We often hear much about “financial independence”, what that means and how people reach it. Truth is that it means different things for different people and no two are exactly the same. My goal is to reach my personal idea of financial independence, but I have to go the “long way”.
What Is Financial Independence?
Financial Independence is different for everyone but here is what I have found.
Financial independence is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses. – Wikipedia.org
This could be from dividend investing such as Jason Fieber(formerly of dividendmantra.com). Or from having rental properties such as Paula Pant at Affordanything.com, or any other way that basically means you don’t have to work anymore the money you get from you passive income provides enough to care for your needs and even some if not all wants.
The Normal Path To Financial Independence
For nearly the last century the thought of financial independence was simply called retiring. Most didn’t reach this level of independence until 65 at the earliest or possibly never. They would get pensions from their employer for years or they would save money through a 401k or another type of savings/investing account and use that once they left their 9 to 5, thus the saying “9 to 5 to 65”.
The New Path To Financial Independence
What has become more and more popular is what some have called the “new rich” or more aptly named the early retirement. Not early as in 55 or 60 but people working till there 40, 35, or even younger and then simply living off of what they have saved in that time.
They reach financial independence early because they spend only on what they need and don’t get caught up in the hustle and bustle of keeping up with the Joneses. They don’t need a new phone every 6 months, or buy a house because that is what you do. Instead they decide that they only want to work for a set amount of years (sometimes 15 or fewer) and they decide what vehicle will get them there (stock market, real estate, etc) and the put everything into that until one day they can retire.
This has brought about a number of wonderful people to look up to that have successfully done this, such as Mr.Money Mustache, or Jason Fieber, or The Go Curry Cracker couple. All of which are more than happy to share their story and help others reach there too.
The “Long Way” To Financial Independence
I unfortunetly wasn’t as smart as them, I spent all my money I would get on silly things I didn’t need, and really don’t even remember. I got deep into debt when I should have been saving, and didn’t invest a dime.
Now my life has been constructed in a way that makes working towards financial independence difficult (not impossible but more difficult than had I started earlier). First I need to get rid of my debt, by cutting costs and growing my income. Then I need to start investing, the chosen path I will be taking to reach financial independence will most likely be dividend investing.
To do this though I have to make sure my family is happy with our lives and at the same time grow to financial independence so I can’t save ruthlessly like I would like, I can’t not go out to eat, or never go on vacation until I reach independence. No, I have to go the long way, the slow grueling way that drives most who have this as a goal crazy. It can and will be done but will take me longer than if I was simply working for just myself.
Life is hard, enjoyable, and exciting if you don’t work with it you will never succeed. It’s my hope to get out of debt and reach financial independence sooner rather than later.
At the same time I want and need to enjoy life because if I don’t than whats the point of everything else?
What are some things you are not giving up that you know is prolonging financial independence? How quickly will you reach financial independence at your current rate?
Image courtesy of adamr at FreeDigitalPhotos.net