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Fast Track Financial Independence (5 steps) | Millennial Money

05 Jul Fast Track Financial Independence (5 steps)Grant SabatierFounder of Millennial Money and Author of Financial Freedom. Dubbed “The Millennial Millionaire” by CNBC, Grant went from $2.26 to over $1 million in 5 years, reaching financial independence at age 30. He’s passionate about helping others build wealth and is addicted to Personal Capital.Latest posts by Grant Sabatier (see all)

One of the most common questions I get is How can I reach financial independence or retire early? While its never been easier to get rich slowly (save 10-20% and invest in index funds), its actually a lot harder to fast track your financial independence (when work is optional).

And when I say fast track financial independence, I am talking about retiring in 10 years or less from today, even if you are starting with very little. You need to make a lot of money, cut back on your three biggest expenses, invest as much as you can, and keep track of your net-worth using a free tracker like Personal Capital.

Honestly, trying to make as much money as you can and reach early retirement can be pretty stressful. There were weeks where I hardly slept and I definitely wasnt chilling as hard as I hustled. Im not going to sugar coat it for youit was the hardest and most intense thing Ive ever done in my life. While I always say that saving is an opportunity, not a sacrifice, trying to essentially go from broke to financial independence in 6 years requires a pretty big sacrifice.

But would I do it again? Absolutely. While tired, I was pretty happy most of the time. I enjoyed the challenge, the discipline, the mistakes, and simply doing something different than 99% of people out there. I like being different and a little weird; its just more fun. Chasing early retirement is definitely not the status quo.

Most people just didnt get it. They thought I was crazy. You save 80% of your income? You have a six figure income so shouldnt you have a nice car? Im sorry, Grant, but why do you live in such a crappy apartment when you make so much money? None of it phased me. I had a goal. Its what I thought about when I woke up and what I thought about when I went to sleep. How was I going to escape the rat race? How was I going to make more money?

Whether you are just starting your financial independence journey or you are deep in it,heres how I was able to fast track and go from broke to financial independence in 6 years. This is what I did and what I wished I did (like sleeping more and learning when to treat myself sometimes).

In 2010 when I started my financial independence journey, I didnt set a goal for how long it would take. All I knew was that when I did the math I was never going to be able to retire if I was only able to save 5-10% of a $40,000 $50,000 income.

The math I did was pretty simple. If I was able to save $5,000 per year maximum, even with an expected compounding rate of 6%, I would have about $433,000 in 30 years. While that might seem like a lot of money today,its not going to be that much in 30 years, because of two expected variablestaxes and inflation. You will need to pay tax on that money when you take it out, assuming a 30% tax rate that cuts the after-tax value to $308,000, which when adjusted for 2% annual conservative inflation amount (it could be higher than this even!), then the future value of that money after taxes and inflation is approximately $170,000.

While $170,000 is still a lot of money, its not going to be in 30 years. It definitely wont be enough to live on for 20+ years.

Typical wisdom is that you need 25x your annual expenses to retire early. When I did this calculation, I anticipated my annual expenses would be at least $50,000 in the future (who knows if I will actually be able to live off $50,000 in the futureI sure hope so!). But it was the best starting point I had, so by simply multiplying 25x by $50,000, I determined that I would need to save $1,250,000. Thats a big number, but it was my target.

You can sit down with a piece of paper and see how much money you need to retire early by checking this calculator I built.

Keeping a budget is really hard and its what stops most people from really fast tracking their financial independence. Of course, its important to keep track of your money, but if you really want to save, then you need to look first optimize your three biggest expenseshousing, transportation, and food.

The average American spends 70% of their money on housing, transportation, and food, so if you can spend less on them (say 25% or so, then you can bank the difference). If you move to a smaller apartment, walk to work, and cook at home, you could realistically increase your savings rate to 25%+ or even higher.

By reducing what I spent on my housing, transportation, and food costs, I increased my savings rate to 40% and sometimes as high as 80% while I was fast tracking my financial independence. The only way I was able to fast track was by cutting way back on my living expenses and investing the difference. If you want to save money on housing (typically your biggest expense), check out how to live rent free and the fundamentals of house hacking.

At the end of the day it comes down to a personal choice, but I was happy moving to a smaller apartment, moving closer to my office, and eating out less, to bank the difference. And I definitely was able to bank the differencesaving at least an additional $13,000 per year by cutting back. While I dont have the exact figures, I estimate that cutting back for 2 years, before buying my first home, I was able to save about $25,000 that I invested in 2011 and 2012, and that cutting back is now worth more than $100,000 in my investment accounts. Im going to continue to let it grow and hopefully making that decision 2 years ago will compound in 20 years into a lot more money. It was totally worth cutting back on my three biggest expenses. Try it out.

After doing the simple math that making $50,000 was definitely not going to be enough to fast track my financial independence, I knew I had to make a lot more money to invest. I startedside hustlingintensely in 2010, back when it was just called freelancing or gigging. Ive probably had over 25 different side hustles over the past 7 years, but the smartest thing I did was invest as much money of my side hustle money as possible.

One day in 2011, I sold a $50,000 website project, then that same day, someone who lives in my building posted on the community message board looking for someone to watch his cat for the next few days for $60. I was around for the weekend, so I jumped on it. Two days later, I sold one of my mopeds for a $300 profit. The next week, I resold 4 tickets to a Kanye West show for $550 profit.

A few weeks later, I took the $60 + $300 + $550 = $910 and the $50,000 x .70 = $35,000 after estimated taxes, and put the $35,910 directly into my Vanguard Total Stock Market Index fund from my phone. This was all side income, which I was investing 100% of at the time to fast track my financial independence.

Today, as Im writing this in 2017 that $35,910 is now worth about $108,000. The $910 alone that I made on the side increased in value to over $2,700. Not bad for building a website, watching a cat, selling a few tickets, and flipping a model.

At the height of my side hustling, I had seven pretty consistent income streams and was only living off one of them. The rest went right into investments. Every day I look for money making opportunities like this and then I do the most important step of allinvest it, so it can grow.

First, its essential to switch from a saving to an investing mindset. Its not possible to fast track financial independence by keeping your money in a savings accountinvesting is an essential ingredient. I have made more money through investing than anything else and most of it in my sleep! Just recently, I was looking at my investing returns over a 90 day period and realized that I had made over $15,000 in gains from one of my investments, which is more money than I made in 6 months working at my first job after college. If you really want to make money, then you need to be investing as much money as you can.

As Ive written about before, if you increase your savings/investing rate 1% every year, you can retire up to 2 years earlier, or if you save just 5% more then you could retire 10-15 years earlier. The math is pretty simple and the higher your % saving/investing rate, the faster you will able to reach financial independence. During my most intense months, I was saving 60%+ of my income and 100% of my side hustle income. Earlier this year, I tested myself and was able tosave 82% of my total income. While that might be a little extreme, it makes a massive difference for your future net-worth.

Remember what I said about living differently? A 50% saving/investing rate is more common than you would think amongst the FIRE (financial independence early retirement) crowd. I know a lot of people that save this much each month because they get it. Saving 50%+ of your income is definitely going against the status quo, but thats how you fast track wealth. If you want to go deeper, here are two posts onhow much money you should be savingandmy investing strategy.

At 24 years old, with no money, I had no idea how I was going to save my target $1,250,000.Its been shown in a bunch of research studies that our brains cant actually comprehendthat much moneythe numbers are too large and abstract to most people. It was daunting, to say the least.How was I going to make all that money?

This is why a lot of retirement calculators just arent that effective. They tell you that youll need $2,000,000 saved in 30 years, but dont break down the steps to get you there.

Recent psychology research also highlights that our brains work best when we break down large goals into daily goals. I figured out that to reach $1,250,000 in 30 years (expecting a return of 6-7% per year) using my investing strategy, I would need to save $50 per day to retire in 30 years. Every dollar I could save after $50, I would be fast-tracking my financial independence. Its also worth noting that I didnt start at $50 per day, I scaled up to it starting at $5 per day and then pushing it a few dollars more when I could.

Research also highlights that we should accomplish these daily goals through better habits. The key to building wealth is really in our daily habits. The better our money habits, the more money we will make, save invest, and grow. To go deeper, here are mybest money habits.

The five steps I used to fast track financial independence are simple in theory but can be difficult in practice. Like many things in life, its all about the effort and execution. You need to be consistent. Consistency is more important than anything elseyou cant just follow these steps for a few months. If you want it, youll prioritize it. You can also start as slowly or quickly as you want.

In 2010 when I made the decision to chase financial independence, I jumped in 100%, but thats just what I needed to do to get going.The key to building any sustainable results is to start at your own pace, start making more money where you can, and really push your investing percentage higher 1% at a time. It really adds up and every $1 you are investing today will compound as long as you keep it invested. As Ive mentioned before every $1 I invested in 2010 is worth almost $4 today.

It took almost all of my energy for six straight years to go from broke to financially independent. I also got lucky the stock market has grown so much over the past 7 years, but I was ready. Building wealth is about controlling as many of the variables as you can and then letting it grow.

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Fast Track Financial Independence (5 steps) | Millennial Money

theFIREstarter – Financial Independence. Retire Early

Greetings!

Welcome to theFIREstarter! If you are interested in themes such as Financial Independence, Retiring Early, Downshifting, or simply just working less and living more then please stick around, I think well get on just fine

If all of that sounds right up your alley then you can follow along by:

Subscribing by EmailFollowing me on twitterSubscribing by RSS feed

If you’d rather have a poke around first then by all means do so! You can always subscribe later by using the link at the top right of the menu above.If you want to get the full story you can start from the very first post here or for a more casual read, just see what catches your eye on the list of all posts page.

My thoughts and plans have slightly changed in the few years since I set up the blog, you can learn a little bit more about me and the main points on what those plans were and how they’ve changed here, here, here, here and finally here.

