Declare Your Financial Independence!
July 3, 2011
Happy Independence Day! I read the full version of The Declaration of Independence every 4th of July. Not as popular as fireworks, but I am fascinated by this document and its place in world history. If you have not read it since high school, I encourage you to read it again from start to finish (not just the first two paragraphs).
I find myself this Independence Day not only reflecting on the desire of the people to declare independence, but on the desire of the individual to obtain their own financial independence. Some perceive financial independence as the freedom to say goodbye to their employer for good and retire. This perception may be at the heart of financial independence, but I believe there is more.
Declare Financial Independence from the Bank!
Wouldn’t it just be nice to tell the bank, or any lender, goodbye? What a sense of liberation! Today, individuals are finding it increasingly more difficult to finance or refinance a home. I have heard the term “good” debt. It seems like an oxymoron to me sometimes. Your home may be vital to your pursuit of happiness. It provides you shelter and security. It may be your playground. It may be part of your identity. To be overburdened by debt in order to keep this vital aspect of your life is not financial independence. In fact, it may not be living at all. Debt, “good” or bad, can weigh on an individual, both consciously and subconsciously. This is not to say that you shouldn’t borrow money to buy a house. Under most circumstances, it is necessary in order to purchase that first home. But if financial independence is what you want to declare, then you will have to pay off your debt and remain debt free.
Declare Financial Independence from the Government!
But it’s my biggest tax deduction! Have you ever heard the expression “the government can giveth and taketh”? At one point the US government allowed taxpayers to deduct consumer interest. They repealed it. If the government decided to repeal the mortgage interest deduction, how would that impact your personal finances? What if the government changed another program that has significance to you? Should I even mention Social Security here? Don’t put yourself in this position. The less you rely on the politicians in Washington to provide you direct economic benefit, the more financially independent you will be.
Declare Financial Independence from Family!
For young adults, pursue a worthwhile career and live responsibly so that you can become financially independent from your parents. They will love you for it. Of course, they will love you either way, but don’t be 30 and living in their basement. I have worked with widows and divorcees who have found themselves suddenly responsible for their own financial independence without proper preparation. Empower yourself with financial knowledge and an understanding of your financial situation. Independence can be defined as self-reliance and free of control. I believe financial independence from family brings them closer together on the important matters of life, not further apart. Depend on your family or spouse in areas other than financial.
On this Independence Day, reflect on your own financial independence and the things that stand in its way. It may not be on the same scale as the Declaration of Independence, but in my opinion, financial independence is a cause worth pursuing.
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