Are You on the Path to Financial Independence?

On this episode of The Long View, Jamila Souffrant, author of a new book called Your Journey to Financial Freedom: A Step-by-Step Guide to Achieving Wealth and Happiness and host of the Journey to Launch podcast, talks financial freedom, the FIRE movement, real estate, how to eliminate debt, and more.

Here are a few excerpts from Souffrant’s conversation with Morningstar’s Christine Benz and Amy Arnott.

Living Well in the Here and Now vs. Deferring Gratification

Amy Arnott: One of the key challenges for all of us, even beyond the FIRE movement, is balancing living well in the here and now versus deferring gratification into the future. And you write about the fact that this is very individual-specific. So, there’s no right answer that has to apply to everyone. What questions do you think people should ask themselves to figure out where they land on that spectrum?

Jamila Souffrant: I think questions to ask yourself for anyone—there is a bit of self-reflection and going within because what you really want to ask is what type of life do you actually want to live? What are the things you want to have and really have because you want them not because of society. And there are some things, it could be in just your own culture that that’s just the norm and you do want to upkeep that norm or is it something you want to do differently? And so really understanding what you truly, truly want and what will make you happy is important and then crafting a life and then your financial goals around that. And so, I think the season of your life that you’re in, makes a big difference on what this journey looks like and your starting point. So not everyone is starting from the same point and depending on their lifestyle goals, and something I call guac levels in the book, might not be something that you actually want to sacrifice for. The guac levels go from one to five where one is the most frugal and guac level five is the most expensive or extravagant. And understanding the type of life you want to live versus what your goals are and then what you’re willing to give up and the opportunity costs associated with those sacrifices or investments are important because then you can realistically plot out what this initial run at financial independence looks like.

Christine Benz: So just to clarify those guac levels correspond with guacamole and how comfortable or how much latitude I would give myself to say, yeah, give me the guac as well as whatever my salad or burrito or whatever I ordered, right? Is that how people should approach it or think about it?

Souffrant: The guac level stands for guacamole and there is a range. So guac level one being the most frugal where you would never buy guacamole outside; you make it at home. And then guac level five is like something ridiculous, like you have a guac factory, and you can replace guacamole with anything you like. But it’s really meant to show the levels at which we want to enjoy our life and also understanding that you can be a guac level one or two in one area of your life, maybe clothing versus a guac level four in vacation. So, there is a varying depending on the budget line item. But it’s to understand why when I first came into the movement, the FIRE movement, and even though it worked for a bit to jump-start our finances to be frugal and invest and save aggressively why it wasn’t sustainable, because naturally, I felt like and feel like the level of lifestyle we want to live is more of a guac level three and four, where we do want to experience nicer things or my husband at least likes to experience nicer things in certain areas. And so, then that makes more sense for us why maybe some things were harder or were not sustainable. And so, if you can start to understand what your true guac level is—and that can actually change. I actually recommend if you’re on the beginning journey or stages that it does require some sacrifice and some frugality to get you forward if you’re not earning enough or spending too much, but it can help give you a guidance on why things may be harder for you than other people that enjoy being frugal or give you a realistic time frame about what it’s going to take to reach financial independence.

How to Get Off the Treadmill of Wanting More

Arnott: I think one of the biggest challenges is that people have a tendency to compare themselves and what they’ve managed to achieve to what their neighbors and other peers are doing. And material goods are the main outward way of expressing how you’re doing. So, what advice do you have about how people can get off that treadmill of buying fancy homes, cars, and clothes as an outward sign of wealth and how they’re doing?

Souffrant: I think releasing maybe shame and feeling guilty if you do think that way because really society and consumerism and capitalism is meant for us to feel that way about things. Corporations and companies spend millions of dollars to know how to market to us and to keep us on this treadmill of wanting more. And then there are some systemic things too in terms of how people of color, particularly Black people, show up in terms of buying material items, being disvalued or feeling unvalued in a society where you may not feel like your worth was seen than showing that your worthy may look like buying expensive, quality items that other people can see. And so, I do think there is a deep-rooted thing that we have that is just not as easy as telling someone just don’t buy that car or don’t want that car.

But I do think when you’re looking at your overall life and what you’re sacrificing in order to have that material thing, is it worth it? So, for me, while I would love a really nice car, I’m sure my husband wants one like now, I love the flexibility and freedom that I have that I’m able to pick my kids up every day or not feeling stressed about our finances. And so that is worth it to me to not have that thing. And I think people just need to sit down and look at the cost of maybe the luxury or the thing that they like and make it a conscious choice that if you are OK with working more or longer in a job that you may not like because you really value this thing, then it’s your choice. But if you sit down and you have that discovery that it’s not worth it, then you can try to make a different choice or work to make a different choice on scaling back, not because you don’t deserve it, but because you deserve something else that’s worth even more to you. So, reframing the way you look at the opportunity cost of having that thing, and maybe decide it’s worth it, then that’s fine. But you may decide, like I did, that it wasn’t. And it’s not to say that I won’t want a nice car again, it’s more of does this fit into and does it take precedence over this feeling and the opportunity and flexibility that I have. And while we want it all and all at the same time, I don’t think that we can have it all and all at the same time. And so, it’s really a choice of do you have it now or do you save and wait for later and can you hold that off? Can you delay the gratification so that you can have this life that you say you want to have?