If you’d like to keep a track of new developments, money saving tips, money making tips, my adventures in attempting self sufficiency and simple living, free financial hacks and spreadsheets, and my general musings on Financial Independence, Personal Finance, investing, and the occasional humorous rant, then please consider following along. Those links again:

Subscribe by EmailFollow me on twitterSubscribe by RSS feed

Thanks for visiting!

TFS.x

Most random photo I could find from November!

Hey all!

Well as the name of the title probably suggests our good run of savings rates has come crashing to a spectacular end, with a lot of heavy spending all hitting us in one month (all entirely optional really, it has to be said!).

Lets find out how/why/what the hell happened shall we?!

Quick note: This turned out to be quite a monster update in the end I would go for a wee grab yourself a cuppa before continuing if I were you!

Read the rest of this entry

See original here:

theFIREstarter – Financial Independence. Retire Early

Fast Track Financial Independence (5 steps) | Millennial Money

05 Jul Fast Track Financial Independence (5 steps)Grant SabatierFounder of Millennial Money and Author of Financial Freedom. Dubbed “The Millennial Millionaire” by CNBC, Grant went from $2.26 to over $1 million in 5 years, reaching financial independence at age 30. He’s passionate about helping others build wealth and is addicted to Personal Capital.Latest posts by Grant Sabatier (see all)

One of the most common questions I get is How can I reach financial independence or retire early? While its never been easier to get rich slowly (save 10-20% and invest in index funds), its actually a lot harder to fast track your financial independence (when work is optional).

And when I say fast track financial independence, I am talking about retiring in 10 years or less from today, even if you are starting with very little. You need to make a lot of money, cut back on your three biggest expenses, invest as much as you can, and keep track of your net-worth using a free tracker like Personal Capital.

Honestly, trying to make as much money as you can and reach early retirement can be pretty stressful. There were weeks where I hardly slept and I definitely wasnt chilling as hard as I hustled. Im not going to sugar coat it for youit was the hardest and most intense thing Ive ever done in my life. While I always say that saving is an opportunity, not a sacrifice, trying to essentially go from broke to financial independence in 6 years requires a pretty big sacrifice.

But would I do it again? Absolutely. While tired, I was pretty happy most of the time. I enjoyed the challenge, the discipline, the mistakes, and simply doing something different than 99% of people out there. I like being different and a little weird; its just more fun. Chasing early retirement is definitely not the status quo.

Most people just didnt get it. They thought I was crazy. You save 80% of your income? You have a six figure income so shouldnt you have a nice car? Im sorry, Grant, but why do you live in such a crappy apartment when you make so much money? None of it phased me. I had a goal. Its what I thought about when I woke up and what I thought about when I went to sleep. How was I going to escape the rat race? How was I going to make more money?

Whether you are just starting your financial independence journey or you are deep in it,heres how I was able to fast track and go from broke to financial independence in 6 years. This is what I did and what I wished I did (like sleeping more and learning when to treat myself sometimes).

In 2010 when I started my financial independence journey, I didnt set a goal for how long it would take. All I knew was that when I did the math I was never going to be able to retire if I was only able to save 5-10% of a $40,000 $50,000 income.

The math I did was pretty simple. If I was able to save $5,000 per year maximum, even with an expected compounding rate of 6%, I would have about $433,000 in 30 years. While that might seem like a lot of money today,its not going to be that much in 30 years, because of two expected variablestaxes and inflation. You will need to pay tax on that money when you take it out, assuming a 30% tax rate that cuts the after-tax value to $308,000, which when adjusted for 2% annual conservative inflation amount (it could be higher than this even!), then the future value of that money after taxes and inflation is approximately $170,000.

While $170,000 is still a lot of money, its not going to be in 30 years. It definitely wont be enough to live on for 20+ years.

Typical wisdom is that you need 25x your annual expenses to retire early. When I did this calculation, I anticipated my annual expenses would be at least $50,000 in the future (who knows if I will actually be able to live off $50,000 in the futureI sure hope so!). But it was the best starting point I had, so by simply multiplying 25x by $50,000, I determined that I would need to save $1,250,000. Thats a big number, but it was my target.

You can sit down with a piece of paper and see how much money you need to retire early by checking this calculator I built.

Keeping a budget is really hard and its what stops most people from really fast tracking their financial independence. Of course, its important to keep track of your money, but if you really want to save, then you need to look first optimize your three biggest expenseshousing, transportation, and food.

The average American spends 70% of their money on housing, transportation, and food, so if you can spend less on them (say 25% or so, then you can bank the difference). If you move to a smaller apartment, walk to work, and cook at home, you could realistically increase your savings rate to 25%+ or even higher.

By reducing what I spent on my housing, transportation, and food costs, I increased my savings rate to 40% and sometimes as high as 80% while I was fast tracking my financial independence. The only way I was able to fast track was by cutting way back on my living expenses and investing the difference. If you want to save money on housing (typically your biggest expense), check out how to live rent free and the fundamentals of house hacking.

At the end of the day it comes down to a personal choice, but I was happy moving to a smaller apartment, moving closer to my office, and eating out less, to bank the difference. And I definitely was able to bank the differencesaving at least an additional $13,000 per year by cutting back. While I dont have the exact figures, I estimate that cutting back for 2 years, before buying my first home, I was able to save about $25,000 that I invested in 2011 and 2012, and that cutting back is now worth more than $100,000 in my investment accounts. Im going to continue to let it grow and hopefully making that decision 2 years ago will compound in 20 years into a lot more money. It was totally worth cutting back on my three biggest expenses. Try it out.

After doing the simple math that making $50,000 was definitely not going to be enough to fast track my financial independence, I knew I had to make a lot more money to invest. I startedside hustlingintensely in 2010, back when it was just called freelancing or gigging. Ive probably had over 25 different side hustles over the past 7 years, but the smartest thing I did was invest as much money of my side hustle money as possible.

One day in 2011, I sold a $50,000 website project, then that same day, someone who lives in my building posted on the community message board looking for someone to watch his cat for the next few days for $60. I was around for the weekend, so I jumped on it. Two days later, I sold one of my mopeds for a $300 profit. The next week, I resold 4 tickets to a Kanye West show for $550 profit.

A few weeks later, I took the $60 + $300 + $550 = $910 and the $50,000 x .70 = $35,000 after estimated taxes, and put the $35,910 directly into my Vanguard Total Stock Market Index fund from my phone. This was all side income, which I was investing 100% of at the time to fast track my financial independence.

Today, as Im writing this in 2017 that $35,910 is now worth about $108,000. The $910 alone that I made on the side increased in value to over $2,700. Not bad for building a website, watching a cat, selling a few tickets, and flipping a model.

At the height of my side hustling, I had seven pretty consistent income streams and was only living off one of them. The rest went right into investments. Every day I look for money making opportunities like this and then I do the most important step of allinvest it, so it can grow.

First, its essential to switch from a saving to an investing mindset. Its not possible to fast track financial independence by keeping your money in a savings accountinvesting is an essential ingredient. I have made more money through investing than anything else and most of it in my sleep! Just recently, I was looking at my investing returns over a 90 day period and realized that I had made over $15,000 in gains from one of my investments, which is more money than I made in 6 months working at my first job after college. If you really want to make money, then you need to be investing as much money as you can.

As Ive written about before, if you increase your savings/investing rate 1% every year, you can retire up to 2 years earlier, or if you save just 5% more then you could retire 10-15 years earlier. The math is pretty simple and the higher your % saving/investing rate, the faster you will able to reach financial independence. During my most intense months, I was saving 60%+ of my income and 100% of my side hustle income. Earlier this year, I tested myself and was able tosave 82% of my total income. While that might be a little extreme, it makes a massive difference for your future net-worth.

Remember what I said about living differently? A 50% saving/investing rate is more common than you would think amongst the FIRE (financial independence early retirement) crowd. I know a lot of people that save this much each month because they get it. Saving 50%+ of your income is definitely going against the status quo, but thats how you fast track wealth. If you want to go deeper, here are two posts onhow much money you should be savingandmy investing strategy.

At 24 years old, with no money, I had no idea how I was going to save my target $1,250,000.Its been shown in a bunch of research studies that our brains cant actually comprehendthat much moneythe numbers are too large and abstract to most people. It was daunting, to say the least.How was I going to make all that money?

This is why a lot of retirement calculators just arent that effective. They tell you that youll need $2,000,000 saved in 30 years, but dont break down the steps to get you there.

Recent psychology research also highlights that our brains work best when we break down large goals into daily goals. I figured out that to reach $1,250,000 in 30 years (expecting a return of 6-7% per year) using my investing strategy, I would need to save $50 per day to retire in 30 years. Every dollar I could save after $50, I would be fast-tracking my financial independence. Its also worth noting that I didnt start at $50 per day, I scaled up to it starting at $5 per day and then pushing it a few dollars more when I could.

Research also highlights that we should accomplish these daily goals through better habits. The key to building wealth is really in our daily habits. The better our money habits, the more money we will make, save invest, and grow. To go deeper, here are mybest money habits.

The five steps I used to fast track financial independence are simple in theory but can be difficult in practice. Like many things in life, its all about the effort and execution. You need to be consistent. Consistency is more important than anything elseyou cant just follow these steps for a few months. If you want it, youll prioritize it. You can also start as slowly or quickly as you want.

In 2010 when I made the decision to chase financial independence, I jumped in 100%, but thats just what I needed to do to get going.The key to building any sustainable results is to start at your own pace, start making more money where you can, and really push your investing percentage higher 1% at a time. It really adds up and every $1 you are investing today will compound as long as you keep it invested. As Ive mentioned before every $1 I invested in 2010 is worth almost $4 today.

