Welcome back! I hope you were inspired by the stories of people who have used the tools of Financial Independence to create a lifestyle they are excited about. If you have no idea what i’m talking about, get caught up here.
If you’re all caught up, grab a cold one from the ice chest and let’s get into the nuts and bolts of Financial Independence.
“Opportunity is missed by most people because it is dressed in overalls and looks like work”Thomas Edison
I want Financial Independence, where do I start?
Knowing that you even need to start is the place to start. Achieving Financial Independence is a lot of hard work. Mrs. C and I have been working at it for over 30 years. To be fair though, we didn’t know what we were working for 30 years ago. We just wanted to be together in our own place and have a few “nice” things. Our starting place was “we need jobs and money……now!” There was no grand plan, no strategy. We didn’t even have “the internet” back then.
We chugged along for many years, living the typical American lifestyle of 40+ hour workweeks with little time off. We spent pretty much everything we earned and trusted in our ability to keep earning. We were young and and thought we could handle whatever life sent our way. For the most part, this was true. Living in Southern California, there have always been plenty of jobs to be had, and everyone around us seemed to feel the same way.
But something happened along the way. Job losses, stress, having to choose between work and family or relationships. These things accumulated, and as we aged we were less and less able (willing?) to tolerate these things. Having a plan 30 years ago would have been great, but it’s never too late to improve your life, and pursuing Financial Independence can benefit you in many ways. These are some things that led us to understand we needed to start doing more with our money than just spending it.
- Realizing that the life we were leading may not be sustainable as we age
- Feeling stuck in careers that are unfulfilling or unhealthy
- Wanting to provide a better example for our son
- Spending everything limited our opportunities
- Having a financial cushion reduces stress
- Financial Independence allows you to pursue things that don’t provide a paycheck, but may provide fulfillment to you and charity to others
What are the reasons that will fuel you on your own journey to FI?
The Tools to get you started
Mr. C loves a good set of tools. Having the right one for the job can make all the difference. If you’ve ever tried cutting a piece of plywood with a handsaw, you know what i mean. Financial Independence is no different. One of the most basic tools you will need is a budget. Knowing where your money is going allows you to maximize your savings and plan ahead for those expenses that only come up once in awhile. Below are some of the top products to help you manage your money.
If you’re anything like Mrs. C, you are probably less than excited about creating and maintaining a budget. That’s ok. It’s not the only way, and it doesn’t mean you will never reach Financial Independence. Paula Pant has one of the simplest budgeting strategies I’ve ever seen called the Anti-budget. You can read about it here.
One final budgeting method that’s been around forever is the Cash Envelope system. Mrs. C and I do a version of this for our variable expenses. (groceries, eating out, clothes, etc.) Basically each time you get paid you put a predetermined amount of cash in an envelope, and when it’s gone its gone. While this method is not super practical for something like a mortgage payment, it is a powerful visual cue that makes you very aware of your spending habits. Clark Howard explains it further here.
“Do not save what is left after spending, but spend what is left after saving”Warren Buffett
The road to Financial Independence can be a long one for most of us. Setting aside money that can work for you is key to getting there faster. Stop by our little Hardware store once in a while to chat about saving, investing and the mindset you’ll need along the way. Oh and i’ll keep some cold ones behind the counter for us too.