In the good old days pre-pandemic, several friends and I liked having beers after each softball game. We got to discussing what is the one ingredient necessary for achieving financial independence at a relatively early age.
Here were some of their responses:
- Saving aggressively
- Investing in stocks
- Investing in real estate
- Earning side income
- Taking bigger risks in our careers
- Leveraging the internet
- Working ungodly long hours
- Relocating to areas with huge job growth despite the higher cost of living
- Starting a business
Many of these ingredients are great for helping all of us achieve financial independence.
However, the #1 ingredient that drove me, which nobody mentioned, was FEAR. More specifically, the fear of failure. The more you fear something bad happening to you, the more you take action to make sure it doesn’t come true.
Let me share some examples to explain what I mean. Then perhaps you can share your own in the comments section below.
The One Ingredient Necessary For Achieving Financial Independence
Fear is all around us, especially today. We fear getting a virus that incapacitates us. We fear losing money in our investments when the economy goes into a recession. Some of us even fear living a life full of regret.
Fear can be very debilitating if we let it overwhelm us. However, fear is also a fantastic motivator to improve your life as well. The key is to absorb just the right amount of fear to get going instead of keeping us paralyzed.
Here are all the examples where fear of failure played a huge role in my life. Perhaps fear of failure played a big role in your life as well.
My parents told me at an early age that academics was the main way to a better life because I wasn’t going to become a professional tennis player. They instilled in me a fear that if I was a C-student, I’d only be able to live a C-or-worse lifestyle.
Not only did I fear living a mediocre lifestyle as an adult, I also feared disappointing my parents. I was always getting into trouble as a kid. Each time I did, I saw the shame in their eyes. I finally stopped being a degenerate once I went to college.
Throughout my childhood, my parents worked long hours. I especially felt bad for my mother who didn’t particularly enjoy the work she did in the U.S. Foreign Service. Foreign service work was my father’s dream, not my mother’s.
My Dear Mother
I remember visiting my mother one day at the US Embassy in Kuala Lumpur as a surprise. I didn’t quite understand what she did, only that she worked in the cultural attaché department. She was always so chipper at work, and her colleagues always sang her praises. It felt like a wonderland to roam around the halls of what seemed like a fortress at the time.
When I arrived, she was tidying up the magazines on the coffee table. Instead of working in her own office, my mom worked in the reception area outside of her bosses big office. Oh, I got it now. My mother was the assistant. Maybe foreign service work isn’t so great after all. I was 12 years old.
She told me how she had sacrificed her dream of becoming a biologist by foregoing a graduate scholarship from Duke University to marry my father. She still had what most would call a great adventure, working around the world. But I knew deep down she will always wonder what could have been.
If my mother was going to give up her professional dreams for her children, I damn well wasn’t going to disappoint her!
Growing A Career
Working in the financial services industry from 1999-2012 always made me paranoid about losing my job. The industry is highly cyclical, which means during down cycles, there are always multiple rounds of layoffs. Without a job, I would feel like a failure. And without a steady paycheck, I wouldn’t be able to pay my mortgage on time.
The fear of being one of the thousands of people let go during the dotcom bust and the 2008 – 2009 financial crisis led me to work extra long hours. I needed to add as much value as possible to my firm. There was a lot of misery getting into the office by 5:30 am and getting berated by clients.
Whenever I felt miserable working at 11pm to catch my Asia-based colleagues, I always reminded myself of friends who had lost their jobs. Then I’d just gut it through one day at at time.
It wasn’t until I started listening to the lifestyles of other people working in other industries did I realize how abnormal it was to always be in fear of losing your job.
It was this perpetual fear and failure that made me save 50% – 80% of my paycheck every year. The fear made me figure out the best way to invest my money in order to one day generate enough passive income to confidently leave my job.
If I was comfortable at work, I’d ironically still be working.
Sustaining A Successful Financial Website
However, there’s really no good reason to continue publishing 3X a week anymore. Today’s posts reach 100X as many people as they once did in 2009. But because I publicly made a commitment to write 3X a week, however, I feared being labeled as weak or dishonest if I don’t follow through.
You guys don’t know how many times I’ve wanted to just pass out at midnight, but forced myself to write a new article until 2:30 am just so I could meet my publishing objective.
I have this fear of letting you down, especially those of you who may be going through a difficult time financially. I remember how comforting it was to read and interact with other folks during the financial crisis.
Although life got more difficult for our family one the pandemic hit in March 2020, I decided to soldier on with my writing schedule. If I felt uncertain and nervous about an unknown future, surely, others in the Financial Samurai community did as well.
For the longest time, I’ve sent the message to never fail due to a lack of effort because hard work requires no skill. Therefore, if I stop working hard, then I’m just another hypocrite who doesn’t follow his own advice.
Modern Day Society
While I was working, it felt a little harder to get ahead when there was hardly anybody who looked like me in leadership positions. For example, I worked in Asian equities and for half my career, all my bosses and bosses’ bosses were white.
When I lived in various Asian countries growing up, I was the majority. Everything felt normal. But when I arrived in Virginia as a high school freshman in 1991, the contrasting reality of being a minority instead of a majority became apparent.
Overnight, it seemed I had to address stereotypes, listen to racial slurs, and endure various forms of discrimination that I had never encountered while living in Taiwan, Malaysia, or Japan. You learn to just suck it up after a while and move forward. However, dealing with rational conflicts gets extremely annoying after a while.
I feared being pigeon holed as an Asian guy who was only an academic. Therefore, I worked extra hard on my athletics. I also went to a liberal arts school to become a more well-rounded person.
