Early Financial Independence: Living Your Life in 4 Acts (Not Just the 3 You’ve Been Told About)!

Early Financial Independence: Living Your Life in 4 Acts (Not Just the 3 You’ve Been Told About)!

You're probably living your life in “3 Acts”—so were we. (This may sound a bit esoteric right now, but just bear with me.)

When we finally realized that life was long (hopefully) and retirement seemed a distant goal, we started to imagine a new way to think of the story of our lives.

So, If you can achieve early financial independence, you can add a whole extra unexpected act to your life story. And who wouldn't want a more interesting story?

Are you struggling to recall the 3-act structure from english class? No kidding.

Ok, kids, pop quiz!

Question: “What are the parts of the 3-Act narrative story structure?” (Yeah…we went to film/art school)

Answer: 1) The “Setup” in which the problem to be solved is revealed; 2) The “Confrontation” in which the character (you) attempts to solve the problem, but doesn’t yet have the skills or knowledge to do it; and 3) The “Climax,” which is the most dramatic point when the main character (you) solves the problem and is somehow forever changed! The end.

So Why Should You Care About This Act Stuff at All?

Here's why: It may hit closer to home than you think.

In our own real lives, we’ve also been taught (somewhat subliminally by society) a basic 3-act structure that we are supposed to follow. Let's call it “Your Life in 3 Acts.”

Here's what that looks like.

Your Life in 3 Acts

Act 1 (The Setup):

We attain knowledge and go to school

Act 2 (The Confrontation and Rising Action):

We work to succeed in our career, earn and save money–all while (often) having and raising children.

Act 3 (The Climax):

Retirement/financial independence and…well…death. THE END.

Why Is This a Problem?

Well, immediately I see one major issue. Notice how close The Climax (retirement) is to death? Both elements exist in the same act! Retirement is supposed to be the most dramatic point of the story, where we as humans solve our problems, come out on top, and then…what?! We die?!

Is this a story (about you) that you'd want to read? In the movies, they don't usually die at this point, do they? Don't they “live happily ever after.”

I would argue that the main “problem” we are all trying to solve in life is: “How do I (make enough money to) live comfortably and be happy?”

I'm sure that statement is going to come under some serious fire. I realize not everyone is trying to “live a comfortable and happy life”…some people just want to be uncomfortable and miserable…and good for them. Not having any money will suit that pretty well.

I'm sure others are saying, “Sure, I want to be comfortable and be happy, but I don't need money for that.” That sounds great too, please send me any info on achieving that state of mind, I seriously want to learn. (I'm currently reading this book which helps a little, A New Earth by Eckhart Tolle.)

But if you are like us at all, you're feeling is that while money can't buy happiness, it can make your journey there much more comfortable. Ha! I laugh but we do feel that way. So we made the decision to spend more time thinking about money, so we could spend less time stressing about money. (aka solving the money problem.)

Okay…back to the story. Now, if you retire at age 65, and die at age 80, you’ve spent about 42 years trying to solve the problem of making enough money for you and your family to live, and then a measly 15 years celebrating your success (half of which you will spending complaining about your aching body) and then dying.

Sounds like a damn disheartening story to me—and one I think is worth an attempted rewrite (especially since the main character is SO DAMN SEXY—Ba-dum-bump!).

Enter: The 4-Act Structure (and Early Financial Independence)

Many authors and screenwriters would agree that the most interesting stories deviate from the traditional 3-act structure. So I'm thinking that maybe our own lives should too!

I'm going to go ahead and just steal from the Japanese 4-Act Structure, cause it's awesome. They throw in “The Twist”: a contrasting, even seemingly nonsensical, departure from the character and situation set up in the first and second acts. (And come on, it looks like a loop-dy waterslide! Now that's just FUN.)

So What Could a 4-Act Structure Look Like Applied to Real Life?

Well, here you go:

Your Life In 4 Acts

Act 1 (Introduction)

Hello hero! Attain knowledge and go to school. Find yourself!

Act 2 (Development)

Capitalize on your strengths. Launch your career, make money, and invest aggressively (attempting to solve the problem of having enough money to live on in Act 3).

Act 3 (The Twist!)

Achieve early financial independence or semi-retirement. Change it up! This is the time for less work, being active, traveling, and raising children. (Ok, I admit, the children part bunks the travel part a little. Oh well.)

Act 4 (Conclusion)

Full retirement. A life of leisure. A comfortable rocking chair on your porch, a box of reasonably priced wine, and the warm embrace of the death just over the sunset.

Does This Sound Like A Better Story?

There you have it–a much more intriguing story indeed. In this interpretation, our most dramatic and exciting act is…Act 3! In this act, the hero (you again) have overcome the major problem (making enough money to live comfortably), and now have the financial freedom to be spontaneous, spend more time with family, and enjoy being alive!

