A Freedom Fund For Financial Independence

What are you saving for? I was sitting around the other day catching up on the other blogs I like to read when it hit me. I had never answered that question for myself!

I had made it a point to save, I’d consistently funded my 401(k) and my Roth IRA. I’ve even built up a nice emergency fund. But I had never stopped to really plan what the hell I was doing it all for.

Then the other day at work, during a particularly boring conference call, it dawned on me. I want to stop doing this as soon as possible! I have never been a big fan of the corporate 9-5 life. Even in job’s I’ve enjoyed, it always just seemed like I was trading my time for money. That’s why I’ve decided to start a freedom fund (or a f**k you fund for my french speaking readers).

A freedom fund is essentially savings, or investments that are built up with the purpose of being used for whatever you want it to be used for. For some, it’s how they take their freedom, financial independence, financial freedomfamily on vacation every year. For others, it’s a way to find financial independence and retire by 40. My freedom fund is something of a hybrid between those two ends of the spectrum.  While I have no illusions of being able to retire in the near future, I would like to have a sum of money that would take a layoff from being a major event to a minor bump in the road (and maybe take a few vacations along the way).

With interest rates on savings and money market accounts at laughably low rates for the foreseeable future, I won’t be keeping much of my freedom fund in cash. At the start, my plan is to invest my freedom fund in a combination of ETF’s, dividend paying stocks and P2P lending loans. A little further down the line I may branch out into some other alternative investments, but for now I plan to keep things fairly basic.

The overall goal of my investments in this account will be to build up a stream of income that could hopefully one day replicate or replace the income from my paycheck. While I won’t stop contributing to my retirement accounts, I think it’s important to have investments outside of retirement accounts. Investing outside of our 401(k)’s and IRA’s allows us the flexibility and the opportunity to build a better life for ourselves today instead of solely planning for the years where we’re old and gray.

I’ll be making regular monthly contributions to my freedom fund, and any extra or unexpected income that may come my way will go directly towards this fund as well.

Do you have a freedom fund? What goals are you saving towards and how close are you to reaching them?

 

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15 Responses to A Freedom Fund For Financial Independence

  1. Michelle says:

    I’m definitely working on a freedom fund. Saving as much as we can!

  2. Pauline says:

    This is how I budget. My freedom fund is a cushion in case money is scarce, a travel fund, a “I don’t have to work in an office again” fund… I prefer to put everything there instead of having a car repairs fund and a retirement fund, since life happens and you may need it for something else altogether. It is a let’s sleep well at night fund.

  3. I’m concentrating on debt repayment. If we were debt free, we would have an extra paycheck from each of us to spend otherwise. Basically a 33% raise. How is that for freedom?

    • Freedom from debt might be more rewarding than freedom from the workplace. When I paid off the last bill to get myself out of credit card debt it felt like someone just lifted an elephant off my back. Hopefully you get there soon

  4. Ah, so that is what we’ve decided to do over the next five years, to build a ‘f*ck you’ fund (I like French). The other thing is that it not only seems that you are trading your time for money – this is exactly what you are doing, and what most people are doing. It is even worse – you are selling your labour which is part of you.

  5. I would also like to build separate passive income streams to live off of, even modestly. Time is an irreplaceable commodity and I value my own time way too deeply to simply trade it willingly for continuous indentured servitude (ie, slaving away in a cubicle while concurrently making somebody wealthy). Makes not a lick of sense!

  6. I have a freedom fund that I’ve been aggressively building for the last two and a half years. My goal is to achieve financial independence by the time that I’m 45. Some back of the envelope math suggests that with my 50% savings rate and investment strategy I should be able to pull that off.

    I’m not interested in early retirement or anything. I really like my job right now. I just want the ability to walk off my job if things get bad in the future. Or if I am laid off, I would like to have the ability to casually look for a job that I want in a place I want to live instead of having to make a mad scramble for wherever will take me.

  7. Yep our freedom fund is going towards paying off the mortgage. That’s a freedom that is well worth the savings! Aside from that we are starting to save for other things now where we can use for a trip, or other things that we want to do.

  8. Shilpan says:

    I don’t believe in retirement in a traditional way, but I can’t agree with you more about having enough F-You money(give creidt to Jim Collins). Sooner you start building nest egg with the goal to never work for the money, better you will feel about your life and your future.

  9. First, it’s about immediate basic needs for me. Then, it’s truly about freedom. I too have had days when I think that the true freedom of choice is so underrated, and much more valuable than people seem to realize. Many people get so caught up in day-to-day life that the notion of actually having the freedom to walk away isn’t even on the radar screen. Which is ironic, because people often show up at work wishing they weren’t there :)

  10. Integrator says:

    I have a target of $50/k in 5 years from my independence fund, all from dividend income. I want the option to walk off the job at 40 if I want to, although at this stage, i dont plan to. We are a little over half way there ~$27k/yr.

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