Would You Risk Financial Independence for a Dream?

I’ve been feeling inspired lately. A couple weeks ago, two of my favorite personal finance bloggers wrote remarkably similar posts discussing the need for big ambitions and new projects in early retirement. Mrs. Our Next Life described them as “your next BIG GOAL,” while Mr. 1500 Days framed things slightly differently as “passion reignited,” writing that “work is the key to happiness.”

My takeaway from the two pieces was the same: most people pursuing a big goal like financial independence aren’t going to be satisfied living without another big goal in the future.

So much for my plan to sit on the beach and drink margaritas for the next sixty years.

Would You Risk Financial Independence for a Dream? - The Resume Gap

I agree with their perspectives. “Work,” in some form, has always been part of my long-term vision for my life. It’s the reason I prefer the idea of “semi-retirement” over “early retirement” and the reason I recommend envisioning your life without a full-time job. Do I want to go back to a 60 hour/week office job with only a couple vacations every year? Probably not. But part of my time will always be spent working on something.

Some years, it might come in the form of W-2 or 1099 contract work with an employer. Some years, it might be aggressively pursuing an income-generating side hustle. At other times, it might be a challenging and rewarding activity that doesn’t lead to any income – like learning to play piano or building my Spanish language vocabulary. Even now as we travel full-time, I’m committed to writing semi-regularly here, an activity that requires far more time than I would have guessed a few years ago.

As I pondered the importance of work and continuing to pursue big goals, a question occurred to me:

What if my next big dream requires capital?

When we were traveling in Guadalajara a few weeks back, we stumbled upon an awesome restaurant called Churros La Bombilla. The place is open every night from 5:30 to 11:00, and it specializes in serving just two items: warm, crunchy churros and delicious hot chocolate. What a dream!

Even in warm Guadalajara, the place was packed every night.

Even in warm Guadalajara, the place was packed every night.

For years, I’ve toyed with the fantasy of opening a food truck or a neighborhood beer bar. From what I gather, it’s a fairly common entrepreneurial dream, in spite of the high failure rate. But that still doesn’t stop my daydreaming every time we come across a cool new restaurant. Dining out is one of our favorite pastimes, after all.

“This churrería concept would be crazy popular at home! I think we’d have a great time running it, too.” As we savored each sugary bite, Daniel and I discussed potential locations in our home city.

We’re a long way from pursuing any big new business ventures, and this example probably isn’t the one we’d choose anyway. But suppose we found one to which we felt really committed. Our next big dream. The thing that’s going to keep us excited every day.

Of course, we’d work to make things as capital-efficient as possible. Instead of signing a ten-year retail lease, maybe we’d give it a shot with a little food truck – something we could resell if it didn’t work out. Perhaps we’d even try to raise some money from investors, though I’d be hesitant to have someone else’s money on the line.

Even in those circumstances, though, we might need to have some of our own “skin the game.” Whether it’s opening our coming-soon churro place or hiring a developer to build an app or launching an online store, most entrepreneurial ideas require some upfront investment. Which brings me back to the question I’ve found myself debating:

How much of my savings would I be willing to bet on my next big dream? Would I risk my financial independence?

I could easily argue that retirement savings are for lifelong cash flow only. I’m allowed to touch 3-5% per year, no exceptions! If I need capital for a new venture, maybe I need to go earn it first.

I could also make the case for more flexibility. We’re still relatively young, and I expect to earn income in the future anyway. If I lose some money along the way, I’m not overly concerned about my ability to earn it back. What better way to spend money than pursuing our big dreams?

I’m still debating my own answer. Thankfully, we have a few more travel adventures on the horizon before any hypothetical new ventures become a reality.

Readers, do you consider your savings untouchable for anything but retirement, or are you open to other uses? Am I appropriately risk-tolerant (keeping in mind that I’m a childless 29-year-old), or have I lost my mind? As always, we love learning from your perspectives in the comments!

44 Comments

  1. This is an excellent question. I’ve spent a little bit of time thinking about it, and here is what I came up with for us:

    1. Pad our FI number. We’re saving more (I hope!) than we will actually need and this extra padding, apart from providing the same feeling of security that I used to get from the blanket I lugged around in my childhood, will allow for small capital investments. Small = able to hire an app/web developer for some months. Small != being able to lease and open a restaurant.

