I first discovered the concept of early financial independence in late 2011. I vividly remember coming home from work late one night, totally burned out as usual, and having no desire to do anything else other than to plop myself onto the bed. I closed my eyes momentarily, overwhelmed with exhaustion, and muttered to myself, “LIFE SUCKS!”
On the surface, you could argue that I had a lot going for me:
- New job
- Relocated to Orange County
- Employed at a premiere company
- Still young and only in my mid 20’s
But I was completely unsatisfied with my life! Regardless of those things that I had going for me (or what people told me I had), I lived in a much different, harsher reality. Instead, I couldn’t get over the fact that the following was occurring on a daily basis:
- Doing the same shit everyday
- Days and weeks and months blurring together because I spent 40+ hours/week doing the same shit
- Wasting away the prime years of my life chasing after money
- Becoming stagnant and not learning anything new and exciting
Yes, I did have weekends to enjoy (for the most part), but I’ve never been the type of person who could rationalize living a life where you only get to own 2/7 days of each week. For those who can make that type of “work-life” balance work, that’s totally awesome and kudos to you! I commend you for that, but that type of compromise is something my mind, body, and soul will NEVER accept.
I was at a loss and didn’t know what to do… When I FINALLY discovered the concept of early FI… it was a defining moment in my life. The light bulb switched on full blast for the very first time, and I knew, without question, that this was something I needed to achieve in life.
In late 2011, I made the commitment to pursue early FI. I went “all in” with absolute conviction. In my mind, I had to get to early FI, because a life without it was not one worth living.
Early FI became my light at the end of a drab, monotonous tunnel. I was determined to get there as soon as possible, by whatever means necessary…
After 3 years on the journey, I feel confident that I will be able to declare early FI sometime in 2015! Here are some of the techniques I’ve used that have helped me out the most:
The declaration to START was cemented in February 2012, and my first major accomplishment. Prior to that, I was more or less just floating around, without clear direction. After that declaration, I was laser focused and had the singular vision of financial freedom on my mind. I became obsessed with it on a daily basis… and still am today.
Achieving early FI isn’t easy! Like any dream worth pursuing, you are going to have to tackle it one step at a time. However, you can do yourself a huge favor and set yourself up for future success if you take the time out to visualize your goals. You can literally “will” yourself to success if your mental focus is strong enough. It’s kind of like learning how to unleash “the force”… The mind is insanely powerful, so don’t ever sell yourself short or underestimate the power your thoughts have! As is repeatedly suggested in Napoleon Hill’s legendary Think and Grow Rich, you must learn to visualize… and know very clearly where it is that you are trying to go if you are to accomplish your goals.
If you have CLARITY, the journey becomes that much easier. These days, I rarely (if ever) find myself swaying too far away from center, because I know implicitly what it is that I want; my thoughts and actions all serve to accomplish the same thing.
Pretty potent, when you have harmony between the two!
I don’t like to use the term “sacrifice” because I don’t feel like the things that I’m doing in my life are causing me to have to make a compromise. Instead, I’m simply choosing to align my life with actions that resonate with my own belief system. But it also doesn’t hurt that these decisions are also helping me shortcut the journey to early FI by several years, if not decades.
One way that I’ve been able to optimize my life is to question everything mainstream society tells you to accept as a universal truth.
Here is my own list:
Mainstream: “You’re doing well if you are saving 10% of your income each month.”
My Take: I don’t want to retire at 65, or 70+! I want to reach early financial independence much sooner than that. Perhaps, as early as 30/31. After accounting for my necessary expenses, I see no reason why I can’t and shouldn’t be saving 70% to 80% of my net income each month. So, that’s what I do.
Mainstream: “You must own and live in your primary residence.”
My Take: Only if owning makes more sense than renting! Most people splurge on their homes, CHOOSING to take out enormous loans that result is even larger property tax bills. These same people CHOOSE to pay more to live in the nicest locations with the most amenities. A roof over your head is usually a person’s largest monthly expense. How do you reduce that? Live with multiple roommates and split the bill! Live in a cheaper building, slightly farther away from work. Live in your parents’ basement. Rent out a room in your uncle’s garage converted (unpermitted) guesthouse… Build a tiny house! Who cares what society says?!? Even if you are “sacrificing” in the near-term, take solace in your actions: “Live a few years like others won’t so that someday soon you can live out the rest of your life like others can’t.”
Mainstream: “As you build up equity in your home, trade up and upgrade to a nicer home…”
My Take: It’s sad how many people actually go through with this… You don’t create wealth by splurging on yourself! Nor should it even be necessary. That equity could be used to fund other income generating assets… And how come no one ever decides to cash out their home equity and DOWNGRADE to a cheaper, more cozy home, instead?
Mainstream: “You must invest in a 401k and Roth IRA.”