It took almost all of my energy for six straight years to go from broke to financially independent. I also got lucky the stock market has grown so much over the past 7 years, but I was ready. Building wealth is about controlling as many of the variables as you can and then letting it grow.

+ GET A FREE 5 DAY “MAKE MORE MONEY IN LESS TIME” EMAIL COURSE

Success! Now check your email to confirm. FIGHTING THE SPAMBOTS!

Read the original post:

Fast Track Financial Independence (5 steps) | Millennial Money

Financial independence – Wikipedia

For the concept of independence from another person for support, see Dependant.

Financial independence means you have enough wealth to live on without working.[1][citation needed] Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses. Income you earn without having to work a job is commonly referred to as “passive income”.[2] For example, if someone receives $5000 in dividends from stocks they own, but their expenses total $4000, they can live on their dividend income because it pays for all their expenses to live (with some left over). Under these circumstances, a person is financially independent. A person’s assets and liabilities are an important factor in determining if they have achieved financial independence. An asset is anything of value that can be readily turned into cash (liquidated) if a person has to pay debt, whereas a liability is a responsibility to provide compensation. (Homes and automobiles with no liens or mortgages are common assets.)

Age and existing wealth or current salary don’t matter – if someone can generate enough income to meet their needs from sources other than their primary occupation, they have achieved financial independence. If a 25-year-old has $100 in expenses per month, and assets that generate $101 or more per month, they have achieved financial independence, and they are now free to spend their time doing the thing they enjoy without needing to work a regular job to pay their bills. If, on the other hand, a 50-year-old earns $1,000,000 a month but has expenses that equal more than that per month, they are not financially independent because they still have to earn the difference each month just to make all their payments. However, the effects of inflation must be considered. If a person needs $100/month for living expenses today, they will need $105/month next year and $110.25/month the following year to support the same lifestyle, assuming a 5% annual inflation rate. Therefore, if the person in the above example obtains their passive income from a perpetuity, there will be a time when they lose their financial independence because of inflation.

There are many strategies to achieve financial independence, each with their own benefits and drawbacks. To achieve financial independence, it will be helpful if you have a financial plan and budget, so you know what money is coming in and going out, have a clear view of your current incomes and expenses, and can identify and choose appropriate strategies to move towards your financial goals. A financial plan addresses every aspect of your finances.[3]

Since there are two sides to the assets and expenses equation, there are two main directions one can focus their energy: accumulating assets or reducing their expenses.

Accumulating assets can focus one or both of these approaches:

Another approach to financial independence is to reduce regular expenses while accumulating assets, to reduce the amount of assets required for financial independence. This can be done by focusing on simple living, or other strategies to reduce expenses.[4][5]

The following is a non-exhaustive list of sources of passive income which potentially yields financial independence.

The rest is here:

Financial independence – Wikipedia

Financial independence – Wikipedia

For the concept of independence from another person for support, see Dependant.

Financial independence means you have enough wealth to live on without working.[1][citation needed] Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses. Income you earn without having to work a job is commonly referred to as “passive income”.[2] For example, if someone receives $5000 in dividends from stocks they own, but their expenses total $4000, they can live on their dividend income because it pays for all their expenses to live (with some left over). Under these circumstances, a person is financially independent. A person’s assets and liabilities are an important factor in determining if they have achieved financial independence. An asset is anything of value that can be readily turned into cash (liquidated) if a person has to pay debt, whereas a liability is a responsibility to provide compensation. (Homes and automobiles with no liens or mortgages are common assets.)

Age and existing wealth or current salary don’t matter – if someone can generate enough income to meet their needs from sources other than their primary occupation, they have achieved financial independence. If a 25-year-old has $100 in expenses per month, and assets that generate $101 or more per month, they have achieved financial independence, and they are now free to spend their time doing the thing they enjoy without needing to work a regular job to pay their bills. If, on the other hand, a 50-year-old earns $1,000,000 a month but has expenses that equal more than that per month, they are not financially independent because they still have to earn the difference each month just to make all their payments. However, the effects of inflation must be considered. If a person needs $100/month for living expenses today, they will need $105/month next year and $110.25/month the following year to support the same lifestyle, assuming a 5% annual inflation rate. Therefore, if the person in the above example obtains their passive income from a perpetuity, there will be a time when they lose their financial independence because of inflation.

There are many strategies to achieve financial independence, each with their own benefits and drawbacks. To achieve financial independence, it will be helpful if you have a financial plan and budget, so you know what money is coming in and going out, have a clear view of your current incomes and expenses, and can identify and choose appropriate strategies to move towards your financial goals. A financial plan addresses every aspect of your finances.[3]

Since there are two sides to the assets and expenses equation, there are two main directions one can focus their energy: accumulating assets or reducing their expenses.

Accumulating assets can focus one or both of these approaches:

Another approach to financial independence is to reduce regular expenses while accumulating assets, to reduce the amount of assets required for financial independence. This can be done by focusing on simple living, or other strategies to reduce expenses.[4][5]

The following is a non-exhaustive list of sources of passive income which potentially yields financial independence.

View original post here:

Financial independence – Wikipedia

financial independence / early retirement – reddit

Ive been reading this thread for almost two years and have been on the journey to financial independence for almost ten years. Below is going to be a question I pose to fellow readers and contributors. I have posted one question two years ago on whether or not to sell our house to downsize to a residence closer to work and dramatically reduce our commuting time. We pulled the trigger almost a year ago and have been so much happier than before, even happier than we anticipated in ways we didnt foresee. Now, theres another issue that may result even further

I performed well enough in my job that I was rewarded with a management opportunity about eight years ago. Ive always been a solid individual contributor. Ive also been a glutton for punishment and worked a lot of overtime to develop the skills to get that opportunity. When it was offered, I initially wasnt interested because I just didnt want to manage people. I eventually gave in to the promise of more money and decided to go for the promotion. I wasnt sure when the next offer to move up the corporate ladder would come up. Plus, I always kept the idea alive that I could demote myself back into my old role if I wasnt happy.

I wasnt happy. Sure, I learned quite a bit during the past years, but I often found myself not only busy during expected deadlines, but also a never-ending series of special projects would come up. Three years into that promotion and I was beyond burnt out. After trying out the same role at a couple other companies, my burn out wasnt cured, but has gone dormant. My current position requires even more time managing and less time performing actual job duties. Notably, my satisfaction at work has diminished further. I spend a lot of time on activities I dont feel worthwhile and have to greatly rely on my staff to understand the issues in detail. I wish for more time to better understand things, but my role requires me to comprehend an inch deep and a mile wide.

Sadly, or not, Im still perceived, as far as I can tell, as a top performer. Ive managed to internalize most of my dissatisfaction and keep it covered up. Ive even been able, knowing that we have no debt and a significant net worth, to bring up issues no one else would dare bring up and push for some action in making things better.

As part of my New Years resolutions, I want to bring up with my boss the possibility of me moving into a different and preferable department while taking a step down in rank. After seven years in a management role in a role with numerous deadlines, I realize that I will not become happier doing this work and am hoping to return to a role that, although also challenging, was more satisfying.

I also believe this move would provide for less stress. My wife and I are hoping to start our family this year after many delays, all within our control, and I believe my focus should be with my family and not with trying to maintain or climb the corporate ladder.

So, I wanted to put a little financial independence math together below to show what the differences would be in taking the reduced role now versus later, or never.

The Math: With a reduced role and income, we are on target for an early retirement date of 50 years old. If I were to gut out this management role for another three years, and then take the reduced role, we would be on target to retire at age 46. If I were to gut out this management role until financial independence, we would be on target to retire at age 44. I am very conservative in all of my calculations, assuming a gross rate of return on investments at 7%, inflation at 3% and assuming only inflationary salary increases.

The Reasons Not To Step Down: With starting a family, Im unsure if my wife may want to take extended time off to be with our future children. She enjoys working for now and doesnt have any stated desire to stay at home, but I would want her to have that option. If she were to stay home, we could potentially reduce certain expenses and delay retirement by another couple of years at stay on track for retirement around 52 or 53.

The Explanation: If I go forward with this to my boss, how should I explain my intentions to go the opposite way on the corporate ladder? How could this be justified in my bosss eyes? I understand that it shouldnt matter, but sometimes honesty, especially in Corporate America, is not the best policy.

Reddit, what advice would you give? I am happy to clarify anything and everything. I think I am living the classic example of one more year syndrome. Its a real thing.

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financial independence / early retirement – reddit

Fast Track Financial Independence (5 steps) | Millennial Money

05 Jul Fast Track Financial Independence (5 steps)Grant SabatierFounder of Millennial Money and Author of Financial Freedom. Dubbed “The Millennial Millionaire” by CNBC, Grant went from $2.26 to over $1 million in 5 years, reaching financial independence at age 30. He’s passionate about helping others build wealth and is addicted to Personal Capital.Latest posts by Grant Sabatier (see all)

One of the most common questions I get is How can I reach financial independence or retire early? While its never been easier to get rich slowly (save 10-20% and invest in index funds), its actually a lot harder to fast track your financial independence (when work is optional).

And when I say fast track financial independence, I am talking about retiring in 10 years or less from today, even if you are starting with very little. You need to make a lot of money, cut back on your three biggest expenses, invest as much as you can, and keep track of your net-worth using a free tracker like Personal Capital.

Honestly, trying to make as much money as you can and reach early retirement can be pretty stressful. There were weeks where I hardly slept and I definitely wasnt chilling as hard as I hustled. Im not going to sugar coat it for youit was the hardest and most intense thing Ive ever done in my life. While I always say that saving is an opportunity, not a sacrifice, trying to essentially go from broke to financial independence in 6 years requires a pretty big sacrifice.

But would I do it again? Absolutely. While tired, I was pretty happy most of the time. I enjoyed the challenge, the discipline, the mistakes, and simply doing something different than 99% of people out there. I like being different and a little weird; its just more fun. Chasing early retirement is definitely not the status quo.

