Financial Freedom - Why it is Obtainable for All Walks of Life

Written By: Mr. Horizon


The Story Behind Mr. Horizon


The home page of our website tells everyone a little about the Horizon’s and one key point is currently, we are both engineers. Many who read this immediately believe it is easier for us to obtain financial freedom than it would be for other professions since we are higher earners. While this is not wrong, we do make very good money which allows us to take full advantage of having a high savings rate, this was not always the case. While Mrs. Horizon had a very typical path for obtaining her engineering degree, I did not. I had a very difficult journey to where I am today and I hope by telling you my story, I can inspire people from all walks of life to think differently about their relationship with money and material goods. Through hard work and discipline, financial freedom is obtainable for everyone. You do not need to have an advanced degree if that is not for you. If your close circle of friends do not believe it is possible then it is up to you to find new friends and mentors to change your life. The first part of this entry will be my personal story to where I am today. To follow up my claim that it is possible to achieve financial freedom no matter the walk of life, I will explain the math behind achieving this goal.

This was a hard one for me to write. I hope after reading this you will all have a bit more insight into Mr. Horizon, but before I can start I need to say I love my family very much and would not change anything about my life to this point. I would not be the man I am today had I not gone through some of the things I have gone through.


Where to begin? Let’s start with my mom and dad’s divorce. I was so young I can barely remember it. My dad is an alcoholic (over a decade sober at this point and now I have an absolutely fantastic relationship with him), but not back then. I don’t know all the facts because I was so young and I do not really have anyone to ask about what actually happened, but I do know the relationship was abusive, so my mom filed for divorce to get out. She later remarried and we lived quietly until I was about 12. We were poor, but survived and being young I did not understand the financial state we were in anyway. Funny thing about traumatic experiences though is everyone deals with them differently and no one knows exactly what is going to come of it. Enter my teenage years. Fighting over money situations became more and more frequent in my house as bills piled up with no way to pay them. Neither my mom or step dad understood money very well. On top of that my mother began to exhibit odd behavior. She had developed and eating disorder and was beginning to drink heavily. Things continued to get worse and by the time I was sixteen my mother would be hiding bottles of booze all around the house and would be acting crazy drinking herself to near death multiple times. We would have the cops there one night for domestic disputes and the next, the ambulance to take my mother to the hospital because she had blacked out and stopped breathing. This took its toll on my step dad and the rest of the family. My brother lashed out and, being older, he left. Me and my sister stayed, but I was developing unhealthy ways to cope. I would go out and party every chance I got, getting in trouble with the law, and running from the police. This continued to get worse for another year and finally everything came to a head one drunken evening. My step dad had left the house to try to escape the arguments. He was a shell of his normal self and had totally withdrawn from the family. I had had it with my mother and we were arguing furiously and my younger sister was crying uncontrollably. I was out of control, but so was my mother. It ended when, in a drunken rage, her small 5’2” frame charged me and took a full swing punching me in the throat. My mom had spanked me before, but this was the first time in my life she was actually coming at me to attack me. She told me to leave and never come back, so I did.


At 17 years old I was on my own. Now, I needed to decide what to do. I had done okay in school to this point so I had almost enough credits to graduate. I was a senior so I went into the school and sat down with them. I explained that I was now living on my own and told them I would only be taking the classes I needed to graduate as I had to begin to work to support myself. I did not go into all the details. I was from a small town so this is the only reason this worked. I had worked ever since I was 14 so this was nothing new to me. I had been putting in 60-hour weeks every summer since my 15th birthday. So, I laid out a plan. I would house hop until I graduated, sleeping on friends couches until they got sick of me then I would move to the next. I worked every hour I could at 3 different jobs to support myself and make ends meet. But I was still in a pretty bad place, partying very hard every time the opportunity arose. Never the less, I graduated. I failed every class that was not necessary to graduate my senior year, but I got a diploma. My mom had asked me to come back home but there was no way that was happening. I had so much anger.


Now here I am after high school and finally some luck. My dad had gotten sober and was doing very well for himself and his now wife. They were building a new house and I was allowed to stay in the other until it sold, paying a small rent check to him and maintaining it for showings. I had transitioned into a full-time job in concrete, but was still lost. I would spend everything I made during the week on the weekends and was scraping by, partying and out of control. I knew something needed to change or I was going to be no better off then everything I hated about my Dad’s and Mom’s disease.

So, about two months before my nineteenth birthday I joined the Marines. This changed my life. It gave me the discipline and focus I needed to turn my life around. It also gave me the passion and the drive needed to be where I am today.