    2. If we had an idea for a venture that required a large capital infusion, we’d have to be creative about how we raised that money: convince other people to invest, go back to work for a time to raise some funds. Risking our financial independence stash is not an option that is on the table. Here is how I think about it: if my idea is so very fantastic, and so likely to succeed, that I am willing to put a few 100k of my own money on the table, then that should mean that I can convince other investors to do the same. If I can’t, then the idea is probably questionable and I shouldn’t be betting a chunk of my money on it.

    • Great points, Mrs. BITA. Personally, I feel like I have enough padding that I’d be comfortable with some small investments. If I were still in the accumulation phase and had a capital-intensive dream, I would have to factor that into my savings goals. Your point about recruiting the investors is a really good one; if no one else will bet on your success, perhaps a little more time at the drawing board would be wise before risking your own financial future!

  2. Love it! But I also love hot chocolate and churros. I once had churros filled with Bavarian cream! Feel free to steal that gem of an idea.

    I wrote a post last week about being a “committed quitter” and how we try things, test them, then scale them. So I’m not sure what you should do, but that’s what I would do. I would test it out. Small. I have pulled money from our retirement accounts to start a business and buy a rental. Not a lot, but a little. Even with 5 kids, I think life is worth testing and trying things. It might be AWESOME! Would I pull 100k? Nope. But $5,000-$10,000, if I could see how I could make that capital back, Sure! Maybe start super small for a few months with a Churro catering/delivery business, renting out kitchen space? You might need $1000 for that. I find the testing and scaling of ideas fun.

    Plus you are right, you both have great earning potential, no kids, and are young! If the process sounds fun, why not? I’ve know a lot of people who made good money with coffee stands. =) And loved the work/life balance.

    • Noted, and added to our prospective menu! 😉 The test-then-scale approach makes total sense to me. If we lose 5 or 10k, we can earn that back without any significant lifestyle impact. Losing an order of magnitude more than that, though, would be totally devastating to me.

  3. As far as “appropriately risk-tolerant” – do you expect or want to change your current profile (age aside, since we’re assuming you’re going to live a long and healthy life)? I was a lot less risk tolerant in my 20s, ironically, than I am now in my 30s with a family and more dependents. If you’re assuming nothing changes insofar as how you define risk tolerance, it sounds like you’re in the right ballpark. You’re willing to consider taking some risks with the assumption that you’ll be able to earn income sometime in the future, and you’d plan to mitigate that risk when you take it on. The variable seems to be whether you’d want the earning to happen before or after the capital investment and you’ll know that when you get to the point where you have something you’d like to get into. Make sense!

    For now, I consider all retirement savings untouchable, and we’re only broaching the “emergency savings” fund for a new place because we have to. Otherwise, those savings are non-negotiable savings for future risk mitigation (job loss unless we’re FI). I suppose a more accurate description is that we’re more risk-tolerant because we can withstand more risk but more risk-averse because I spend a lot more time mitigating against the consequences of risk before taking on any more.

    I’m curious though, if you were to start a business venture, what would your goal be with that? Try a new adventure that could earn money and sell when you’re tired of it?

    • I like your framing of risk tolerance. The more I’ve saved, the more I’ve felt comfortable being able to withstand risk — that’s what financial freedom is all about. I’m not sure how my risk tolerance will change over time. I could imagine getting more wary with age about things like healthcare expenses and difficulty re-entering the job market, which would make me less likely to gamble any of my savings.

      You raise a really good question: why pursue any new business venture, especially one with personal financial risk? For me, I think it’s the joy of building something from scratch and being able to turn a concept into reality. I’ve worked in an early stage start-up setting before, and there’s an energy to it that I thrive on. In the future, I’d probably also be looking for something that could be a “lifestyle” business — enjoyable, intellectually stimulating, plenty of free time, and with some extra cash flow as a bonus. I suppose that probably disqualifies anything in the restaurant industry!

