I am reading posts in this subreddit for more than a year. I am fascinated about the idea before starting to read here. I think I was always fascinated about the idea of independence, and nowadays, money is required to live so you achieve independence you also need money ( I ruled out the idea to move into mountains and consume only what I produce ). Few years ago, a friend asked me to go out and I refused, saying I was working. He knew that I work on my own projects and I could work whenever I want, and he asked me why I am working so hard and not having fun more often, and I told him that I want to work hard now so I can retire in few years. That was way before I even heard of RE. It was a joke, I enjoy what I do and I don't see myself stopping, but that came to my mind at that point.
Despite reading a lot of posts here, I am still confused and having problems understanding some concepts of FIRE. Maybe because of my situation and my background. As I said, I was always fascinated about the idea of independence. I think it started in high school or before. I was always searching ways to make money so I can be independent ( from my parents I think - I didn't had any issues, i had this urge to be independent ). I failed at everything but I made some money during this time, far from the independence, but it was very nice to not having to ask for money. Going to college, I started freelancing, taking a job on the side, and made more money than I spent. This is when I realized that I am not going to be independent soon by selling my time to others and started my own online thing. Several years later, found myself making a full salary working when I want and what I want ( some sort of independence ), but I still require to to certain tasks.
I am thinking that my situation makes me hard to understand some FI concepts discussed here over and over again:
1. Working for 20+ years for a job I don't like. I find it hard to see how working for 20 years in a job I dislike, so I can be FIRE after that. The plan might be right, but a lot of things can happen during these 20 years: unexpected expenses, loss of job, financial crysis, drastic cut of salary. There are just so many things that can happen in 20+ years that makes me to not consider it to worth. If I don't like what I do, then I move on. The sooner the better. Staying at a stressful job will make someone burn out way before those 20+ years. Combining the stress of a bad job with the stress from not spending on anything else than important stuff can have an irreversible impact on a person motivation to go on.
In a situation like this the only option is to move to a job which I like even if I will get to be FIRE later.
2. Reduce spending. I never spend money on things I don't consider necessary. I think 10 times before buying something. However, this conservative thinking had a bad effect on some purchases that would have saved me money in the long term. For example, buying a new refrigerator might seem an unnecessary expense. However, the new one will usually consume less power, so you will end up spending less on electricity. If you do the math right, you can recover your money in 3 years, while you can keep that refrigerator for 10 years. This means that you are making good savings by spending. This should be called an investment and it is a spending that should be encouraged even for those who dream to be FIRE. There are also other examples where things that might seem unnecessary spendings might turn out to be time and money savers.
I think that someone who wants to be FIRE should know very well if a purchase is unnecessary spending or and investment.
3. Making more money. It seems that 90% of the discussion here relies upon how to cut spending, and none about how to think so we can make more money, or how to really save. I read some articles that explained how poor people tend to make bad decisions because they think too much how can they spend less money and if they should buy something or not. I tend to believe this because if you spend all day thinking how you can save more money and to get to another store where a specific item is cheaper, will eat up a lot of time and there will be none left to think about how to increase the income. To improve our lives, we need time to read so we can improve ourselves, try new things that can lead to bigger income, and make the right decisions when it matters ( moving jobs, investing in something ) instead of spending all the time deciding which is the cheapest meal we can get.
4. Retirement calculations. I've seen that the withdrawal rate accepted here is 4%, which is a correct amount. Considering that money can be invested and can generate at least 5% in interest. However, unless you save more than 1M, to have at least $40,000/year, 4% seems very low. I don't think you can live up a good life with only $40,000, unless your dream life is to sit in front of the TV or computer. I read posts where people considered to cut the phone or internet service to save more money. Why would you like to work so hard for 20 years so you can live the next 20 with the bare minimum ?
5. Time to achieve FIRE.. I consider that 20+ years to achieve FIRE is too long. Most of the times, there are unforeseen issues that will add some more years to the goal. In my country, there are jobs ( like cops, fireworkers, etc, including office workers from police ), where they can retire with full compensations at age of 45 or before.
I think the right thing to do here if you want to live a better life and really retire early is to step up and invest in yourself or in something that will generate more revenue, so you can save more and get really independent and with money to do the things you want.
6. Investing mentality. In all threads here, it is hard to find information about smart investing of money to help you to make more money or to save more, except few threads about real estate investing which most people here are against. Well, I don't consider real estate such a good and safe investment ( sometimes it is contradictory with independence ), but there are other investments that can help you reach FIRE faster.
Submitted June 14, 2016 at 05:05PM by faptebune http://ift.tt/1Yo4xL6 financialindependence
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