In the 5 years I served I began to turn my life around. I quit drinking and dedicated myself to learning and becoming the best I could at anything I started. I picked up a book in the airport, The Automatic Millionaire, and couldn’t put it down. I read article after article about personal finance and financial freedom. I wanted the opportunities it would provide for me and my future family. I worked as an aviation electrician and attended night classes in aeronautics. I felt like things were finally turning around. I never made much, I averaged $22,000 a year. Yet I started saving into the military thrift savings plan. By the time my contract was up I had totally changed my line of thinking. I now wanted to go back to school and get my electrical engineering degree. I had worked my butt off and had nearly $30k in the bank and another $15k in my TSP.


I got out in late 2010 and immediately bought a house and got a job at a manufacturing facility making cranes and heavy equipment. Do you know what my starting pay was? $13.50 an hour, that’s it. That is all I had that is less than $500 a week after taxes. To put that in perspective typically the kids at gas stations now are making very close to the same amount. I did not care, I knew what I wanted. I immediately enrolled in the collaborative engineering program. I worked full time, went to school full time, and owned a house. Even with all of this I never stopped saving. My work did not have any retirement fund so for the next 5 years while I finished my degree I saved in a personal IRA. I did not max it out the first year but during the second I had increased to achieve the maximum contribution allowance of $5500 while making just $29,000 annually ($14.00/hour). Things were going pretty well, but I had another setback…

My mother and I still hadn’t been on speaking terms. She had been leaving me messages about a guy she was seeing and how she was trying to turn her life around but he was not good for her. She wanted to leave. I did not pay it much attention and kept all contact very distant. Then one day I got a phone call from my older brother. That man had walked into the gas station where my mother was working and shot her dead. I was 25 years old and my mother had just been murdered. I felt helpless. After the man was put in prison for the rest of his life and I was able to work through the loss, I became even more resolute. Something had changed with in me. In my younger days something like this would have caused me to go into a tailspin, but now it just lit an even larger fire. I would not let something like this happen to my future family. They would not see or deal with the things that I had seen.


A little while later I met Mrs. Horizon. We met at school over classes and she inspired me, she drove me to be a better version of myself. I knew I wanted her in my life. We set out with tenacity to complete our degrees. I cut hours down at work, but continued to save and picked up more engineering courses to finish faster. Our relationship continued to grow and we developed some of the ideas and philosophies we talk about on this blog together. Like how we want to have a family and be financially free and be able to live life generously and adventure.


Then it was graduation time for me. I had completed my engineering degree while working and had fixed up the house in the meantime. In the first 10 years of my journey I had only made over $30k a year twice and after the sale of my house do you know what I had grown my nest egg to? $98,802… I did this through a meticulous and disciplined savings approach. I learned so much getting to that first $100k and I will tell you that this is achievable for anyone. The best part is that after you have the first $100k it gets so much easier! You have built all the habits necessary and have laid a solid foundation for your future. From here all you need to do is keep it up!

The Possibilities are Endless (It is all discipline and mindset)


I have been at the low-income levels and I know it is hard to see savings as a priority. I have talked to many people about the financial decision-making process and we just do not have any formal education to teach people about money and how it works. I do make more money now, but I don’t want anyone to think that it is impossible. I started this process when I was in the low-income area and have worked my way through all of the income levels. To help I want to look at a few scenarios to show that financial freedom is obtainable no matter the income level. Remember it is all about savings rate and required replacement income. I will base all of my scenarios on a family of 4 income assuming $0 savings and $0 debt. For all of my scenarios I will use a total market low cost index fund yielding 8% return. The user will not try to time the market and will be investing in a tax deferred IRA. For each income shown I will assume the saver can increase the savings rate by a multiple of the step 12.5%, 25%, 37.5%, 50% savings rate as the result of more disposable income. I realize in each case we will see some lifestyle inflation but the goal is to always focus on discipline purchases and seeking value and meaning with the dollars we choose to spend.


1. Low-Income Household (< $25000):


I know it is a struggle to live on less than $25,000 a year supporting a family of four, but remember we are assuming no debt. This means no big interest payments that need to be made. $25,000 a year is right around $12.00 an hour. I want to go back to the pay yourself first principle I have discussed in other posts. I am going to assume this person is working from 7:00 - 3:30 with a half hour lunch each day. That means on Monday morning until noon he agrees that financial freedom is his primary focus and until 12:00 he is working to pay himself. The rest of the week can pay the bills, put food on the table, or whatever but the first 5 hours of the week is for the family’s future. This results in the saver putting away 12.5% of his income. The saver did not go into any apprenticeship program or go to college and went directly to work. I am going to assume the financial independence journey started at 19 years old.

