What’s Poppin’,

This is the Master Money Newsletter. We combine all of your internet tabs into one easy to read email.

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Here’s what we have on deck today:

📰 Read: The 9 Paths to Financial Freedom

📺 Watch: 4 Online Side-Hustles That Can Turn into $1M Businesses

🎧 Listen: What to Do With Your Tax Refun (By Financial Situation!)

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Numbers to Know

💰 U.S. Home Sales have fallen for 12 months in a row

💻 48% of FSA account holders lose money every year by not using their FSA funds!

📈Rent is up 2.73% from last year.

The Rule of 72 may not be the perfect way to find out how to double your money. Although, I still think it gets you close enough.

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📈 CHART OF THE DAY (Powered by YCHARTS)

This is a chart of the largest 3 indexes over the last 10 years. One is a GLARING winner.

YCharts is where I get my investment data. If you want to check them out with a free trial you can HERE.

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Today we are going to talk about the 9 paths to Financial Independence.

Why?

To show you that there are many ways to get there. No matter what your career path is.

Most people fail because they don’t realize there are many ways to get to the same outcome we all want. This is not a cookie cutter life.

In fact, the more creative you get, that faster you can be free.

So, throw back a shot of espresso and lets get down to business.

The 9 Paths to Financial Freedom

1/ Steady Saver

The steady saver is someone who consistently lives below his or her means and saves and invests on a regular basis. The goal here isn’t really early retirement. The steady saver is preparing for retirement between 50 to 60 (or somewhere around that age).

🤔 Fun Fact: The average millionaire is 57 years old.

Being a steady saver doesn’t require you to be a high-income earner or to be a minimalist that cuts all expenses that aren’t absolutely necessary. It’s possible to have a moderate income and reach financial independence by choosing a lifestyle that allows you to save and invest every month.

This is the path everyone should strive for at a minimum.

Overview of the Steady Saver Approach

• Doesn’t require a high income
• Doesn’t require extreme frugality
• Does require consistency and discipline
• Great approach for retiring at a traditional age

2/ High-Paid Professional

While the steady saver path doesn’t require a high income, having extra income can certainly help to accelerate the progress. A physician is one example, but others include attorneys, executives, and other high-paid professionals.

A higher income gives the potential to save more money, but of course, that’s not always the case. There are plenty of high-income individuals and families who are spending everything they’re making and even living above their means. They are broke as a joke. A high income doesn’t eliminate the need to live within your means and save money.

If you take that high income and live on half, and invest half, you can become financially independent in less that 20 years.

💰 Learn how to invest with our flagship course Index Fund Pro ​

Overview of the High-Paid Professional Approach

• High income allows for the potential to save and accumulate wealth quickly
• Financial discipline is still required
• Early retirement is very realistic with an above-average savings rate

3/ Entrepreneur

Another option for earning an above-average income is to start a business. Of course, not every business is successful, but if you’re able to have some success as an entrepreneur, you may be able to reach an income level that most people won’t reach in a more traditional career.

While the high-paid professional approach and the entrepreneurial approach both provide the possibility of high income, the details of the approaches are much different.

One of the keys to the entrepreneurial approach to financial independence is that a business is an asset that can be sold. Not only can an entrepreneur earn a high income while running a successful business, but that business can be sold when the entrepreneur is ready to move on.

This type or payday is capable of getting an entrepreneur to financial independence very quickly.

Overview of the Entrepreneurial Approach:

• Possibility for high income with a successful business
• Possibility to sell a successful business for a lump sum
• Involves an inconsistent income and is not for everyone
• Early retirement is realistic for those who have a successful business

4/ Real Estate Investor:

One of the common paths to financial independence is to invest in real estate. While there are a number of different ways to invest in real estate, owning rental properties is my all time favorite.

When you invest in real estate you need to know how much you want to live on each year in retirement, then, how long it will take to get there.

Say you need 60,000 per year. That means you need $5,000 per month in after tax cashflow.

If your average property cashflows $200, then you would need 25 properties to be free. Now you have your goal.

If you want to be completely hands off, you will need to hire a property manager. The key thing to note is this. You still have to manage that property manager so it is never as passive as stocks would be.

Overview of the Real Estate Investor Approach

• Proven path that is used by many millionaires
• Can be done part-time, on top of a full-time job
• Rental properties produce cash flow that can be used to cover your living expenses
• Hire a property manager to handle the details if you want passive income

5/ Extreme Frugality

If you have a moderate income and you want to reach financial independence faster, another option is to take the path of extreme frugality.

Extreme frugality involves eliminating or reducing as many expenses as possible in order to reach a very high savings rate. While it’s not easy, it is possible, and many people have done it.

