Podcast Title: How to Money
Episode: Financial Independence Exists on a Spectrum (Bestie Ep) #1005
Release Date: July 4, 2025
Host: Joel and Matt (iHeartPodcasts)

Overview

In Episode #1005 of How to Money, co-hosts Joel and Matt delve into the concept of financial independence (FI), challenging the traditional all-or-nothing mindset. They propose that FI exists on a spectrum, comprising various stages that individuals can achieve progressively. By breaking down financial independence into manageable steps, Joel and Matt provide listeners with a practical framework to enhance their financial freedom without feeling overwhelmed.

Introduction to the Financial Independence Spectrum

Joel opens the discussion by highlighting the common misconception that financial independence is a singular, distant goal. Instead, he emphasizes that viewing FI as a spectrum with incremental milestones can transform both the psychological and practical approach to achieving financial freedom.

Joel [07:00]: "Financial independence exists on a spectrum. It is not an all or nothing thing."

Matt reinforces this by drawing parallels to sports, particularly baseball, where an overemphasis on home runs has made the game less enjoyable for some fans. Similarly, focusing solely on accumulating a large financial nest egg can make the journey to FI seem unattainable.

Matt [07:00]: "Financial independence exists on more of a spectrum."

The Stages of Financial Independence

Joel and Matt outline a proprietary framework comprising six stages of financial independence:

1. No FI
   Individuals living paycheck to paycheck with no financial buffer.

   Joel [22:12]: "This is where everyone starts... Unless maybe like, you're a trust fund baby."

2. Credit Card FI
   Achieving a basic emergency fund that covers unexpected expenses, reducing dependence on credit cards.

   Matt [24:09]: "This is when you still don't have much credit card fi, but you've amassed enough to give yourself some basic breathing room."

3. Layoff FI
   Building a fully funded emergency fund (three to six months’ worth of expenses) to withstand job loss without derailing financial progress.

   Joel [25:57]: "The next step is achieving what we call layoff I... when you have three to six months worth of expenses on hand."

4. Peace Out FI
   Saving beyond the emergency fund, enabling individuals to voluntarily leave jobs for personal reasons without financial strain.

   Joel [30:13]: "Peace out fi means you not only have that base amount saved up but have enough to engineer your own layoff if you want to."

5. Sabbatical FI
   Allowing for extended absences from work to pursue personal growth, education, or entrepreneurial ventures without immediate financial pressure.

   Matt [33:15]: "Sabbatical ci is like the ability to take an extended absence from work and be just fine."

6. Full FI
   Complete financial independence where individuals can choose to work or not without financial obligations, allowing for maximum personal freedom.

   Matt [44:37]: "The last stop on the financial independence spectrum is achieving full and ultimate financial independence."

Key Insights and Discussions

Financial Independence as a Journey

Joel and Matt stress that financial independence isn’t a final destination but a continuous journey with multiple milestones. This perspective encourages sustained motivation and allows individuals to celebrate small victories along the way.

Joel [47:36]: "The ultimate goal is not dying with millions in the bank. Don't be afraid to lean into your financial independence level and enjoy the benefits of it."

Wealth Beyond Money

The hosts differentiate between wealth and money, emphasizing that true wealth encompasses an abundance of resources beyond financial assets, including health, relationships, and personal fulfillment.

Joel [09:08]: "Wealth is really an abundance of resources. It doesn't specifically have to mean US Dollars."

Matt [10:28]: "The SPHIRE framework divides your life into different sectors like spiritual, physical, intellectual, relationships, and emotional."

Saving vs. Investing

Joel and Matt tackle the often-confusing dichotomy between saving and investing, advocating for a balanced approach. They recommend beginning investments once listeners reach the "Credit Card FI" stage, ensuring both liquidity and growth.

Joel [43:08]: "The right way to think about the saving versus investing conundrum is to take the both and approach."

Matt [43:15]: "It's like the Muhammad Ali approach: do it just like Muhammad Ali."

Practical Strategies for Advancing Through FI Stages

The hosts provide actionable advice for progressing through the FI spectrum, such as:

• Debt Repayment: Prioritizing the elimination of high-interest debts.
• Emergency Funds: Building and maintaining a robust savings cushion.
• Investment Initiatives: Leveraging tax-advantaged accounts and diversifying investments to ensure long-term growth.

Matt [24:14]: "Should have called it the stepping stones of financial independence... Maybe a bit more tame, but okay."

Real-Life Analogies and Examples

Baseball Analogy:
Joel and Matt compare the pursuit of FI to baseball, where focusing solely on home runs (ultimate financial goals) can make the game less enjoyable, while appreciating all aspects of the game (incremental FI stages) enhances the overall experience.

Fisherman Parable:
Drawing from a classic parable, they illustrate how working incessantly for a distant goal can lead to missing out on present joys and relationships.

Joel [14:14]: "The ultimate goal is to get back to the exact life he's living now... enjoying fishing and having beers with friends."

Hiking Analogy:
Using a hiking metaphor, Joel describes FI as conquering one step at a time rather than attempting to scale an intimidating mountain all at once.

Matt [54:32]: "Financial independence is like taking small steps up a mountain trail rather than attempting to scale the entire mountain in one leap."

Encouragement and Mindset Shifts

Joel and Matt encourage listeners to redefine their relationship with money, emphasizing that financial independence should enhance life’s quality rather than restrict it. By celebrating each stage of FI, individuals can maintain motivation and appreciate their progress.

Joel [55:26]: "Freedom is the best thing that money can buy because it means you get to call the shots more and more about how you spend your time."

Matt [51:16]: "Breaking it down into manageable stages makes financial independence more attainable and less demoralizing."

Conclusion

In this episode, Joel and Matt effectively dismantle the notion of financial independence as a singular, distant milestone. By presenting FI as a multi-stage spectrum, they offer a more inclusive and achievable roadmap for listeners. This approach not only makes the pursuit of financial freedom less daunting but also allows individuals to enjoy incremental benefits along their journey, fostering a healthier and more balanced relationship with money.

Notable Quotes

• Joel [07:00]: "Financial independence exists on a spectrum. It is not an all or nothing thing."
• Matt [07:00]: "Financial independence exists on more of a spectrum."
• Joel [22:12]: "This is where everyone starts... Unless maybe like, you're a trust fund baby."
• Matt [24:09]: "This is when you still don't have much credit card fi, but you've amassed enough to give yourself some basic breathing room."
• Joel [43:08]: "The right way to think about the saving versus investing conundrum is to take the both and approach."
• Matt [43:15]: "It's like the Muhammad Ali approach: do it just like Muhammad Ali."
• Joel [55:26]: "Freedom is the best thing that money can buy because it means you get to call the shots more and more about how you spend your time."

Additional Resources

For a detailed breakdown of the financial independence spectrum discussed in this episode, visit howtomoney.com. The show notes also include links to resources like Monarch Money and credit card tools to aid your financial journey.

This episode serves as an essential guide for anyone looking to navigate the complexities of financial independence, providing both strategic insights and motivational encouragement to embrace a balanced and progressive approach to managing finances.