If you ask ten random people about what financial freedom means to them you probably get ten different answers. Financial freedom from what? From relying on your parents’ money? From having to worry about having enough food or a roof above your head? From never having to trade your precious time for a salary again?
If you plan for financial freedom, you have to define what it means to you. Only then you can map out a plan to attain it.
For me, financial freedom means not being dependent on a job. This sounds straightforward. But what is the matching lifestyle? What are my future expenses? Only when my generated income matches or exceeds my expenses, I will be financially free.
The timeline is important. For me financial freedom is having the means to cover 100% of my expenses from early retirement until full pension age. Where I live full pension age is 68. So if I want to be financially free at the age of 55, it means I need to be able to cover my expenses for 13 years. After this my pension will kick in and I will be less dependent on my investments – if I don’t increase my expenses at least.
Having said this, I do plan to invest for lifetime income (rather than investing only to ‘eat up’ the money over a number of years).
So, is early retirement realistic? For me? For anyone? Yes, I believe it is. But ask yourself the following questions:
- Are my goals realistic? What are my expenses going to be? What is the minimum amount I need each month?
- How much money can I earmark for investing?
- How much time do I have?
Use common sense, be realistic and do not engage in wishful thinking. Also, think about whether you have what it takes to retire early.
On these pages I am going to document how my plans are unfolding. You will be able to follow me on my journey, every step of the way. This will hopefully inspire you to map out your own plan towards financial freedom and early retirement.
Let the adventure begin
Before we start, we need to change our mindset about money. Money can buy us food, clothes, a house, education, etc. All our basic needs. And we should not cut our spending here.
Money can also buy us pleasures. The latest flat screen, fancy designer clothes, a BMW instead of a Toyota, travels to exotic destinations instead of holidays in our own country.
The question whether you can afford to invest is most often a question about whether you are willing to give up short term pleasures. If you start thinking long term rather than short term and set aside some of the ‘short term pleasure money’ for ‘long term pleasure’, you are well on your way to achieve your dreams of becoming financially free and early retirement.
So here we go.
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