Toward Financial Independence

I commented in this post about the consumerist fog that in which I was living as a middle-rank American military officer, and my desire to “fix” or improve my situation by taking command of my finances.

How did we do it?

It was simple, but not easy.

After working through the mental gymnastics of being in the consumerist fog, I resolved modify our life along four lines of effort: Tracking, Intent & Direction, Fighting Consumerism, and Improving Relationships.

1) Tracking. I needed to figure out what, exactly, was going on with the income and expenditures. As I said before, it was relatively easy to drift from month to month, bills getting paid, and random purchases getting processed through these pieces of plastic that the American economy ensures we carry. This way of living needed to stop.

So I decided to track. Every penny of income, every penny of expenditure. Pre-tax income, the few pennies of interest earned in our checking account. The status of the student loans payments, car loan payments, everything. Absolutely everything.

To be sure, there are numerous tools available to do this (Quicken, YNAB, pen & paper, etc.), but I chose to build an Excel spreadsheet. I’ll describe this spreadsheet in a future post, but suffice to say that it provided the method to track and analyze what we were doing with our money, to optimize our debt payments, and to assist with saving and investing.

This tracking would have been impossible without taking a very rigorous appraisal of all things financial: Credit reports, statuses of loans, when each bill is due and how it gets paid, pay stubs (to account for the withholding of taxes, insurance premiums, etc.)

Note that I’m not saying “budgeting.” Budgeting is forward-looking. It’s difficult to project future financial needs without some real historical data, so that’s why I put so much effort into tracking the finances, instead of budgeting. You need to build up a history of financial data before you can accurately project what will be required.

Today, my wife and I have 14 months of transaction data saved and available for future use.

2) Intent & Direction. After having started tracking the finances, we decided to cut out the waste. This was done through intimate awareness of how each purchase would affect the finances. Every day of buying lunch while at work had a financial dimension. Each day I filled up the gas tank, each time I decided to allow “extra” money to sit in the checking account without a purpose, each day a loan balance didn’t have a principal curtailment applied–it all had a financial dimension. We had to become aware of it, in real time. This awareness informed our future decision making.

3) Fighting Consumerism. I needed to push back the fog of consumerism that was in our life, and naturally, I turned to books for this. Most influential on me was The Millionaire Next Door, by Stanley & Danko (more info here and here), which is something of a classic among those who care about personal finance. This book really showed me what was possible to accomplish by reasonably well-off Americans who really take charge of their finances. It is a book about how the stealthy wealthy among us arrange their lives, how they build personal relationships, how they invest, and how they control their consumption. It is a classic book in personal finance, and rightfully so.

Also influential on me was The Intelligent Investor, by Graham, which basically taught me that traditional stock investing isn’t an amateur’s game, unless you’re willing to put serious time and effort into it, or risk losing a good amount of your money. Sure, you can speculate, but speculating isn’t investing.

I also turned to a number of blogs: I binge-read Mr. Money Mustache, and read many posts from No More Harvard Debt, Early Retirement Extreme, Frugalwoods, jlcollinsnh, and Get Rich Slowly, and others. The New Yorker just published an article this week on Mr. Money Mustache, the man. (No…we’re not frugally hardcore like him.) These blogs assisted with reprogramming my financial brain by providing good financial tactics and techniques, and they also provided a degree of inspiration: We live in an immensely rich country, with gobs of wealth all around us (seriously!). But we need to wisen up on how to make use of it. When you do, you can really do amazing things.

The dark side of American wealth is really the consumerism. We have a consumption-based economy, with so much focused on immediate gratification of various needs which are, frankly, programmed into us. (T.V. programming is called “programming” for a reason!). When you become aware of this, it’s much easier to resist the urge to consume and instead save that Geld.

On an equal footing of the blogs were the numerous podcasts which I listened to. These were particularly influential because I was able to radically increase my financial literacy during activities which are amenable to consuming a podcast, like commuting, doing tasks around the home, and yard work. Looking back, it’s difficult to really quantify how this changed my outlook on finances, money, and broader life choices. I intend to write a post in the future reviewing these podcasts, but I’ll point out that Joshua Sheats’ Radical Personal Finance podcast has been singularly awesome. His podcasts are a bit long, and they can be rambling, but that’s a function of the information that he conveys. I have listened to all 300ish episodes to date, and it’s been well worth the time. Also, note that “Radical” is in the title: This is not a mainstream financial podcast.

I’m also a fan of the Wealthsteading Podcast, The Financial Independence Podcast (aka The Mad Fientist), The Investor’s Podcast (a.k.a. We Study Billionaires), and, of late, the M.O.N.E.Y. Podcast.

