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Straight Story: Financial independence

Chris Farrell Jul 3, 2009

Straight Story: Financial independence

Chris Farrell Jul 3, 2009


Stacey Vanek-Smith: It’s time for the Straight Story. That’s where our economics editor Chris Farrell gives us his insights into the economic issues of the day. Hey Chris.

Chris Farrell: How are you doing?

Vanek-Smith: I’m fine, thanks. How are you?

Farrell: I’m doing well.

Vanek-Smith: So it’s the Fourth of July weekend and we are celebrating our country’s independence.

Farrell: Wonderful weekend. I love it.

Vanek-Smith: Yes. Burgers, beer, fireworks. What’s not to like? And the origin of Independence Day is freedom from British taxes, but what about financial independence from the rest of us? What about personal financial independence?

Farrell: Well Stacey, I think that’s a great question, because it is Independence Day, Independence Weekend. You know, a lot of people are really stressed out during this great recession. So what would financial independence mean? What would financial independence mean to you?

Vanek-Smith: Well, no more credit card debt would definitely be a good step towards financial independence for me.

Farrell: Well, I think that’s for many people. I mean, for a whole generation, personal finance, what it really means is getting out of credit card debt. You know, to my parents’ generation, it was burning that mortgage. It was just getting rid of the mortgage. They talked about “Burn the Mortgage” parties.

But I want to take a slight twist here. Getting out of debt is wonderful, but what I want to emphasize is savings. And the reason why I want to emphasize savings is that’s the financial independence that allows you to do what you want. If you have savings and you want to take a career risk, you’d like to downsize and spend more time with your family or volunteer in the community. If you have savings, you have freedom of choice. And one of the messages that’s coming out of this great recession is the need to save more.

Vanek-Smith: Well, we are saving more.

Farrell: Yes, this is a positive thing. And it’s not just positive, because it’s good for you. It’s positive, because this is how we declare our freedom. We bring about control over our lives. It’s not the credit card company that decides, “You go to work, because you have to pay the bill.” It’s you decide, “You know what I want to do this and I have the savings that gives me the freedom to do that.” And that, to me, is financial independence.

Vanek-Smith: Well Chris, thank you so much for your thoughts on financial independence and I hope you’re enjoying your weekend.

Farrell: I am and thank you.

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