Mind the Gap

Mind the Gap

“Life’s is just OK, but …”

Are you in this situation? You are in your second life (career, kids) and…..

  • Your job is no longer meaningful. It isn’t bringing you the fulfillment you used to have. You go through your days on autopilot. You’re not psyched about the new “reorganization” your company just announced. You are getting more weary of playing office politics.
  • You live in a nice big house, drive the newest model luxury car, have the latest iPhone and gadgets, vacation in a five-star hotels, and yet the more stuff you acquire, the more empty you feel.  You wonder if collecting toys is all there is.
  • In your search for a meaningful life, you read about people in need, or a place calling for assistance in the wake of a calamity, and you vow to help such unfortunates…someday (right after the report, or after the project, or after the other unfortunates you vowed to help years ago).
  • You hear music, or see a painting, and remember back when such artistic creation was a passionate expression of yourself, and you wonder when you got away from that.   

I wrote previously about my perspective of getting ready to retire mentally  When to Start the Third Life? For most of us, being mentally prepared to make the jump to retirement occurs before we are financially ready. Jim posted  in  Trenches & Tapas that our daily plodding in the trenches traps us into thinking we have only one route to follow, but what can we do if we are ready to leave the trenches but haven’t budgeted for the ladders and shovels we need to escape?

Part of the thinking that traps us is that we think in reverse; we have a known effect (the trench path we already follow), so we look for how to keep causing it (what we need to make our one apparent path as comfortable as it can be).

Are you a frog in financial “boiling water?”

In financial terms, we grow used to having the lifestyle we have slowly bought into, so our only question is how to maintain enough income to support this seemingly non-reversible way of living. We fear we have to stay on this income path lest we lose it all, even if we are only making enough for the now, not the now and the future (retirement).

It’s like the frog in ever increasing boiling water, except the frog knows it’s a trap but says, “I can’t imagine any other way to live!”

For most people, the law of inertia applies; it is easier to continue in the direction we are comfortably (or numbly) moving in than to make the effort (and take the risk) of moving in a different direction.  

We are not comfortable with change.

Recognize the life trade-offs we all make.

It’s just easier to stay in the trench, wishing it leads to financial independence (FI) someday, than to stop and ask, “Will this path ever change? Is this the only path? What else is out there, and how can I change course to get it?”

What if I tell you, however, that it is possible to get up out of the trench, get off the treadmill, even bust out of the cage, and to retire much sooner?

BUT…. and here comes the big BUT (I cannot lie)…

Everything in life is a trade-off.

It is a trade-off between your current and future life –  between pacifying normality now and self-determining life of tomorrow – between your familiar second life, knowing where your next step will land in the trench without looking, and an open-ended third life of new paths to explore.

It will require you to start taking inventory of your life and, more, your lifestyle, to see what prevents you from reaching FI.  

Just like a leaky faucet can blow the water budget one drip at a time, so you can find the little changes that will shorten the journey to FI.

It might be outside factors (like college tuition for the kids) that you have limited control of; it might be internal factors (like wanting to eat at expensive restaurants several times a week) that you can make different choices about, but you need to be honest and face what are the factors creating a gap between your savings and the amount you need to retire.

Board the train to FI, but first Mind the gap

As anyone who has traveled on a London subway (tube) knows, it’s important, before you step on the train, to mind the gap. The gap is that space between the train and the platform, and for most of us it’s a small but potential tripping point, so the London metro reminds us to be careful. But what if that gap were a huge leap? You’d say the platform was poorly designed, and that someone should have thought out the design and build long ago.

In terms of you stepping on to the vehicle that can carry you to FI and retirement, take notice of the financial gap between the current financial platform that you’ve built and that train.

Is there a big gap? Is it growing? Most of all, what can you do to close the gap sooner so you can step over it with greater ease?

If you are living in a big 4000+ square foot house with a three-car garage, eat out often, maintain a membership at the country club, and vacation at the five-star hotel, then you will need to save a lot more money to maintain your current lifestyle after your income stops.