Changing my consumption of books, blogs, and podcasts also had the added benefit of getting me away from more toxic sources of entertainment and commercialism. Each minute spent on a good book is one additional minute away from the consumerist machine. Each podcast episode listened to is one less episode listening to the liberal infotainment of NPR or talk radio. Each blog post about personal finance topics represented actual time NOT spent on other forms of fog-propagating social media (Facebook, for example.)

4) Improving Relationships. I worked to improve the interpersonal aspects of managing the finances. I have a small family: It’s just my wife and me, and a couple cats. That’s all. We each bring strengths and weaknesses to the table, along with different upbringings, experiences, and expectations. Yet we’re a unitary financial entity: A Family. My taking charge of the finances, and ensuring that the finances were being appropriately directed was definitely a change in the relationship dynamic, and that required some significant massaging to ensure that the changes I was leading us toward could be sustainable over the long term. The challenge was to enlist the support of my family in the financial decisions that I was making on our behalf. This was done, mostly through leadership by example, not by cajoling, haranguing, plea, or argument.

Having a supportive spouse is invaluable–I can’t express enough how important it is. Personal finance really is, in total, a summation of individual decisions over time. If a portion of your marital union is working against the other, financial progress will be difficult at best, or perhaps impossible. Becoming financially healthy and getting on the same financial page as the rest of the family go hand-in-hand.

Those are the four pillars that we took to get on the trajectory we’re on right now. What is that trajectory? Well, we’ve managed to save or invest over $11,000 in 2016 so far. We’re on track to invest perhaps $65,000 this year, which, given some Monte Carlo Analysis, will do much to get us toward independence.

Notes: I have no financial qualifications or credentials. You do what you want with your own money and I’ll do the same. I’m just sharing my story.

Additionally, I’m also an active-duty Marine Corps officer. All words I have written on this blog, however, are solely my own, and do not in any way represent those of the US Government.

14 thoughts on “Toward Financial Independence”

  1. We use Quicken. It’s budgeting tools are nice, but it’s terribly buggy, always mucking up data transfers from our bank. I’d be interested in seeing your spreadsheet.

  2. I’ve used Quicken for years but the Mac versions have been getting worse. For many years after I switched to Macs, I had a PC just for Quicken and check writing. Then it died.

    Besides, I write very few checks anymore.

  3. I tried out a version of Quicken myself, but it was so buggy that it threw everything off, my messing around with the numbers. It was less work just to keep a spreadsheet of my own to track expenses for the Tiny Bidness.

  4. Joe Dominguez’s Your Money or Your Life allowed me to retire at 45 in 2002. [Wow! Looking at the preview this comment sure looks like spam!] Since then I’ve moved quite a bit away from government bonds and into residential rental real estate but still, Dominguez’s book provided the initial impetus and guidance and “state of mind”. Great book.

  5. CapitalistRoader-

    Yes, YMOYL is a classic in the early retirement area. I haven’t read it. Yes, bonds probably aren’t the place to be these days…the interest rate environment is radically different than it was back in the 70s. But the core argument of his book, based on what I know of it, is still accurate.

  6. Since then I’ve moved quite a bit away from government bonds and into residential rental real estate…

    …and equities and PM’s of course. When one zigs hopefully the other zags. The Bogleheads forum is a great place to learn about asset allocation, DFA vs. Vanguard, Fama&French, etc. from them that’s been there. Thanks to that group I backed the truck up to the door and loaded up on TIPS when they briefly tanked in Oct ’08 and have been reaping the rewards since.

  7. What are you investing for? Not a facetious question, but personal saving (what is commonly referred to as personal investing) should lead to an accumulation of wealth which is only beneficial if it has some ultimate value. Some do so for additional security in a world that has no guarantees, some for an early option to stop working for someone else (self employment or pursuing non monetary interests), some to just feed an ego of accumulation (who ever dies with the highest net worth, wins), some to feel empowerment in controlling their finances better than they used to or better than others (exercising control over finances using a great portion of their effort and time) and some because they want to use their accumulation to help others. Saving for future lavish consumption is not really opting out of consumerism. I’m sure there are other reasons and usually saving motivation is for some combination of motivations.

    My thought is that one needs to think deeply about the purpose of accumulation of wealth before one devotes a large chunk of your life’s blood to it. This is for two reasons, to sustain motivation to do the hard work and to make sure the efforts so devoted are in balance with your core values.

    I am a fan of Dave Ramsey and have taught his course to others. He is a great motivator because he emphasizes purpose and goals.