Most people just didnt get it. They thought I was crazy. You save 80% of your income? You have a six figure income so shouldnt you have a nice car? Im sorry, Grant, but why do you live in such a crappy apartment when you make so much money? None of it phased me. I had a goal. Its what I thought about when I woke up and what I thought about when I went to sleep. How was I going to escape the rat race? How was I going to make more money?

Whether you are just starting your financial independence journey or you are deep in it,heres how I was able to fast track and go from broke to financial independence in 6 years. This is what I did and what I wished I did (like sleeping more and learning when to treat myself sometimes).

In 2010 when I started my financial independence journey, I didnt set a goal for how long it would take. All I knew was that when I did the math I was never going to be able to retire if I was only able to save 5-10% of a $40,000 $50,000 income.

The math I did was pretty simple. If I was able to save $5,000 per year maximum, even with an expected compounding rate of 6%, I would have about $433,000 in 30 years. While that might seem like a lot of money today,its not going to be that much in 30 years, because of two expected variablestaxes and inflation. You will need to pay tax on that money when you take it out, assuming a 30% tax rate that cuts the after-tax value to $308,000, which when adjusted for 2% annual conservative inflation amount (it could be higher than this even!), then the future value of that money after taxes and inflation is approximately $170,000.

While $170,000 is still a lot of money, its not going to be in 30 years. It definitely wont be enough to live on for 20+ years.

Typical wisdom is that you need 25x your annual expenses to retire early. When I did this calculation, I anticipated my annual expenses would be at least $50,000 in the future (who knows if I will actually be able to live off $50,000 in the futureI sure hope so!). But it was the best starting point I had, so by simply multiplying 25x by $50,000, I determined that I would need to save $1,250,000. Thats a big number, but it was my target.

You can sit down with a piece of paper and see how much money you need to retire early by checking this calculator I built.

Keeping a budget is really hard and its what stops most people from really fast tracking their financial independence. Of course, its important to keep track of your money, but if you really want to save, then you need to look first optimize your three biggest expenseshousing, transportation, and food.

The average American spends 70% of their money on housing, transportation, and food, so if you can spend less on them (say 25% or so, then you can bank the difference). If you move to a smaller apartment, walk to work, and cook at home, you could realistically increase your savings rate to 25%+ or even higher.

By reducing what I spent on my housing, transportation, and food costs, I increased my savings rate to 40% and sometimes as high as 80% while I was fast tracking my financial independence. The only way I was able to fast track was by cutting way back on my living expenses and investing the difference. If you want to save money on housing (typically your biggest expense), check out how to live rent free and the fundamentals of house hacking.

At the end of the day it comes down to a personal choice, but I was happy moving to a smaller apartment, moving closer to my office, and eating out less, to bank the difference. And I definitely was able to bank the differencesaving at least an additional $13,000 per year by cutting back. While I dont have the exact figures, I estimate that cutting back for 2 years, before buying my first home, I was able to save about $25,000 that I invested in 2011 and 2012, and that cutting back is now worth more than $100,000 in my investment accounts. Im going to continue to let it grow and hopefully making that decision 2 years ago will compound in 20 years into a lot more money. It was totally worth cutting back on my three biggest expenses. Try it out.

After doing the simple math that making $50,000 was definitely not going to be enough to fast track my financial independence, I knew I had to make a lot more money to invest. I startedside hustlingintensely in 2010, back when it was just called freelancing or gigging. Ive probably had over 25 different side hustles over the past 7 years, but the smartest thing I did was invest as much money of my side hustle money as possible.

One day in 2011, I sold a $50,000 website project, then that same day, someone who lives in my building posted on the community message board looking for someone to watch his cat for the next few days for $60. I was around for the weekend, so I jumped on it. Two days later, I sold one of my mopeds for a $300 profit. The next week, I resold 4 tickets to a Kanye West show for $550 profit.

A few weeks later, I took the $60 + $300 + $550 = $910 and the $50,000 x .70 = $35,000 after estimated taxes, and put the $35,910 directly into my Vanguard Total Stock Market Index fund from my phone. This was all side income, which I was investing 100% of at the time to fast track my financial independence.

Today, as Im writing this in 2017 that $35,910 is now worth about $108,000. The $910 alone that I made on the side increased in value to over $2,700. Not bad for building a website, watching a cat, selling a few tickets, and flipping a model.

At the height of my side hustling, I had seven pretty consistent income streams and was only living off one of them. The rest went right into investments. Every day I look for money making opportunities like this and then I do the most important step of allinvest it, so it can grow.

First, its essential to switch from a saving to an investing mindset. Its not possible to fast track financial independence by keeping your money in a savings accountinvesting is an essential ingredient. I have made more money through investing than anything else and most of it in my sleep! Just recently, I was looking at my investing returns over a 90 day period and realized that I had made over $15,000 in gains from one of my investments, which is more money than I made in 6 months working at my first job after college. If you really want to make money, then you need to be investing as much money as you can.

As Ive written about before, if you increase your savings/investing rate 1% every year, you can retire up to 2 years earlier, or if you save just 5% more then you could retire 10-15 years earlier. The math is pretty simple and the higher your % saving/investing rate, the faster you will able to reach financial independence. During my most intense months, I was saving 60%+ of my income and 100% of my side hustle income. Earlier this year, I tested myself and was able tosave 82% of my total income. While that might be a little extreme, it makes a massive difference for your future net-worth.

Remember what I said about living differently? A 50% saving/investing rate is more common than you would think amongst the FIRE (financial independence early retirement) crowd. I know a lot of people that save this much each month because they get it. Saving 50%+ of your income is definitely going against the status quo, but thats how you fast track wealth. If you want to go deeper, here are two posts onhow much money you should be savingandmy investing strategy.

At 24 years old, with no money, I had no idea how I was going to save my target $1,250,000.Its been shown in a bunch of research studies that our brains cant actually comprehendthat much moneythe numbers are too large and abstract to most people. It was daunting, to say the least.How was I going to make all that money?

This is why a lot of retirement calculators just arent that effective. They tell you that youll need $2,000,000 saved in 30 years, but dont break down the steps to get you there.

Recent psychology research also highlights that our brains work best when we break down large goals into daily goals. I figured out that to reach $1,250,000 in 30 years (expecting a return of 6-7% per year) using my investing strategy, I would need to save $50 per day to retire in 30 years. Every dollar I could save after $50, I would be fast-tracking my financial independence. Its also worth noting that I didnt start at $50 per day, I scaled up to it starting at $5 per day and then pushing it a few dollars more when I could.

Research also highlights that we should accomplish these daily goals through better habits. The key to building wealth is really in our daily habits. The better our money habits, the more money we will make, save invest, and grow. To go deeper, here are mybest money habits.

The five steps I used to fast track financial independence are simple in theory but can be difficult in practice. Like many things in life, its all about the effort and execution. You need to be consistent. Consistency is more important than anything elseyou cant just follow these steps for a few months. If you want it, youll prioritize it. You can also start as slowly or quickly as you want.

In 2010 when I made the decision to chase financial independence, I jumped in 100%, but thats just what I needed to do to get going.The key to building any sustainable results is to start at your own pace, start making more money where you can, and really push your investing percentage higher 1% at a time. It really adds up and every $1 you are investing today will compound as long as you keep it invested. As Ive mentioned before every $1 I invested in 2010 is worth almost $4 today.

It took almost all of my energy for six straight years to go from broke to financially independent. I also got lucky the stock market has grown so much over the past 7 years, but I was ready. Building wealth is about controlling as many of the variables as you can and then letting it grow.

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Fast Track Financial Independence (5 steps) | Millennial Money

Financial independence – Wikipedia

For the concept of independence from another person for support, see Dependant.

Financial independence means you have enough wealth to live on without working.[1][citation needed] Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses. Income you earn without having to work a job is commonly referred to as “passive income”.[2] For example, if someone receives $5000 in dividends from stocks they own, but their expenses total $4000, they can live on their dividend income because it pays for all their expenses to live (with some left over). Under these circumstances, a person is financially independent. A person’s assets and liabilities are an important factor in determining if they have achieved financial independence. An asset is anything of value that can be readily turned into cash (liquidated) if a person has to pay debt, whereas a liability is a responsibility to provide compensation. (Homes and automobiles with no liens or mortgages are common assets.)

Age and existing wealth or current salary don’t matter – if someone can generate enough income to meet their needs from sources other than their primary occupation, they have achieved financial independence. If a 25-year-old has $100 in expenses per month, and assets that generate $101 or more per month, they have achieved financial independence, and they are now free to spend their time doing the thing they enjoy without needing to work a regular job to pay their bills. If, on the other hand, a 50-year-old earns $1,000,000 a month but has expenses that equal more than that per month, they are not financially independent because they still have to earn the difference each month just to make all their payments. However, the effects of inflation must be considered. If a person needs $100/month for living expenses today, they will need $105/month next year and $110.25/month the following year to support the same lifestyle, assuming a 5% annual inflation rate. Therefore, if the person in the above example obtains their passive income from a perpetuity, there will be a time when they lose their financial independence because of inflation.

There are many strategies to achieve financial independence, each with their own benefits and drawbacks. To achieve financial independence, it will be helpful if you have a financial plan and budget, so you know what money is coming in and going out, have a clear view of your current incomes and expenses, and can identify and choose appropriate strategies to move towards your financial goals. A financial plan addresses every aspect of your finances.[3]

Since there are two sides to the assets and expenses equation, there are two main directions one can focus their energy: accumulating assets or reducing their expenses.

Accumulating assets can focus one or both of these approaches:

Another approach to financial independence is to reduce regular expenses while accumulating assets, to reduce the amount of assets required for financial independence. This can be done by focusing on simple living, or other strategies to reduce expenses.[4][5]

The following is a non-exhaustive list of sources of passive income which potentially yields financial independence.

