Step by Step to Financial Freedom

Posted by 29 May, 2008

Financially Free. What does that mean? To me, it means that I have the choice to work or not; that I could quit my job if I deemed there were other things that would make me happier. It means that should the company I work for head down the financial toilet, I wouldn’t have to worry because I am financially free. I’ve thought about how to be financially free for many years. I’ve often thought that it would take a massive amount of money to get there, thus the initial pull to real estate investing.

Does it take a ton of money to be financially free?

At first glance, I thought you had to have millions of dollars to retire early or be financially free. However, after reading about the topic for a year or so, there are many resources that provide compelling points that suggest otherwise. For example, the book “Your Money or Your Life” suggests that you take a look at your spending habits and decide whether your “life energy” is worth the items you are purchasing. Instead of my initial feeling that I must to make a ton of money to achieve financial freedom, this book taught me that my wife and I can simply control our spending and use that towards capital.

There are many paths to being financially free. As of now, we do not have a set plan, but we have a few paths that we will go down until we find what fits us best. We’ve spoken to way too many financial planners, so in that vein I will use buckets to illustrate:

Bucket 1

In bucket 1, we have our current financial situation. We have two 401K’s, 2 IRA’s, stocks and mutual funds, and two variable adjustable life insurance policies in addition to two term policies. Basically, if our other plans fail, we will be just fine with relying on this bucket for our future. I will not be focusing on this bucket.

Bucket 2

The other bucket is our side business. We currently have 2 side businesses (3 if you include this blog) that we are in the process of starting. The two businesses are our real estate investing business and my wife’s cake business. I’ll elaborate on both of those in the near future.

Bucket 3

This bucket is the least defined bucket. We aren’t really sure which path we are going to take with this. At this time, we think we will be splitting our capital and resources between two ideas. As I mentioned earlier, we are following the steps of “Your Money of Your Life” (I’m not sure if I mentioned that J ). The authors suggest investing in bonds. I do not know anything about bonds so I need to educate myself on the subject – which I will be sharing on this blog. The other idea sharing the path with possible bond investment is investing in the latest and greatest mutual fund and etf using a monthly investment letter called No Load Fund X by the Dalworthington Company. I will go into this newsletter more into a future post as well as reveal how my investments have performed since I have been investing using this newsletter.


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