If you're new here, this blog will give you the tools to become financially independent in 5 years on a median salary. The wiki page gives a good summary of the principles of the strategy. The key to success is to run your personal finances much like a business, thinking about assets and inventory and focusing on efficiency and value for money. Not just any business but a business that's flexible, agile, and adaptable. Conversely most consumers run their personal finances like an inflexible money-losing anti-business always in danger of losing their jobs.
Here's almost a thousand online journals from people, who are following the ERE strategy tailored to their particular situation (age, children, location, education, goals, ...). Increasing their savings from the usual 5-15% of their income to tens of thousands of dollars each year or typically 40-80% of their income, many accumulate six-figure net-worths within a few years.
Since everybody's situation is different (age, education, location, children, goals, ...) I suggest only spending a brief moment on this blog, which can be thought of as my personal journal, before looking for the crowd's wisdom for your particular situation in the forum journals.
If you enjoy the blog, also consider the book which is much better organized and more complete. You can read the first chapter for free, listen to the preamble, or see the reviews (1,2,3,4,5,6,7,8,9, A,B,C,D,E,F,G,H,I,J,K,L,M,N,O,P,Q,R,S,T,U,V,W,Z). Subscribe to the blog via email or RSS. Get updates on the facebook page, join the forums, and look for tactics on the ERE wiki. Here's a list of all the ERE blog posts.
Before I started saving for financial independence, I would save up money on the order of a $1000–2000 and then blow it all on gadgets bringing my savings back down close to zero.
I would think up new hobbies just so I could spend many hours researching and reading consumer reports on which camera or computer system to buy, which accessories I should get for my system. I probably spent more time contemplating the equipment before I bought it than I did using it later.
My name is Jacob and I’m a gadget-o-holic.
My initial solution along with many holics was complete abstinence. From that point on, all hobbies were to be free to avoid the excitement of making big plans just to excuse the later acquisition which was the real driving force behind the plan.
Eventually I mellowed out. Instead of insisting that all hobbies must be free, I now try to enforce bootstrapping. This means that I am allowed to purchase equipment only insofar that using it can return a value corresponding to the money I spent or am going to spend.
This means that hobby expenses need not be zero if there is a corresponding revenue in terms of money saved or earned. The hobby must not operate at a net loss on the income statement.
This excludes many hobbies which are only intended to burn through money with no valuable return. Yet it leaves some hobbies with the potential to earn money or simply eliminate an existing expense.
Originally posted 2010-09-05 11:10:45.