2979: 9 Things To Do To Reach Financial Independence and Retire Early by Christina Browning of Our Rich Journey

[00:00:00] Have you ever noticed how a calm mind can really set the stage for a good night's sleep? That's the idea behind our new podcast, Good Sleep. Greg, our host from Optimal Relationships Daily, is here to help ease you into a peaceful night's rest with some positive affirmations. And these affirmations aren't just comforting. They can help ease anxiety and nurture positive thoughts, setting you up for true good sleep.

[00:00:25] So press play on Good Sleep Tonight, because a good tomorrow starts with a good night's sleep. Just search for Good Sleep in your podcast app and be sure to pick the one from Optimal Living Daily.

[00:00:40] This is Optimal Finance Daily, 9 Things To Do To Reach Financial Independence and Retire Early by Christina Browning of OurRichJourney.com

[00:00:51] If you've been following our rich journey, you know that Aman and I have achieved our decade-long goal of becoming financially independent and retiring early. But we didn't just stumble onto this achievement. No, to get where we are today, we had to take real actionable steps. Interested in pursuing financial independence and actually reaching it? Here are nine things that we did, and that you should do too.

[00:01:17] Number one, establish the proper mindset. When you first come up with your FIRE number, you may become overwhelmed and discouraged by just how large of a number it is. But when you believe that you can achieve financial independence, you see that number as a challenge to be overcome. Easier said than done, right?

[00:01:39] Okay, so how do you actually adopt a positive mindset if you're not already a naturally positive person?

[00:01:47] What I recommend is start by making a list of all the struggles and challenges that are facing you.

[00:01:53] As you make this list, start thinking of solutions for each obstacle that you face.

[00:01:59] You don't even have to come up with these solutions yourselves.

[00:02:02] There is an entire FIRE community out there that has had those same challenges.

[00:02:07] There are people out there who have had lower incomes, families, or other challenges and have already succeeded in overcoming them.

[00:02:16] Find these people and gain inspiration from them.

[00:02:19] If there's a will, there's a way to get this done.

[00:02:23] Number two, create a pay-yourself-first budget.

[00:02:28] The next thing we did was create a budget where we listed and tracked all of our expenses.

[00:02:34] I know, I know, you may hate budgeting, but I'm going to be 100% real with you right now.

[00:02:40] You need to get over it.

[00:02:42] Budgeting is non-negotiable.

[00:02:44] You cannot achieve financial independence without a budget because it's a vital part of the planning process.

[00:02:52] Establishing a budget helps you identify areas to save and also helps you determine your FIRE number.

[00:02:59] Most importantly, though, we structured our budget around paying ourselves first.

[00:03:05] What I mean by this is that we made sure to invest our money first before we started spending our money on other discretionary expenses.

[00:03:13] We treated investing like any other bill.

[00:03:16] It had to get paid every month, no matter what.

[00:03:20] When we created our budget, we not only prioritized investments, but we prioritized specifically the investments that would support us in early retirement.

[00:03:30] The investments that are catered towards early retirement are much different than investments you'd make if you're aiming for traditional retirement.

[00:03:39] Understand the differences and make your investment decisions accordingly.

[00:03:44] Number three, calculate your FIRE number.

[00:03:48] Your FIRE number refers to the amount of money you need in investments to sustain yourself during retirement.

[00:03:54] Calculating your FIRE number is a very powerful exercise.

[00:03:58] Even if you don't want to retire early, you should still determine what your FIRE number is because this number signifies your freedom.

[00:04:07] Once you reach this number, you should literally never have to work again.

[00:04:11] You calculate your FIRE number by taking your estimated expenses in retirement and multiplying them by 25 to come up with the amount of money you'd need in a stock portfolio to reach FIRE.

[00:04:24] If you're investing in real estate, you simply need to ensure that your expenses are equal to or less than the profits you'd generate from your property.

[00:04:34] Be careful not to overestimate when calculating your real estate income, though.

[00:04:39] People often fail to account for vacancy rates, maintenance fees, property management fees, HOA, and taxes, just to name a few.

[00:04:49] Number four, create an incremental FIRE plan.

[00:04:53] By creating an incremental FIRE plan and tracking that plan, you're making your overall goal more achievable.

[00:05:01] Personally, we broke down our FIRE journey into 10 stages, and we loved going through them.

[00:05:07] The stages weren't so far apart that we became disillusioned by the distance.

[00:05:12] And when we hit a stage, we celebrated.

[00:05:15] We were able to visualize the next step more easily, and in doing so, gained confidence in ourselves.

[00:05:23] The incremental FIRE plan helped us get into the right mindset and really believe that we could do it.

[00:05:30] Number five, cut expenses.

[00:05:33] This is where you finally get to put the plan into action.

[00:05:37] Look at your budget and identify where you can save money.

[00:05:41] Aman and I started with the biggest expenses first.

[00:05:45] For us, that was housing.