My Take: No, you don’t. I invest in a 401k and Roth IRA, but those traditional retirement accounts were designed for a reason… to keep you chained to your employer for as long as possible. It’s not a bad idea to contribute up to the company match, but if you want to achieve early FI, you are going to have to invest in more than just those traditional accounts! Since early FI requires a sustainable income stream sooner rather than later, a lot of folks take up dividend growth investing (DGI), and/or real estate investing (REI). If you buy right, you can still find investments that not only pay you TOMORROW, but also TODAY!
Mainstream: “You will spend more as you earn more.”
My Take: That won’t ever happen if you are laser focused and fully committed to achieving early FI! I probably spend less now than I did in 2012. For certain, I spend much less now than I did when I was an intern in 2008 earning less than $60,000/year. Again, it goes back to visualization and knowing what you really want out of life. I know when enough is enough, so I don’t have to worry about this problem. As I earn more, the only thing I’m spending more on is my investment portfolio. Use money to make more money. That’s how you really shortcut the path to early FI!
Mainstream: “You need to aim to replace your current income, if not more, for your retirement years.”
My Take: Again, it’s your life, so there’s no reason why you have to accept mainstream thinking as being the only right, definitive answer. I can’t answer this with full certainty yet (since I haven’t reached early FI), but I highly doubt that I will need to replace my full W-2 income to be able to survive post-FI. In fact, my initial plans are to leave the expensive Bay Area entirely, and live a few years overseas where the cost of living is dramatically less. There are many, many options out there! Your employer wants you to stay rooted in one location, so that kind of thinking becomes prevalent in our minds. But without the handcuffs, the world becomes your oyster. Go wherever you’d like. For me, I’m going someplace warm and cheap!
Mainstream: “You need to go to school, get married, have kids, and then focus on wealth building…”
My Take: Then I’m obviously deviating from this path greatly! That’s the route most people take, but you can ask around, and I’m pretty sure you’ll find out that isn’t always the optimal solution. Life happens, so roll with it… You should not feel embarrassed or out of place for starting the journey to wealth building prior to all those things. If anything, becoming financially independent before getting married and having kids will probably lead to less stress! And for what it’s worth, I feel like formal education has become extremely unaffordable, and a 4-year degree is vastly, vastly overrated… College trains you to become a wage drone, not how to become financially independent!
So, keep an open mind, always! If you go against the grain, you might just find some neat solutions to help you achieve your dreams faster than you ever thought possible.
I’m a firm believer in documenting your early FI progress. It’s impossible to know how high you’ve climbed if you don’t know where you started from. For instance, I just finished documenting my November 2014 Net Worth, and looking back, I can see that my net worth has increased by about $200,000 this year. But that type of progress is hard to notice or feel on a day-to-day basis! You would have had me fooled, otherwise…
If anything, documentation will add fuel to the fire and motivate you further on your journey to early FI. Almost everyone who looks back is always in awe with how far they’ve progressed since first starting out. Also by time-capsuling your every move, you’ll be able to look back in the future and know what you did right/wrong. With each investment move I make, I also make it a habit to outline my thought process at the time; this helps me learn from my mistakes and avoid falling into the same traps in the future.
So if you haven’t given documentation a try, get to it!
These days I’m attending real estate meet ups in Cupertino and San Jose. I love to network with other investors, and have even gotten to know some readers on this blog! 🙂 It’s awesome, and what better way is there to find motivation than to network with other like-minded individuals who are trying to accomplish the same things?
And you never know who you will end up meeting, so get out there! In fact, I recently partnered up on a real estate deal with a reader of this blog. Just one year ago, I didn’t even know this guy existed…
Another great idea would be to start your own blog, if you haven’t done so already. The early FI community is AWESOME and the most supportive network that I know of! Many thanks to the all the readers of the blog and felllow bloggers for all the inspiration!
Anyone can achieve early financial independence! There are no secret paths, or expensive seminars that you have to attend to acquire the requisite knowledge. In theory, it’s all incredibly simple: Make money, save a HUGE chunk of it, invest and re-invest it. Lather, rinse, and repeat!
The real question is, “How badly do you want it?” If you are dead serious about making early FI a reality, then you will do absolutely everything possible to make sure that it happens.
I’m not quite there yet, but I’ve been on the journey to early FI for 3 years now. 2015 will mark Year 4, and hopefully the final year until I get there. Through the years, I’ve learned many things, and the following have helped me out tremendously: Visualization, Optimization, Documentation, and Networking.
2015 is fast approaching and I’ve never been more excited! When I first discovered early FI in late 2011, I was incredibly motivated and hungry… but I lacked direction. By utilizing the 4 pillars (VODN), I was able to bring focus to my vision.
4 pillars = 4 years to early FI (2012-2015)?
Maybe that’s just a coincidence, but if things do indeed work out that way, I’ll gladly take it. 🙂