There’s no feeling like the freedom that comes with being financially independent. Knowing you can support your lifestyle without needing to work for someone doing something you don’t want to do means you can escape from the burden society places on us.
You might have already started your journey and done the initial calculations. It’s not uncommon for people to be disappointed when they realize how long it will take them to save the money they need to so they can officially declare themselves part of the FIRE family. It’s natural to want to speed up this journey when you know how satisfying the destination will be, but it might be hard to see how you can do that.
Here are 9 helpful tips which can get you to where you want to be faster.
#1 Sell assets you don’t need
One of the fastest ways to increase your bank account balance is to sell off things you no longer need. If you’ve got a car that you barely use, you can sell it, and it will be the equivalent of months or even years’ worth of cutting out excess spending.
Selling assets that you no longer need or use can be a good way to generate extra cash that can help improve your financial situation. Some examples of assets that you might consider selling include unused electronics, furniture, and collectibles. There are online marketplaces as well as local buy-and-sell groups that can help you sell these things so you can have extra cash.
Jewelry and decorative items particularly fall into this category. You might be sitting on a significant financial value that doesn’t even carry much sentimental value. Selling these items can kickstart your journey to financial independence and give you the motivation you need.
#2 Use debt smartly
People can take too simplistic a view of debt; when used smartly, it can help you to a healthier long-term financial situation. Obviously, it introduces a liability in the short term, but if you use the money well, the returns can more than make up for it.
Let’s say you take out a loan to attend a vocational course that massively increases your earning potential. A short-term debt that leads to a job paying twice as much is a no-brainer. However, make sure you shop around for the best personal loan rates and be sure to read the terms and conditions carefully.
If you have high-interest credit card debt, you can apply for a personal loan with a lower interest rate which can help you consolidate your debts and potentially save money on interest. This can help you pay off your debts more quickly, which can also help improve your financial situation. Also, if you have equity in your home, you may be able to use a personal loan to make home improvements that can increase the value of your property. This can potentially increase your net worth and improve your financial situation.
#3 Track ruthlessly
If you have a target age in mind for financial independence, the only way you can know whether you are on schedule is to track ruthlessly. This information is crucial so you can work out whether you need to make more drastic changes or whether you might be being more frugal than you actually need to be.
This also allows you to see the trends over time. You might find it in certain months. You tend to overspend, and armed with this information, you know for the future, you will need to make up the money elsewhere to reach your target.
#4 Invest passively
It’s easy to get sucked into scams when you become too obsessed with a FIRE lifestyle. If the results seem too good to be true on social media, they often are. The truth is, however; most active investors don’t beat the market. You’ll see people who only post their wins and neglect to mention all the times they lose money, so be careful. For people who trade frequently, there are also hefty transactional costs that add up over time.
It’s smart for most people to buy an Exchange Traded Fund that tracks something like the S&P 500 and let it be. Investing is a long-term game, not a short-term one.
Passive investing is relatively simple, as you don’t have to spend much time researching individual investments or trying to time the market. To start investing passively, you’ll need to open a brokerage account and select the passive investments that are right for your financial goals and risk tolerance. It’s important to regularly review your portfolio and make sure that it’s properly diversified to align with your financial goals.
#5 Buy quality
Being financially responsible and being cheap isn’t the same thing. You want to build a sustainable base for your future self not be caught up in the present.
If you buy fast fashion where a top costs $10 but breaks after a couple of uses, it’s a false economy. It’s better to buy a top for $100, which lasts for 20 years. While this may hurt initially, over the time period your target, you’ll make your money back easily.
#6 Cancel subscriptions you don’t need
Eighty-four percent of Americans underestimate how much they spend on subscriptions per month. They are the hidden vampires that suck away money without you realizing it. The first thing you must do is to become acutely aware of exactly what you are spending and to who. Keep an extra eye out for annual subscriptions as these are usually highly expensive but easy to forget about.
Once you have your list, start unsubscribing for anything that doesn’t bring value to your life. If you are using a membership every day, then, of course, it’s worth keeping, but if you can’t remember even signing up, then that’s a big red flag.
#7 Invest in your health
There’s no better investment than an investment in your health. You shouldn’t work until you burn out in an effort to reach financial independence. If you overwork yourself, then you might be forced to spend time away from work which costs you lost income and puts even more pressure on you. It’s a vicious cycle that you should do your best to avoid.
The healthier you are, the more energy you can put into your financial efforts and the less tempted you’ll be to buy superficial products as a pick-me-up.
#8 Find cheap hobbies
Many pastimes have become increasingly expensive, and their marketing is everywhere. People are convinced they need the latest fad exercise equipment, which costs thousands though many others can stay healthy without it. Part of this culture is caused by social media, where you can feel pressured to keep up with what everyone else is doing, even if it doesn’t make financial sense for you.
Seek out hobbies you enjoy that are low cost, and you can significantly save money each month. Rather than buying a gym membership to run on a treadmill, run outdoors instead!
#9 Get a personal coach
Sometimes it’s difficult to read the label from inside the jar. You might know you’re not making the progress you want, but you aren’t sure what the root cause is. Here it’s best to seek the advice of a professional who can change how you think and help you resolve whatever is holding you back.
They might realize you can save money in one area of your life that you never even considered. If you pick the right person to coach you, you should easily make a return on investment.
These tips can help you speed up your journey to financial freedom but remember you will always need the willpower to get there. You need to remember why you are pursuing this goal to keep yourself motivated and stop yourself from going off track. The independence at the end will be everything you hoped for.