According to my calculations I have reached the halfway point of achieving this goal. This endeavour started almost exactly 7 years ago in June The purpose of this blog and my book is to document how I am striving to complete this task within 10 years.
Motivation There are many factors which have motivated me to embark on this journey. I moved to the UK from a developing country which was facing a severe economic crisis and went on to study engineering at university. This was particularly tough due to the very high international student fees, living expenses involved and having to adjust to a new culture.
Uncertainty and job security in the workforce were other major factors. Money was always scarce when I had to work all throughout my studies which was not ideal.
It was therefore no surprise that when I got my first professional job I thought I had made it.
I was thinking in terms of income rather than net worth. This led to an episode of lifestyle inflation in my mid to late twenties.
I did the opposite while working at that job. Moving from shared housing to my own rented flat greatly diminished my savings rate as I faced an explosion of monthly bills. On the food front I was equally terrible; I never prepared my own work lunch, instead opting to buy costly unhealthy food every lunch break. Life was good I thought. As if all this was not enough I decided to embark on my next wasteful adventure: car ownership.
At that time I lived in Manchester where commuting to work by bus was incredibly cheap. I convinced myself that I needed to drive so did a lot of lessons and got my licence. Soon after I went car shopping. This car turned out to be a real lemon. It was dangerous and very expensive to keep.
How to become financially independent in 5 years
I remember at least three times where the car left me stranded on the motorway due to major mechanical faults. One situation was the clutch snapping during heavy snowfall and the other was parts falling from underneath the car in the dark. Such breakdowns are often accompanied by other extra costs such as repair bills, recovery and using alternative transport. Obviously this was financial independence for 7 years good but it turned out to be the greatest thing to happen to my situation.
Financial independence for 7 years I financial independence for 7 years Manchester to go and stay with my mother as I had managed to save exactly nothing in three years due to the above. I managed to get a new job soon after though so did not need to sleep on the floor for too long. Realising that my previous lifestyle was unsustainable I moved back to shared accommodation and started to keep spending under control.
I also started aggressively paying all of the credit card debt. However, I still did not have a good financial education and lacked long term thinking. The only thing I was saving for was a car.
This one final major mistake ensured that 5 years after starting my first job my net worth dipped back to zero.
I consider this the beginning of the journey to Financial Independence as I have not made any drastic purchases since. The BMW was a nicer vehicle which i kept until it was written off in a crash in I did not need any convincing at financial independence for 7 years and hopped on to the movement. By applying these principles and living frugally, my net worth has been increasing exponentially. Lessons learnt July By only looking at the purchase price it is very easy to ignore the true cost of car ownership when making a purchase.
How to gain your financial independence
More detailed typical costs are provided by the RAC here. I would recommend to avoid car ownership if you have access to other reliable means of transport.
- Once you reach Financial Independence, you no longer need to work for a living.
- Он стукнул по стене, и на середину комнаты вылетел светляк.
- How to Become Financially Independent Quickly Using the FI Formula
- Options just
This is very difficult for me as I enjoy researching the latest cars, watching Top Gear and going for a Sunday drive. In future I will ensure that such a purchase is made from a position of strength and once all options have been thoroughly vetted.
Automation and consistency are critical to building wealth. I find it very useful to budget every month by estimating upcoming expenses as accurately as possible.
Tracking net worth is also a good motivator see example chart above ; it gives a snapshot of where you are in relation to the goals. It takes a long time to see big gains.
How to Become Financially Independent Quickly Using the FI Formula
During the first few years of investing seriously little or even negative progress will be experienced. It is only at this point that the effects of compounding can be noticed. Giving up early is not an option.
Ready to do your own thing? Those who are on track to be "financially independent and retiring early" -- or "FIRE" -- are.
Take advantage of market crashes. When the stock market is down it means prices are cheap.
Resize icon iStockphoto Everyone knows they should start saving for retirement as soon as possible.
It is best to invest as much as possible during such times. If I look back 5 or 7 years ago I am astonished at how low prices were compare to today. Keep calm and do not sell.
However, we should aim to be rational and not start investing more now when there is irrational exuberance. Focus on the long game not day to trading platform in new zealand market movements. Keep learning and building skills. I am amazed at how much knowledge is out there.
50% FI (Financial Independence) in 7 Years! – What it took to get here
Just pick up any good book to find out. Try out many new ideas; most will fail but you will learn a lot.
I have picked up a lot of skills from running this site including SEO, Analytics, Adsense, graphic design, improved writing, web design and digital product creation. I did not know most of this stuff a few years ago. Avoid keeping up with the Joneses. It is tempting to acquire flashy material possessions cars, houses, clothes etc.
This can backfire and you will be the one left to pick up the bill. Best thing is to obtain what you actually value and is affordable to you.
The point of Financial Independence is to open up more life options, not necessarily early retirement. I look forward to covering the next half of the journey. I know that this will not take as long and the gains will be ever bigger as the snowball keeps rolling bigger and faster.