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Financial independence – Wikipedia

How to Become Financially Independent

Hero Image/ Getty Images

Most people believe the key to wealth is a high-paying job. Yes, it’s easier to amass assets if you have more money coming in each month, but one key to increasing your net worth is to spend less than you make. Ultimately, spending habits are the reason a professional athlete making $20 million a year can quickly go bankrupt while a bus driver can retire a multi-millionaire. It can be a cliche but it is a fundamental reality of money.

To escape the spending trap, you need to understand that income is not long-term wealth. What is wealth? Income is obviously a component of wealth but wealth can have varying definitions. Many people see wealth as their total net worth at any given time. This can be paralleled to the assessment of an individuals balance sheet. Wealth can be referred to as the part of your balance sheet that is considered equity. Your assets minusliabilities. The wealth you have after liquidating.

Thinking Long-Term

Thinking long-term is an important characteristic for accumulating wealth and achieving financial independence. There can be several considerations for long-term wealth and they will differ for everyone.

If you are a doctor or lawyer, you need to put in long hours after years of specialty training and higher education to get a paycheck. However, in any occupation, as discussed, your annual salary does not necessarily translate to wealth. With long-term thinking, helping to ensure your jobs security, taking initiative to achieve a promotion, or taking steps that will result in higher sales commissions can all be factors for wealth and ways to help ease your anxieties over financial independence.

Side gigs, private investments and a host of other variables can also be utilized for long-term thinking, wealth accumulation, and achieving financial independence. A few considerations here may include a portfolio of private businesses, car washes, parking garages, stocks, bonds, mutual funds, real estate, patents, trademarks. Some of these cash generators can be relied on for long-term income in addition to your job or just as cash generators that can pull in money while you take long vacations or sit by the pool.

Assessing Your Balance Sheet

When you take a look at your personal balance sheet you may already have organic investments you can rely on in your quest for financial independence. Oftentimes this is wealth that generatescapital gains, income, and dividends without labor. The more of these investments you can afford, the sooner you can fully achieve financial independence.

Reaching a Goal

Overall, the real value of your income is partially determined by the amount you can invest to achieve a financial independence goal. Setting this goal can be important for keeping your perspective on income in check. At your goal, you can successfully maintain the lifestyle you want without working.

Thus, your level of wealth can also be measured by your long-term thinking and potential sustainability. Working with a financial adviser can help you to set a goal for wealth accumulation that allows you to maintain your standard of living without an additional paycheck and achieve the financial independence of your dreams. This goal can be lofty however, as most peoples annual spending includes a long list of budget items such as mortgage payments, car payments, clothing, college tuitions, music lessons, entertainment expenses, and more.

Original post:

How to Become Financially Independent

theFIREstarter – Financial Independence. Retire Early

Greetings!

Welcome to theFIREstarter! If you are interested in themes such as Financial Independence, Retiring Early, Downshifting, or simply just working less and living more then please stick around, I think well get on just fine

If all of that sounds right up your alley then you can follow along by:

Subscribing by EmailFollowing me on twitterSubscribing by RSS feed

If you’d rather have a poke around first then by all means do so! You can always subscribe later by using the link at the top right of the menu above.If you want to get the full story you can start from the very first post here or for a more casual read, just see what catches your eye on the list of all posts page.

My thoughts and plans have slightly changed in the few years since I set up the blog, you can learn a little bit more about me and the main points on what those plans were and how they’ve changed here, here, here, here and finally here.

If you’d like to keep a track of new developments, money saving tips, money making tips, my adventures in attempting self sufficiency and simple living, free financial hacks and spreadsheets, and my general musings on Financial Independence, Personal Finance, investing, and the occasional humorous rant, then please consider following along. Those links again:

Subscribe by EmailFollow me on twitterSubscribe by RSS feed

Thanks for visiting!

TFS.x

Most random photo I could find from November!

Hey all!

Well as the name of the title probably suggests our good run of savings rates has come crashing to a spectacular end, with a lot of heavy spending all hitting us in one month (all entirely optional really, it has to be said!).

Lets find out how/why/what the hell happened shall we?!

Quick note: This turned out to be quite a monster update in the end I would go for a wee grab yourself a cuppa before continuing if I were you!

Read the rest of this entry

More:

theFIREstarter – Financial Independence. Retire Early

About Reach Financial Independence

Im Pauline, born and raised in Paris. I have since then graduated debt-free, gone on a 1 year around-the-world trip, lived in Guatemala, Spain, the UK and Morocco, gone on two 6 months motorcycle trips, and have been itching for adventure all my life.. During all these years, I have worked hard for the man, until I set off to see the world and live my life on my terms.

Read more from the original source:

About Reach Financial Independence

theFIREstarter – Financial Independence. Retire Early

Greetings!

Welcome to theFIREstarter! If you are interested in themes such as Financial Independence, Retiring Early, Downshifting, or simply just working less and living more then please stick around, I think well get on just fine

If all of that sounds right up your alley then you can follow along by:

Subscribing by EmailFollowing me on twitterSubscribing by RSS feed

If you’d rather have a poke around first then by all means do so! You can always subscribe later by using the link at the top right of the menu above.If you want to get the full story you can start from the very first post here or for a more casual read, just see what catches your eye on the list of all posts page.

My thoughts and plans have slightly changed in the few years since I set up the blog, you can learn a little bit more about me and the main points on what those plans were and how they’ve changed here, here, here, here and finally here.

If you’d like to keep a track of new developments, money saving tips, money making tips, my adventures in attempting self sufficiency and simple living, free financial hacks and spreadsheets, and my general musings on Financial Independence, Personal Finance, investing, and the occasional humorous rant, then please consider following along. Those links again:

Subscribe by EmailFollow me on twitterSubscribe by RSS feed

Thanks for visiting!

TFS.x

Today we have a guest post for you written by Kieran of Money On Fire blog! He is living an FI style life in Scotland after building up a lifestyle business that now covers his expenses and he can pretty much do what he wants, when he wants. Sounds ideal to me!

I really like his blog format, he writes short form posts that are often inspiring, about productivity, life/happiness optimisation and many other topics beyond that. It reminds me a bit of Seth Godins blog which is high praise indeed.

Anyway without further introduction, here is Kierans post

Read the rest of this entry

More here:

theFIREstarter – Financial Independence. Retire Early

About Reach Financial Independence

Thanks for stopping by! Thats me

Im Pauline, born and raised in Paris. I have since then graduateddebt-free, gone on a 1 year around-the-world trip, lived in Guatemala, Spain, the UK and Morocco, gone on two 6 months motorcycle trips, and have been itching for adventure all my life.

During all these years, I have worked hard for the man, until I set off to see the world and live my life on my terms. In January 2010,I quit my last full-time jobto start freelancing. I write for a few money and travel blogs, do translation jobs here and there, and try to allocate my money smartly, to produce passive income. I used to hold two properties, andsold one of them to buy a fixer-upper in Guatemala, that is now a guest house.

I wantto show you that even with a small amount of money, you can live your dreams fully and make deliberate decisions to reach financial independence, freedom from work, the office and anything that is holding you back.

I am not a financialadvisereither, all content is for informational purpose only!

If you would like to get in touch you can follow me on Twitter, like my FB page or send an email to info at reachfinancialindependence dot com. Looking forward to hearing from you!

What this site is about:

What this site is NOT about:

Extreme frugality

Compromising your values and well-being for the sake of saving a few pennies

Giving you a one size fits all solution. Money is personal, and what your want to do with it as well. You may want to become a stay-at-home parent, work less hours to start a side hustle, travel the world all is fine, it all requires dedication and persistence.

Go here to read the rest:

About Reach Financial Independence

Fast Track Financial Independence (5 steps) | Millennial Money

05 Jul Fast Track Financial Independence (5 steps)Grant SabatierFounder of Millennial Money and Author of Financial Freedom. Dubbed “The Millennial Millionaire” by CNBC, Grant went from $2.26 to over $1 million in 5 years, reaching financial independence at age 30. He’s passionate about helping others build wealth and is addicted to Personal Capital. Latest posts by Grant Sabatier (see all)

One of the most common questions I get is How can I reach financial independence or retire early? While its never been easier to get rich slowly (save 10-20% and invest in index funds), its actually a lot harder to fast track your financial independence (when work is optional).

And when I say fast track financial independence, I am talking about retiring in 10 years or less from today, even if you are starting with very little. You need to make a lot of money, cut back on your three biggest expenses, invest as much as you can, and keep track of your net-worth using a free tracker like Personal Capital.

Honestly, trying to make as much money as you can and reach early retirement can be pretty stressful. There were weeks where I hardly slept and I definitely wasnt chilling as hard as I hustled. Im not going to sugar coat it for youit was the hardest and most intense thing Ive ever done in my life. While I always say that saving is an opportunity, not a sacrifice, trying to essentially go from broke to financial independence in 6 years requires a pretty big sacrifice.

But would I do it again? Absolutely. While tired, I was pretty happy most of the time. I enjoyed the challenge, the discipline, the mistakes, and simply doing something different than 99% of people out there. I like being different and a little weird; its just more fun. Chasing early retirement is definitely not the status quo.

Most people just didnt get it. They thought I was crazy. You save 80% of your income? You have a six figure income so shouldnt you have a nice car? Im sorry, Grant, but why do you live in such a crappy apartment when you make so much money? None of it phased me. I had a goal. Its what I thought about when I woke up and what I thought about when I went to sleep. How was I going to escape the rat race? How was I going to make more money?

Whether you are just starting your financial independence journey or you are deep in it,heres how I was able to fast track and go from broke to financial independence in 6 years. This is what I did and what I wished I did (like sleeping more and learning when to treat myself sometimes).