When you achieve early financial independence or semi-retirement, you can quit your job or do something completely different from your work in Act 2. You don't have to be focused on making money because you have invested in Act 2, and now these investments are covering (hopefully most) of your expenses.

In Act 3, the hero still has vitality, youth, and a sense of adventure—all without the stress of a long-hours job. You can enjoy the “Golden Years” well in advance of your Act 4 demise. That's the twist!

Aaaand now, for the visual learners…

Here's a handy cartoon infographic. All you need to remember is: slug, butterfly, tap dancing cat, tired bear. That's all there is to it!

What “Act 3: Retirement” Might Actually Look Like in 3 Acts….

My hips aren't bothering me at ALL! Road Tripping in this van is REALLY comfortable! I'm so glad we didn't retire early!

Let's go back to the old 3-Act life structure for a bit. So, when most people think of retirement, they envision themselves completely worry free, journeying abroad, strolling on a deserted beach, and enjoying the fruits of their many years of difficult labor and stressful career and family life. But what most people conveniently leave out of this image, is the ugly reality of old age.

They don’t picture, for instance, their bad knees which make them unable to walk without pain. They don’t “dream” about spending half their time visiting doctors, having cancer removed from their face, or endless hours in surgery and physical therapy rehabilitating their various “senior oriented” injuries.

They also leave out the possibility that their spouse may be too ill at this point of retirement to travel anywhere, let alone a foreign country.

No one ever includes in their idea of retirement the very real possibility that by the time they actually make it “there,” they are too cynical, too tired, or too bitter about all the difficult things that happened during their very elongated Act 2, to ever really relish the view from their Tommy Bahama beach chair. Worst possible scenario? They never make it to retirement at all. (Sorry to be morbid, but I had to say it.)  

Basically guys, the older we get, the more set in our ways we become, and the less likely we are to take a risk or head out on a big adventure. So, the harsh reality is that when most people retire, often the possibility of real adventure has passed.

Yeah, it's not what most people see when they picture their “Golden Years,” because most of us just live on the hope it will all work out well enough (and hopefully for some it does). But hope is not my kind of plan!

Will early financial independence give your life story a rewrite?
Is it too late for a rewrite?

A Different Kind of Retirement Plan

Because we've been thinking about this “less than desirable retirement story” for quite some time, my wife and I started pondering how we could find a way to ride the “Golden Years” train a bit earlier—like in our 40s or 50s?! Ideally, we wanted to be retired (or at least semi-retired) when we had the energy to be active, focus on health and happiness, and spend quality and quantity time with our little family. Was this even a possibility?

It turned out, through good planning (and some luck), we are actually living it. We have attained financial freedom-“ish-ness,” and are on the road to financial independence—our ideal Act 3.

What Exactly is Financial Independence?

Well, in the strictest sense, it means that you have amassed enough money that the investment returns it produces are more than enough to cover your living expenses. Which also means you have no need to “work for a paycheck.”

Let's be honest, that's pretty damn hard for most of us to achieve—and we're not completely there yet ourselves. However, a version of Act 3 can also be a “down-shift” of your career to something that's more flexible, and takes fewer hours to accomplish. Or perhaps you position yourself to work from home, which would allow you to move to a less expensive area to live. This is the path we are currently on now. We call it “financial freedom” instead of full independence.

I totally understand that switching the plan of your life to be 4 acts takes some serious planning and execution. So, I'm not going to try and solve that whole problem for you in this one post. But hey, the good news is…that's pretty much the entire goal of this website—to help you execute good planning!

Hopefully this post will get you thinking, or at least curious, about how you can rewrite the 3-act story of your life, if you so choose. We're doing it, and you can too.

A SIDEBAR ON F.I.R.E. (Financial Independence Retire Early)

Now some of you (who read lots of financial blogs) may be saying to yourself…wait…this all basically sounds like the FIRE movement. And you would basically be right. (For those of you who don't know what the FIRE movement is, checkout this Money Magazine Article.)

Oddly, we knew nothing about the FIRE movement when we started thinking about this. The thing that actually sparked the idea that this might be possible was…get ready…International Living Magazine.

If you want to know more about our journey to early (semi) retirement, read our article on How We First Started to Imagine our Early (ok, semi-ish-early) Retirement.

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Founder at Play Louder !

Joe DiSanto is the founder of Play Louder! He has built multi-million dollar businesses, produced critically acclaimed documentaries and an Emmy-winning TV show, invested millions in real estate, and semi-retired at age 43. Now, Joe serves as a Fractional CFO for several creative firms and is sharing a lifetime of fiscal know-how via Play Louder, an invaluable resource that helps individuals and business owners increase their net worth and plan better for their future.