    I use an excel spreadsheet and iBank to allow me to track what is going on, budget and measure how we are doing. I keep a modest fund entitled Blow for those little indulgences and a 90 day minimum living expense fund for emergencies (as distinguished from large anticipated periodic needs such as vehicle maintenance, braces, property taxes, home maintenance, etc.). Sure have to agree with the idea of tracking every expenditure to be able to anticipate and fund periodic major expenses as well as gauge how much consumerism is going on. I began to actually manage our finances at about the same point in my military career as you have, Nathaniel. My motivations were probably much the same as yours. We were out of control, but with little debt. Before that, I was absorbed in my career and was surprised that I had actually survived past 30. It began to occur to me that I might not die on the Russian front and that I needed to think about taking care of my family even if I did.

    Thanks for the post. Very timely as I was just reviewing February and checking on March’s plan. Looks like I can buy some more ammunition and put a little more toward charity and political support. I’m excited.


  8. We use MoneyDance after we gave up on Quicken around 2003. It works well, though some of the reporting could be better. It runs on Windows,Mac, and Linux. It can read and write Quicken files, so you can move your accounts and sync your bank and credit statements. I’ll check out the reccommdations above, though I got into the habit of saving after an unfortunate incident in college. Also being able to do your own repairs and home/vehicle maintenance has also helped. The internet has helped immensly, along with community college classes. I’m basically cheap :-), though I learned not to waste money on cheap/shoddy tools.

  9. Since I cut the windows cord & moved to Linux, I had to give up Quicken & move to GnuCash. It was a bear to set up though, since it does honest-to-god double entry bookkeeping (unlike Quicken). It runs on everything (Mac, windows) & apparently even has an android app to import transactions from smartphone to PC. Since it is open-source & covers a lot of ground (including small business) it does take some effort to learn all the bells & whistles.

    Death6, I’m in favor of saving/investing as much as possible because you never know what the future will bring. It wouldn’t surprise me to end up having to pay everything myself for health care or assisted living care. Not to mention having to make up for a lack of social security down the road. The demographics of SS is what got me started saving in the first place. Kudos to a HS business-ed teacher & college ROTC instructor who always pointed out the SS time-bomb to each of their classes.

  10. “It wouldn’t surprise me to end up having to pay everything myself for health care or assisted living care.”

    I think that when Obamacare collapses, as it will unless repealed, cash payment for routine care and real insurance for insurable events will come back. That what we had when I was a kid.

    Now, we face a crisis that the NHS is previewing for us.

    Thousands of NHS doctor and nursing positions are lying vacant as trusts and health boards struggle to recruit from inside the UK.
    More than two-thirds of trusts and health boards admitted they are looking to fill positions with staff from abroad, a Freedom of Information request revealed.
    Health unions say poor workforce planning is to blame while officials said there are more NHS staff than ever before.

    I’ve previously posted links to stories that thousands of NHS doctors are emigrating.

  11. Death6-

    Thanks so much for the thoughtful and considerate comments. I’ll keep this comment short because you gave me some great fodder for one or two future posts. Much appreciated!

    I’m only a partial fan of Dave Ramsey. He’s truly been wonderful for many Americans, particularly those who deal with large amounts of debt. With the caveat that he does recommend seeing a financial advisor when the time comes to invest money, I don’t think that his investment advice is particularly sound, unless you want to be a worker-drone until the day you die. It’s just not creative nor aggressive enough if your strategy is to invest in bonds and equities. But can rationalize the first several steps of his basic plan (save $1000, do the debt snowball, save for emergency funds, etc.). That’s where Ramsey’s ideas are of real value.

    I can see your point on goals, but I suppose I look at things a bit differently–there is no way you can even entertain the idea of having a goal without first introducing financial discipline into your life (i.e. thinking financially). Achieving goals requires luck, and I want to make my own luck, as they say. Or, put differently, “We are what we repeatedly do. Excellence, then, is not an act, but a habit”, as is attributed to Aristotle.

    I’ll write more about this stuff in the future.

    I hear you on the military piece, too. The military is decently-paid, in my opinion, but you sure do work for every penny! And sometimes you take incredible personal risks.

    Nathaniel Lauterbach

  12. “I am a fan of Dave Ramsey ”

    I am too. Unfortunately, I could have used his advice 40 years ago but you can’t have everything.

  13. Great thread here. When it comes to putting your savings to work, I highly recommend a strategy called the Permanent Portfolio (25% each of stocks, bonds, cash, and gold) – a simple and stress-free approach to investing for regular folks, not financial whiz kids. Harry Browne invented it and there’s a very thorough recent book on the topic by Rowland and Lawson; see also the informative and entertaining discussion forum at

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