Go to school. Study. Get a job and go to work. Pay taxes. Get married. Buy a house. Pay the mortgage. Get children. Send them to school. Keep working and paying down your obligations. Do that until you’re 70. Maybe 75. Retire. Die.
That’s the ordinary way.
That’s what the rat race is to me.
And I refuse to accept this to be the only way.
The alternative starts with something called FIRE.
FIRE. Financial Independence Retire Early.
FIRE is all about becoming financially independent. Having no more worries about money would enable one to skip the time to retirement, and to reclaim a sense of freedom. To most, this is the sole reason to play the lottery. Most people hope for some miracle or windfall of luck. Being so busy with their job, following their daily routines, and living paycheck to paycheck they simply have no time and not enough knowledge to find any other way.
So how can you reclaim your time? How can you reclaim your freedom?
Well, like it or not, it all comes down to money.
A sufficient amount of money will give you back the time that you normally spend to work. By getting the time back, you get the freedom to pursue ideas, plans, to support others or ourselves. Money is not the definition of freedom, but it is a tool that can vastly increase your freedom to make conscious decisions on how we spend your time.
How much money is enough?
The term “financial independence” is a vague wording, with a different meaning for every person out there.
If you live in Chile or in Thailand it will be a different story compared with a person living in the US or in Singapore. If you grew up in a one-family house it will be a different story compared to someone who grew up sharing one room with the entire family. Expectations and lifestyles matter. So how to break it down? Firstly, by removing the pressure on the most essential things that every human being needs to cover:
I would say that if you can ensure that those three things are covered, you are basically financially independent. Every other expense that would come on top of that I would consider a non-essential. Luxury. That’s not what financial independence is about. Covering the essentials is.
Clarifying this point will give you a pretty accurate expectation of how much money you need every day, every week, every month, every year. And looking at it this way, I am pretty sure that this amount doesn’t look that impossible now.
Setting up passive income
Most of us go to work to make a living. We dedicate our time to earn money. We are trading time for money. However, going FIRE means stopping doing that. And the only way to achieve this is to find a way to earn money without sacrificing time. To earn money not actively by working, but passively.
There are several ways to set up streams of passive income. The way that I chose is to become an investor. By constantly investing in dividend-paying companies, I have started to create a constant stream of passive income. Enough to cover my expenses for shelter, food, and health. But how do you start? What is the smartest, fastest possible way, especially when you have nothing right now?
Let me guide you through my plan step by step.
The way that I see to make this happen is as follows:
- Getting a job.
- Working on a successful career to create as much cash-flow as possible available for investing.
- Buying dividend-paying stocks to start creating passive income from dividends.
- Re-invest every penny from the dividends back into more stocks.
- Enjoy the benefit of compound-interest on stocks and dividends.
- Work, save, invest, repeat – until reaching the target.
There are of course a few more steps to consider in between to either make it easier, or faster, or smarter, but this is the basic strategy and this is what this blog is all about. I hope you enjoy the read. Feel free to reach out via feedback, comments, or any other suggestion that may come across your mind.
#FIRE #FINANCIAL #INDEPENDENCE #PASSIVE #INCOME #DIVIDENDS #STOCKS #SHARES