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I have always wanted to become financially independent in my 30s. It has always been a goal of mine. It all started for me around 2007 and it coincided with meeting my wife in 2006. She introduced me to Rich Dad, Poor Dad by Robert Kiyosaki. Kiyosaki talked about his Rich Dad, who understood how money worked and built businesses. He was his friend's father. His Poor Dad (his own father) was a schoolteacher and was a slave to money.
Kiyosaki spoke about how he learned that having a business is a bridge to building wealth and introduced us all to the E/S/B/I triangle. E for Employee, S for Self-Employed, B for Business, and I for Investing. The goal was to move away from being an employee or self-employed (which Kiyosaki called owning a job) and move into the B/I side. Your goal was to build a business that you could use to invest From there, you could build true, sustainable wealth.
And I was hooked. I wanted financial freedom really bad. These days it's called "Financially Independent, Retire Early," or FIRE. Yes, it's still a strong desire of mine and one that I'm committed to achieving in the coming years.
What about you? Are you new to the concept of financial independence? Have you ever considered it? Consider some of the points below as a way to jump start your FIRE goals!
A few things to consider as we get started here on your journey to become financially independent. First, do you have a budget in place? If not, you need to get that squared away immediately. I go into greater detail about budgeting in this post. Read that and then return here.
Also, how's your Emergency Fund Preparedness Strategy? Do you even have one? You need to be ready for life's little (or big) surprises and the Emergency Fund takes care of that. Therefore, if you lose your job or the car breaks down, you have rainy day fund to take care of some of those things. You can get the car fixed or buy some time while you figure out the job situation. I put together an informative post about getting started with your Emergency Fund Preparedness Strategy. Go check it out here.
Finally, for this section, you need to consider your debt situation. Do you have credit card debt? What about student loans? How about any other types of debt? You need to know how much you owe and figure out how you can pay it off. Nothing puts the breaks on financial independence faster than being dependent on someone else who you owe lots of money to. You need to get that figured out and I can help you if you check out this post.
A lot of people never even consider financial freedom. They think it's only possible for crooks and charlatans to achieve that kind of lifestyle. You can often here these people saying things like "well, I'm sure they're doing something illegal" which is often followed by "nobody is able to achieve that kind of money legitimately."
However, these people are misguided in their thinking. Further, many times they are trying to live the lifestyle of the rich and famous, but using credit to do so. They buy a house they can't afford. Lease brand new cars. Buy a vacation home or two. They take exotic vacations in an attempt to top their friends.
We see this at a variety of income levels, but usually in the middle class to upper middle class sectors. They attempt to keep up with the Joneses, the Smiths, and their good friends. They only learn later that everyone (including them now) is broke! It's all a facade. All a charade. You pull the curtain open and it's no wizard. Only a clueless guy putting on a show and pulling the levers. It's all fake and you bought into the lie. Now what?
If you want to truly be free, you need to break out of the cycle. It isn't healthy and it's a surefire way to remain poor. You need to have a mindset shift. This concept of financial freedom is not about accumulating things. That's not what makes you wealthy. Kiyosaki expertly laid it out like this and it always stuck with me. He said you need to consider wealth as a component of time, not only an element of money. So, it's like this. If you stopped working today, how much time would you have? Would your savings, investments, or other sources of income (if you have any) buy you a month when considering all of your expenses? Or maybe it's more like a week?
Time. That's true wealth. Once you have your income cover your expenses, you're financially free. That's the goal. But, you need to divorce yourself from the day job mentality as well as the concept that your life's expenses need to financed with credit cards. No and no.
There's another great book out there called The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime. That one's by MJ DeMarco, who also runs a message board with the same name. DeMarco's philosophy to become financially independent boils down to one main point: satisfying the needs of others. It's not about you or what you want.
Rather, it's about what the market wants. The market isn't just made up of your customers. It's made up of people. Flesh and blood. They have desires, wants, and needs just like you do. Only in this case, your desires don't matter. This market, these potential customers, and these people do not give a crap about your quest for financial freedom. See, it isn't about you getting yours. It's about them getting theirs. It's like the great Zig Ziglar said folks, "You can have everything in life you want, if you will just help other people get what they want." Give and you shall receive.
