July 4, 2016
Happy 4th of July! While you are watching fireworks, remember how much hard work and dedication it took the founders of the United States to declare independence. It takes the same effort and dedication when it comes to financial independence. These are the best habits for independence.
Finding financial independence takes a lot of hard work too. Today the guys talk about building habits for independence and what mindset you need to become more freedom financially.
What Retirement Should Be
Andrew was recently having a conversation with his father about retirement. He said even when he has enough money to retire, the thought of having a finite amount of money and slowly burning it down its a pretty scary.
The Concept of retirement is changing. Thomas read a book called The Happiness Equation, which talks about where the idea of retirement came from. In the 1880’s the German started making it mandatory for people over 65 to retirement to free up jobs for younger people. Back then the average lifespan was 67, so they only needed to have enough money to survive a few more years.
Fast forward to today. The retirement age is still 65, but people are living well into their 90’s. They need a lot more money to live out the rest of their lives comfortably.
Because retirement is a time of leisure, and travel, you will need to save more than just the cost of living. After reading this book, Thomas believes the idea of retirement is broken.
Retirement for Thomas is having enough money so he can work on not for profit projects and still be able to support himself. Independence is not retiring; it’s the ability for you to put your time where you want to put your time.
Getting Out of the Rat Race
Many of us feel trapped in the cycle of going to work every day so we can pay the bills every month. This never-ending cycle is called the rat race. It is a period where you are required to put in a certain amount of time to get a certain sum of money. Always trying to get those TPS Reports to your boss.
The ability to step off of the wheel and claim your time back is true independence. Although it isn’t going to happen overnight and it indeed takes some work but it cane is done. If you have your mind set on financial independence, creating habits for success will help you get there faster.
Do three things every day
Take an hour in the morning plus an hour when you get home and dedicate them to accomplishing daily tasks that will help you reach your goals. A bunch of those small steps will lead to bigger things.
Keep your expenses low
Recently, Andrew and I played Cashflow with some friends. It’s a board game where the goal is to get out of the rat race. You have a job, investments, balance sheets – it’s pretty intense but super fun.
Get out of the rat race by increasing your passive income to twice that of their expenses. Keeping your costs low is just as important as making more money. Budgeting aside, once every few months go over your reoccurring costs and make sure all those things you’re paying for are still important in your life and making you happy. Beware of lifestyle creep. Don’t let your expenses increase your income.
Invest In Your Labor-Asset
By 2020, 40% of the US workforce will not be full-time workers. Being your own boss will be the new norm. Labor is your biggest asset. It is crucial to building the value of your work by actively trying to learn new things.
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