Tuesday, January 3, 2012
My plan for financial independence
The reason I crave financial independence is simply because I crave freedom in general. Sure the idea of not having to work a normal job is pretty appealing, but that is not my primary motivation. Nor is wealth in general, as I expect to be living frugally until I reach financial Independence, and afterward.
I just want the freedom, and so my plans for financial independence are based around that main goal. Wealth creation is secondary, but also important.
My goal is to have enough money to 'retire' from formal employment and be able to live off of the income generated by my savings.
Obviously this can be accomplished in two ways: either by having a lot of savings, or by not needing very much income. I intend to use a combimation of the two, by earning and saving as much as possible, while simultaneously learning to live on as little as possible. So I am going to be working on earning more, spending less, and saving the difference.
While I intend to constantly evaluate employment opportunities, my main plan for additional income is to develop additional sources of income through websites, selling merchandise, and online videos. I currently make about $100 a month from my videos and websites, and an additional $50 - $100 from selling things locally and online.
My plan for decreasing spending is to practice extreme frugality, cut all fat from my spending, and constantly look for ways to save money, and then saving as much of my income as possible.
My intermediate goal (2-5 years) for income is to increase my internet money-making activities to the point where I am making $500 a month. I don't think this is unreasonable, given the current rate of growth. I am also going to be adding an ebook, a merchandise website, another youtube channel, and hopefully continuing to grow the readership of this (and my other) blog.
My long term (10 year) income goal would be to get to about $1200 to $1500 a month from my online ventures. This amount would completely cover all my bills and normal living expenses (at their current levels) and allow me to save 100% of my normal job income. It is safe to say that I wouldn't be working for much longer once I started to make that much online!
My intermediate (2 year) savings goal is to be able to save 50% more than I currently am from my take-home pay.
My overall goal is to reach total financial independence by the time I reach my 40th birthday, which is about 12 years from now. I have seen others do it sooner, but I have relatively low levels of income right now.
If that is not possible I want to at least have my house paid off in that same time period. Considering I owe about $110K on it, that should be possible for sure. Without a mortgage, my living expenses would basically be cut by 30%, and that is at my current level of spending. If my spending decreases as I hope, I will need very little income without a house payment, so I will be that much closer to financial independence.
So that's the plan. You are welcome to tag along for the journey. Should be educational.
-The Money Monk