I recently listened to a Friday roundup episode of the ChooseFI podcast. I was surprised that comments I had recently made were discussed by Jonathan and Brad, the two hosts of the show.
I first heard these two as guests on the Radical Personal Finance podcast. I left a comment for that show, and I also wrote a blog post discussing it. While I had a couple of criticisms (constructive) of what was said (or perhaps not said), I am obviously still listening to the podcast, as I find value in it.
I think Jonathan and Brad took this as constructive criticism, as they used my remarks to clarify their thoughts and to add to what they had previously said.
My two main points:
- Don’t take a high income for granted in achieving financial independence.
- I wish they would have explored ways to make a good income without going into debt for college.
On the second point, I agree that there are better ways to make a high income without taking on big student loans. Whether or not this means going to college at all is another topic for discussion.
On the first point, it was stated by one of the hosts of the ChooseFI podcast that they will be discussing more about playing offense in the future.
I can understand having a podcast that focuses more on playing defense (saving money by cutting expenses) than on playing offense (earning more money). It is easier to find common ground with cutting expenses. Almost everybody deals with buying (or not buying) cars, houses, cable television, and $5 lattes.
When discussing earning more money, it is hard to find common ground with a broad audience. They did a show on real estate investing, but it gets harder when it comes to finding a better job or starting a side business. But while this may make for a tougher show, we shouldn’t take a high income for granted.
My blog here frequently discusses economic trends and investments to protect the wealth you have already accumulated. But I try to stress (perhaps not often enough) that your main source of income is the most important aspect of your financial life unless you have a really significant net worth.
If someone has $200,000 in assets and makes a bad investment that loses him $20,000 in a year, he is obviously not going to be happy. But it is a minor setback. If that same person lost his job paying $100,000 per year, that will be a much bigger blow. Even if he finds another job paying $80,000 per year, he will be “losing” $20,000 every year compared to before.
So while it is important to protect your wealth through smart investing, it is even more important to invest in yourself and protecting your income. If you are nearing retirement or if you have a large net worth (at least one million dollars), then this may not apply as much.
If you really want to achieve financial independence quickly, you need to play offense. You have to make a decent income whether this is through a business or a well-paying job. Defense is still important in that you don’t spend the extra money that you make.
If you can live a middle class lifestyle on an upper middle class (or upper class) income, then you will be well on your way.