Quest to Financial Independence
Financial independence is when your investments provide you with enough passive (non-working) income where you no longer have to work to be able to meet your financial needs. Most minorities think this is only achievable in your 60s (or older), but contrary to popular belief this could be possible in as little as 7-10 years starting from nothing. Translations: If you master the principles that are addressed in this blog in you late teens/early twenties you can retire from your job as early as you late twenties and spend the rest of your life pursuing your true passions. It does take sacrifice, hard work and careful planning, but it can be done. So if you are interested in learning these principles keep reading.
Principle 1-Financial Plan
A Financial Plan (aka Budget) is essential to being able to survive off of passive income for the rest of your life. (If you would like to know how to put together a Financial Plan, please check out my Financial Plan blog.) You cannot build up a nest egg based on a certain lifestyle and then blow the entire budget by splurging on every luxury possible. You will eat into your nest egg and cause your financial independence to be short lived. The key is maintaining the same lifestyle you had before you became financially independent so that you passive income from you nest egg can last the rest of your life. If you want to enhance your lifestyle then you need to build up a bigger nest egg so that you can produce greater passive income. You must protect your nest egg at all cost. It is strictly there to make you money-not to live off.
Principle 2-Maximize Income
While you are building up your nest egg you must maximize your income so that you are able to save quickly. If you only want to work a few years then my suggestion would be to go into a high income profession that requires minimal education. Bachelor degree in Computer Science, Computer Engineering or Business tend to yield higher starting salaries then most bachelor degrees. Keep in mind that I know you may not want to work in these fields but this is a job for specific purpose (build up your nest egg) for a short period of time; not a career you will work for the rest of your life. Once you are financially independent you can pursue whatever your passion is without the financial strain.
If you cannot imagine working in those fields you could start you own business; however, there is a bigger risk with this option. The business could fail or it may take a lot of capital and time to get it to a state where it is producing the income you need. Nevertheless, if you are willing to do the hard work this could be the most lucrative return of them all because it would continue to provide you income even after you stop actively working it.
Principle 3-Buy Income Producing Assets
It is best to have several sources of income so if you could work at a high income day job, have a lucrative side business and buy income producing assets you will see the greatest results. Stock portfolio that generates dividend income, rental properties, royalties from patents and copy rights and income from ads on blogs, forums or websites are all great income producing assets. This is the key to financial independence. You need to invest your time and money in these assets so that you can have enough income to sustain yourself long after your paycheck stops.
Principle 4-Keep Expenses Low
As I stated in A Free Man’s Slavery blog debt needs to be eliminated. Mortgages, student loans, credit cards, and auto loans need to treated like Ebola and avoided at all cost. If you have them and you want to achieve financial independence quickly then you need to pay them off ASAP. This decreases the amount of money you need to sustain yourself; thus, making financial independence available faster.
Principle 5-Partner with the Same Goal
As I stated in All Star Team blog statistics show that who you marry is the most important factor that determines how your financial life will turn out. If you are in a serious relationship it is important that the person has the same financial independence goal as you. It will be next to impossible to complete this goal with someone who is not on the same page. They will want to spend and you will want to save and invest which will turn into an argument. If you are single, instead of the adding this type of stress to your life (that will hinder you from maximizing your potential) just find someone who are pushing you towards your goals-not someone who is working against them.
1) Do you want to be financial independence? How can you make adjustments to get there quickly?
2) Calculate your magic number that you need in a nest egg to able to be financial independent.
3) Join me tomorrow.