I have gained financial freedom, and I want to share all the secrets with you, because I think you deserve financial freedom too.
I. Why have money?
To me, money is used to prevent yourself from dying of hunger, prevent yourself from dying of thirst and prevent yourself from dying from the cold.
That means, enough money to feed yourself, for water and (of course) coffee, and for an apartment to shield you from the elements.
To be frank, after that, you don’t really “need” any more money.
Let’s do some math. I’m American so I’m going to do some American math based on living here, assuming you are from the SF Bay Area, one of the most expensive places to live in America (and possibly one of the most expensive in the world, but not as expensive as Hong Kong).
Cindy and I get subsidized university housing for graduate students, which costs $1300 USD a month, includes water, electricity, and wifi for a one bedroom. A non university apartment in Berkeley is around $1600-1700 a month.
I no longer eat breakfast or lunch. Just a lot of coffee. So I make my coffee in the morning at the apartment, and usually go to a coffee shop to do work. An espresso in gentrified Berkeley or SF is around $3, or $4 with a $1 tip. I usually have two coffees a day at the coffee shook so around $8-10 a day in coffee. That’s $300 a month in coffee. To me, it is like renting an office. And I get free wifi.
Cindy ad I usually cook at home. We eat mostly pork belly, chicken (dark meat), kale, kimchi, and other assorted veggies. We usually buy whatever meat or veggies are on sale at the grocery store
When we do eat out, we usually share a single appetizer and single entree. Eating out in the Bay Area, it might be $10 for appetizer, and $15 for entree. So ~$30 a meal eating out for dinner. And we might eat out 2-3 times a week. So around $60-90 a week. Around $240-360 a month. Let’s round up, let’s say eating out is $400 a month. Groceries are another $200 a month. So food is around $600 a month.
Let’s say random health insurance, transportation, and other costs is around $500 total a month.
II. My living expenses
So we have so far:
– $1,300 a month in rent
– $300 a month in coffee
– $600 a month in food
– $500 a month in living expenses, transportation, health, etc.
That is around $2,700 USD a month in expenses, or around $32,000 a year in expenses.
So in theory, to have “financial independence” or “financial freedom”, we need around $35,000-40,000 a year (to estimate up).
The reason I find this interesting: the number is very reasonable. When I got my first job out of college, as an online community manager for a tech company, I made $40,000 a year, plus health insurance and other benefits. So out of college at age 21, I had “enough” money. Yet I was miserable, because I fell for the sucker trap of wanting to buy shit I didn’t need (new BMW, Leica camera, new iPhone, BOSE headphones, Nike shoes, iPad, MacBook laptop, etc.)
III. How to get rich.
As of 2017, Cindy and I have $150,000 in the bank. We make a combined income of around $200,000 a year. How did we do it? Easy: live below your means.
For a while I had a personal rule:
If I want to spend more than $300 on anything, I need permission from Cindy.
It helped me save a lot of money, and prevented me from making dumb investments or buying shit I didn’t need.
Now my new rule I am experimenting with is:
If I want to spend more than $4, I need permission from Cindy.
Why $4? That’s the price of a coffee and tip.
I honestly have all the shit I need. I don’t own a car, because I don’t need one. I no longer own a smartphone. I have a laptop, an iPad, clothes, a digital Ricoh GRII camera, and headphones.
Also, to be frank, I cannot trust myself with money. I grew up poor, my dad was a chronic gambler (my mom had to file for a bankruptcy when I was a kid, because we couldn’t afford to pay off our credit card debt, and rent). I still remember when I was twelve, I had to pick up the phone when the creditors called for my parents, and I always lied that my parents weren’t home. Pretty sad shit.
Growing up in poverty, my mentality was always:
Tomorrow is uncertain. I must spend the money today, or else my dad might take the money and gamble it away.
When I was a teenager, I had a tutoring job ($10 an hour), had a small $200 a month stipend from the community center I worked at, and made some side cash building and selling custom computers. I spent all the money on shoes (K Swiss and Adidas Shell toes), clothes (LRG, Adidas track jackets, Foot Locker basics), and my car (intake, header, exhaust, spray paint).
My mom lived paycheck to paycheck. I never learned how to save money. Because we were in perpetual debt.
Cindy taught me how to save money and life below my means. Thank you Cindy, we are balling now because of you.
IV. How much money is enough?
To be honest, if you live in America, or most anywhere else in the world, and you earn at least $40,000 a year (before taxes), you have “enough” money.
Anything more than that is superfluous. Nice to have, but not really “necessary”.
My buddy the Stoic philosopher Seneca said the proper amount of wealth was:
Not to live in poverty, but not to be too far disconnected from poverty.
Growing up poor, I can tell you, not having money fucking sucks. Does the alternator in the car go out, and it costs $300 to fix? We gotta take out a credit card debt, beg family or friends for money.
Or how about all four tires on your car are bald, and your brakes in your car are not working properly? It begins to be the rainy season in the Bay Area for three months. Now, do you spend $200 to get your tires replaced? Do you spend that $100 to fix the brakes? Or do you drive more “carefully”, and have your fingers crossed that you don’t die in a car accident? Oh yeah, and what if the cop pulls you over, and gives you a ticket for having your headlights that don’t work, and that costs you another $100 for the ticket, and $100 to fix the headlights? Don’t forget you need to pay the rent this month, and your husband just gambled way the rent money in Reno. Oh yeah, and you’re already $10,000 in credit card debt. You owe another total of $2,000 to your friends. You’ve borrowed $5,000 from your family already. Imagine the anxiety that my mom felt every night going to sleep, and commuting to work.