Minimizing expenses leads to two significant benefits that are both equally important:

• You can save a very high percentage of your current income
• It reduces the amount of money that you need for living expenses

Achieving a very high savings rate will allow you to build up an investment portfolio quickly, and if you’re able to maintain the same lifestyle, you won’t need a lot of money to cover your living expenses.

The best blog to read about this is Mr. Money Mustache. ​

Overview of the Extreme Frugality Approach

• Drastically reducing expenses leads to a very high savings rate
• A high savings rate allows you to grow your investments and net worth quickly
• Low living expenses mean that you’ll need less money in retirement (if you are able to keep your living expenses at the same level)
• It’s not easy, but it makes early retirement possible even on an average income

6/ Hustler

It’s clear that making money gives you the opportunity to save more and build up your net worth faster. But making more money at your job isn’t always an option. Regardless of what you do for your full-time job, one option is to start a side hustle.

Make no mistake about this. Growing your income is the most important thing you can do to achieve freedom faster.

A side hustle can be anything that allows you to make money outside of a job, and there are plenty of possibilities. The money that you make from a side hustle can increase your income, increase your savings rate (assuming you’re saving that money), and allow you to reach financial independence faster.

We have a video about 4 of my favorite side hustles below this post!

A side hustle can turn an average income into an above-average income.

Overview of the Hustler Approach

• A side hustle increases your income and allows you to save more and reach financial independence faster
• You can take an average income to an above-average income with a side hustle
• There are endless options
• A side hustle can also be used as a source of income after “retirement”

7/ Geo Arbitrage

The area where you live will have a big impact on your living expenses, and that can be used to your advantage.

The idea behind the geographic arbitrate approach is to move to a lower cost of living area for retirement. The lower cost of living can allow you to retire earlier and/or have a higher standard of living at a lower cost.

Some people use this approach and move to another city/town or state, and some people even move to another country with a significantly lower cost of living.

For example, $1 million may not be enough to retire in San Francisco, but it can be enough to retire to Costa Rica, thanks to a much lower cost of living.

This can be outside of the United States as well.

Maybe you love the country and would be willing to move to a place with a cheaper cost of living.

Overview of the Geo Arbitrage Approach

• Moving to a lower cost of living area can reduce the amount that you need for retirement
• You may be able to retire earlier by moving
• This can involve a move within the country or outside of the country

8/ Part Time Worker - Barista Fire

Hate your job? If you get to a point where if you just worked part time you can achieve FIRE. Work part time.

Let’s say you need $1 million to retire. You have $750,000. That means you can draw down $30,000 a year safely.

Can you work part time somewhere and make 10K a year? That’s less than 1,000 per month.

FIRE is FLEXIBLE.

• Maybe you love sailing and can do sailing tours.
• Into craft beer? Work at a brewery
• Love fashion? Work at a boutique or designer store part time
• Love golf? Work at a course
• Love Yoga? Become a Yoga instructor part time.
• Love Hiking? Then host paid hiking tour.

You get the idea.

Overview of the Part Time Worker

• Extremely flexible
• You can get paid for things you enjoy.
• You can leave a job that you hate sooner than expected.

9/ The Laid Back Approach

If you have not heard of coast FIRE, it is a way for you to work hard and save a ton of money in the short term so that you can coast to retirement later in life.

It is the work hard now, enjoy life in a few year approach.

A coaster saves a ton of money early, then is able to coast their way to financial independence. Here are some examples:

• If you had $500K, and did not invest another dollar with an 8% return. In 10 years you would have $1.1 million dollars.
• If you had $250k, and did not invest another dollar with an 8% return. In 20 years you would have $1.165 million dollars.
• If you had $1 million, and did not invest another dollar with an 8% return. In 10 years you would have $2.15 million dollars.
• If you had $750k, and did not invest another dollar with an 8% return. In 10 years you would have $1.7 million dollars.

You have so many options.
​Overview of the The Laid Back Approach

• The work hard now coast later approach.
• Allows you to make decisions on how you want to spend your money
• Great if you know your future will have lifestyle changes (i.e children)

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📈 Quick Tip Of The Week

This may be a 3-paycheck month for you if you get paid bi-weekly!

If your first paycheck in 2023 was Friday, Jan. 6, your three-paycheck months will be March and September.

Outside of your weekly expenses like groceries and daycare, you can use this check for wealth building!

TIP: Use the Stairway to Wealth to decide what to do with that third paycheck.

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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. If you would like to see our previous picks, you can find them here.

​https://kit.co/MasterMoney/high-performance-book-club/buy-back-your-time​

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​

The Personal Finance Podcast 🎙️ ​ ​

​What Should You Do With Your Tax Return (By Financial Situation!)
​​How to Become Financially Whole with Tiffany Aliche (The Budgetnista!)​

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Youtube

​4 Online Side-Hustles That Can Turn into $1M Businesses!​

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