Five Steps I Took That Helped Me Become Financially Independent

November 30th, 2006.

*This article is part 3 of a series. You can read part 1 here and part 2 here.  

Everyone seems to think there is a secret formula to becoming financially independent. There’s not and as much as I want to, I can’t give you step-by-step instructions on how to retire in 5 years. Even if I could, you’d be a retard for following it. There is no single financial recipe that fits every market, every situation, every individual. You’ll either find your own direction or you’ll stay poor.

But like I said before, it’s not so much about connecting the dots anyway. It’s about changing your perceptions, re-evaluating your wants and needs, and gaining the ability to make your own choices even if they go against the grain. A little self discovery will take you farther than any spread sheet I could show you.

I guess the real question is: How bad do you want it?

I asked myself a similar question a few years ago and realized that I wanted it more than anything I could possibly purchase for myself. Big screen TV? Diamond earrings? Trip to Italy? I could wait. For the time being, I was working on securing my freedom. There was nothing more important.

So how did I do it? I’ll try to narrow it down.

1. I Lived Frugally And Put My Extra Money Into Investments

This seems really fucking obvious, doesn’t it? But it’s not if you consider that most people define ‘living frugally’ as giving up their weekly outing to the movies. But shaving $100 off of my living expenses was not enough for me. Remember, I wanted to gain financial independence as quick as possible. I wanted to save as much of my time as I could. To do this, I had to re-define what it meant to be frugal.

I gave up every single one of my creature comforts. I moved into a tiny apartment and I got a roommate to share the expenses. I drove to work in a crappy car and walked to the grocery store. When gas prices got out of control, I bought a space heater to keep me warm at night so I could turn down the heat. I learned things like basic home repair and car maintenance so I wouldn’t have to pay a professional. I bought basic necessities at the dollar store, people! The dollar store!

Was I miserable?

Oh, for sure. But it almost became a game to me. How cheap could I live? After awhile, I was paying for all of my living expenses on what one would earn working part time at a fast food restaurant….which freed up a lot of my money for investing.

2. I Only Invest In Things I Enjoy

I know a guy who is a whiz with stocks; he loves them. My husband, on the other hand, gets a huge kick out of investing in small businesses. Yet another friend is into precious metals. There are countless investment opportunities out there, but the trick is finding one that fascinates you.

Personally, I love real estate. I can walk into the biggest, dumpiest, most wrecked foreclosure on the market and find something cool about it. I adore single family homes, old buildings, abandoned restaurants and I’d rather go to an open house than the movies. I’m obsessively diligent about watching the market and at any point in time I could tell you with reasonable accuracy how many houses in my city are for sale, how long they’ve been on the market, and how much they’d have to go for to make money. Real estate is ‘my thing’ and I’m convinced the only reason I’m successful with it is because I enjoy it. Give me 10K and tell me to the play the stock market and it’s likely I’d be broke in a week. Give me 5K and a copy of a MLS and watch me go.

3. I Educated Myself and Made Contacts

If you’ve taken my advice in Step 2, it won’t even feel like education. You should want to read about, talk about, and research the things you’re interested in. If you don’t, you picked the wrong investment, dummy.

Also, remember that you can get a lot of great tips if you talk to people in your field. Do you want to know where the people into real estate hang out? The bar. I’ve met realtors, mortgage brokers, notaries, builders, tradesmen and other investors just hanging out at the bar. The information I’ve gleaned from them has been invaluable to me.

4. I Never Advertised How Much I Was Making to My Friends and Family

Wow! That one came out of left field, didn’t it? You’re not supposed to shares stories of your success with your loved ones? Well, why the hell not?

The answer is simple, really. For every success you have, you will have a friend who will match you with a story of woe. Because they are family (Or close to it), your heart will bleed for them and you will loan them money. And sometime after hell freezes over, you’ll get it back! It really is shocking how many people suddenly end up down on their luck the second they hear you have extra money.

I am not advising you against helping your family. I am simply saying that if you refrain from advertising your wealth, you will only hear about financial hardships when they are actually an emergency.

5. I Quit Letting People Talk Me Into Making Financial Mistakes

This one is the most difficult because peer pressure is a bitch. Every day people will insist that you ‘work so hard’ and that you should ‘treat yourself!’ It’s even worse if you have children because the world is full of well meaning idiots who will imply that you’re a bad parent if you don’t plow your kids with toys and trips to Disney Land. They will poo-poo every thing that you do and then go home and stare in horror at their checking account that just went into the negatives again.

Fuck em all. They’ll be making your lattes someday.

We live in a youth obsessed culture that thrives on gluttony and excess. People don’t want cultivate qualities such as self discipline and constraint because they refuse to believe that they will ever get old. Everyone is always banking on ‘the big break.’ They’re going to become a rock star! They’re going to get onto a reality TV show! They’re going to marry someone famous! They’re going to win the lottery!

They’re ridiculous self obsessed children wearing big boy clothes. One day the party will end and they’ll be popping prozac quicker than they can fluff your hotel pillow all the while thinking to themselves, ‘What happened?” What happened was that the big break never came and they never figured out that a few years of self restraint could add up to a lifetime of joy and leisure.

There is nothing wrong with being an adult. In the long run, adults have more fun.

Now pass the corona, will ya?

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