Aug 7, 2016

What is Financial Independence and How Do I Get It?

What is Financial Independence?

Sounds pretty sexy doesn't it?  I'm sure you'd like to put that on your LinkedIn profile--Financially Independent.

What does that mean though?  Simply put, the early retirement community points to having 25 years worth of expenses saved as the indicator for being financially independent.  So, if I spend 30k/year for my family of 3, and I have 750k saved in index funds... yep, I'm financially independent.  I'll cover the specifics on how this is done in the future, but for now--that's enough.

How Do I Do It?

Well, to focus on the Pareto principle, don't buy too much car and too much house on credit.  Oh, and watch your "eating out" expenses.  These are the biggest culprits I see from my clients, and you would do well to keep a lid in these areas.  I know that seems like someone telling you to "spend less" and doesn't seem like that great of advice, but I truly believe a focus on these areas will put you ahead of 90% of investors.  This will also serve the purpose of "burning the candle at both ends" potentially reducing your annual expenses which will require a smaller "stash" as Mr. Money Mustache would say.

But Why?  What Will I Do All Day?

Most people don't have a hard time buying into the idea of not having to work anymore, but if you're one of the select few that are ultra-motivated, view it instead as Financial Independence, rather than retirement.  This way, you can DO YOUR BEST WORK!  What does that mean for you?  Have you put off being an entrepreneur?  Would you like to spend more time with your kids, or volunteering in non-profits?  Have a desire to learn a new skill like being a home-builder?  Financial Independence allows you to do this?

Example

Yours truly just eclipsed the 600k net worth milestone.  What does this mean?  Am I financially independent yet?

Nope, not quite.

I plan to sell our current home in a high cost of living location, and purchase a new home with cash for around $300k.  This leaves $300k in index funds.  Using the Trinity study, I know I can spend approximately 4% (with several margins of safety) annually, adjusted for inflation, with a relatively high level of certainty I won't run out of money over a 50 year period.  (Rawr, yes, early retirement experts are angry with this statement, but relax, I WILL earn money through part time/entrepreneurial ventures so RELAX)!

With 300k in investments, this provides 12k/year in income.  My family's annual expenses are 30k though, so I need another $450k to be able to claim financial independence.  By my estimates, I should reach that coveted title in about 5 years.

I'll link to a great article by Mr. Money Mustache titled The Shockingly Simple Math Behind Early Retirement which details why "burning the candle at both ends" is such a great strategy for early retirement.

Until next time friends!  If you'd like future posts sent directly to your email inbox, please subscribe by typing your email address into the box on the upper right.  I promise not to spam at all, just posts (probably 2 to 3 a month max).


Tortoise Banker

27 comments:

  1. Replies
    1. EDWARD JONES FINANCE IS THE BEST PLACE TO GET A LOAN {Jonesloanfinance@yahoo.com},
      God bless you sir, I will not stop telling the world about your kindness in my life, I am a single mum with kids to look after. My name is Emily Thomas and I am from Convention Center Drive, Miami Beach, FL . A couple of weeks ago My friend visited me and along our discussion she told me about EDWARD JONES FINANCE, that they can help me out of my financial situation, I never believed cause I have spend so much money on different loan lenders who did nothing other than running away with my money. I have been in a financial mess for the pass 7 months now, She advised I give it a try so I mailed him and explain all about my financial situation to him, he therefore took me through the loan process and gave me a loan of $390,000.00 at a very low interest rate of 2% and today I am a proud business owner and can now take good care of my kids, If you must contact any firm to get any amount of loan you need with a low interest rate of 2% and better repayment schedule, please contact EDWARD JONES FINANCE email:- {Jonesloanfinance@yahoo.com} OR Text +1(307) 217-5388

      .....

      Delete
  2. Hello!

    Do you seek funds to pay off credits and debts? Do you find yourself in a bit of trouble with unpaid bills and don’t know which way to go or where to turn? What about finding a reputable Debt Consolidation firm that can assist you in reducing monthly installment so that you will have affordable repayment options as well as room to breathe when it comes to the end of the month and bills need to get paid? Navaro Loan Company is the answer. Email (Navaroloancompany@yahoo.com)

    We offer the following types of loans

    *Debt Consolidation Loans
    *Business Loans
    *Personal Loans
    *Home Loans
    *Car Finance
    *Commercial Loans
    *Investments Loans
    *E.T.C

    Note: we do not ask for upfront fees, We give you loan with a low interest rate of 2% and loan duration of 1 to 40 years to pay back the loan (secure and unsecure). Do not keep your financial problems to yourself in order for you not to be debt master or financial stress up, which is why you must contact us quickly for a solution to your financial problems. It will be a great joy to us when you are financially stable. Email {Navaroloancompany@yahoo.com}


    Note: We do not ask for upfront fees ones you qualify you get your loan.

