You have decided to start the journey to financial independence (FI)? But where do you begin? This guide will walk you through the basics of FI. Financial independence is a personal choice and journey - so if something doesn’t fit your lifestyle - thats okay!
Use the tips you find helpful and toss the rest.
Prioritizing paying off debt is important in the path to financial independence. The sooner you pay off your consumer debt the sooner your financial freedom clock begins.
Eliminating Debt Tip
If you currently have credit card debt, consider doing a balance transfer over to a card with a 0% intro rate and pay it off as quickly as possible.
Lowering your living expenses can help you reach financial independence in two ways:
1. Lower living expenses allow you to save more money.
2. Lower living expenses means you need less needed in your nest egg
Lower Living Expenses
Living Expense Saving Tip
Have you considered cutting your cable/satellite and use Netflix and other less expensive options for entertainment. Also, try driving an older car or negotiating for a lower cell phone bill.
Check out our recommended balance transfer cards!
The path to financial independence is not about living a life of deprivation. You can travel more than you realize for free or very cheaply using travel rewards. The general idea is that you use credit card rewards (earned through sign-up bonuses) to cover your travel expenses.
Use Travel Rewards
Travel Saving Tip
If you don’t excessive credit card debt and can responsibly manage credit cards, consider a card that has travel rewards.
Housing is likely your largest expense. Getting this for free or very cheap goes a long way towards increasing your savings rate. House hacking is when you find a way to eliminate or greatly reduce your housing costs.
Housing Saving Tip
Do you have a family member or friend you can share housing with? Can you buy a duplex and live in one half while renting the other half? Can you downsize your home to reduce costs?
Ready to get started?
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As a rule, you should aim for a savings rate 40-50%. That probably sounds like a lot–and it is! But if you adhere to the traditional 15% savings rate, it would take 40 years to reach financial independence.
Saving in Sexy
Are you taking full advantage of your employers retirement savings program? If your employer has a 100% match you can DOUBLE your savings by maxing your contribution.