In 2010 when I started my financial independence journey, I didnt set a goal for how long it would take. All I knew was that when I did the math I was never going to be able to retire if I was only able to save 5-10% of a $40,000 $50,000 income.

The math I did was pretty simple. If I was able to save $5,000 per year maximum, even with an expected compounding rate of 6%, I would have about $433,000 in 30 years. While that might seem like a lot of money today,its not going to be that much in 30 years, because of two expected variablestaxes and inflation. You will need to pay tax on that money when you take it out, assuming a 30% tax rate that cuts the after-tax value to $308,000, which when adjusted for 2% annual conservative inflation amount (it could be higher than this even!), then the future value of that money after taxes and inflation is approximately $170,000.

While $170,000 is still a lot of money, its not going to be in 30 years. It definitely wont be enough to live on for 20+ years.

Typical wisdom is that you need 25x your annual expenses to retire early. When I did this calculation, I anticipated my annual expenses would be at least $50,000 in the future (who knows if I will actually be able to live off $50,000 in the futureI sure hope so!). But it was the best starting point I had, so by simply multiplying 25x by $50,000, I determined that I would need to save $1,250,000. Thats a big number, but it was my target.

You can sit down with a piece of paper and see how much money you need to retire early by checking this calculator I built.

Keeping a budget is really hard and its what stops most people from really fast tracking their financial independence. Of course, its important to keep track of your money, but if you really want to save, then you need to look first optimize your three biggest expenseshousing, transportation, and food.

The average American spends 70% of their money on housing, transportation, and food, so if you can spend less on them (say 25% or so, then you can bank the difference). If you move to a smaller apartment, walk to work, and cook at home, you could realistically increase your savings rate to 25%+ or even higher.

By reducing what I spent on my housing, transportation, and food costs, I increased my savings rate to 40% and sometimes as high as 80% while I was fast tracking my financial independence. The only way I was able to fast track was by cutting way back on my living expenses and investing the difference. If you want to save money on housing (typically your biggest expense), check out how to live rent free and the fundamentals of house hacking.

At the end of the day it comes down to a personal choice, but I was happy moving to a smaller apartment, moving closer to my office, and eating out less, to bank the difference. And I definitely was able to bank the differencesaving at least an additional $13,000 per year by cutting back. While I dont have the exact figures, I estimate that cutting back for 2 years, before buying my first home, I was able to save about $25,000 that I invested in 2011 and 2012, and that cutting back is now worth more than $100,000 in my investment accounts. Im going to continue to let it grow and hopefully making that decision 2 years ago will compound in 20 years into a lot more money. It was totally worth cutting back on my three biggest expenses. Try it out.

After doing the simple math that making $50,000 was definitely not going to be enough to fast track my financial independence, I knew I had to make a lot more money to invest. I startedside hustlingintensely in 2010, back when it was just called freelancing or gigging. Ive probably had over 25 different side hustles over the past 7 years, but the smartest thing I did was invest as much money of my side hustle money as possible.

One day in 2011, I sold a $50,000 website project, then that same day, someone who lives in my building posted on the community message board looking for someone to watch his cat for the next few days for $60. I was around for the weekend, so I jumped on it. Two days later, I sold one of my mopeds for a $300 profit. The next week, I resold 4 tickets to a Kanye West show for $550 profit.

A few weeks later, I took the $60 + $300 + $550 = $910 and the $50,000 x .70 = $35,000 after estimated taxes, and put the $35,910 directly into my Vanguard Total Stock Market Index fund from my phone. This was all side income, which I was investing 100% of at the time to fast track my financial independence.

Today, as Im writing this in 2017 that $35,910 is now worth about $108,000. The $910 alone that I made on the side increased in value to over $2,700. Not bad for building a website, watching a cat, selling a few tickets, and flipping a model.

At the height of my side hustling, I had seven pretty consistent income streams and was only living off one of them. The rest went right into investments. Every day I look for money making opportunities like this and then I do the most important step of allinvest it, so it can grow.

First, its essential to switch from a saving to an investing mindset. Its not possible to fast track financial independence by keeping your money in a savings accountinvesting is an essential ingredient. I have made more money through investing than anything else and most of it in my sleep! Just recently, I was looking at my investing returns over a 90 day period and realized that I had made over $15,000 in gains from one of my investments, which is more money than I made in 6 months working at my first job after college. If you really want to make money, then you need to be investing as much money as you can.

As Ive written about before, if you increase your savings/investing rate 1% every year, you can retire up to 2 years earlier, or if you save just 5% more then you could retire 10-15 years earlier. The math is pretty simple and the higher your % saving/investing rate, the faster you will able to reach financial independence. During my most intense months, I was saving 60%+ of my income and 100% of my side hustle income. Earlier this year, I tested myself and was able tosave 82% of my total income. While that might be a little extreme, it makes a massive difference for your future net-worth.

Remember what I said about living differently? A 50% saving/investing rate is more common than you would think amongst the FIRE (financial independence early retirement) crowd. I know a lot of people that save this much each month because they get it. Saving 50%+ of your income is definitely going against the status quo, but thats how you fast track wealth. If you want to go deeper, here are two posts onhow much money you should be savingandmy investing strategy.

At 24 years old, with no money, I had no idea how I was going to save my target $1,250,000.Its been shown in a bunch of research studies that our brains cant actually comprehendthat much moneythe numbers are too large and abstract to most people. It was daunting, to say the least.How was I going to make all that money?

This is why a lot of retirement calculators just arent that effective. They tell you that youll need $2,000,000 saved in 30 years, but dont break down the steps to get you there.

Recent psychology research also highlights that our brains work best when we break down large goals into daily goals. I figured out that to reach $1,250,000 in 30 years (expecting a return of 6-7% per year) using my investing strategy, I would need to save $50 per day to retire in 30 years. Every dollar I could save after $50, I would be fast-tracking my financial independence. Its also worth noting that I didnt start at $50 per day, I scaled up to it starting at $5 per day and then pushing it a few dollars more when I could.

Research also highlights that we should accomplish these daily goals through better habits. The key to building wealth is really in our daily habits. The better our money habits, the more money we will make, save invest, and grow. To go deeper, here are mybest money habits.

The five steps I used to fast track financial independence are simple in theory but can be difficult in practice. Like many things in life, its all about the effort and execution. You need to be consistent. Consistency is more important than anything elseyou cant just follow these steps for a few months. If you want it, youll prioritize it. You can also start as slowly or quickly as you want.

In 2010 when I made the decision to chase financial independence, I jumped in 100%, but thats just what I needed to do to get going.The key to building any sustainable results is to start at your own pace, start making more money where you can, and really push your investing percentage higher 1% at a time. It really adds up and every $1 you are investing today will compound as long as you keep it invested. As Ive mentioned before every $1 I invested in 2010 is worth almost $4 today.

It took almost all of my energy for six straight years to go from broke to financially independent. I also got lucky the stock market has grown so much over the past 7 years, but I was ready. Building wealth is about controlling as many of the variables as you can and then letting it grow.

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Your Money or Your Life | Achieve Financial Independence …

Your Money or Your Life | Achieve Financial Independence | Your Money or Your Life

Your Money or Your Life and everything you find here is rooted in transforming your relationship with money, not just changing your money habits. The goal is to find and have enough (and then some) rather than always seeking more. This work requires rigor, honesty and a radical willingness to change. It equally requires curiosity and compassion, offering no shame no blame as a mantra for the journey.

Money as a tool is both materialandspiritual to get what we need and to reflect on the meaning and purpose of our lives. We see our lives as both our own to live responsibly and as a gift and in service to our wider circles of community.

The New York Times Bestsellercompletely revised and updated for the 21st century.

The philosophy behind Your Money or Your Life started back in the 1970s.

Join the financial independentmovement. Get strategies, inspiration, resources, support, and community.

A long-con ponzi scheme: How money rules the world

Would you rather have freedom or stuff?

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Financial Independence, Early Retirement and FIRE – Miss …

There are a few buzzwords or rather, acronyms youll hear in the financial blogosphere FI, RE, and FIRE. What do they mean and why do folks keep talking about them?

FI =Financial Independence

FI is pretty much everyones goal (I would think!). FI means that you donthave to work for money. Traditionally, FI was equivalent to retirement. Retirement meaning you stopped working all together usually around the age of 65 or so. Think days at the golf course, river cruises in Europe, and a drink with a little umbrella in hand. Now, the definition of retirement is evolving and FI seems more fitting now since it includes the traditional definition and more.

Youve arrived.

RE = Retire Early

RE is pretty self-explanatory. Whatcounts as RE depends. In the non-physician world the famous RE folks are in their early 30s:

Early 30s would be exceedingly difficult for a traditional physician who begins attending life at age 30. I guess youd have to be a Dr. Doogie Howser to do that. Physician on Fire is almost there as he recently announced thathe is going part-timeat the age of 41. I think a physician who can retire at age 45-50 is considered RE.

FIRE =Financial Independence,Retire Early

FIRE is a special club. Youve officially arrived if youre a member. Not only can younot work for money if you dont want to but youve attained this at an age much earlier than anyone else. This is a popular goal to strive for.

FF = Financial Freedom

Isnt FF and FI the same thing? Maybe. If youre a splitter (vs. a lumper) then FF is one step beyond FI. Its FI + generous wiggle room. Its a bit naive to think you know and can predict your expenses 20 or even 30 years into the future. Things may go as planned, but often, they do not. Your wants will most certainly change. Health care costs are nebulous and completely unpredictable. A health crisis can easily eat up several 100s of thousands of dollars for things like home health care or a long-term care facility. A family member may need help and maybe youd like to be in a position to help them andnotderail your goals either.

Stay tuned for the second part of this post how to determine your FI or FF number and more!

Whats your FI number? Are you FI, RE, FF, or FIRE? Comment below!

