How to become financially independent

This job is killing me!

Right now, maybe you are thinking the same thing I thought not too many years ago. I did not enjoy my job and I did not make that much money from my job. So I was in a tough spot. I did not make enough money to quit and “retire”. I needed money to get from month to month and I did not like my boss or the work I was doing. Basically, dying a slow death at a desk.

Things need to change.

This is where financial independence. Don’t like your job? Quit. Don’t like your boss? Bye.

What you are doing right now, is not going to get you where you want to be.

Working at desk, making an entry level salary was not going to get to freedom or anywhere really.

You need to get uncomfortable. Do things you have never done before.

That is what it is going to take to reach financial independence and retire early.

The first step to becoming financially independent is to decide that you want to be financially independent.

Make the decision and then commit to doing what it takes to get there.

Finally independence will take time. How much time depends on you. Financial independence means that you have enough money to live off your investments or passive income and can quit the race. If you want to live off investments alone you need to save up 25times your annual expenses. Once you have that 25x saved you can withdraw 4% of your portfolio in perpetuity to live off of. With 25x your expenses saved that amount should last the rest of your life.

25x your expenses is a lot of money. Think $1,000,000. That will allow you $40,000 to live off of.

For most people, including myself it takes discipline, patience and hard work to reach that number. How to reach $1,000,000:

  • Earn $1,000,000 from working for an employer
  • Become an entrepreneur and the money building your own business
  • Earn $1,000,000 from investments, ex: stocks, bonds, real estate, business
  • Inherit $1,000,000 from a windfall

If you are like me and other employees, you will reach $1,000,000 through a combination of option 1&3. You are going to work for money and then invest in a 401k and other asset vehicles.

How do I reach financial independence faster?

  • Increase your income
  • Decrease your expenses and taxes
  • Invest the difference
  • Increase investment returns

If your are an employee your goal should be to max out your 401k, but I am getting ahead of myself. The general idea is that the more you can save and invest the faster you will reach financial independence.

Is financial independence right for you?

Maybe, but maybe not.

  • Do you love your job and want to do it forever?
  • Do you like have a lavish lifestyle right now? Nice car, nice house/apartment, shopping sprees
  • How much money do you make?
  • Are you mentally prepared to invest in the stock market?
  • Are you willing to follow a different path from the people around you?

Those are all questions that you need to ask yourself before starting on this path. Because if you are not prepared for the journey then do not take it, because you make yourself miserable.

You can achieve financial independence and still have an incredible life. You just have to be intentional about your life. Make things happen rather than letting things happen to your. Be proactive.

Have you decided that you want to be financially independent and you are willing to do what it takes to get there?

If the answer is no, that is ok.

If the answer is yes, let’s go. Walk this journey with me, because as of writing this I am still in the struggle. I have not yet reached my FI number and it will be a few years maybe even decades before I reach that number. But I am excited and I am walking the path with you.

Here are the steps that I have come up with to help us to successfully reach Financial Independence:

Step 1: Decide that you are going to become financially independent.

Step 2: Determine where you are now. What are your current assets and liabilities? What is your current yearly income and monthly expense?

Step 3: Where do you want to go? Determining your FI number and creating an Automatic investment system to get there.

Step 4: Design your life now. Where do you want to live? How many children? Buying or renting. Is travel important to you? Entertainment? Charity? Determine your priorities right now.

Step 5: Increasing your speed to FI. Maximizing your career or becoming an entrepreneur.

Step 6: Plan for what your life is going to look like in retirement. Income, travel, side hustle etc.

Step 7: Reach your FI number and pull the trigger on retirement. Living off your investment income. Withdrawing your income in a tax efficient manner. What happens if the market goes into recession?

Step 8: Preparing for the next generation. Donor advised fund for charity. Estate Planning etc.

These are the steps that I use to make sure that I am on the right path and that I working toward the right goals. These steps are the framework that I use to determine my priorities. Feel free to steal. I will break down each step on this blog. Within each steps there are many different lessons I have created to breakdown each concept into small digestable parts.

This will be an organic process like life. I will continue to add more information as I learn it.

Not too rush you, but you really need to decide now that you want to be financially independent. Or even better teach this concept to your children or other children. Why do you need to decide as soon as possible?

Because your most important asset is time. Investing in the stock market and your career and pretty much anything takes time to build up. There is a great book I recommend reading about one of my hero’s Warren Buffett called The Snowball that is breaks down the concept. Basically, your investments are the snowball and you start pushing it down the hill. The larger the snowball gets the faster it rolls down the hill and the larger it becomes. Make no mistake, you have to push the snowball to make it move.

You become financially independent by earning money and then buying assets with that money that then begin earning you more money. You become the boss and your money becomes your employees.

But let’s actually throw out the idea of financial independence. Forget about it and just think about your life.

What do you want out of life? Do you want to travel the world? Raise a family? Live in New York City? Start a charity?

Stop thinking about things happening to you. Start thinking about things you can do. Decisions that you can make.

The more proactive you are, the more you can control. The house you live in, the car you drive, the stores you shop at; were all created by someone just like you that had to figure it out. There was nothing special about them. They just made one decision after the next that created the world around us.

You can do the same thing with your life.

But other people will try and stop you or throw you off your chosen path. They really mean well. They are scared and have been through their own trials. Do not try and convince them you are right. Listen to them and say thank you, but then continue walking your chosen path. Only a few people do really hard things. Most take the more comfortable path less difficult path.

I encourage you to choose financial independence. It can have a profound impact on your life for the better. It will help you accomplish great things. There is a whole community of people, each one with their own unique circumstances, who are likeminded and will support you.

I created You Need To Be Rich! to be a resources for myself, where I could store information in an organized manner and connect with other people. I hope you get as much out of it as I do. Feel free to read more and explore the different areas of the site that meet your needs.

Sign up with your email to be notified of my latest posts and other endeavors. I always want to hear from so send me an email or comments on anything I say. Call me out if you think I am wrong. Im not perfect.

This site might help you a lot or it may not be for you. But find something that helps you make a bigger impact. We only get so much time in this life. Let’s make it count.

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