The Financial Freedom Craze – Pie In The Sky Or A Do-able Exercise?

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I put my blog together last year to teach about good money management skills to decrease money-related stress and ensure a secure retirement. It’s ambitious, but NOT out of your reach.

But what if your goal is even more ambitious than that? What if you want financial freedom or retire earlier than in your 60s?

The internet is filled with ways to achieve this elusive goal. It certainly doesn’t come without sacrifice. Those in the FI/RE (financial independence, retire early) camp do some pretty extreme things to reach this goal as early as possible. It could also be argued that it’s for the privileged few who can afford to be extreme for a short period of time.

So this contributed post today is all about achieving this new level of wealth. I’d love to know your thoughts!

Enjoy!


Freedom

Financial freedom/independence is something of a big deal in the money blogging community.

And the idea is starting to spread to the rest of us.

For those of you not in the know, financial independence is simply the name for that state of affairs where you no longer have to rely on your job to support you. You can choose to work or not.

Financial independence is where you have enough passive income from investments  and other ventures to support your lifestyle and bills for the rest of your life.

Savvy Retirement

It’s sort of like the state that most people get to in retirement, but even then they have to watch the pennies, because the money can run out of it is not continuously invested.

Financial freedom has no such limitation. If done properly, and managed well, the money won’t run out, leaving you free to pursue your dreams.

While increasing your income and saving the gains is one way of gaining financial independence, there are other ways to achieve this rare state of affairs. You don’t need to earn more money in order to have more money.

Spending less than you earn and then saving and investing that money, is the way you achieve financial freedom.

Saving Money to Invest

With that being said, there are numerous routes to achieve financial freedom. The difference with retirement in your 60s is that if you want to achieve financial freedom (maybe even retire early too, then you MUST put your effort into lots of income generating strategies).

Perhaps you want to invest in property and become a buy to let landlord or lady? Maybe instead you’ll want to invest in vending machines. You could start speculating in bitcoin (but this would be the top of your investing pyramid- as in, don’t put your life savings into it!).

Your job is to pick a path, learn as much as you can, and follow it until successful! (And before moving on to something else ideally)

Make sure you have a mentor who can help you on your journey too before committing too much financially. Mentors have been there and done that, so they are excellent people to befriend and learn from their mistakes.

Getting Serious

If you are serious about achieving this state of affairs, then you’ll need money to do it. If you’re in a precarious financial position, and you need to pay off debt with high interest rates, aim to this first, but you absolutely can start investing a small amount of money on the side, providing you are able to meet all of your commitments.

Then there are some ways to dramatically cut some of your costs to free up money to stay throwing into some new ventures. And in all honesty, to achieve this goal, you HAVE to be dramatic. £2 coins in a pot is not going to cut it I’m afraid!

1. Your House

Let’s go straight for the big one: Your house. Your home is by far your biggest expense. If you’re renting, and want to be financially free, you could buy instead (if it’s financially viable).

Rent is money down the drain, and it typically costs you more to rent a property than the mortgage on that home would be. However, renting may be the best thing for you right now, and if that is the case, then build up other assets and a decent chunk of savings instead.

But let’s say you are a homeowner and you are paying your mortgage off at a steady rate. Ensure the mortgage is a repayment one though. There are millions of people on interest only versions, which means they will never pay off the mortgage. Bad news.

Just remember, no mortgage means no huge monthly expense, and money to throw at other investments.

The easiest way to pay off your mortgage is to downsize. Most people buy homes that are far larger than what they need. You may have a couple of kids, but do you really need a huge four bedroom house when you only have two children? Use a company like Flying Homes Ltd to get an idea of what your property is worth, then have a look at smaller homes you like the look of. Any profit you make can go straight into paying off a lump sum of your mortgage.

2. Your Car

Your next biggest cost is probably your car. These days, everyone has to have the latest model, and it has to be a premium brand to boot. How many hundreds per month are you spending to make sure that you have the latest car? And when the three years payments are up, you either pay a huge lump sum to own the car outright, or you start the whole process again with another new car, which is more money down the drain.

This may financially make sense for businesses, but for the majority of us, it’s not a great strategy.

Break the cycle and buy a used car outright. After three to five years, most cars are worth around half of their new value, and at five years old, most cars are still full of fairly new technology.

3. Those Pesky Daily Costs

The smaller costs are the ones that you don’t notice so much, but they still add up quicker than you might think. That daily trip to Starbucks might only cost you a bit of change, but all that change adds up over the month. Start to keep track of the small purchases that you make; you will be shocked at how much money you are spending without even realising it.

The path to freedom

There you have it, a few BIG ways to cut down on your monthly costs and take a few steps closer to financial independence. The point is that you have to do extreme things in order to achieve a goal of retiring early or have complete financial independence. It’s a lifestyle commitment choice, and of course it won’t be an easy journey, but if you truly want it, then it can be yours.


I hope this post gave you some inspiration! You might not be interested in achieving this goal, but the same principles apply even with reaching retirement, so it will all help.

Now your turn. What are your goals? What are you willing to do to achieve them?

Until next time,

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1 thought on “The Financial Freedom Craze – Pie In The Sky Or A Do-able Exercise?”

  1. Pingback: When Buying A House Isn’t the Right Thing To Do - The Female Money Doctor

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