Hi, I am Olaf, and today I want to discuss what I did when I received $100,000 and how it fueled my feelings of being an imposter and the associated pains of imposter syndrome. While it is a subject I have debated journaling, I suspect many in the financial independence community don’t share their story with full transparency, and I hope this aids others in being more forthcoming. So, here is my attempt at lifting the veil!
Imposter syndrome
Imposter syndrome is a psychological pattern in which an individual doubts their skills, talents, or accomplishments and has a persistent internalized fear of being exposed as a fraud.
Wikipedia
Discussing my imposter syndrome feelings
Imposter syndrome is something that infiltrates and reverberates across all areas of our society, and my story is no exception.
For me, imposter syndrome arose from the idolization of traditional financial unicorns in the personal finance blogosphere.
Why? Because I did not climb out of debt. My parents paid for my college. And my parents helped kickstart my savings, which I hope to do for my future child, though not extravagantly. (For further reading, see How Much Money Should You Leave Your Kids?)
I was very fortunate, and for that, I am grateful.
Most Americans carry non-mortgage debt, struggle to save, and lack financial literacy. Consequently, it is easy to feel out of place in the personal finance world because I am not the norm. How do I celebrate my successes while not dismissing those who have made significant triumphs? It is complicated, or at least I thought it was.
You see, the more I age, the more I reflect. And today, I want to acknowledge that each person’s journey is different and that it is okay to embrace my privilege and success while still being cognizant of others’ achievements.
I admire the harrowing journeys made from debt to riches, and I respect those who embrace opportunities afforded to them. After all, every person shapes their future from their inherited past, and we can all win simultaneously; that is the beauty of personal finance!
So, whether you are a tech-worker, with a household income eclipsing $300,000, or a single parent making a modest hourly wage, we can all celebrate in the revelatory freedom that Financial Independence provides.
Yes, some people will have faster journeys while others will face tumultuous climbs, but the promised land exists for everyone alike.
Ca-ching
Without further ado, I want to discuss a subject that I have been reluctant to detail in my previous blog and guest posts: I received a large chunk of cash a couple of years back.
My name is Olaf, and I received a one-time payment exceeding $100,000 during my FI journey.
Yes, you read that right: $100,000.
How, you ask? Well, I was injured in an automobile accident and lost my ability to hike, mountain bike, and do anything that required meaningful exertion with my right foot.
It wasn’t a fun experience, and I don’t recommend it to anyone, as my abilities returned only after surgery, months of physical therapy, and relearning how to walk.
As for the outcome, the positives were that I learned my determination was greater than expected and that the other party’s insurance compensated me. Hence, the lump sum payment.
While I find it odd, our society has a strange way of using cash to fix problems. Though I suppose there isn’t much else to remedy the situation, which I would have preferred to avoid the experience altogether.
$100k is a lot of money
Not to state the obvious, but $100,000 is life-changing money. One could put a down payment on a home, buy a used vehicle, and start saving towards financial independence, all at once.
Concurrently, one could travel the world many times thereover, purchase a sports car, or fund their XYZ dream. Heck, the world could be your oyster!
Still, I was a disciple of the FIRE movement by this point and well on my way to financial emancipation, saving more than half of my income and with ample savings. Thus, taking advantage of this opportunity to buy my freedom earlier was at the forefront of my mind.
I wasn’t going to let the founders of FIRE down!
A silly thought I had at the time
Therefore, with ample savings in stow, I saw my net worth increase by nearly half overnight, and I began to strategize: how would I deploy this small fortune?
Sticking to my plan
I have an investment policy statement of putting the vast majority of my money into index funds. Why? Because statistically, that is where one is most likely to grow their money.
So, armed with a substantial cache of cash, I began buying into the market over three weeks using most of the money. As for the remaining funds, I bolstered my emergency fund and discretionary spending accounts (approximately 11% of which went towards indulgences later down the road, but more on that later).
Why didn’t I dollar-cost-average (DCA) into the market over a year or longer? After all, this was a considerable sum.
Because the data says investing money now is more likely to yield excess returns when compared to a prolonged DCA strategy.