[00:05:46] We were able to live rent-free by house hacking and having our employer pay for our housing.

[00:05:52] Next was transportation.

[00:05:54] We sold our fancy car and replaced it with an $800 beater.

[00:05:59] These changes ended up saving us so much money.

[00:06:03] If this looks overwhelming to you, don't panic.

[00:06:06] Just focus on getting 1% better.

[00:06:09] If you can challenge yourself to just save 1% of your budget every month, by the end of the year, you'll have cut 12% off of your budget.

[00:06:18] And you'll be that much closer to financial independence.

[00:06:22] Number six, make more money.

[00:06:25] There's only so much you can cut, which is why you really need to figure out ways to increase your income,

[00:06:31] especially if you work a lower or medium income job.

[00:06:35] Aman and I started working numerous side hustles in addition to our jobs as government employees.

[00:06:41] We did everything from driving Uber to retail arbitrage to Airbnb, and anything we could sell, we sold.

[00:06:50] Remember, you may be stuck with a stagnant salary, but your salary is not the only way you can make money.

[00:06:57] You just have to be creative and prioritize making more money.

[00:07:02] Number seven, become financially literate.

[00:07:06] We continue to learn throughout our entire FIRE journey.

[00:07:10] It's so important to become financially literate, because after you make all this money, you have to understand what to actually do with it.

[00:07:18] You need to teach yourself to be self-sufficient and not rely on others when it comes to finances.

[00:07:24] You can't rely on others for the rest of your life, nor should you.

[00:07:28] Financial advisors will suck you dry with their fees, and you should never just blindly trust others with your money.

[00:07:35] Trust me, you will be able to pick up these skills as you go.

[00:07:39] If you can figure out how to open a Netflix account, then you could do the same for a brokerage account.

[00:07:45] All you need to do is pick up a book, research the topics online, and watch a YouTube video.

[00:07:51] Take advantage of all the resources out there.

[00:07:54] Number eight, invest.

[00:07:57] You cannot achieve financial independence without investing.

[00:08:01] Your money needs to work harder than you, and it needs to keep working even after you stop.

[00:08:07] Putting your money to work is key to financial independence.

[00:08:10] Take time to research and determine what you want to invest in.

[00:08:15] A business, the stock market, real estate, etc.

[00:08:18] And then take all that money that you're making and invest it as soon as you can.

[00:08:24] And number nine, surround yourself with positive people.

[00:08:28] I totally understand that you may not always be able to choose the people who are involved in your life.

[00:08:34] But when dealing with negative people, just understand that they are usually coming from a place of insecurity, fear, and unhappiness.

[00:08:43] This is your journey.

[00:08:45] Don't let your journey be dictated by the negativity of others.

[00:08:49] So these are the nine things that Aman and I did to achieve financial independence and retire early.

[00:08:55] I hope that you're feeling inspired because now it's time for you to begin taking steps towards fire.

[00:09:06] You just listened to the post titled,

[00:09:08] Nine Things to Do to Reach Financial Independence and Retire Early by Christina Browning of OurRichJourney.com.

[00:09:16] I thought this article was a great summary of things to keep in mind while pursuing financial independence.

[00:09:22] I'd like to add here that your fine number of 25 times your yearly expenses

[00:09:27] is only as good as your assumptions behind how much money you'll need.

[00:09:33] Budgeting and tracking your expenses does help you make an educated guess, though.

[00:09:38] If you retire at 30, it's really hard to know with any certainty what your yearly expenses will be at 60 years old.

[00:09:46] But you can start with your current expenses,

[00:09:49] pad your numbers, and think through worst-case scenarios and backup plans.

[00:09:53] This article reminds me of how I was pursuing FI when I first got started.

[00:09:58] But don't be surprised if you change your approach over time as your circumstances change.

[00:10:04] I'm currently taking a much more flexible approach with my FI plans.

[00:10:09] Because the reality is, the only guarantee in life is that everything always changes.

[00:10:14] I like to call it FI-lexibility.

[00:10:17] Because I simply can't help myself when it comes to making up and misspelling words.

[00:10:21] So please forgive me.

[00:10:23] In short, FI-lexibility is about gracefully navigating the unknowns.

[00:10:28] And maybe more importantly,

[00:10:30] seizing the opportunities that present themselves on the path to financial independence.

[00:10:35] I often remind myself when I'm dreaming up a goal or developing a plan to reach that goal,

[00:10:41] financial or otherwise,

[00:10:42] that I can't possibly anticipate today the opportunities that present themselves tomorrow.

[00:10:48] Goals are great.

[00:10:49] They help us chart our path.

[00:10:52] But if we're so rigidly focused on them,

[00:10:54] we might miss out on some amazing opportunities along the way.

[00:10:59] And that's a wrap for the Sunday show.

[00:11:01] Have a great rest of your day.

[00:11:03] And I'll be back tomorrow where your optimal life awaits.