  4. I hit basic financial freedom a couple of years ago and left the corporate world, but I’ve since gone back to part time work, and taking regular extended time off between projects. Definitely the sweet spot between full time retirement and full time work. I don’t have kids, so I like having some work, but I’ll never go back to a full time salaried job. With that said, one thing that is great about having this income above and beyond what I need is that I can use it to meet some goals. I definitely plan to touch my retirement funds to live my life to the fullest. And I’m not talking about fancy cars or expensive resorts… I’m talking giving back and doing something very profound to help others. I am also a risk taker, but a very calculated risk taker. I think you need to go with your gut feeling. For some inspiration, I talk about DUMB goals on my website: Daring, Uncomfortable, Meaningful, Balanced.

    • Ha, I love the DUMB goals! I relate to your mindset on earning more, even after reaching financial freedom. Money is still motivating to me — not necessarily to buy fancy new things or upgrade my lifestyle, but definitely to support my favorite causes, help friends and family in times of need, etc. To your point, I’ll have to assess a specific opportunity when the time comes, but an alternative would be mixing in some part-time work in the future like you’ve done. Thanks for the food for thought!

  5. Any potential business venture that would require more than a few thousand dollars (i.e. business ventures that couldn’t just be funded by normal cash flow) would make me nervous. In that case, I think it would make sense to either earn some additional money and earmark it for future business opportunities or earn a little extra for the same purpose.

    My reasoning is that failed business ventures anecdotally seem to be what get old and/or high-earning folks into trouble frequently, so it’s best to set limits on their financial impact.

    • I agree with you, L4S. Even something cracking the five-figure mark would make me hesitant, and I would want a really solid backup plan in place. In my silly restaurant example, I would probably want to spend 6-12 months working in that type of environment to build experience and make sure I actually enjoyed it — and perhaps the income from that could cover some basic start-up expenses. That’s a good point about people getting into trouble with failed business ventures. It would probably be a good idea to set a strict cap on spending — e.g., I won’t invest more than $xx of my own capital into it. Like gambling at a casino, it’s good to know in advance when you’re going to walk away.

  6. I’ve been having similar thoughts, although I’m not yet FI. I’ve really been thinking about getting out of the rate race before I’m FI (potentially within the next 12 months). Therefore I’ve been hoarding cash. All the money that was earmarked towards my Vanguard brokerage account for this year will get funneled into my savings account while I figure out my plan.

    While entrepreneurship will most likely slow down my path to FI, I think 90 year old me wouldn’t be happy looking back and not giving it a shot. In my mind the worst thing that could happen is I don’t reach my goals in 2 years and have to resort back to working for the man until I’m full FI.

    I’m sure it’ll be stressful putting capital on the line (I’m stressed out just thinking about my entrepreneurial goals). But you’re definitely young enough where you could risk some capital and recover fairly easily if it doesn’t go well… So as long as you aren’t risking too much capital, I say GO FOR IT!

    • I always like the “what’s the worst that could happen” assessment. If the dream is inspiring and the worst case isn’t particularly bad, that’s something worth pursuing. In my example here, I would probably want to establish some maximum loss that I’d be able to stomach and say “Hey, it was worth a shot.” I appreciate the motivation! Now I just need a specific goal…

  7. I consider my savings and investments as untouchable. Until they’re not.

    If something come along that I value more, and if I’d carefully considered the angles, then hell yeah I’d risk it!

  8. If you’ll make the churros gluten-free, I’ll sign on as an investor. 😉 I love this question, and for me right now, the answer is no way. I’m only interested in doing post-FIRE work with small start-up costs, or things that I have the know-how to do myself. But a few years in, if the markets do okay and we have wiggle room, then maybe. Our pretend FI work dream is to find an undeveloped mountain somewhere not too pristine (because we don’t want to deforest some wilderness spot) and build a nonprofit ski operation there and sell lift tickets at cost. It would by definition not be a money making operation, and is probably financially completely unviable, which is why we won’t actually do it. But we hate that skiing keeps getting more and more expensive, and totally out of reach for anyone who’s not swimming in cash. So if you want to invest in that, you know where to find us. 😉

    • Deal! Maybe we can swap equity in our churro shop in exchange for lift tickets at your unviable resort. 🙂 I am not surprised at all at your answer on this question given your goal of never having to work again after retiring, and that totally makes sense to me.

