So where do I start? Do I need a plan?

So where do I start? Do I need a plan?

To get the ball rolling, one needs to have a plan.  You need to figure out what basic rules or changes you need to put in place to start your journey to financial independence (FI).

First, let me explain what I mean when I say “financial independence“, or FI for short.  I don’t want to be rich, I don’t want to live in a big fancy house and drive a big fancy car.  What I’m really after is time.  Available TIME to do what I want whenever I want (well, mostly).

For example, if I want to spend the day tending to my garden and NOT having to buzz off to work every day, or having the TIME to phone my mom in the middle of the week and ask her if I can pop over for a cup of coffee, the freedom to do the things I love when I want to do them, NOT when my corporate handcuffs allow me to.  That’s what I’m after.  And hopefully this pursuit of FI will “buy” me this freedom.

Where do I start

Enough of that.  So how does one even start?  I’ve read quite a few books and blogs, and they all basically state the same thing in terms of where one needs to start, and that is:

Spend less than what you earn. 

Invest the difference.

Repeat.

Wait with extreme patience.

That’s it!  It really is that simple (though not easy!)

The secret is to build, slowly over time, enough reserves to sustain your lifestyle when you finally stop working.  We’ll get into all the details in later posts, but this concept is at the root of it all, so let’s explain it a little more…

Spend less than what you earn

This is key.  Most people (my previous self included!) spend all their hard-earned income, every month.  Some even spend more than they earn, by incurring debt!  And whenever they get a raise, they upgrade their lifestyle – new car, bigger house, new cellphone, bigger TV.

Stop.  Whenever and where-ever you can, try to keep your lifestyle costs as low as possible and avoid the lifestyle-creep like the plague!

If you have any debt, try to pay it off first!  Debt is nothing but compound interest working AGAINST you!

Invest the difference

As soon as you have a little spare money available, you can start to build a little emergency fund.  More about this later.  After the emergency fund is in place, you can start to invest into for example the stock markets, so that your money can grow (taking advantage of compound growth).  This money will pay for your lifestyle when you stop working for an income.

Repeat

Remember to do this month after month, year after year.  Relentlessly!

Wait with extreme patience

Patience is key.  Don’t rush it.  Don’t become distracted or lose focus!

There’s a lot more to it if you want to get into the details.  Don’t worry, we’ll be covering all the inner bits of awesome tricks and ideas as we go along!

Until next time!

Hamster

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