This value comes directly off the take home pay which means their income required to live is:

Using the 4% rule, the nest egg required to replace their income is: $547,000


Graphing out the growth of this savers account they would reach their required income needed to be financially free between years 35 and 36. For this saver, that is their mid-fifties, which is a major accomplishment for most any one today.


2. Middle-Income Household (< $50,000)


Typically, these are single income households. The professions typically trade skills, manufacturing, teachers and many others. Breaking this down into hourly pay it comes in around $24.00 an hour. This saver has higher income and no debt again so they will be able to double the first savers savings rate and stash away 25%. Using the pay yourself first principle, this saver works all of Monday and the first 2 hours of Tuesday for the family’s financial freedom. To earn a little more money, this earner either did an apprenticeship or 2-year college program some possibly even a 4. There savings journey is going to start at 21 years old.

This value comes directly off the take home pay which means their income required to live is:

Using the 4% rule, the nest egg required to replace their income is: $938,000


Graphing out the growth of this savers account they would reach their required income needed to be financially free between years 25 and 26. That means this saver reaches their required nest egg by their mid to late forties. This is a fantastic achievement, but is only possible with a disciplined, saver’s mindset.

3. Upper-Middle-Income Household (< $100,000)


These are the typically two income households or one high skill income. It covers a wide range of professions and skilled trades. Breaking this down hourly for analysis it comes in around $48.00 an hour. In this area the disposable income should be quite large so I again increase the savings rate to 3 times the original. This family is saving 37.5% of their overall income. Using the pay yourself first principle, this user works all of Monday and Tuesday until 2:30 in the afternoon to reach the family’s financial freedom goals. This means he has 15 hours of paying himself first. It took this saver longer to get the education needed so he did not start until 23 years old.

This value comes directly off the take home pay which means their income required to live is:

Using the 4% rule, the nest egg required to replace their income is: $1,564,000


Graphing out the growth of this savers account they would reach their required income needed to be financially free between years 19 and 20. That means this saver reaches their required nest egg by their early forties. They worked hard and were able to achieve their goal following principles off pay yourself first and having a money saving mindset.

4. High-Income Households (< $200,000)


For the sake of argument, I decided to cap this at $200k main reason is if you are earning more than that I can’t see any reason why you need anything like this as a tool. If you are in one of those positions figure out how to get to whatever your number is and then find ways to help others. Giving back is the best thing we can do to make this world a little better every day.

In this $200,000 range the majority of your income is disposable. Breaking this down hourly is about $96.00 an hour. This person should be able to save 4 times our original savings rate. Doing the math that puts us at 50%. Again, looking at the pay yourself first principle this saver should be working half of their week to pay themselves. Monday, Tuesday and half of Wednesday should all be going to fund their nest egg. Typically, these earners come from difficult or long educational programs. Master’s degrees, and many of the STEM fields (Science, Technology, Engineering, Mathematics). Some others are small business owners. No matter how they got here they have the ability to help a lot of people and after they achieve financial independence they need to find ways to give back because they have been blessed with good fortune. These people do typically get a later start in earnings though. I will start them at the age of 24 for this analysis.

This value comes directly off the take home pay which means their income required to live is:

Using the 4% rule the nest egg required to replace the income is: $2,504,000.00


Graphing out the growth of this savers account they would reach their required income needed to be financially free between years 14 and 15. That means this saver reaches their required nest egg by prior to their 40th birthday. They have the rest of their lives to decide what they will do with the freedom they have been able to obtain.

I would also like to point out that it is in this higher bracket where you find the extreme savers. The ones saving 60%, 70%, or even 80% of their income. Every percentage you increase your savings is like a double bonus. First, it allows more money to go into the investments growing the nest egg even faster; second, it reduces the amount of replacement income needed to fund the lifestyle you currently live. Every saver on the list was able to reach financial independence. The table below summarizes all the data from above.

In a follow-up post to the Financial Freedom - Why it is Obtainable for All Walks of Life I will be posting our 10 reasons why we believe obtaining financial freedom is a worthwhile endeavor. The reason I shared so much of my story with you is because everyone comes from a different place in life and we all have our own path. I always hear people blaming their upbringing, circumstances, income level, and many others as excuses for the troubles and problems they have in their lives. Remember the ability to change your situation is entirely up to you. Go out there and make this world what you want it to be, and remember to HYOH!


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@mr.andmrs.horizon

Crossing the Event Horizon

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