If you're new here, this blog will give you the tools to become financially independent in 5 years. Here's how I did it and here's a few dozen online journals from other people who are currently doing it. This is not some stupid get rich quick scheme. The method is robust and replicable (no need to win the lottery, sell your business, or win at real estate), but not easy; much in the same way that a diet results in weight loss but is hard to follow persistently unless you set your mind to it.
The key is to save 75%+ of your net income and invest it in income producing assets (bonds and dividend stocks). This is done by running your personal finances much like a business, thinking about assets and inventory and focusing on efficiency and value for money. See this post on how to enjoy a middle class lifestyle on $7,000/year (Please read it, especially the part about the lentils!). There is a "21 day" step-by-step plan for how to get beyond 75% in the left side bar. Also, check out my answers to Frequently Asked Questions which also covers common misconceptions regarding my personal budget, blog income, retirement, marriage, children, health care, etc. I also suggest reading About ERE in the top menu bar.
Yeah, hey what wait, isn’t it the other way around? As regular readers will know I have a manic obsession with turning things on their head and making fun of them (just ask our dog), but there is some truth to this.
Consider the regular idea of making small sacrifices now to get big differences later. Usually the concept of saving small monthly amounts and compounding the interest (a pf blogger favorite) is brought out as an example. However, the small changes may easily be lost in the noise of daily operations. One week of saving $2 a day are eliminated by an extra expenditure on Sunday because the money was there.
Conversely, current big sacrifices are very visible and can not be ignored. And later on they will still cause small ripples. For instance, today I bought another 50 shares of GE stock (I got it close to the 4 year low price) which over the next year will pay $62 in dividends and so and on so forth, hopefully. Not a lot compared to the bigger splash of around $1400, but every three months from now on there will be a small difference from the dividend pay out.
Originally posted 2008-06-20 07:08:05.
Permaculture articles!
