Why 2020 Isn’t the End of Financial Independence

We have more than one person believing hard that this is it. The end of financial independence is NIGH. Grant Sabatier of Millennial Money believes the FIRE movement “will disappear” because of COVID-19; Sam Dogen of Financial Samurai agrees, claiming “there is a lot of devastation” that will amount to the end of a movement. Both of these individuals have clocked years in the financial media spheres; are they correct in their predictions?

In a word: nah. That just ain’t true.

Speaking subjectively, there was maybe a week during which my net worth dipped below $100k. Then it went right back up, leaving me at $114,000 as of this morning. That’s a total coronavirus loss of 10% – hardly something to freak out over. Big whoop, I still have 90% of my peak riches and can still work for decades if need be.

But that’s just me, and I am part of the teeny part of the population actually working towards financial independence. So many others are getting hit hard in 2020 and are worrying more about making rent than they are at making a million. Not acknowledging that struggle does more damage to the financial independence movement than coronavirus ever will. It’s really easy for money gurus to say “get a raise!” or “start a side hustle!” without considering the top reasons why people haven’t already. More often than not, the reasons are concerns over work/life balance and fears over inadequacy than they are about willful refusal to better yourself.

If you really think this is the end of financial independence, you’re not thinking long-term. And if you’re not thinking of financial independence at all, chances are you just haven’t considered the possibility.

Representation Matters in Finance, Too

I’ll point to the Scully Effect to prove this. The X-Files TV series became a hit back in the 90s, featuring all-around badass Dana Scully as an FBI agent and doctor working paranormal cases.

Casting a woman for this role made a massive difference in the amount of women who decided to enter STEM fields. Becoming a scientist, engineer, or doctor requires a lot more formal schooling than other careers, which, combined with the inherent “boy’s club” atmosphere of said fields, discouraged many women from breaking into them. But having a role model busting through their preconceived beliefs inspired countless people into changing their careers. Specifically, almost doubling the amount of ladies who are now entering the sciences. Representation matters, and seeing what your life could hold leads to huge change.

The financial independence movement should take a page from the Scully Effect playbook; there’s enough overlap in how showing what’s possible = more people making the change. Becoming financially independent requires a lot more thought and discipline than other lifestyles, which can discourage many would-be FIRE adherents. But like Scully’s example, we should show people that it’s at least possible no matter where you start. There are some incredible stories out there of people reaching sustainable wealth when they were once imprisoned, drug addicted, or coming from abject poverty. The more people share their financial stories, the more chance someone will go “Hey! They’re just like me! I can do that too!“

Best of all, there’s people who are still financially independent even after the shitstorms of the dotcom bubble and financial crisis. 2020 might have given us all a wallop, but 2020 also isn’t going to last forever. This will not end the financial independence movement, and anyone who says otherwise doesn’t know what they’re talking about.

Only These Situations Can Make it Truly End

For many people it just got harder. That doesn’t make it impossible. There are several things that need to happen to make that true, and if any one of them does NOT come to pass then FI will still chug along.

1. Everybody stops building new business forever

Let’s be realistic, especially when we consider the last two recessions in 2001 and 2008. Does anyone really think that this pandemic is so damaging to the human psyche that we’ll stop innovating for the rest of time? Because innovation is a tenet of index fund investing, which is itself the #1 recommended long-term investment strategy. Said index funds track the top performing publicly-traded companies, which on average grow by 10% each year.

The only way that won’t happen is if everyone stops dreaming about their future business, or pulls the plug completely on working towards/maintaining said dream. There are few guarantees in this world, and one of them is the determination of man when their dreams and goals are united. New businesses will continue to blossom and established companies will continue to prosper, provided they have excellent leaders at the helm.

2. Wages plummet across the board, making it impossible for anyone to save no matter the budget

A tenet of reaching financial independence is having the means to work towards it. Several millions have lost their jobs, but this doesn’t mean they’ll never have jobs or other income again. As for those who are still employed, they’re not suddenly working for free either. Wages are still being paid out, and I’ve got the pay stubs if you need receipts.

Best of all, we still live in a democratic society. While it’s being deeply threatened by an oligarchical elite, we all still have the right to choose our government officials being elected. Therefore, we can also choose representatives who will work on our behalf to ensure more people can take care of their own.

3. The stock market will do a 180 on its long-term behavior

The stock market always goes up in the long run. Again, this is due to human innovation, which has never showed signs of stopping. It’s always possible, on one hand, that something in the machinery breaks down and makes the stock market forever stop behaving the same. The stock market mirrors society, and we’ve seen society break down in the distant.

On the other hand, that’s only going to take place when society itself turns upside-down. Coronavirus has sent us into our homes for safety but hasn’t upended civilization. We’re still typing away, being creative, and making memes about everyday life. Society is tougher than this. We will keep going.

4. Nobody likes new things anymore

Either someone would have to deploy a mass mind control device and set it to “anti-consumerism,” or this blog starts a new world order of consumer behavior and attitudes. Either event would cause an abrupt halt in dumping cash into the latest and greatest gadgets for your every need; it would cause people to (gasp!) make do with what they have. Or worse: buy used. That would sent a shitload of factories into bankruptcy, and bring down the dependent industries like a fiery game of dominos.

Luckily for these businesses, the education just ain’t in place for making folks aware there’s another way to live. Even when there will be, there will always be some percentage of the population who believes their lives are inherently superior by possessing only the newest, state-of-the-art crap in existence. Yeeaah, this won’t happen anytime soon.

5. Businesses don’t make profit anymore

Need I say more?

6. Angels/aliens get around to abducting the human race

The sudden confirmation of either religious mythos or extraterrestrial intelligence will make money absolutely Not Matter. I still don’t see UFOs outside my window or newsreels about people floating up into the atmosphere, so this is another scenario we can put to bed.

Unless, of course, Mulder and Scully prove me otherwise.