That feeling of excitement at the opportunity to discuss investing, or explaining your budget to someone, or rejoicing with a spouse about your work optional date is passion. And for me that passion has taken over my being. I have become engrossed with the idea of FIRE. I love thinking about how money invested is money working for you instead of you working for money. I just get so excited! But…
I didn’t start out with this joyous love for all things FIRE. In fact when my husband Jeff first mentioned it I felt as if it was a death sentence or a penance for past misdeeds. I felt restricted to the point that I’d often hide purchases from him more out of shame than judgment. But I trudged along mostly out of obligation for years. Not to say that the journey was all bad because it wasn’t in fact I think we took the long road to financial independence (FI). We always had nice cars, a nice home, and we ate well.
Then something happened about three years ago. I started to notice that our investments had reached $100K and it felt like it was seamlessly increasing without effort. That’s when I discovered the true effects of compound interest. Once you enter into the FIRE community it feels like everyone is talking about this magical “pixie dust” that just puts more money in your account. It’s only at this point of experiencing it yourself that you realize it works. Money was just appearing in my account like magic.
Compound interest is what happens when your investments pay dividends and when reinvested buy more investments that in turn pay more dividends and this continues on and on. Then once your investments get to a certain point, usually over $100k the growth from the investment takes over and you don’t have to work as hard to see larger investment growth. Now there is a lot more technical stuff related to investments and return but for now focus on saving and investing that first $100k. You’ll see.
I tell you this to inspire you. If you are just starting or you’re on your way to that first $100K, keep going it gets better and easier. An article that has inspired and taught me a lot about the compounding effect and the first $100k was this article by Four Pillar Freedom. Once the magic starts you’ll want more and you will become so excited to share the idea with others. Albert Einstein is famously quoted as saying, “Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… pays it.”