My mom is a saint. I remember she started a college fund when I was 5 years old. She put a very little amount of money in there– maybe $200 or $500. She told me when I was a kid, “Eric, I started you a college fund. Let’s learn how to save money, and one day you can go to college.” One day my mom finds out that money is missing. My dad stole it and gambled it away. Fucking sad shit.
V. How does it feel being rich?
Consider that Cindy and I have very low living expenses, especially living now in Vietnam. Our monthly expenses (combined including rent) is less than $1,000 USD a month. Our income is starting to slowly climb up, with a combined income of $200,000+.
Because we are earning more money than we spend, we are rich. In theory, we can now never run out of money, assuming we don’t do any stupid shit like buying a Hermes bag, a Hublot watch, and a Maserati.
Now that I’m rich I have realized this truth, that money is only good for peace of mind.
Funny thing is that it doesn’t matter how much money you have. Because you can be a billionaire and still living in anxiety. Apparently there was some hedge fund manager who was worth $3 billion, but lost $2 billion in the market crash, and was only worth $1 billion. He jumped out of his office window.
The truth is that for us dumb human beings, no money is ever enough. We always want to add more commas and zeroes to our bank account.
Also, we fall victim to the “hedonic treadmill”. When we reach a certain amount of happiness with our material possessions, we want to constantly upgrade.
We also fall victim to “lifestyle creep”, where our standard of lifestyle starts to creep up. For example when in the past, I loved my 1991 Nissan Sentra SE-R, I might want to upgrade to a BMW M3, then a Porsche, then a Maserati, then a Lamborghini, then a Bugatti, then a private jet, then my own spaceship.
A more practical lifestyle creep: you start to eat at $$ Yelp restaurants instead of $ Yelp restaurants. Or you start to upgrade from $$ Yelp restaurants to $$$ Yelp restaurants.
Or instead of staying at hostels or cheap airbnb, you start staying at expensive hotels.
Or instead of wearing Uniqlo, you wear Club Manaco. Or instead of Zara, you wear Alexander Wang.
Or instead of the standard iPhone headphones, you buy $300 Beats by Dre, or $500-700 audiophile headphones.
Or instead of shooting photos on your iPhone you get a DSLR, then a full frame DSLR, then a Leica, then a medium format digital camera.
The human bias is that we get easily bored with our material possessions, and we always want to upgrade.
The secret that has worked for me is,
Live below your mans. Use shittier stuff than you can afford.
For example, I can go out and buy a $30,000 digital hasselblad, or a $10,000 digital Leica. But I prefer to use a cheaper, shittier camera (Ricoh GRII). Or I prefer to use a “cheaper” film Leica MP which I got from Bellamy Hunt at Japancamerahunter.com for $3,500 USD.
I can go out and buy $1,000 headphones if I wanted, but I prefer to use these $20 earbuds I bought in Hanoi.
I can go out and buy Alexander Wang, Versace, Louis Vuitton, Hermes, A.P.C., etc — but I prefer my generic Uniqlo clothes.
The mistake many of us make is that we live exactly at our own means (our income is identical to our expenses), or even worse, our expenses are higher than our income.
You can be poor earning $1,000,000 a year, if your lifestyle means you spend $1,000,001 a year.
You can be rich earning $40,000 a year, if your living expenses are only $20,000 a year.
VI. Why have financial freedom?
When you have financial independence, you essentially have “fuck you money”. That means you no longer need to work for money. But it don’t mean you just sit home and jerk off all day, it means that you financially have time, focus, and freedom to do more creative work.
When you have financial freedom, like me, you can thrive creatively.
Now that I don’t need no more money, I can blog about whatever I want. And it’s fun. I’ve been able to blog 10,000 words a day, about 3-5 blog posts a day, on topics that interest me. Funny enough, I’m doing this all on a 4 year old iPad Air, in the IA writer app, drinking a $3 Starbucks cold brew, while standing. Now you can buy a brand new iPad for $330. What excuse do any of us have anymore?
Now that I have financial freedom, I can help support my sister Anna, and Cindy’s sister Jennifer. I can help support my mom, because I use all my extra cash and income to support their travels, their backpacking trips, or having a financial buffer to pay for their rent.
I still want to make more money. Why? I aspire to create the first trillion dollar photo company, in order to use money as a tool to solve world poverty. I have this utopian view where everyone in the world (at least starting in America) gets $40,000 a month in “universal basic income”. I don’t think capitalism is going anywhere anytime soon. So why not just exploit capitalism for fun and profit, in order to help the greater good of humanity? Who knows, I might run for American president one day (yes I was born here, born in San Francisco in 1988).
So friend, help me make more money to help more people. Your support helps me write these articles for free, helps me keep all the books and videos on this blog open source and free, and helps me support my family, then eventually to build up local free photography community centers for at risk youth, and to eventually help out the entire photography world.
The only one material thing I want in life is a (used) Lamborghini. Hey, I’m modest.
Conclusion: Work the system (to your benefit)
To conclude, just ask yourself,
Do I already have financial independence from my day job? Do I live without fear of not being able to pay the rent?
I don’t think you need to make a living from your passion. Einstein came up with the theory of relativity while working a boring 9-5 job at the Swiss patent office.
So if you have a boring office job, my practical tip:
Do the minimum work necessary not to get fired, and use all your free time to pursue your passion. Get the maximum upside from your job (financial security) with the minimum downside (office politics, wanting a raise, etc).
Learn more: Photography Entrepreneurship 101 >