It took forever to get to 5.0 in tennis, but I was determined, even as a player with zero weapons. Now, I joke with my tennis buddies who poke fun of my ranking. They clearly don’t believe I belong at the 5.0 level, despite the computer algorithm keeping me there since 2016. Now, my favorite retort is, “I’ve got 4.0 ability with a 6.0 mind baby!”
I wasn’t going to let being a minority in America keep me from achieving the lifestyle I wanted. But growing up, I feared society would never let me be who I really wanted to become. I just wanted a chance.
Having Enough Money
Ever since I lived in Malaysia as a 11-13 year old, I’ve been hyper aware of the haves and the have-nots. To see some of my friends live so poorly really wigged me out as a kid. I often questioned why life was so unfair for so many people.
As a result, I made a promise never to take any job or financial opportunity for granted. I wanted my kids to grow up being able to study and play rather than being forced to work to help support the family.
After you’ve achieved your retirement number, will you continue to work as hard? For most folks, I think they may decide to take things down a notch.
For me, however, I’ve made it a priority to press on, like I’m starting over each year. But this relentless focus on trying to make more money since the pandemic began has worn me out.
Growing up seeing poverty on a daily basis makes one afraid of losing everything one day. You’re always wondering when your luck will run out. And the longer you go without any unfortunate events, the more you brace yourself for cataclysmic disaster.
If I had grown up with a lot of money, I’m not sure I would have worked as hard. Then again, those who were born rich have the ability to take more risks than the rest of us.
At age 44, my health is not as good as it once was. It seems like the asthma I had as a kid is slowly making a comeback. My colds have gotten longer and harder to combat.
If you have dependents and liabilities, for the love of god, please get life insurance. Your health will eventually catch up to you, no matter how healthy your lifestyle. One of my regrets is not getting more affordable term life insurance before I had kids.
The one positive is that I still fit into my same 20+-year-old jeans. The reason why I haven’t let myself go is not so much due to pride or vanity. I try to stay fit because I fear an earlier than normal death. My two young children are depending on me until they become adults.
A single friend once told me he enjoys food more than he enjoys the chance at a healthier life. “If I die early, so be it! I’m not going to deny myself my greatest pleasure just for the unknown chance of living until 90.”
This type of thinking is actually quite freeing. To not have anybody depend on you can be a great blessing. To not care how you look to other people is also amazing.
However, as a parent, the #1 fear I have is not being able to live long enough to see my children grow up to be happy, independent adults. Therefore, regular exercise and not over-eating continue to be necessary habits. Who knows whether these two activities will extend my life. However, I want to give my best chance at survival by being more risk-averse with my health.
Comfort May Be Our Greatest Enemy For Achieving Financial Independence
Perhaps one of the worst things that can happen to you is if you are born with everything.
Your parents are rich so you don’t appreciate money. You’re good looking, so you don’t work on your personality as much. The first job you ever had pays you well and allows you to only work from 9 – 5.
It is impossible to fully appreciate how good we have it if we don’t go through some suffering first. The longer our suffering, the more appreciative we will be.
We need a steady dose of uncertainty to keep us hungry. Therefore, in a way, perhaps this damn pandemic will motivate us to change some poor habits. Motivation is so important for building wealth and staying healthy.
I remember as soon as I paid off one rental property mortgage in 2015, my motivation to hustle went away. I decided to drop all my consulting clients, travel through Asia for 8 weeks, then go to NYC to watch the US Open for 2 weeks! It’s funny that the biggest downside to paying off a mortgage isn’t the opportunity cost of making more money elsewhere.
Harness Your Fears For A Better Life
As time passes, I’ve been able to be less fearful of failure. Academics, work, and societal fears are behind me now. It feels good not to be beholden to anyone. To speak your mind is a blessing.
The fear of not being a good blogger has also faded since I’m past my 10-year commitment. There’s nothing left to prove, at least online.
Money fear still persists because I’ve now got three people depending on me, instead of just myself. This fear is tempered through a proper net worth asset allocation, keeping expenses under control, and finding ways to earn supplemental income.
My main fear now is not being a good enough father. I pray I will always have the patience to teach my kids right from wrong. I hope I have the kindness to be encouraging, and never critical.
One day, maybe my children might tell me they couldn’t have asked for a better dad. But before that day comes, I must earn their love.
Don’t let fear paralyze you. Instead, use fear as motivation to do better. The fear in our heads is often greater than reality!
Achieve Financial Independence Through Real Estate
Real estate is my favorite way to achieving financial independence because it is a tangible asset that is less volatile, provides utility, and generates income. By the time I was 30, I had bought two properties in San Francisco and one property in Lake Tahoe. These properties now generate a significant amount of mostly passive income.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.
Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.
Read The Best Book On Achieving Financial Independence
If you want to read the best book on achieving financial freedom sooner, check out Buy This, Not That: How to Spend Your Way To Wealth And Freedom. BTNT is jam-packed with all my insights after spending 30 years working in, studying, and writing about personal finance.
Building wealth is only a part of the equation. Consistently making optimal decisions on some of life’s biggest dilemmas is the other. My book helps you minimize regret and live a more purposeful life as you build more passive income.
You can buy a copy on Amazon today. The richest people in the world are always reading and always learning new things. Learn from those who are already where you want to go.
Stay On Top Of Your Finances
To achieve financial independence you’ve also got to track your finances like a hawk. To do so, sign up for Personal Capital, the web’s #1 free wealth management tool.
In addition to better money oversight, run your investments through their award-winning Investment Checkup tool. I will show you exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.
After you link all your accounts, use their Retirement Planning calculator. It pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely run your numbers to see how you’re doing.
I’ve been using Personal Capital since 2012. In this time, I have seen my net worth skyrocket thanks to better money management.
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