You Can Retire Early If You Focus on These 5 Things
Do These, and You’ll Enjoy a Better Sunset
Imagine that September is just a dream, that it is still August, and you are still at the beach, visiting the Dominican Republic, or the place that this year has served as a reward for so many hours of work. Sound good? Well, now stop imagining that and start living on vacation all the time.
Here are five tricks that will help you achieve financial freedom to become the master of your economic destiny and your time.
From there, you can choose whether you want to live always on vacation, spend the day on a cruise, work only on what you like, or keep your life as it is now.
These are the five steps that will allow you to have such financial freedom:
#1.- Stop Saving at The End of the Month
If you’ve ever wondered why it costs so much to save, the answer is because we do it backward than we should. We have learned to spend our payroll and save what is left over at the end of the month. The problem? That we never have anything leftover or have very little leftover. The solution? Pre-saving or you pay first, rather than last.
Starting to pre-save will take 30 seconds: schedule a periodic transfer every first day of the month that reserves the money you have decided to save in your account. That way, since the money is not in your account, you won’t be tempted to use it and will soon get used to your new spending budget.
#2. - Have a Worse Car Than Your Neighbor
I wish I could earn more to save money, with what I have, it is impossible! Surely you have thought about this, and later, when that raise or that job change comes, you still can’t save. The reason is what is known as the rising spending trap. In other words, the more you earn, the more you spend.
Your brain is not trained to save, and leaving your account at zero is easier than not doing so.
Start by forgetting to spend your pay raises and use them to accelerate your savings. What’s more, pre-save them directly, and you won’t have to worry about that money.
Certainly, your new position as a team leader does not include buying a state-of-the-art car among the requirements. Stop thinking about having a better car than your neighbor and think about having more financial freedom.
I have already written an article addressing this topic; you can read it here.
#3.- Don’t buy on Credit
Avoid debt, and you will have a good part of the way to your eternal vacation.
Today it is easy to fall into the trap of cheap financing.
The stores themselves are responsible for promoting zero-rate loans, but for which you pay other expenses, such as study and opening.
Debt has three pernicious effects on your wallet:
The first: is that you spend more than you need. Our brains consider it reasonable to pay $50 a month for a new television, but it will cost more to accept it if the price is $800 and you cannot finance it.
The second: effect is that when you go into debt, you pay more for the same product because of the interest on the financing or loan.
The third: is that when you have debt, you are a slave to it. Debt is an emotional plaque, a reminder of financial obligations and additional pressure. In addition, they force you to be able to maintain a level of income to pay them off.
#4. - Take Advantage of Dividends, Invest
Saving is the first step to financial freedom, but you are orphaned without the investment.
To speed up the process, you need to put your money to work and invest it to take advantage of the power of compound interest, which also works in your favor over long periods.
Dividends consist of reinvesting each year the benefits you get from your money so that each time you get interested from a larger initial capital.
In short: the typical snowball effect.
Imagine two co-workers:
Samantha and Amanda
With the same salary and saving the same $250 every month, the difference being that Samantha keeps it in her account and Amanda invests it, earning 4% per year. After 25 years, Samantha will have $75,000 in her account, while Amanda will have accumulated $128,532. The difference of $53,532 is the interest your money will have generated.
#5.- Generate Passive Income
Like investing, passive income is a formula for accelerating financial freedom. What characterizes passive income is that it doesn’t need your time constantly to contribute money to your checking account. They are not like your job, where if you don’t go to the office and work, you don’t get paid.
Passive income requires an initial investment of time or money, but from then on, they work almost on their own, so they are called passive. There are many formulas for generating passive income, from online courses and books to setting up a business that works in automatic mode.
If you can’t figure out how to do this, think about your hobby or something you are really good at, a knowledge that only you have and that you know is valuable.
I have already written about this topic, you can read it here.
Could you translate it into a practical manual? Certainly.
Could you put this manual for sale on eBay, Amazon, and other repositories?
Also, this would be generating a lot of recurring revenue every month, with hardly any time spent on it. Those are passive revenues.