this a few days ago. We have friends getting married in Ireland next year and it’s so nice to be able to instantly say, yes, we’ll go. We don’t make a lot of impulse buys so when a big ticket item comes up that we really want, it’s not a big deal anymore.

    Greta reminder of the benefits of living below your means.

  14. 22

    Lisa says

    Hi Len- I agree completely! I am almost there!! I was just wondering what are your definitions of “mad money” and “rainy day” funds? Is the rainy day fund your emergency fund? Keep up the great work!

    • 23

      Len Penzo says

      Lisa, I have multiple savings funds. In a nutshell:

      Rainy day fund – I keep about $2000 in this for short term emergencies.
      Emergency fund – I keep a minimum of six months of living expenses to cover me in the event of a job loss or medical issues (although right now it’s more than that)
      Mad money fund – the amount in this fluctuates, but I use the money in this for pop-up opportunities like concerts, last-minute vacays, or consumer splurges

      Hope that helps!

  15. 24


    Yes, being financially free is the important thing, not being rich. If you’re comfortable and you’re able to bless others, you’ve got it made.

  16. 27


    People do not really need all the crap that they buy, but there are certain things that everyone needs, housing, food, etc.Being rich is loving what you have got, not wanting what you do not have.

  17. 28

    kapil says

    yes this is very true if you want something you first think about it and it is related to our state of mind weather we are financially free or not.

  18. 29

    Paul says

    Great post!

    I have learned over time that the ultimate goal in life is to be happy. In order to be happy you need to feel happy. In order to feel happy you need to do things that get you in that mindset. If you know what you want in life, just by doing something about it everyday, big or small, you set your mind, you feel happy and finally become a happy person. I am 28, I come from a 3rd world country, and I am on my way to financial freedom


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