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Financial Independence, Early Retirement and FIRE – Miss …

theFIREstarter – Financial Independence. Retire Early

Greetings!

Welcome to theFIREstarter! If you are interested in themes such as Financial Independence, Retiring Early, Downshifting, or simply just working less and living more then please stick around, I think well get on just fine

If all of that sounds right up your alley then you can follow along by:

Subscribing by EmailFollowing me on twitterSubscribing by RSS feed

If you’d rather have a poke around first then by all means do so! You can always subscribe later by using the link at the top right of the menu above.If you want to get the full story you can start from the very first post here or for a more casual read, just see what catches your eye on the list of all posts page.

My thoughts and plans have slightly changed in the few years since I set up the blog, you can learn a little bit more about me and the main points on what those plans were and how they’ve changed here, here, here, here and finally here.

If you’d like to keep a track of new developments, money saving tips, money making tips, my adventures in attempting self sufficiency and simple living, free financial hacks and spreadsheets, and my general musings on Financial Independence, Personal Finance, investing, and the occasional humorous rant, then please consider following along. Those links again:

Subscribe by EmailFollow me on twitterSubscribe by RSS feed

Thanks for visiting!

TFS.x

Its been around a month since I started trying out Huel, a liquid food that could in theory provide you with all the nutrients and energy you need, without eatinganything else at all. Before a more in depth look at my thoughts and tips on eating Huel, here is a quick TL;DR FAQ stylee:

If you would like to give Huel a try please consider using this link here which gives you 10 off of your first order (and me 10 off my next order! Thank you if you do!)

Now onto some more long form thoughts and a few tips from my experiences with trying out Huel for a month.

Read the rest of this entry

Originally posted here:

theFIREstarter – Financial Independence. Retire Early

theFIREstarter – Financial Independence. Retire Early

Greetings!

Welcome to theFIREstarter! If you are interested in themes such as Financial Independence, Retiring Early, Downshifting, or simply just working less and living more then please stick around, I think well get on just fine

If all of that sounds right up your alley then you can follow along by:

Subscribing by EmailFollowing me on twitterSubscribing by RSS feed

If you’d rather have a poke around first then by all means do so! You can always subscribe later by using the link at the top right of the menu above.If you want to get the full story you can start from the very first post here or for a more casual read, just see what catches your eye on the list of all posts page.

My thoughts and plans have slightly changed in the few years since I set up the blog, you can learn a little bit more about me and the main points on what those plans were and how they’ve changed here, here, here, here and finally here.

If you’d like to keep a track of new developments, money saving tips, money making tips, my adventures in attempting self sufficiency and simple living, free financial hacks and spreadsheets, and my general musings on Financial Independence, Personal Finance, investing, and the occasional humorous rant, then please consider following along. Those links again:

Subscribe by EmailFollow me on twitterSubscribe by RSS feed

Thanks for visiting!

TFS.x

One Million Pounds.!

So this is the first part of a hopefully ongoing series of posts organised by new UK FI Blog kid on the block The Saving Ninja, where he will pose a question or thought experiment and many bloggers will chip in with their answers. Ill let him describe this in his own words:

This article signifies the start of a new post category which Im going to name, Thought Experiments!

The way this type of post will work is by starting off with a question, like What would you do if you got given 1 million?, and the blogger will have to write whatever they first think of. No pre-planning or major editing allowed and blabbering is definitely encouraged! It should read like an internal monologue.

Right at the top of the post, Ill post a link to all of the other bloggers that have participated in the thought experiment (I encourage other bloggers to do likewise!) Youll then be able to see a vast array of different opinions to the same question.

Ill also be taking question requests in the comments below!

So, without further adoThought experiment number 1!

What would you do if right at this very instant you got given 1 million great British pounds? This could be from a lottery win, an IPO, a scratch card, you name it. No tax needs to be paid, its just been plopped directly into your run of the mill bank account.

Before we get to my answer, here is a list of links to other bloggers whove participated so far:

The Savings Ninja

Quietly Saving

Ms ZiYou

My first reaction would be just to stick it in an index tracker like VWRL, start withdrawing 4%/year and call FI. Then obviously hand in my notice at work the very next day! However that would make for a rather short and boring answer so let me think a bit deeper on that one.

Other topics which are immediately spring to mind are:

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theFIREstarter – Financial Independence. Retire Early

financial independence / early retirement – reddit

I work as a financial advisor for a large company. I am also a big proponent of the FIRE lifestyle–if it weren’t for my health issues it would be a goal of mine (and something I was actively working towards before they came up).

There has been a trend, probably since the movement has been around, to throw blanket advice out there. This advice usually comes from two ‘insights’–that low cost is the best and that the market will always go up.

And while those are true, there are major stipulations that should be applied. First of all–the obsession with 100% in low cost equity funds. I’ve seen this touted to people who are asking what their recently widowed mother should be in. To people who are retiring in 5 years. To people without any savings.

Even if you are 20 years old–NOBODY really knows how appropriate this portfolio is for you without knowing your full situation. Having a portfolio that is 100% equity is dangerous with a small time horizon, no matter how low the costs are–simply because you are at that point completely dependent on the market to either stay the same or go up for you to be able to spend that money that you put into it. And while over 15-20 years that is historically true, it is not the same for a 5 year window.

Now on to the costs–very few people here have been through an actual recession. A lot of people have been investing since the very bottom of the last recession, and have only seen slight volatility. Nobody actually knows what their risk tolerance is.

I say this because people immediately throw out managed money. There are companies who have very sound investment philosophies–I’m not talking about the EJ where you have Joe Schmo giving you his best ‘stock picks’–but there are companies that are all about asset allocation and are managed by teams of very well educated people. And the biggest benefit is NOT that they are going to make people money. But that they are going to NUMBER ONE assess what someones risk tolerance is, and make sure to not put them in a position where they will jump off a cliff when the next recession hits. And number two, be a source of reason and discipline to the investor who does freak out when he thought his tolerance was very high, but is now convinced that we are seeing a “black swan event” and willing to take it all out.

I used to refuse to put people into managed accounts–but after seeing the absolute insanity that a little bit of volatility can manifest, I have absolutely no qualms getting people in. The reason managed accounts have a better return on average than a DIY investor isn’t because of return–but because it is forcing that person to stay disciplined.

People forget that the BIGGEST component to investing is emotional. If you have to pay someone a % to make sure you stay in the market, do it. Unfortunately, we might not know that until the next recession.

Every time there is a drop like there was today, I have to talk people off of the ledge. For those who are DIY and 100% in equity, its usually the first time we ever even discuss risk tolerance and the emotional component of investing.

Not only that, but I have so many young investors who are so afraid of costs that they are determined to do everything on their own–yet they ask questions like “what is the difference between an index fund and a mutual fund”–that is probably the #1 question of people under 25. People expect me to explain the way investing works within 30 minutes so they can build their own portfolio as cheap as possible. I wouldn’t ever even put a 20 year old in a managed account–but even the mention of target date funds has them bringing out a silver cross. I can’t with good conscience tell someone who doesn’t know what a mutual fund is to go 100% S&P 500 index when I know they will lose their minds with the next correction.

Am I against a 20 year old going 100% into S&P? If I feel they are truly aware of the volatility and will have a stomach for it, and do not need access to the funds for 10 years–not at all (although I’d suggest some diversity). But I think the percentage of those kinds of people are very low–even within this community.

There are people that are just ANXIOUS. You can understand everything fine, but you can still have a personality type that just WONT WORK with these kind of strategies. And instead of lumping everyone under the same solution, why not talk about what is needed for the individual.

I’m really interested in what this generation is going to learn with the next recession. I think it’s very much needed to help shatter some of the ego that seems to have taken over the average investor today.

Edit: I should say Im with a large discount broker. I understand Merrill and Ed Jones are filled with bad apples. The problem with those companies is they let your advisor, someone who doesnt need a degree even, to choose and manage your portfolio. Discount brokers have their adviser be the doctor. The prescribe a managed account but they are not managing it. Instead, a team of essentially fund managers have hundreds of model portfolios that they manage. Your financial situation and risk tolerance determines the model portfolio. I am a big proponent of this model. Doctors dont make the meds they sell, management and advising are two different skill sets.

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8 Paths to Financial Independence – PassionSaving.com

Financial Independence Path #1 The Slow-and-Steady Conventional Path

All money advice is ultimately advice aimed at helping you attain financial independence. So even the most popular writers, people like Suze Orman and David Bach, are in a strict sense part of the Retire Early Movement. As a general rule, however, the conventional advice does not work. If it did, a high percentage of the population would be attaining financial freedom early in life. Thats obviously not the case.

This doesnt mean that there is not good advice put forward in the books of people like Orman and Bach. There is. But those seeking early financial independence need to do better than most of those who rely on the conventional guidance. Those who put their faith in the most popular money gurus may be able to retire at age 65 or perhaps a bit earlier. Its not realistic to expect to do too much better than that by following The Slow-and-Steady Conventional Path.

Our movement does not reject the conventional advice. It rejects the idea that it is sufficient. We aim higher. We seek to do better. We view the conventional advice as a base of knowledge to which we add more exciting ideas for the purpose of achieving financial independence a good bit sooner.

I included The Mind-Over-Matter Motivational Path in this listing to provide me a place to discuss inspirational speakers like Tony Robbins. I am not familiar with most of Tony Robbins work (if you feel that I have misrepresented him, please let me know). I wanted to include this path because of the attention that has been directed to The Secret, a book with which I am also unfamiliar that urges an inspirational approach for people hoping to achieve ambitious life goals.

I obviously am not overly excited by inspirational speakers or I would spend more time learning about their work. I am not dismissive either, however.

