How the Financially Independent can plummet back to Financial Dependence

Merry Christmas everyone! I hope that everyone is having a safe and relaxing holiday with their families, whether that means opening presents in front of the cozy fireplace or watching films while eating Chinese food.

While I do feel envious of those in the blogosphere who have reached financial independence, I do realize that everyone is in a different situation and phase in our financial journeys. The financially precocious of this world have surely gotten a head start, but building up hoards of money isn’t the name of the game. We just need to be smart about what we put our labor towards and enjoy ourselves during the journey.  Doctors enter the workforce—money people call this the wealth accumulation phase–later in life, but we are fortunate to have good earning potential.  I’d pick compound interest over earning potential any day, but earning potential can get you pretty far in life.  Well, if you are a doctor who doesn’t have good financial firepower, I hope that you are still saving lives and healing people. ?

One aspect of financial savviness that I was skeptical about early in my financial readings was how  one can be confident that safe withdrawal rates can actually be safe? The financially bold were able to set their expenditures within a tight range, build up to a 3-4% safe withdrawal rate, minimize their tax burden, and tell off their employer a la Office Space style.

I see others simply working a “few extra years” with strong savings rates over 50% to build up additional buffer. Then there are the exceptional prodigious who actually develop additional income  after declaring financial independence.  There are many roads to Rome, as they say.

But out of the prominent few out there who are truly level-headed and are able to make unemotional financial decisions, how many out there with decent financial sense, make it to financial independence, and then fall back to financial ruin? Anything can happen in this world, and here are a few habits and life choices that can erode away your financial independence:

Rising Eating Habits

While food in general is much cheaper than what was available a decade ago, there are clearly more wallet-gouging options available now as well. Foodie cultures, microbreweries, organic foods, fad-diets, and Manuka honeys all contribute to increasing the cost of food.  Perhaps you have a dream to dine at every Michelin-starred restaurant you can get your hands on. Maybe your daughter decides to become vegan and your wife goes gluten-free, too.  Uncontrolled, the cost of food for a family of five can easily double or triple with selective eating.  If there is any redeeming aspect of rising food habits, it’s that we only have one stomach. No matter much you crank up your food expenditures, you probably aren’t going to undo years of prudent financial decisions that got you to financial independence.


Once you cut back on your job, you will undoubtedly have more time to jet set. Travel can get quite pricey, especially if you go heli-skiing or drink champagne in a glacier.  However, most people who can handle their finances well should be able curb their need to splurge on vacation. I consider vacations to be a possible financial sink, but the financially astute ought to be able to curb their expenses if the going gets tough.

Heli-skiing this area looks like fun but is going to cost a pretty penny.


The danger with spending on your kids is that they are your kids. Since you’re not spending on yourself, it is easy to convince yourself that you’re contributing to their success. Raising children can be economical but it can also destroy your ability to retire. Just because you thought you had planned out their public school trajectory by moving into a good (read: expensive) housing neighborhood doesn’t mean that your kids will actually go to public school. I’ve seen plenty of highly intelligent parents who, against practical judgment (and sometimes at the urging of their spouse), send their kids to private school. Think that the fifth grade couldn’t possibly get any more expensive when your daughter started attending a $25,000/year private school? Wait until she asks you for an iPhone X because all of her classmates have one too!  You’d better work a few extra years if that happens.


No one ever plans for divorce, but it happens to more than 40% of Americans. If you have children, you’d better believe that there is likely going to be legal influence on that constitutes child support. The toughest part about dividing up retirement savings exactly in half is that it may not be possible to divide up everything in half. I’ve seen some families in these situations forced to sell property at a loss simply to convert real estate to capital so that it could be divided more easily. Your spouse may not necessarily have the same financial goals as you do, and divorce may prohibit both sides from ending up in a good financial situation.

What other situations can whittle away your financial independence?

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2 thoughts on “How the Financially Independent can plummet back to Financial Dependence

  1. I think you covered the big ones. Lifestyle inflation is big. Starting to speculate or chase yield instead of prudent investing. Also catastrophic losses or uninsured medical expenses can bring people down.

    1. True. Medical expenses can always put a wrinkle on your savings. I’ve known people with unexpected vet bills too. Had I known the cost of healthcare for pets, I would have considered veterinary mediine!

      Merry Christmas!

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