After publishing Why We Keep Spending Even Though We Know We Shouldn’t, I realized something important: the real reason I wasn’t willing to spend on a vacation rental this summer is because we no longer have financial freedom. I didn’t think about this fact until after I got a lot of feedback from readers on how I should spend my money.

After buying our latest home, I sold a significant amount of stocks and bonds to pay for it in cash. As a result, our passive income temporarily dropped from around $380,000 to about $230,000.

Given our annual after-tax expenses were around $260,000 at the time, we suddenly had a deficit. And by my definition, financial independence means having enough passive income to cover your desired living expenses.

Justifying the Decision To Save

While writing that post, I justified not spending on a vacation rental for the following reasons:

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