If you have read The Simple Path to Wealth by J.L. Collins, you are familiar with the term F-U Money. This is an amount of money that you have accumulated in savings that gives you a level of security that would allow you to say “F-U” to your employer and move on to do something on your own terms. While this initially sounds very aggressive, I took this to be more of a defensive move in that, if your working employment came to an end suddenly or if circumstances changed in a way that you were no longer happy with your situation, this nest egg would give you the security to say “no” to those changes or to survive your unemployment period long enough to scrutinize future job prospects, rather than have to panic-accept the first opportunity that presents itself. While this post is specific to F-U Money, this approach is the main reason that I am pursuing Financial Independence overall. I don’t see myself as someone who will retire in the traditional sense and sit on a beach or play golf until my dying days. My pursuit of FI is to allow me to pursue work or activities that interest me and not worry about the paycheck attached to them. These may be volunteer opportunities or even paid work where the pay is not at a level that can sustain my lifestyle on its own.
When I first encountered the concept of F-U Money, my immediate reaction was to think back to a time when I had what I consider to be this amount and had a need to put this concept into action. This came in 2009. I had a nicely paying position that ended abruptly. I immediately panicked and went through all of the emotional challenges that such a scary event brings about. Once I settled down, I did a quick analysis of my financial situation and realized that I had enough money in savings and short-term investments that I would be safe for an adequate period of time. As you know 2009 was not a particularly robust time for the US Job Markets. At this time, I searched for full-time work but also began considering switching careers and going into consulting. This was not a position of comfort for someone like myself as I am very structured and liked knowing the exact details of when, where from and how much each of my paychecks would be. The search for consulting jobs was more fruitful than the search for full time work. I jumped into this line of work and this started a 2-year period of inconsistent paychecks. During this period, I was working as an independent consultant, trying to find my own projects. This two-year period was very difficult financially, but I was able to stay afloat using my savings… my version of FU Money. I consider the end of that bleak period to be when I caught on with a consulting firm and began getting more steady work. I was still an independent contractor and therefore the paychecks were not as consistent as I would have liked but I was regularly engaged and have been for the past seven or eight years. A few years back, this same firm asked me to come on full-time and I am still with them to this day.
While my FU Money helped me get through this very tough financial time, I still had a very negative view of this concept. It was always attached, in my mind, to a negative life event. Fast forward to my current situation and those feelings will be put to the test again. While I am a consultant and that career brings with it some uncertainty, I have been very fortunate. Not only have I been with the same consulting firm for several years, as mentioned above, but I have also been with the same client for much of that time. This client is in the public sector and through the world of election politics, my time here may be coming to an end soon. This creates quite a bit of uncertainty in the world of someone who is not only budgeting the next month but the next 25 years of their life. At my salary level, once this contract ends, if there is not another project lined up almost immediately, my firm may no longer be able to carry me either. This has led to much analysis of my personal financial situation and discussions with my wife about what is next and how we will endure should these events play themselves out in this way. This soul searching has led me to revisit the concept of FU money over and over. While I don’t have a fully funded emergency fund; at least not funded to a level that I am targeting, I do have some money put aside for this purpose. I have also put money into a taxable investment account and invested this in index funds. This money is accessible should I need it. Combine that with the fact that I have steadfastly paid down all debt outside of my mortgage and home equity line of credit and I am not in a dire position.
While my situation is not ideal, I am confident that I can weather the storm. Although the length of such a storm will negatively impact my future plans, at least I can go to sleep at night knowing that I can take care of my family.
So, while the person who coined the phrase FU Money, may have had a more offense-minded move in mind when they considered themselves to have reached this milestone, I tend to view this more defensively and it works just as well. To me, this is the absolute beauty of pursuing Financial Independence. It gives you options!