The FI Wisdom Transfer Project
Nobody just stumbles upon Financial Independence. FI is a process that requires dedication and serious effort over time. And, I do not see how it could be done without faith as well!
FI is a very specific goal. People are searching all over the internet and trying to learn from all of the current Guru’s of the day so they can move closer to FI. Many of the most well known Financial Guru’s of our time have strong financial plans a person can work to improve their personal balance sheet. But, so few of them really make sense for an individual truly perusing FI because the goals of the FI community are very different from the traditional Financial Guru.
The most important factor for achieving FI is to max out all of the deferred retirement accounts available. The second goal is to make sure the capital is invested in index funds only. No advisor fees should ever be paid. Based on rates of return and tax laws, this is truly the most efficient way to become FI. And, it needs to be started right now! A person cannot get time back. It is crucial to invest the max in every plan so a person can get off the flat part of the investing curve. Turns out, the investing companies will accept your money early and not just from your paycheck.10% return on 100k is 10K, but 10% return of 1.0 Million is 100k. Start now and get aggressive!
Paying off the house can wait, and so can the student loans. All extra money needs to go into the deferred retirement plans. Additional work, contract labor, and any other way a person can make money should be leveraged to free up money to max out the deferred plans. This even includes selling stuff! Delaying maxing out deferred plans to pay off student loans or the house is bad financial advice. Sure, there are some positive feelings associated with elimination of all debt, but the unemotional math supports aggressive deferred investing as the most direct path to FI.
There are ways to access this money before age 59.5 without extra taxes and penalties. A person can also borrow against the assets if times become desperate. As the money compounds, figuring out how to access it to start living the FI lifestyle is a good problem to have.
Other things to consider are creating a financial time line to include RMD’s, Social Security, (409 and 457 plans), broker accounts, dividends, and businesses. Real estate will be a necessary factor as well. The personal residence should never be considered an asset. And, different seasons of life will require different kinds of housing. Let go of the idea of a forever house! Most likely, to achieve FI, at least one additional property will be needed.
Read and articles and comment. There is so much I want to share. Much of it will be controversial! I have read and studied all of the financial Guru’s materials and attended all of their classes. I have met with the financial planners and accountants. And, over the years, our family has achieved FI. I want to share the details of the journey! Knowledge and experience over time will cause a person to develop wisdom. It is this wisdom that will be shared. While I am a Christian and will quote the Bible often, I cannot promise to be politically correct! Join me because this is going to be too much fun!
Jack