Don’t fall into the trap of thinking that one has to be “rich” to attain financial freedom. There are lots of people earning millions per year who aren’t financially free, just as it’s also true that there are folks earning less than $50,000 annually who are financially free. The latter case is more common than you might think because financial freedom doesn’t depend on money so much as it relies on personal responsibility and a commitment to fiscal discipline.
The bottom line: Financial freedom comes easiest to those who understand it’s a state of mind as much as a state of being.
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Pamela says
I’ve even known people below the U.S. poverty line ($12,880) living a life of financial freedom. Those are my real heroes.
Len Penzo says
Isn’t that amazing? It can definitely be done. Someone wrote to me awhile back regarding my article on how $40,000 is enough money to live on, saying that they have a family with six kids (or maybe it was seven) and live happily on $25k per year. Like I said, it’s all a state of mind!
retirebyforty says
If I can make $40k annually without working, I would be financially free. If I have to work for that 40k, I’m not. pretty simple to me.
Amanda L Grossman says
Very interesting thoughts! And completely true–there are definitely rich people who are not financially free. And how sad! It’s easy for the rest of us to think “if I had their income I would be financially free for the rest of my life”, even without working more than one more year.
Les Conyers says
Dare mrPenzo, I really loveyour website as to it is very educational and the blogs are sometimes very funny! Keep up the superb work. “Neither borrow nor lender be”
Len Penzo says
Thank you, Les. I’ve been here for more than six years. Welcome aboard!!
Doable Finance says
Bill McMahon (sidekick of Johnny Carson) made more than $5 million a year. He was heavily in debt. At one time, he could not even pay for mortgage.
Les Conyers says
Greed will consume us all! One must separate ones needs from wants
Little House says
Definitely true – as long as the $40K comfortably covers expenses, doesn’t accrue any debt, and there’s enough left over for savings, it works.
AniVee says
I can’t agree more! It doesn’t require that you have a lot of assets, but it DOES require that you have a very small amount of *LIABILITIES* – (or none!) … those are the little devils that bring you down…
Bret @ Hope to Prosper says
I agreee with AniVee. Financial freedom is more a lack of debt and liabilities than a hefty income. Most Americans have created their own financial restraints by choosing the lifestyle of a consumer.
Financial Frankie says
It is disappointing to think that some financial advisors out there are more concerned with increasing income for families rather than assisting them with adjusting to the amount of financial security they do have. While this could be the case for some, we need to take initiative over what we really value in our lives and weigh them heavily with the lifestyle and budget we create for ourselves in order to really have the chance to feel financially free.
matthew penzo says
HI DAD (Im at school)
Len Penzo says
Hi, son. Hopefully you’re on lunch break and not in class. You are on lunch break, yes? Love, Dad.
bill says
lol I love it.
Barb Friedberg says
Brilliant. I’m going to print thisone out!!!!!!
Doable Finance says
I come from a third world country. Many folks back there live on $2 income per day.
Charles Hummelke says
To DOABLE: Johnny’s Side kick was ED McMahon And you are right he went “belly up” after Johnny retired.He had to sell most of his possesions to survive. It was a shame./ My brother and I had an understanding that if he borrowed from me, he should exspect that I had the same right to borrow from him. We never kept records just an understanding that we help each other out. This has worked well through out our long life times. (75 & 66) Hands
Lena Gott says
‘Bout time someone pointed this out! My freedom is tied to my time. When I have time to do what I love, I consider myself free. Not only does the amount of money you make not matter, I think having to WORK for money is a drag. The older I get, the more I just want my basic needs taken care of, then the ability to spend time with my loved ones. And that doesn’t take a lot of money.
Kevin says
I have raised two kids on 25 grand a year.
I own a mobile home (totally misnamed since it has never moved)My bills are less than 1/2 my take home.
I do splurge on vacations I have an annual pass to a major theme park in driving distance.I stay at 35 dollar a night rooms while there (you can get 25 dollar a night rooms if bring bug spray and your own sheets it is just cheaper to pay an extra 10 a night)I once bought a 500 dollar car(air cond worked) that I drove for 4 years and junked it and received 285 back.
P.S, renewing an annual pass is 1/2 the cost of a new one.
David C. says
Len,
Last weekend I was paid a surprise visit by an ex-neighbor who, with his wife, managed their money and were able to retire in their early 60’s back in 2012. I think they were financially independent for a bit before that, but just wanted a bit more cushion before they pulled the trigger on retirement. They downsized from a 1,700 square foot house here in OK and moved to a smaller pueblo style house in AZ. That is a culture shift!
Anyway, they are as happy as newlyweds again, since they became FI and left the rat race behind. Seeing them again made me very happy that they had made it and that there might yet be hope for me. It was a pleasant visit and a nice little push to try harder to get to the point that I can give my employer my “two cheeks notice”, lol.
Len Penzo says
That’s terrific, David. I think most people look forward to the day where they can give our employer two weeks (or cheeks!) notice!
bill says
By the time you are old enough to do that, it’ll be two mudflaps notice.
I had two weeks vacation scheduled, mailed off my paperwork the last working day before that, and I was gone.
Len Penzo says
I’m almost there, Bill. Eight weeks away to be exact!
KiwiBloke says
Bingo – you explain it in an instant. I’ve always earned well below the median wage in NZ yet in 20 years of working part time I got to the point where work has been an optional extra for the last few years. I live comfortably off $20000 (NZD) investment income is well over that, which means there’s enough to put extra away for my daughter’s uni fees, old aged medical care and the proverbial rainy day. I feel I want for nothing.
Mary says
Knowing the difference between wants and needs is the kicker. My husband and I are debt-free, don’t bring in a ton of money a year (basically live off one salary) and are still able to save over $8,000 per year just for a rainy day; which will come soon enough as both our cars are over 13 years old, but currently work fine. I guess we both don’t want what the “Jones’s” have, and that makes a huge difference. Not being in debt is what makes each of us feel “rich!”
RD Blakeslee says
Life happens doesn’t it, Mary?
Our family has been accumulating personal capital (savings) for years.
So when our beloved 1999 Suburban gave up the ghost, we were able to take advantage of the current financial situation.
The Fed has been flooding the economy with money, so interest rates on savings are not keeping up with the deflating value of savings accounts.
Meanwhile, automakers are struggling with huge inventories and offering genuine financial incentives to push sales.
Ergo, we bought a replacement vehicle with a zero-interest loan, which we will pay off from savings.
dafik says
We have to know how to differ between wants and needs. Thanks for sharing knowledge…
bill says
If a person does not have a spirit of generosity, extreme monetary wealth turns into a prison.
If I am not happy being me, I will always be poor in spirit.