Hence, I mobilized the funds through indexed ETFs purchased in a taxable brokerage account. As for the three-week purchase window, that was my attempt at DCA in a shorter period.
Nonetheless, it was that simple!
How it worked out
I am glad I didn’t wait to invest these funds, as the market has appreciated substantially in recent years, and my experience was no different.
I am also grateful I invested in index funds, as ARK Funds is an excellent example of why you should never bank solely on actively managed funds.
While I like to hold some money in actively managed funds, I never gamble more than a small amount, and I abhor cryptocurrency and individual stock picking. (For further reading, see Crypto Is Not What You Think.)
Did this money accelerate my journey towards FI? Absolutely, and saying otherwise would be a lie. But did this money create my FI? No, it did not. And I can say that without feeling the associated imposter syndrome anymore. I continued saving after receiving this money, just as I had before, which, when combined, enabled me to quit my day job last year.
Numerically, I attribute 30% of my worth to this sum and my parent’s aid, and the remaining 70% to my saving habits (yes, that factors in compounding). As for the values that enabled my FI, credit goes to my parents, the personal finance community, and myself.
What happened to the remaining funds? Admittedly, I spent some of the money frivolously, and most of that occurred recently due to changing circumstances and plans. But life is an evolving journey, after all.
Importantly, I continue to remind myself to live in the moment and not take life too seriously! Speaking of which, I just pierced one of my ears and bought hot red jeans. My spouse shook her head in disbelief about the latter.
What is your story with imposter syndrome?
Receiving these monies accelerated my path towards financial independence, but they weren’t the make-or-break point for my financial success. Instead, determination, persistence, and my value system were.
Notably, I did have to recover from imposter syndrome and becoming cheap during my FI journey, the latter of which you can read about in my Budgets Are $exy guest post, Enjoy the Pilgrimage as Much as the Destination.
But enough with me, what was/is your non-typical PF story or circumstance? Has imposter syndrome ever afflicted you? How does it affect your perception of yourself in the Financial Independence community or elsewhere? Let me know in the comments below, and as always, have a great day!
Mile High Finance Guy
finance demystified, one mountain at a time
Hey Olaf! First off, I’m sorry to hear about your accident. Crappy stuff like that happens in life, and you just gotta move on and focus on the good things around you. $100k is amazing, and you dealt with it well by investing it for the future. Love it!
As for imposter syndrome, I used to think it was a bad thing. But I’ve changed my mindset and now I think it’s kinda awesome. Whenever I feel like an imposter, it means that a) I’m learning new things, b) I’ve got some sort of exciting challenge in front of me and c) I’m exploring life outside the “normal”. It’s kind of all good news (as long as I don’t let it hold me back).
Anyway, thanks for sharing your story and feelings. And thanks for encouraging others to do the same 🙂
Joel
Joel,
The accident is part of life and as you said, you just have to move on. Fortunately, I have made a great recovery and while it changed my life, some positives came out of it.
Regarding imposter syndrome, that is an awesome mindset to incorporate and I love the positive twist you added to it.
Thanks for the comment and your guidance offline, I look forward to tomorrows 5am email!
Olaf, the Mile High Finance Guy
I think my more talented coworkers (that I’m close with) have one point or another mentioned to me of their imposter syndrome. Like Joel said, I don’t think it’s a bad thing – it’s a source of humility. Doubting yourself is actually having good perspective because you’re aware that you could be wrong about things. If you’re blind to the possibility of being wrong, then you can’t really ever learn anything.
On the flip side, I also know a lot of people at work that don’t doubt themselves nearly enough and that leads to catastrophes as well since they’ll insist on things that are factually wrong or things they’re not 100% sure of. This leads to a lot of misunderstandings and wasted work.
Angie,
I think you are spot on with your takes! A bit of humility goes along way, as does believing in yourself. I think there is room for both concurrently, but the key is finding the sweet spot. Thanks for commenting!
Nice work throwing that right into the market! I know the numbers say not to DCA but mentally I think I would have to over a short period of time. To see that money immediately drop would make me sick haha.
Impersonal Finances, thanks for stopping by and commenting! It certainly is difficult to ignore DCA when using large sums, but the longer one waits to invest the entire amount, the greater the opportunity cost (usually).