I teach you how to master your money in less than 5 minutes per week. I am the host of The Personal Finance Podcast with 400K downloads monthly and the Founder of Master Money.
Financial Independence (In 5 Easy Steps)
Good Morning,
This is the Master Money Newsletter where we teach you how to go from cubicle to dream life in less than 5 minutes a week. Can I get a fist bump?
Here's is what we are sliding across the table today:
-The Quick Guide to Financial Independence (In 5 Easy Steps)
-Book of The Week
-How to increase your credit score in under 5 minutes
There’s a new American Dream.
It has nothing to do with owning a house, buying a fancy car, or having a good job.
Instead, we want independence from the corporate environment. A way to escape the rat race and spend our time doing what we want, on our terms.
The dream is to work on projects that you enjoy. Things that are important to you, free from the chains of the cubicle or corner office.
We talk about financial independence a lot. Put simply, it is when you have accumulated enough money that you don’t have to work anymore. You can do what you want.
Does this sound like something you want? Then financial independence is right up your alley.
Here are 5 simple steps to get started:
1. Calculate Your Net Worth
You need to know where you stand before you begin this journey. The only way to do that is to calculate your net worth (I describe how to do that in detail here). Tally up your assets and subtract them from your liabilities to get a clear picture of your net worth. This will clear any misconception you have about how well you are doing.
You may be making a lot of money, but if you are not keeping that money, then what’s the point? Your net worth is the scorecard that measures financial independence. To understand how much opportunity you have had thus far, take this a step further and try to calculate how much money you have made over your lifetime. This will crush any doubt about how much you earn and the opportunities you have.
2. Track Every Penny
To understand how much you can save, you need to know how much you spend. Personal Capital is my favorite way of doing this. It’s a free web based software that can give you a detailed breakdown of your spending habits.
3. Question Every Spending Decision You Make
Everything is a trade off. When you have a job, you are trading your time, energy, and mental bandwidth for dollars. That means, if you want to buy a 100 inch tv, you need to calculate how many hours you will need to work to purchase that TV. Is this item really worth X weeks salary? Asking the question will eliminate buyers remorse.
4. Invest in Index Funds, Real Estate, or Both
When it comes to building the major portion of your wealth, you want simplicity and automation. Index funds are low cost, and help you do just that. Most companies like Vanguard, Fidelity, or Schwab offer funds that cost less than .1%. Trust me when I say this, fees matter.
Real estate is another great tool to supplement your income. A lot of financially independent people invest in it, including myself. You can buy property and be an active investor or become a passive investor through crowdfunding or REITS.
5. Map Your Progress
Keep track of your progress as you are saving and investing. Once your investments and dividends exceeded your expenses, you have crossed into financial independence. You monitor your progress digitally with personal capital or kick it old school and put one of those fundraising thermometers on your wall.
Conclusion
If you are ready to step up and change your life then taking these steps are the way to push the momentum in your favor. It’s not always easy, and there are trade-offs along the way, but 10 years down the line, your future self will be so happy you did.
High-Performance Book Club 📚
I get a ton of questions from listeners and readers as to what I am reading. So we decided to let you know via the newsletter. The High-Performance Book Club will be a way to share this. If you want to be Elite in your career, business, or with your wealth, then welcome to the club.
10-second tip of the week ⏰
Your credit score is one of the most important factors to your financial health here is what you are going to do:
Step 1: Grab your CC and call the number on the back. You want to do whatever you can to get to a real person.
Step 2: Say "Hi, I would like to request a credit limit increase".
Why this matters: Increasing your credit limit helps reduce your credit utilization Which is a fancy way of saying how much available credit you use. The lower your credit utilization the better.
This helps bring up your credit score if you spend responsibly.
PODCAST
This weeks episode is sponsored by MINT MOBILE
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We have two episodes for you this week!
Should I Take Money From My 401(K) to Pay Down Credit Card Debt? Money Q&A
How to ACCELERATE Paying Down Debt (The Shred Method) with Adam Carroll
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Master Money
I teach you how to master your money in less than 5 minutes per week. I am the host of The Personal Finance Podcast with 400K downloads monthly and the Founder of Master Money.