Secret #1: FRUGALITY. Saving Time and Money.
What can you cut back on? Car payment (can you sell car and downsize), Rent/mortgage (can you downsize or move into 4plex that you own) that’s close to work, do you have cable bill you can eliminate, bar tab?
Suppose you now spend only $2,000/month and can save $1,500/month. This provides you with CA$H Reserves that allow you to take a better opportunity, job/business …i.e Lower paying job that offers commission, equity or other scalable financial rewards.
DESIRE for EARLY Financial Freedom, as a Long-term goal, not 40 year-career. It takes sacrifice, saving by spending less, to be able to Live life on your terms.
Make wise and sensible decisions with your money. Be disciplined, control your emotions/mood in the short-term. Be emotional about the long-term FFI.
“Is this EVENT/ITEM so important that I’m willing to delay my FF in order to pay for it?”
Before you pull out your wallet, determine how far back this transaction will set you on your journey toward FF. Become very uncomfortable with the delay.
CONSISTENTLY prioritize your EARLY FF, then you will choose lowest cost option to fulfill your desire.
WHY: Maybe you want to focus on raising a family, pursuing a hobby or just wanna have more security.
Get rich by doing it Yourself: Learn to solve day to day problems and fix things.
You may hire out if you detest that type of work and can hire it out for less than $25/hour.
Take a few hours to research and find a pro who is uniquely suited for your particular problem.
Study the basics and specific issues , then decide to hire if the PRO can do it better than you. i.e Fix your own toilet @ $75-150/hour saved tax free!
Learn about law, accounting, health, finance, home, auto services. Have HEART, and DOI. “I can easily do this myself.”
Good can be better than the Best. Cars you can pay all or mostly cash for can save you thousand$ over the term of a loan for an expensive car.
Instead of sending your children to the best schools, how about having more time to hang out with them? Average schools can still have excellence.
Live frugally and use the surplus cash to invest in real estate or a startup business.
Prepare lunch ahead of time and place in fridge so it’s ready next day.
Design and plan a Low Cost Lifestyle.
Wealth begins with and examination of EXPENSE$ and Though process when it comes to spending. Be Frugal my friend. Protect and preserve your hard earned money.
You can get by with acceptable goods and services. Guard your mind against marketing messages telling you deserve the best. You deserve FREEDOM and power over ur livelihood. Save to buy your Freedom.
Fix ur own sink or alternatively price around and get 50 bids to get it done for reasonable price. Does it make sense to pay $75/hour if you are making $15? If you save 50 here, 100 there…can add up.
Wanting FF so badly that the choice not to spend is easy. Take pride you live efficiently and don’t blow it all on toys, temporary pleasure, which should offend you cause delay your FF.
When you see the Jones’s, say “Foolish, foolish man.”
Be frugal and save up your first $25,000 (1 years worth of spending).
Ch. 2 Live Efficient Lifestyle
National Average for Consumer Spending Pie Chart (excluding taxes).
80% of spending: Housing/mortgage, Transportation/time/gas/maintenance/wear&tear, Food/Groceries not eating out, Insurance, Healthcare (focus on these Large Chunks 1st)
20%: Entertainment, Apparel and services, Cash contributions, Education, Misc (having a beer, coffee or shoe shopping in moderation is fine)
– Focus on the largest chunks of YOUR spending FIRST, which will allow you to enjoy the small day to day pleasures.
$50/week on small meals and treats with family and friends is okay. Unless you are spending thousand$ on unnecessary shopping, meals and entertainment.
Renting. Find an affordable apartment, house or mobile home to rent or buy. Reasonably close to work and have roommate(s) to help with costs.
How much could you save living in a cheap apartment w/a roommate, close to work, along with having some good clean fun? Like having friends over for a meal or go fishing, instead of living near a bar and going out clubbing.
If you are a family, you can have a roommate or not, and/or have a double income.
Commute. Bike more and drive less. Cost of driving are in money, time, health, anxiety and happiness.
Pay cash for your vehicle if possible, otherwise do the least loan amount. Economy cars are: Honda Civic, Nissan Sentra, Toyota Corolla. Use Kelly Blue Book and Edmunds to look up pricing, etc.
Maybe do a car wash and an undercoating once/year. The rest of the year hose car off.
Food. You do not have to miss lunch with your partners/peers i.e soup and salad. You can enjoy happy hour w/your friends.
Always have healthy food and snacks around home i.e Nuts, berries, fruits, meats, fish, healthy grains, legumes and veggies.
This will keep you away from the fast-food and vending machines and you will be healthy and focused.
Personal Insurance & Pensions. This is to protect you from the big stuff. Use high-deductible to save hundred/year.
Healthcare. Important to have insurance for Dentist and Primary care doctor. Again, go with the high-deductible w/low premiums. Exercise by biking, walking and swimming.
Entertainment. Some of your fondest memories and sometimes your connections and what you learn from a lunch can enrich your life in many ways.
- Cut out pay TV, watch free stuff instead.
- Avoid subscriptions, cancel right away after you sign up. You can always sign up later if it’s something you’ll use frequently.
Apparel. Like anything else purchase only Clothes that you Like, is reasonably priced and are going to actually wear. If you get a ton of Joy, 100 to 200 a month is fine.
Cash Contributions. I.e Child support, alimony, gifts or allowances to your children/dependents, and charity. Donations and any travel for events or volunteering are often tax deductible. Keep receipts. Often the people that are running in the charity can be powerful local connections that could financially propel you more than anything else you could do.
Education. Helps to increase earnings and build or buy assets. This book is about Personal Finance and progress toward Financial Freedom. Invest in books, seminars and mentors.
Miscellaneous. Keep your eye on the Financial Freedom long-term goal. Will this significantly enhance your health, wealth and happiness? Avoid vices and time waiters.
Conclusion. Save 50% of your income. If it don’t bring you happiness, don’t buy it. Handle your own problems, make choices that will save you THOUSAND$ and live with excitement.
Eliminate, minimize, no consumer debt and take up free or low cost hobbies.
Do not give up your favorite small luxuries and recreational spending. Do more biking. Prepare healthy foods in advance. Housing, transportation, children, personal insurance and pensions, healthcare and education. Spend less than $2,000 per month.
Chapter 3: What To Do With Your Money
- Emergency fund of 1k-2k
- Pay off all consumer debt & build strong credit
- Build up 1 year livelihood by building up cash reserve or equivalent.
Stop going out to eat, multiple gas trips… pay the car off or refi!
Hospital debt, wait several years and then negotiate down to a few thousand or even a few hundred dollars.
Research your debt if it is more than 3 or 4 years old. Consult a professional. Sometimes making payments can actually hurt your credit. Sometimes 7-10 year old debt don’t need to be paid off.
- Car loans
- Personal loans
- Low interest rate (probably less than 5 to 6%)