Book Review: My Money Journey
My Money Journey, edited by Jonathan Clements outlines the stories of thirty people from all walks of life who managed to find their way to the promised land of financial independence (FI).
FI is a new life model growing in popularity that is best described on a cash-flow basis. It’s the point where your basic (non-discretionary) living expenses are covered by your passive (non-work) income. This is the amount of annual cash flow you require to keep a roof over your head, put food on the table, and pay for the basic necessities (heating, electricity, property taxes, etc.).
Once you achieve FI you are in a position that you no longer need to work in order to survive, and if you decide to continue working in some capacity you are working because you want to, not because you have to.
After getting there some people will simply retire in the traditional sense while others will use their FI as a stepping stone to try or do something better.
They could decide to leave their demanding job and find something less stressful, something they enjoy and are good at, something that is more meaningful and serves as a way of giving back to the community, something they could do late into old age and not worry about how much it pays.
Here are some of the lessons you will learn from reading this book.
Slow and steady wins the race
The road to FI is fairly straightforward, but it takes a lot of time to get there.
The people in the stories were disciplined enough to dedicate a large part of their income to savings. They were patient and methodical. They lived within their means and didn’t spend money on most of the extras enjoyed by others.
When they got a raise at work they kept saving at the original rate and used the extra cash flow to pay down debt and invested the difference. Then all they had to do was sit back and watch the power of compounding interest work it’s magic over time.
Some people were able to increase their income by finding a better paying job or creating additional income via a side hustle or owning rental property.
What is comforting is that there were examples of people who were still able to get there in spite of things that life threw their way, such as job loss, divorce or unexpected health issues. By staying the course and saving diligently these challenges were overcome.
Avoid making bad investments
Early in the game some people ended up making some dumb investment mistakes like investing in hot tech or penny stocks that they didn’t know anything about.
I can relate to what they wrote because I did the same thing.
We all learned the hard way that there is no short cut to achieving FI.
Buying low cost index funds might be the way to go
Instead of owning individual stocks most people in the book invested in low cost index funds which boosted their long term returns and also saved them from spending a lot of time doing research.
Warren Buffett arguably one of the world’s greatest investors swears by this approach and I’m not going to argue against him.
Extreme frugality might not be the way to go
A few people echoed the same warning that maybe they were a little too aggressive in their pursuit of FI and missed out on doing some things that would have made them happy.
My personal take on this is that you don’t want to overdo it and miss out on something important, and then regret about it later like I sometimes do.
Also sacrificing fun today for financial security tomorrow might be a mistake because tomorrow might never come.
Summary
I smiled as I saw myself in many of the stories and was reminded of the struggle and sacrifices I made on the road to FI with more than a few investing mistakes made along the way.
The book reminded me of the day I finally achieved FI.
It changed my world immeasurably and it gave me back control over my life. Because of it I wasn’t afraid of losing my job and not having enough money anymore. It allowed me to stop thinking about money all the time and instead changed my focus to living the best life possible.
