Golden handcuffs for FI people

I thought I was going to be let go.
There was an ominous meeting with HR placed on my calendar.
Turns out, it was about an org change and they’re moving me to another team.

Phew, dodged a bullet.

My mind was in overdrive for the 2 days in which I thought I was going to lose my job.
Should I start applying to jobs ASAP? What expenses to cut? How does this change my plans?

Then I asked myself: why am I so stressed? Aren’t I somewhat financially free?

Golden handcuffs for FI people

The term golden handcuffs refers to a financially beneficial (“golden”) situation that is hard to leave (“handcuffs”). Some examples include…

• Tech workers who stay at their company because leaving would forfeit unvested stocks
• Content creators who feel obligated to maintain their brand and churn out content to keep sponsorships and income flowing.
• High earning professionals who feels trapped in their careers due to lifestyle creep with high expenses.

For financial independence seekers like me, the handcuffs fit a little differently…

There’s this FI number we aim for. Maybe it’s $1 million, or $5 million.
We stick to the plan, diligently saving and investing.
The idea is that *someday* once we hit that number, we could choose to retire early and live off of 4% of our FI portfolio.

But then life punches you in the eye.
Losing a job would mean a disruption to the FI plan.
The easy solution is to tap into pot of investment you’ve been building up…

But many FI people like myself view investments and income differently:

• Income is used to cover living expenses and contribute towards investments
• Investments shouldn’t be touched before retirement so that your portfolio can grow uninterrupted

The idea of tapping into my FI portfolio feels sacrilegious.

Not only because it slows down my FI plan, but also because stocks are a fluid game. If the stock mark dips 20%, I’d hate to sell at the bottom. The volatility of an investment portfolio doesn’t match the consistency of a W2 job.

At this point in my thinking, I realized that I was addicted to the paycheck.

The psychology of a sure thing

While ruminating, this hypothetical question came up:

If your current wages were guaranteed, but in exchange you had to leave your job—would you take it?

99% of people would take that offer, myself included.

This helped me separate out the identity I attached to my job from the income that I think I need.

I also realized that I’ve been anchored to my current W2 income. If my goal is to allow my portfolio to grow (without further contributions if I lose my job), then I’d just need to replace my monthly expenses.

What’s the minimum amount of income I’d like in order to not tap into my retirement portfolio?

I spend roughly $4000/month so I’d need to bring in at least $5,000/month in pre tax income.

How will I make that money?

My game plan now

All I can say about my job and much of tech is that it doesn’t feel stable. The reason my role changed so much was predicated on AI, which is going to massively affect just about every industry.

Aside: I’ve gone down the AI agent rabbithole, and the future is hitting harder and faster than I’d ever though. Progress is happening on the order of months, not years now. The world is going to look extremely different in next 6-12 months.

While I have a source of income, I plan to use it to build stable sources of non-job income. My current top 5 ideas, aligned to my interests, are…

• Create investing courses
• Invest in rental real estate – it’s easier to get a mortgage when you have a W2
• Learn how to build AI agents
• Crypto trading this bull cycle (highly degenerate and unadvised)
• Reboot my UXBeginner website

There’s also a side of me that wants to spend more money. Just like the the lesson I learned from the last crypto crash, I know that I rarely regret spending money on relationships and experiences. In the event if there is a financially negative event like job loss, I’d be more scared of spending money then. So why not do it now?

For example, there are some updates to my home I need to make. If I lose my job, I would be much more reluctant to make big purchases. An extreme example on the other side of the spectrum are people who lose their jobs and forgo health insurance.

Assets are for your life

One of my friends had to face a hard decision: should he sell his Bitcoin to cover some much-needed expenses?
He really didn’t want to sell his Bitcoin because the value could go up (which it most certainly did).

At the time, I said the point of having assets is not only to make money (wait for the value to go up), but to use it for your life if you need it.

There should be no shame nor self judgment in selling something you like, for something you need.

I think there was something about getting permission from a third party to not feel guilty that ultimately helped my friend make a decision.

That’s advice I need to take for myself.

And if you’ve got some golden handcuffs on you, just know that you can take the off any time.