    ReplyDelete
  3. Henceforth, outsourcing such sort of exercises bodes well and therefore fund and bookkeeping outsourcing is a sound practice which ought to be trailed by little and medium estimated organizations. credit check total

    ReplyDelete
  4. This is similar to a commission based financial advisor. If they sell annuities, they'll show you annuities. If they sell mutual funds, all they'll show you is commission paying mutual funds.cryptocurrency compariso

    ReplyDelete
  5. You see in their presentation your investable assets appreciating over the next 10 years all the way up to $540,000. Sweet!PAYDAY LOANS ONLINE

    ReplyDelete
  6. The writer has truly done equity with his perusers and his work.
    Kucoin exchange review

    ReplyDelete
  7. if there is a change in price produces the output into the Observable. Google Finance API gives back Json object. I am using Json.Net library by James-Newton King to parse that. gagner de l'argent

    ReplyDelete
  8. EDWARD JONES FINANCE IS THE BEST PLACE TO GET A LOAN {Jonesloanfinance@yahoo.com},
    God bless you sir, I will not stop telling the world about your kindness in my life, I am a single mum with kids to look after. My name is Emily Thomas and I am from Convention Center Drive, Miami Beach, FL . A couple of weeks ago My friend visited me and along our discussion she told me about EDWARD JONES FINANCE, that they can help me out of my financial situation, I never believed cause I have spend so much money on different loan lenders who did nothing other than running away with my money. I have been in a financial mess for the pass 7 months now, She advised I give it a try so I mailed him and explain all about my financial situation to him, he therefore took me through the loan process and gave me a loan of $390,000.00 at a very low interest rate of 2% and today I am a proud business owner and can now take good care of my kids, If you must contact any firm to get any amount of loan you need with a low interest rate of 2% and better repayment schedule, please contact EDWARD JONES FINANCE email:- {Jonesloanfinance@yahoo.com} OR Text +1(307) 217-5388

    .....

    ReplyDelete
  9. Provide information and prices for 2475 сryptocurrencies: cryptocurrency prices

    ReplyDelete
  10. The financial advisor needs to get paid first so your portfolio's management charges turn out first. Financial Technology

    ReplyDelete
  11. Interested Agents,Brokers, Investors and Individual proposing international project funding should contact us for directives.We will be glad to share our working procedures with you upon request. To know more about payday loan visit find more information

    ReplyDelete
  12. This comment has been removed by the author.

    ReplyDelete
  13. We meet with completely innovational meanings of finances in Z. Body and R. Merton's premise manuals. http://vizualize.me/ChuckRobertsStifel

    ReplyDelete
  14. I am quite satisfied with the article / content you write on this page Winners remorse

    ReplyDelete
  15. Do you seek capital to pay down credits and debts? Do you find yourself with unpaid invoices and do not understand where to show or which way to move? What about finding a Respectable Debt Consolidation company That May assist you in reducing monthly installation

    refinance mortgage north york

    ReplyDelete
  16. That dirty little, and nearly always overlooked secret is THE WAY YOUR FINANCIAL ADVISOR IS PAID DIRECTLY AFFECTS THEIR FINANCIAL ADVICE TO YOU!site

    ReplyDelete
  17. All in a sudden I was need argent loan for my business. The opportunity of getting a loan without any mortgage is very difficult. But thanks I got cash loans online very swiftly. Most importantly, there was no hassle. I only needed to fill up a form only and money was with me. The payment system is also very easy and no hidden charges.

    ReplyDelete

  18. Do You Seek Funds To Pay Off Credits and Debts? { FIFOCapitals@gmail.com } Is Here To Put A Stop To Your Financial Problems. We Offer All Kinds Of Loan (Personal Loan, Commercial Loan, etc.) We Give Out Loan With An Interest Rate Of 2.%. Interested Applicants Should Contact Us Via Email: FIFOCapitals@gmail.com

    Please Fill the Application Form Below:
    - Complete Name:
    - Loan Amount Needed:
    - Loan Duration:
    - Purpose Of Loan:
    - City / Country:
    - Telephone:
    - How Did You Hear About Us:

    If You Are Interested To Get A Loan Then Kindly Write Us With The Loan Requirement. Please, Contact Us via email: FIFOCapitals@gmail.com,,,

    ReplyDelete
  19. This blog does a thing of bridging the gap between reader and writer.
    Mason Soiza

    ReplyDelete
  20. IT professionals are in demand According to BLS, from 2016 to 2026, employment of Computer Specialists is projected to grow at 11%, and that of Information Security Analysts at 28%, much faster than the average for all occupations.CCNA

    ReplyDelete
  21. Do you need Personal Loan?
    Business Cash Loan?
    Unsecured Loan
    Fast and Simple Loan?
    Quick Application Process?
    Approvals within 24-72 Hours?
    No Hidden Fees Loan?
    Funding in less than 1 Week?
    Get unsecured working capital?
    Contact Us At : ahmedconsultancycompany@gmail.com
    Phone number :+1 516-591-0949 (Whatsapp Only)

    LOAN SERVICES AVAILABLE INCLUDE:
    ================================
    *Commercial Loans.
    *Personal Loans.
    *Business Loans.
    *Investments Loans.
    *Development Loans.
    *Acquisition Loans .
    *Construction loans.
    *Credit Card Clearance Loan
    *Debt Consolidation Loan
    *Business Loans And many More:

    LOAN APPLICATION FORM:
    =================
    Full Name:................
    Loan Amount Needed:.
    Purpose of loan:.......
    Loan Duration:..
    Gender:.............
    Marital status:....
    Location:..........
    Home Address:..
    City:............
    Country:......
    Phone:..........
    Mobile / Cell:....
    Occupation:......
    Monthly Income:....
    Contact Us At :ahmedconsultancycompany@gmail.com

    ReplyDelete