So what does that all mean for you? Well, you could start a business or a side hustle in your spare time. This could be something you do in addition to your full time job. How? Well, assess your market. Can you use skills from your job to help others? Do you have a hobby you could turn into a profitable business while also helping others? Do you see problems and have an idea of the solutions to offer? In your local community, is there some gap that you can fill? Ideas and opportunities to assist others are all around us. You just need to look and be open.
What about becoming a landlord? Everybody needs a roof over their heads and you could be the person to provide it. Sure, it takes some work to fix the toilet or screen potential tenants. But, you didn't think this financial freedom thing was just going to be handed to you, did you? Yes, friends, this is going to take some work. But, it's all about applying hard work, consistent effort, staying the course, and resisting instant gratification.
I want to make an honorable mention here about investments. I never want to misrepresent things there with you all, so I'm not going to comment extensively about investments. Now, when I say investments, I mean paper assets like stocks and bonds. I do not have a lot of experience with them, so any commentary will be pointless for you. I would say that people clearly do make money in the stock market, but it's something I have tended to avoid since 2008. That said, it is something I will educate myself on because stocks and bonds (especially dividend-paying stocks) are great wealth-generating vehicles in their own right.
At the end of the day, the goal of all these concepts to this: Income > Expenses. You want your income from your businesses, side hustles, real estate, and paper investments to outweigh all of your expenses. You do that, you're well on your way to kicking it FIRE style.
You need to always be checking up on your money, your business, and your investments. You can't be the person that attempts to "set it and forget it." That's not how wealth is built.
Rather, you need to be the person is constantly investing in learning. Knowledge is power. But, knowledge is also money. Knowledge is also the key ingredient to your financial independence.
Sure, you may have a CPA do your taxes, but what do you know about tax laws? Are you informed? Do you watch the news? What deductions are you able to take for your business? Don't know? Ask, research and read.
Are you a landlord? How do others manage their properties? Is the rent you're charging tenants below, at, or above market? How old is the roof on the place you just purchased? Did you get a good deal? How long will it take before you own your property or properties free and clear? Are doing to the work to keep these places up and running or will you hire it?
OK, I know. You're ready to pull your hair out and rip me a new one. It's a lot to think about and a lot of questions. Annoying and stressful questions. But, necessary and important questions. I can be as immune to hard work as the next millennial, but I know the importance of these things. It sucks. It's hard. It takes you out of your comfort zone.
All that is true. However, you still must do it. Vigilance is key. It's how soldiers survive in battle. And that's exactly what this is. Hell, that's what life is -- at battle. You either battle it out or take your ball and go home.
If you're still reading this, I bet you're a person who goes to battle. Well, pick up your sword of knowledge and continue fighting.
This last point is something I am guilty of not doing quite often. You're on a path and you're committed to the path. The problem is that the path is leading your over a cliff, but you're too damn stubborn to change course. Why? Well, it's usually that you're either a deer in the headlights and you're too scared to do anything. It comes down to being frozen by fear.
Rather, it could also be that you're like me: the eternal optimist. You see the cliff ahead, but you figure that things will turn around when they have to. So, you stay the course.
The problem is fear and misguided optimist lead you down the same path -- over a damn cliff! That's not what you want to do. You don't want to derail your financial independence journey life that.
Instead, have those conversations. Be open to change. Don't go down with the ship. Instead, try to find a life boat. Figure out another way. OK, maybe you suffered a loss of time or money here. It's fine. Keep pushing forward. Find another path. Just don't go over the damn cliff.
At the end of the day, don't be the people that see their money disappearing before their eyes. You know who I mean. The people that saw savings and retirement accounts evaporate in 2008.
Don't be those people.
Learn about your finances. Get an education.
Pivot, change strategy, and attack it.
Don't keep up with everyone else. They're broke.
Find a need you can solve, put yourself out there, and create a kickass business you can grow into something. If it fails, learn from it, and start up again.
The point is that it takes a lot of hard work to become financially independent. It's not easy. No, it's not glamorous. Consider what Thomas Edison said, "Opportunity is missed by most people because it is dressed in overalls and looks like work."
Do yourself a favor. Do the work. Take advantage of the opportunity. Light your world on FIRE and become financially independent. God bless you on your journey to a better life for you and your family.
Do you have a plan to become financially independent and retire early? If so, share it with us. Are you already financially free or close to it? Give us your tips below!