      There are lots of ways we might earn more money in the future that don’t require any capital outlay, and perhaps the income from those could fund any riskier ventures down the road. I do like the idea of always having the FIRE fund as a backup, knowing that no matter what else happens, I have enough to sustain my basic expenses indefinitely. Once you have that, it’s hard to imagine giving it up.

  9. I think if you are really passionate about it you will find a way to make the money you need to fund that kind of dream. It’s probably good to have in the back of your mind, but cross that bridge…?

  10. The way I look at it is, if you’re already financial independence how much you’re willing to risk on a business adventures depend on whether you want to go back to work to make up for it if you ending up not making any money. For example, if you spend x amount every year, and the business ventures require 2x. Are you okay with going back to work for 2 years if business ventures doesnt pan out and your retirement nest egg is short by 2x. Giving enough length, maybe losing 2x will somehow being make up by better investment return, part time work over the next 10-20 years!

    • A very logical approach. For me, I think it would probably be less painful and less stressful to go earn the capital first, rather than always having in the back of my mind, “If this doesn’t work out, not only does your business fail, but you also have to go back to work!”

  11. Great question. My answer would be: yes, I would do it. FI for me is about living your dream life. The FI goal is there to serve a greater purpose : happiness and living regret free.
    My take would be to start working again in a job on my terms. The proceeds could fund the dream. And the dream would need to start small. A food truck sounds reasonable to me then.

    Another way to test the water could be to work in such a similar place to learn the trade. That would require no capital investment, you can see if you like to serve people, cook, clean,…

    • “Living regret free” — I love that. You’re right, that doesn’t have to mean dumping a ton of cash into a new idea. Starting small and scaling over time keeps the risk low while still letting you pursue it.

  12. I am not entrepreneurially inclined, so I have not given this idea any thought beyond reading the comments. If you have a bit of wiggle room, I side with those who say you’ll regret not trying it. With that in mind, the idea of putting a cap (budget?!) ahead of time on how much money you’ll take out of retirement is very smart.

    If you don’t have the wiggle room (meaning extra money saved, other ways to earn money, etc.), it’s too risky.

  13. You def have to be open to opportunities. I was in Belize for a vacation in January and ran into an ex-pat there who was having the best time running a little restaurant and bar. I don’t know what he invested, or maybe he just had a partner, but he seemed to really have found his bliss.

    • I love stories like that, PFK! Unless he happened to be swimming in cash beforehand, that decision probably required a considerable amount of risk, but there is a lot of upside potential — not just financially, but also in lifestyle terms.

  14. I’ve had this discussion often, and I even got Mrs. SSC agreed to some funding (~$10k tops) once I pull a business plan together showing how it won’t just be wasted. 🙂 I was even discussing that plan with a co-worker this morning and it still seems so big, it’s like, “where do I even start to get this to take shape?”

    To answer your question, yep, I’d risk some of our FI money if i saw it as a way to get return on it, but like Mrs. Montana – $100k type numbers, no way, I’d get investors involved or figure some other way to raise that kind of coin. That’s with me being a fairly risk-inclined person as well.

    Everyone has their own risk tolerance, I’d just ask how much would you risk that still lets you sleep at night? That should give you an answer as to how much more capital you would or wouldn’t need.

    • The sleep-at-night test is a really good one, and I agree that $100k-type numbers would feel insane. I’d put together a comprehensive business plan no matter how little the risk, but that’s too much for me no matter how confident I felt.

  15. I’m with you in that I would have to earn the capital first, rather than take it from my stash. Man the churro place sounds great! good post!

    • Thanks! Yeah, we’re already eager to go back. I didn’t even mention how good the hot chocolate was! Maybe we’ll stick to visiting and eating rather than running it ourselves. 😉

  16. It’s an interesting question. I think I’d probably put stipulations that I have to save desperately for it, but a lot of that is simply because with my Fi money I’m fairly risk intolerant. Also I have no personal experience as an entrepreneur dependent on my company. As such I suspect I’d fail early and often, which is not something I’d want to do with my life savings.

