This post appeared firsrt on Reach Financial Independence
People talk about it, dream about it, but what is Financial Independence exactly?
Well, it is a point where you don't really need to work, because you have generated enough passive income to do what you like in life and get money to live.
Yes, you have enough, to live your life without have to go to that office every day!
But Financial Independence can be very different for me, for you, for the CEO of a big company, or for someone deeply in debt. We all have different needs.
In my case, at the moment, I am traveling. So I do not have a rent to pay, I left the apartment that I own rented and that rent pays my bills. But I need to pay for my hotel room when I am not camping, pay for food and gas to put in my motorcycle. And also for visits, treats, drinks and the like. All in all, my whole life costs me about $1400 per month at the moment, and that would be the price of a small studio in Manhattan.
So if I were to live in Manhattan, on top of those $1400, I would need another $1000 or so to cover bills, food, and general expenses. Plus plane tickets when I'd feel like going on holidays. Much more income to generate, and that may be a fail in my plan to become financially independent.
Back to my Financial Freedom. I do not know what tomorrow will be like. So I need to be extra careful. If I need $1400 today I may need $3500 tomorrow, or even more. And I have no way of knowing that. As frugal as I may be, I am hoping to start a family someday, and that's when it gets really expensive. At the moment, I have a certain passive income, through rents and investments, that will allow me to stop working for the rest of my days. Or to dedicate my free time to things that I am really passionate about.
I am already doing what I love, traveling full-time and blogging, and writing for a few travel websites that pay me to travel and live this awesome life.
All without touching my nest egg. But as life will get more expensive, I have to find other sources of income, via investments, starting a business on the side, etc. To sustain my future lifestyle.
Impossible? Not for me. Not for you either if you are really passionate about this goal, then you will succeed. It takes time, and no one gets rich overnight. But it is achievable.
Some people calculate the day they will be able to stop working and be financially independent as the day they will earn X% of their current salary via passive income (real estate rentals, dividends, website earnings...). I do not think I will be looking forward to doing nothing and sit there for the rest of my days. I'll probably keep working, just a little bit, and only doing things I love. That day will come when my doing what I love will bring me the income that I need.
I love teaching for example, and I'm pretty good at it. Anyone is good at what he loves. But I could not imagine myself teaching the same class for 40 years and living on a teacher's salary. So maybe I could start an e-course, and give it when I feel like it and it will be so good that people would be happy to pay to attend, and I could live on that? That, to me, would mean total independence. Be my own boss and work when I want. This is my goal, what is yours?