Joe Udo on his blog site Retire by 40 listed three paths to financial freedom. I think he nails them, by the way. Earn more, spend less, and do something amazing to generate passive income (like invent something or write some best-selling books).
For twenty-five years I didn't pay much attention to retirement. I wish I had started earlier, like Joe.
Divorce wiped me out - twice. So starting over wasn't a big deal to me. I was used to it. They say insanity is doing the same thing over and over and expecting different results. I guess I was insane for decades. I didn't start saving for retirement until I married Darling, but she put me back on a path to sanity, I suppose. She's frugal and so am I, so we managed to put a lot of money away over a very short time. God blessed us, as we say, but that's because we put Him first.
You can look at it any way you want
I made good money. Check. We lived frugally. Check. Do something amazing. Hmmm.
That really sums it up, but what is financial freedom? Joe says that for him it is having enough passive income to maintain a comfortable style of living. I agree with that definition, but it isn't the same with everyone.
I remember a discussion with a coworker a few decades ago that was particularly annoying. I defined wealth using Joe's definition: enough passive income to pay all my bills and be comfortable. I worded it like "my money has to make enough money to sustain me." My coworker disagreed. He didn't offer a better definition; he just said it was "a lot of money" and he gave me this crappy grin. Finally I walked away, annoyed with the grin. He went back to surfing the internet or whatever he did at work.
I finally figured it out. He was really defining wealthy as the ability to buy anything you want, whenever you want.
Okay, that's really wealthy. Except the toys that rich people want don't even cross my mind (unless I think about it). A new jet? A trip to space? A new yacht? A month in Monte Carlo, gambling at the casinos (which really means spending at the casinos)? I get it. That's wealthy. I can't help you there.
But to retire you need much less than that. How much? That's the question we'll address over the next few blog posts, and then we'll finish it up with a series on how to manage your money. More specifically, I'll tell you how I managed my money, because nobody cares about your money as much as you do. You can decide if my advice is meaningful to you.
I've talked about finances before in this blog. If you really want a one-sentence summary of how to successfully manage your money you can read one of my favorite posts: The One Rule.
See you in the next post.