    • Good point. Perhaps I’d decide to say I’m extremely risk-averse with my FI stash, but willing to be quite risk-loving with any savings beyond that.

  17. Great question Matt.

    My view is that nobody ever saved their way to riches. The majority of self made “rich” people own businesses in addition to the usual collection of low cost tracker funds and real estate investments.

    Being FI essentially means your basic needs are being met, regardless of whether you spend the day drinking beer on the couch in your pyjamas watching unemployment television… or perhaps doing something slightly more adventurous, rewarding, or productive.

    So the question becomes how basic is “basic”, and how much is “enough”?

    For mine, once I had “basic” comfortably covered I declared FI, did the victory dance, then started striving for the happy. I considered “basic” to be a safety net, but everything over that to be a consumable resource I could deploy/utilise/gamble on chasing “more”.

    More happy.

    More fulfilment

    More comfort.

    More adventure.

    Basically the luxury to strive for something better.

    If a little Churros place will help you find the happy, then go for it I say.

    We only get one life to lead, and if you are disciplined enough to have achieved FI once, then it would seem a shame to then spend the rest of it sitting on the sidelines out of fear of losing it all and having to return to work… that doesn’t really sound like Independence to me.

    • I really like your last point: what’s the point of hustling to FI only to not go after other dreams because you’re afraid of the consequences? That doesn’t mean I’d risk everything financially, but perhaps that savings above the level required to support the necessities are open for other uses and experimenting with new things. Thanks for the thoughtful comment!

  18. Been there. Done that. Lost shirt.

    But that was OK, because I didn’t invest my shirt in the enterprise. You either invest someone else’s money or you keep your start-up and early operating costs modest enough that you won’t lose funds you need to live on over the long term — i.e., retirement savings, or the principal in your house.

    It’s important to be aware of the ratio of success to failure among business startups…and to understand that those figures apply to you. And it’s also important to set up your entity so as to protect your personal assets from loss in the event of failure or a lawsuit, and never to mix personal and business finances. Oh, and while you’re at it, even though you KNOW you’ll never divorce, consult a lawyer now (not later) about how to set things up to protect the business in the event of an unexpected marital development.

    • Thanks for the healthy dose of reality. I’ve known enough brilliant people whose start-ups failed to know that’s a very real possibility. You’re right to approach this decision with a lot of caution!

  19. Great question.

    I think it’s important to remember that most new business ventures fail. Something like 9 out of 10 new businesses close within 5 years. The food service industry in particular is known to be a difficult industry.

    That said, reaching for your dreams is an outstanding way to live… but plan for failure. Only gamble with the capital you’re prepared to lose.

    You’re still fairly young, so I think you can still fail a few times and bounce back from it.

    • That’s a good mindset — “plan for failure” and be comfortable with those potential consequences. Anything like this would be a gamble, so it would be wise to treat it that way mentally. Thanks for your comment!

  20. Our traditional retirement accounts remain untouched, so our goal is to create other income streams to fund our ideas, like an income snowball.

    There’s a location nearby in York reserved for popup concepts so new (potential) restaurant owners can try their concepts and to give residents new things to try periodically. I know nothing about running a restaurant or a food truck, but this sounds super fun to me as a patron. 🙂

    • I love that idea of a low-stakes place to experiment with restaurant concepts. I think that’s one of the reasons Portland, Oregon, has such exceptional food — people can try out their ideas in food cart format without needing hundreds of thousands to enter the market. Sounds like you’re with the majority of commenters here in treating the retirement accounts as sacred and finding other income to support new ventures. I think I’m with you.

  21. There is no failure in life…only life lessons. If it is truly a dream then I’d go for it. It’s horrible living with regret…plus you’re young, you can recover. I wouldn’t risk my entire nest egg since as you said the failure rate is high. A low-stakes place to try it out is probably your best bet.

    • I like your positive spin on things, though for me, I’d be hard-pressed to think of losing my savings as not at least a bit of a failure! Agreed that low-stakes is a way to fail comfortably — or succeed without having risked it all.

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