Saving around $400 and month for just two years [or about $275/mo for 3 years] would have been enough for the down payment on the first two properties we purchased. Now, that $400 a month puts over $600 [net] into our account each a month. It will continue to pay us over $600 a month for the rest of our lives, our daughters’ lives, their children’s lives, and so on
If you’re feeling a call for a little more freedom, a little less powerlessness, and a lot more independence with your finances; there are some clear and simple steps to get started. Maybe real estate investing isn’t for you. Maybe your answer is index funds, or maybe it’s something entirely different and unique. Regardless of your path, you can start taking action today.
Track your money.
We use a program/app called YNAB (You Need a Budget) to track every penny in and every penny out, but there are many other options out there. You can even track your spending with a pencil and paper. It’s impossible to do step #2 without step #1 though, so start today.
Prioritize your spending.
Use what you’ve learned through tracking your spending to prioritize your wants and needs and spend accordingly. When we began tracking our spending, we found that we were spending money regularly on fountain drinks at convenience stores and salads and sandwiches at a well-known chain. Loaf N’ Jug and Subway are nowhere near a priority for us. We prioritized our budget accordingly. We fund necessities and priorities first. They are now directly aligned with our values and desires for life.
Make cuts where necessary.
Prioritizing spending leads to the realization that you, “…can afford anything but not everything.” Thanks, Paula Pant! Making cuts is inevitable. For example, we value travel and experiences like hiking, backpacking, and skiing. Those are line items in our budget that get funded and prioritized. This means that other line items get less, very little, or no funding at all – like eating out, television, clothes, phones, etc. They are of little priority to us.
Be prepared for lots of conversation.
The truth is the steps to financial independence are pretty simple, but the road getting there isn’t always easy. Being a part of a family means compromising at times. Becoming financially free means taking a look inside at what’s really important and what’s truly driving your spending habits. The trouble with money typically has nothing to do with money at all. Taking a hard look at these things can be just that, hard. I’ve had many tearful conversations with my husband about what’s important. We’ve argued over priorities and spending many times. Those conversations and arguments were tough at the time but ultimately strengthened us as individuals, as a couple, and as a family. They were well worth it.
Start saving now.
Now that you’ve prioritized your spending and made some cuts, you can start looking at saving in a different way. We look at saving as “paying ourselves first,” after reading Rich Dad, Poor Dad and Cashflow Quadrant by Robert Kiyosaki. When you think of paying yourself first, saving becomes a gift rather than a sacrifice. It doesn’t even really matter how much you begin saving when first getting started, just that you begin. You’ll be able to continue prioritizing and adjusting as you go until eventually, you’ll surprise yourself with how much money you’re able to save.
Just start the habit of paying yourself first by putting something aside each time money comes in. Saving around $400 and month for just two years [or about $275/mo for 3 years] would have been enough for the down payment on the first two properties we purchased. Now, that $400 a month puts over $600 [net] into our account each a month. It will continue to pay us over $600 a month for the rest of our lives, our daughters’ lives, their children’s lives, and so on
That’s paying yourself first!
Knowledge is definitely power in this case. No two paths to freedom are exactly alike. Do some digging of your own, and start taking steps toward your own independence. Here are some resources that continue to help us as on our financial journey:
- BiggerPockets – a website, forum, and blog that answer any real estate question you may have. They have a great original podcast that is tried and true and have recently added a new podcast called BiggerPockets Money, for all things FI (Financial Independence). They also publish and release noteworthy books to guide you along the way.
- Afford Anything – a blog and podcast that addresses all areas of FI, including real estate.
- Rich Dad Poor Dad and Cashflow Quadrant by Robert Kiyosaki – great, quick reads to begin shifting your mindset with money
- YNAB and/or Mint – budgeting software/apps to help you begin tracking your spending
- Mr. Money Mustache – a radical blog with a unique approach to extreme frugality and living a fulfilling life without sacrifice
If you haven’t read our FI story yet, you can read about it here, in CHRONIC ILLNESS held our keys to FINANCIAL FREEDOM.
Are you already on your way to financial independence? What tips, tricks, and/or resources can you share? We’d love your help! Comment below.