Financial independence was a goal I achieved about twenty-nine (29) years ago. It was part of a ten (10) year plan, I accomplished in about eight (8) years. It was a goal with a plan! It required a level of commitment, discipline and determination day in and day out. Although I used savings and investing to achieve this goal, it was my choices that helped me achieve my success.
Although financial independence means different things to people, I want to establish a definition for this article. Financial independence is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. In other words, their assets generate income that is greater than their expenses. It helps that I do not live an opulent lifestyle. I do not live in a mansion, drive luxury cars or spend a great deal of money, but I enjoy my life and do not feel deprived.
For most of my life, I have been able to do all the things I wanted to do. I have been a lifelong saver and value shopper. I was fortunate to graduate college/graduate school without student debt. I had substantial savings for a down payment on my first home. I bought my first home twenty-five (25%) percent below market value. I searched for a fixer upper and was able to assume the below market mortgage. My mortgage payment was less than my rent at the time. It doubled in value in three and half years.
Savings was always a priority! I lived on less, but never felt deprived. We moved from a two bedroom apartment with quality furniture to fill the public areas of the three bedroom m home. My wife and I did the remodeling ourselves which was mostly painting, pulling up carpeting and some plumbing work. The hardwood floors were in good condition and we replaced the drapes. The landscaping needed some work and so did the fencing. It was a lot of sweat equity and materials. Time has value, but it was worth it.
It was during this time, I found ways to save money on my expenses. Small changes added up to hundreds of dollars per month in savings. It was more than forty (40) years ago when I earned less and my expenses were lower. No excuses though! I am a value shopper. I look for opportunities to buy at lower prices or I don’t spend my money. I always had a budget and stuck to it. It helped that I was paid reasonable well and excellent benefits working for a Fortune 100 company.
When I bought my house, I immediately set up a payroll deduction for annual expenses such as property taxes, property insurance and savings. I never went into debt for major or minor purchases. Instead of living a more opulent lifestyle, we had parties with friends and everyone shared in the food and drink. We slowly bought outdoor furniture on sale and furnished the additional bedroom when our first child was born. When we moved to our dream house on a country club, we had the savings to fix it up.
This house was our last! It was time to grow our savings to achieve financial independence. I stated to invest in income (rental) property. My first investment in a nine (9) unit had positive cash flow almost immediately. I increased the rental income and traded it for a twenty-four (24) unit. My savings were working harder for me. I plowed the increased income into my investments and began to build wealth. I did not increase my lifestyle, but made different career choices. I left the Fortune 100 company!
I increased my income and took more risk in my career. I was secure in my investments which gave me some freedom to take more risk in my career. I took the skills I learned and increased my income. Smaller companies provide much more responsibility and authority. What did I give up? The security of a Fortune 100 company and Cadillac benefits. I grew as a professional and learned a lot more how to run a company. I went from a senior staff position to senior management.
My ten (10) year plan was to achieve financial independence; however it covered more than building wealth. I saw it as an opportunity to do the things I wanted to do versus the things I had to do. Financial independence provided the opportunity to start businesses and find new opportunities. After seven years, I cashed out and invested in the stock market. It certainly is not as secure as income property, but less management intense. Your time has value although it is difficult to quantify it.
What did I give up for financial independence? Nothing! “The law of work seems unfair, but nothing can change it; the more enjoyment you get out of your work, the more money you will make.” (Mark Twain) This is not some secret, but very few people feel this way about what they do for work. I have to include my quest for financial independence as part of that work. It was not easy, but I enjoyed investing in income property. It is a great way to achieve financial independence!
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