It’s OK to want and to have such things, but what are you NOT having money for in the future? That’s a big gap to fill.

Most of us obviously don’t live like this, but it’s funny how yesterday’s luxury becomes today’s (and tomorrow’s) needs. How many people do you know who say, “Gee, I’d love to retire, but I have so many expenses?”

We tell ourselves we have to have this, we have to spend it, or that we’re not “going to live like hermits.”

And that is when you are trapped by the gap.

You are stuck on the platform, looking at the huge gap. You’re waiting for a closer train (which isn’t going to happen), or a construction crew to come fill the gap for you (how long is that going to take, and are they even coming?).

Or, maybe, you can fill in the gap yourself if you put in the effort; and by effort, I mean simplify.

KISS (Keep it simple, silly) your second life goodbye.

Bear in mind that I am talking about reducing discretionary spending, not necessities like electricity, water, gas, food (although necessity spending could go down as a result of downsizing).

Remember when you were younger and on your own, how you spent on fewer things, and yet you were happy? THOSE are the necessities.

It’s not about living with want; it’s about re-learning how to live with enough (so you have MORE in the future).

It’s a simple trade-off: What you choose to spend money and energy on today leaves you without that money and energy available to spend in the future.

You’re already actually doing a second/third life trade-off now, borrowing from the future to pay for the present. Wouldn’t it be better to reverse that?

It is a bit of a sacrifice, and that’s what puts people off, focusing on “but what am I giving up?”

But that’s the wrong focus, the wrong question, and most of all, the wrong way to think of who you will be in the future.

It’s a matter of buying extravagant contentment for today’s “you” or investing in long term happiness for the “you” that is to come. You could have dropped out of school at 16 and had a great party-lifestyle, for a while, but aren’t you glad you didn’t?

Your “you now” is indebted to the smart decisions the “old you” made. It’s hard to imagine a difference, the gap, between our current and future selves, but common sense says there is one, and like in London, we should mind the gap, if not make it smaller.

When you say yes to something, you say no to the others.

You get to decide where you want to invest your money, time, and life energy. Each choice is not good or bad, right or wrong, but each will take you to a different future. Which future is up to you.

What are you willing to redefine as enough for now in order to gain the freedom you desire in the future?

  • Are you okay with downsizing to a smaller home, especially if you are new “empty nesters” and there’s now only two of you?
  • Are you okay giving up the country club membership or other social dues for less costly social interaction (dinner and game nights at home, public tennis courts, weekly lunch bunch)?
  • Are you okay cooking at home more?
  • Are you okay driving a fuel-efficient car instead of driving a social status machine? Are you still driving the big family wagon out of need or habit?

The list can go on, but like a long journey, or a daunting workout program, start with one thing. It also doesn’t mean depriving yourself of fun (see our future post on living the dream while living on a budget).

If you reduce your living expenses, you’ll need less to retire (and bonus, have more for the future). The result?  You are on the road to FI sooner. There will be more trains you can board than at London’s Waterloo station.

I know this seems over-simplifying it all a bit, and your life and expenses don’t seem that simple. You wouldn’t subscribe to a diet that merely says “eat less!” but the simplest idea sometimes is the hardest to implement, and is often the foundation for complex winning strategies.  

In this case, my advice is not simply, “spend less,” but spend with an eye and a trade-off consideration for the future.

A moment less of second life is a moment more of third life.

In the next post, I will share with you the trade-offs (and struggles) Jim and I made. We disagreed what were “necessities.”  We made mistakes along the way. There were things that we could have done better, there were purchases that we could have lived without, but the most important thing was that we were moving in the right direction (most of the time), even by small steps. We were minding and closing the gap to get on board to FI. I hope to share what worked and didn’t work for us so you can see the possibilities. 

Until then, feel free to share your comments.

  • Do you see an area in your life where you can make a trade-off between your second life and third life?
  • Do you see one small thing that you can change today to get you closer to your third life? It could be very simple as increase your 401k contribution by 1% and you may not even feel the impact on your paycheck.
  • Any other thoughts to share? Let’s chat in the comment.

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