My belief is that inspirational speakers are onto something important. The hardest part of attaining financial independence is saving money. The hardest part of saving money is working up the motivation to do so. The primary reason why the practical steps that are the focus of most guides urging The Slow-and-Steady Conventional Path dont usually lead to early financial independence is that readers of these guides do not become sufficiently excited over their content to change their money behavior in significant ways. Knowing all the practical stuff in the world wont help you if you are not highly motivated to act on it.

So I see the material generated by those urging The Mind-Over-Matter Motivational Path as having value, perhaps equal or even greater value than the material generated by those urging the Slow-and-Steady Conventional Path. This path does not excite me too much either, however.

What works is to marry the motivational with the practical. Practical stuff standing alone is boring. Motivational stuff standing alone is ineffective. Working together, these two approaches acquire far more life-transformational power than either possesses on its own. I see it as the first goal of the financial independence quest to determine how best to mix the motivational and the practical and thereby to discover what actually works for real live people in the real world.

I view Robert Kiyosaki, author of Rich Dad, Poor Dad, as someone who has tried to mix the practical and the inspirational and who has created an explosion of interest in financial independence as a consequence. It amazes me how many people love Kiyosaki; it sometimes seems that his works are going to take over the entire money section of the bookstores. It also amazes me how many people hate Kiyosaki; I have been on discussion boards where the mention of his name has brought on foaming-at-the-mouth reactions on the part of large percentages of the board communities.

The Kiyosaki phenomenon tells us that something important is up. Thats my take.

The people who have achieved some success in their money lives tend to be people who have followed the rules better than most others and who take pride in having done so. Kiyosaki is disdainful of the rules. Many of those who have achieved a good measure of financial success view Kiyosakis message as a threat.

I think that Kiyosaki is onto something in questioning the conventional rules. The rules that used to work are not likely to work as well in the future. Those who resist acknowledging that find Kiyosaki hard to take. On the other hand, those who agree that following the old rules will no longer work tend to be too willing to believe that Kiyosaki has the right answers, in my assessment.

I see the Kiyosaki path as The Hustling Mavericks Path. Being a maverick makes sense. Hustling makes sense. I am personally not persuaded that Kiyosaki has developed the best possible vision of how to attain financial independence early in life, however.

Amy Dacyczyn (she is the author of The Complete Tightwad Gazette) is my favorite money writer. Shes different from most others in many ways. One of the most striking ways in which she is different is that her work focuses on the needs of people who do not make big incomes. Her path is The Struggling Middle-Class Workers Path. Amy Dacyczyn focuses on the hard case rather than the easy case.

By doing so, she shows that amazing things can be done, things that no one before her attempted to do. Its her focus that makes the difference, I believe.

Most money writers start out accepting that it is hard to get by even on an income that is large by relative standards (most money guides are aimed at high-income people and those earning high incomes today are earning far more than just about anybody ever earned in earlier days). If Dacyczyn started with that assumption, she would never have been able to have done the work she has done. All of her work is rooted in the assumption that it is possible to get by and to get by well with remarkably small amounts of money. She makes the case in impressive article after impressive article after impressive article after impressive article. By looking at the money problem from a different angle, Dacyczyn was able to come up with solutions than no one who came before her even bothered to consider.

Dacyczyn doesnt focus on financial independence (she does make brief reference to it from time to time) because that is not the first concern of her readership. All the same, she tells us all more about what it takes to achieve financial independence than any other money writer. If her advice helps those with modest incomes get on their feet, what does it do for those with incomes a bit above the modest level? It tells them that for them financial independence is an available option amazingly early in life.

Dacyczyns writing is often dismissed by mainstream writers as extreme. Thats a dumb criticism. Dacyczyn obviously never compels anyone to adopt any suggestion she puts forward. What she does is to show us the options available to us. All middle-class workers are able to retire early if they elect to do things that some view as extreme. Some can achieve financial independence very early in life indeed. The negative reaction to Dacyczyns work results from the unease that some feel in knowing that these options are available to them.

It is wrong to find fault with a writer for showing us that we possess options that we did not know were available to us. Dacyczyns advice is generally practical in nature. Read between the lines, though, and you pick up a powerfully motivational message: Follow Dacyczns lead and you can be free of paycheck dependence a lot sooner than you once thought was possible. No one has married the practical and the motivational as well as Dacyczyn, in my view. She is the best financial freedom writer around.

Joe Dominguez (co-author of Your Money or Your Life) is in second place. Dominguez offers a nine-step plan for achieving financial independence early in life that has been successfully followed by millions. And his approach works primarily because it so motivates his followers that they come to center their lives on their desire to follow it closely and obtain its rewards as quickly as possible.

The problem with the Dominguez approach is that most of us are not as idealist as the typical Dominguez zealot (I dont intend that to be taken as a put-down). Dominguez sought to obtain financial independence by his early 40s so that he could devote his remaining years to pursuing the environmentalist causes that are his passion. His approach works. He was able to leave paid employment in his early 40s. Lots of others have been able to do so by following his guidance. But how many of us are willing to change our lives around so that we can pursue nonprofit causes? Some are. Most are not.

I believe that the success of the Dominguez book is well-deserved. He understands money and how it works in peoples lives better than any of the better known names in the field, in my estimation. But I believe that the Dominguez approach can achieve its full potential only if his program is expanded to provide guidance for the millions who have different sorts of life goals than the life goals pursued by Dominguez and his followers.

Dominguezs ideas work not just for those who want to pursue nonprofit causes. They work for those who want to be increasingly free of economic insecurity as they age. They work for those who want to be able to retire early. They work for those who want to start their own businesses. They work for those who want to make career shifts in which they pursue work that pays less but provides a greater sense of fulfillment. The Intelligent Idealists Path is a path of great potential that as of today is not fully realized.

John Greaney (owner of the RetireEarlyHomePage.com site) is the nemesis of the Retire Early movement. He has led a Campaign of Terror against our discussion boards for over five years (this article was posted in July 2007), burning several entirely to the ground and intimidating the owners of several others into compromising the integrity of their sites in very serious ways. He is likely the most abusive poster in the history of the internet (measured by the destruction he has done to the work of thousands of good people) and his presence should not be tolerated by anyone with even a minimal desire to help people learn what it takes to win financial independence early in life, in my view.

All that said, I believe that Greaney represents something real and important and that his path to financial independence I think of it as The Disgruntled Cubicle-Dwellers Path should be included in our list of the available options. Greaneys message is a message of anger and contempt and hate. A not insignificant number of todays workers respond to that message. You dont have to like it; I certainly do not. You do need to come to terms with the reality, if you hope to develop a complete understanding of where our movement is headed in days to come.

With Greaney supporters, it is always the other guy who is to blame. It is their employers who cause all of their discontent in the workplace, never their own choices. The answer to lifes problems is to avoid or ignore responsibilities, never to learn lessons from ones experience of the troubles that all of us walking the Valley the Tears are required to endure from time to time. The purpose of financial independence is to escape the outside world, not to make efforts to reshape it in some positive way. There is a market for this vision of financial independence among the cubicle dwellers of today. Most of us obviously do not relate to this vision. But some of us do.

I have sympathy for some of the complaints about the workplace raised by the Greaney supporters. Ive been in staff meetings that went on too long. Ive suffered the frustration of working for one or two bosses who were clueless about some aspect of the work they were overseeing. I see this path of negativity as a dead-end, however. It makes some people feel good to think that they have discovered a means to stick it to their employer. But this path leads only downward, and never upward. My advice is to be aware of this path and to take what good you can learn from those traveling it (Greaney supporters have things of value to teach us) but not to get too caught up yourself in the negativity that is the driver of this vision.

Paul Terhorsts book Cashing in on the American Dream is a brilliant work written ahead of its time. The problem with it is that it is written for the high-income professional without children who is willing to trade the expensive cars and the expensive houses and the expensive vacations and the expensive country clubs for a life of freedom from the need to work. Terhorst points us to a means of attaining financial independence early in life. The Non-Consumerist DINKs Path really will take some people to the place where they want to go. This approach works.

The problem, of course, is that the Terhorst path is so limited in application. Most of us are not DINKs (a DINK is a married couple with a double income and no kids). And many DINKs enjoy their jobs so much that they see no great appeal in leaving them behind. So this is not a vision that is going to take the world by storm anytime real soon.

Its worth studying the approach, however. What can be done by DINKs in very little time can be done by the rest of us in a good bit more time. Most of us can obtain some version of the financial independence enjoyed by Terhorst. The principles and strategies explored in his book have general application, even if the precise details of the particular program examined do not.

This is the Rob Bennett approach. I have tried in my book Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work to put forward a vision that takes advantage of the insights of the other available financial independence visions while avoiding the pitfalls that have limited the success of some of them.

I acknowledge the workplace problems that fill the disgruntled cubicle dwellers with such anger and have tried to put forward a more positive approach for dealing with these problems. I appeal to peoples idealism in urging them to use their desire to do wonderful things with their lives to motivate better financial decisions without going so far as to suggest that we all need to retire from the corporate workplace to sign up with nonprofit organizations. I encourage the exploration of frugal ways of living without showing disdain for the consumerist choices that I believe have added a great deal to many middle-class lives in recent decades. I take a maverick position on many topics as a result of my belief that the old rules no longer work while showing what I hope is the proper measure of respect for the good that has been achieved in earlier times by the conventional money advice.

You do not possess financial independence today. You know that you want to come to possess it at some time in the future. Learn more about the eight paths to financial independence outlined above and you will learn that you can in all likelihood get from where you are today to the place where you know you someday want to be much sooner than you now realize is possible. Talk to people in our community and they will tell you that its an amazing journey, one that will change not only your money choices but your choices about just about everything you do with your life energy from the time you wake up in the morning until the time you drift off to sleep at night.

Money decisions are life decisions. Attain financial freedom and you gain the ability to do with your life what you always wanted to be able to do with it. Its not just about saving your money. Its also about saving your life.

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8 Paths to Financial Independence – PassionSaving.com


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