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Freelancing to Financial Independence

Updated: Nov 28, 2021

I’m trying to buy my way out of a job.

No, this won’t happen next week or next year. In an optimistic case, it will take us about a decade, probably more. The goal is not necessarily to stop working. Actually, I love my work. Instead, the goal is to invest enough money from every paycheck that Sarabeth and I literally purchase more freedom and options for our future selves.

Put another way, we are making a gradual professional shift from freelancers to investors. The formula for this shift is pretty simple: Build a portfolio in which our annual bills are fully covered by the cash flow generated from our investments so that work becomes optional.

This lifestyle decision was inspired by the F.I.R.E (Financial Independence, Retire Early) movement. Most of the money Sarabeth and I earn today comes from consulting and freelance writing. But we’re saving and investing aggressively so that someday the ratio flips, and we earn more from investments than our active labor. For now, this means investing mostly in broad index funds and ETFs (VTI) that track the total U.S. stock market. Someday, it will likely also mean investing in real estate, website flips, or something else entirely.

The formula to get to full-time investing is simple. But it's not easy.

What does it take to bring this financial goal to fruition? As of this writing, we save and invest a little more than half of our after-tax income. This didn’t happen overnight. We started over three years ago the first time we maxed out our IRAs for the year. Ever since, we’ve bumped up our savings rate by a few percentage points every couple months.

But even making these incremental improvements wasn't possible until we first overhauled our philosophy towards saving. We had to make a key mental shift to begin putting away money at our current level. Before, we saw saving as what you do with money that is left over after life and expenses. Several financial books and podcasts later, we eventually realized we had it all backwards. Saving (and by extension, investing) had to come before any other transaction.

Each dollar not spent is an investment toward a future with greater freedom, security, and options. Financial wealth isn't measured in what we own. It's measured in every potential purchase we chose to avoid. As Morgan Housel puts it, “Wealth is what you don’t see.” Pay yourself first became our new financial mantra.

In practice, that means every time new money hits our account, the first thing we do is set aside a set portion for our future. Bills now get paid with the leftover money instead of the other way around. The reason for this reversed order is that there’s always another important expense we can justify paying instead of investing. Waiting to see what money will be left over for saving is like waiting for a river to stop flowing before we cross it. The water will outlast us.

On the road to financial independence, freelancing feels like our superpower. It raises the ceiling of our potential earnings month over month, while already giving us a taste of the flexibility and freedom we hope to achieve through financial independence. There is a tipping point in freelancing. While it may start out more risky than having a 9-5 job, eventually I believe it becomes more stable. (But that's the topic for a future article.)

Another thing we realized, financial freedom doesn’t have to be a one-time threshold you eventually cross. It arrives in phases. We could define the first phase of financial freedom as simply having a positive net worth: your money in the bank equals more than your total debt. Then, you reach another level when you have a month of cash sitting in the bank, after all the bills are paid. Still, you reach another level when you have a full year’s expenses set aside as investments and savings. And so on.

We are freelancing to financial independence. We don’t know what this means for us over the next decade or two. Maybe we’ll be that couple who retire young and I’ll spend all my time writing novels. More likely, we'll continue doing the work we love, with an ever-increasing degree of choice about what projects we work on, who we get to work with, and what days we work. So far, freelancing and our early investing progress already give us a small taste of these freedoms. That might be all it takes to keep us motivated into the future.


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