The Rat Race

Go to school. Study. Get a job and go to work. Pay taxes. Get married. Buy a house. Pay the mortgage. Get children. Send them to school. Keep working and paying down your obligations. Do that until you’re 70. Maybe 75. Retire. Die.

That’s the ordinary way.
That’s what the rat race is to me and to millions of other people.
And I refuse to accept it.

The alternative starts with something called FIRE.
FIRE. Financial Independence Retire Early.

FIRE includes obviously the notion of a desire to retire early. But the real main goal of FIRE is not about that, but rather about becoming financially independent. Some people like to work. I know I do. Others think they might have a better life without it. But whether you like to keep working until you die or not, it’s financial independence that gives you an actual choice about that.

Money won’t make you happy. But having no more worries about money would certainly solve some problems, reduce some pressure, and allow you to live more freely than many others.

In order to achieve financial independence, most people hope for some miracle or windfall of luck. They play the lottery. Some gamble. Being busy with their jobs, following their daily routines, and living paycheck to paycheck, they feel that they have no time and not enough knowledge to find any other way. They get stuck in a system that seems too hard to overcome.

Time is key

A key element of the equation is time. When you have to work all day, you have no time to do other things. You have no time to spend with your loved ones. No time to educate yourself more or to increase your skills. No time to work on a business idea, or to take a longer vacation. It’s really all about the time we have, and how we spend it.

So how can you reclaim your time? How can you reclaim your freedom?

Like it or not, it all comes down to money. Financial independence will give you back the time that you would normally spend working. By getting the time back, you get the freedom to pursue ideas, plans, to support others, or yourself.

Money is not the definition of freedom, but it is a tool that can vastly increase your freedom to make conscious decisions on how to spend your time.

How much money is enough?

The term “financial independence” is a vague wording, with a different meaning for every person out there. If you live in Chile or in Thailand it will be a different story compared with a person living in the US or in Singapore. If you grew up in a one-family house it will be a different story compared to someone who grew up sharing one room with the entire family.

Expectations and lifestyles matter. So how to break it down? The first step is to identify the basic needs of each human being, and removing the pressure on those most essential things:

  • Shelter
  • Food
  • Health

Having those three things covered, you are basically financially independent. Every other expense that would come on top of that I would consider non-essential, thus luxury. That’s what financial independence is about. Covering the essentials.

Again, those 3 essential points might come with a very different expectation based on your situation. Clarifying these points will give you a pretty accurate direction of how much money you would need every day, every week, every month, and every year in order to consider yourself financially independent.

Setting up passive income

Most of us go to work to make a living. We dedicate our time to earn money. We are trading time for money. However, going FIRE means stopping doing that. And the only way to achieve this is to find a way to earn money without sacrificing time. This is what the term passive income is all about.

There are several options to set up passive income, but there is only one way that requires little to no effort. Investing. A side gig is not a passive income. Having an online blog is not a passive income. Dropshipping, online surveys, ghostwriting, online courses, e-books. None of that is passive. It’s all hard work.

Income investors on the other hand do one thing, and one thing only: By regularly investing in dividend-paying companies or ETFs, they create a constant stream of passive income that requires zero effort, and that over a few years can grow significantly enough to cover their regular expenses, such as for shelter, food, and health.

So, how do you start? What is the smartest, fastest possible way, especially when you have nothing right now? Let me guide you through the plan step by step:

  1. Getting a regular job, but one that offers career options.
  2. Working on a successful career to generate as much cash as possible available for investing.
  3. Buying dividend-paying stocks to start creating passive income from dividends.
  4. Re-invest every penny from the dividends back into more stocks.
  5. Enjoy the benefits of compound-interest on stocks and dividends.
  6. Work, save, invest, repeat – until reaching the target.

There are of course a few more steps to consider in between to either make it easier, or faster, or smarter, but this is the basic strategy and this is what this blog is all about. I hope you enjoy the read. Feel free to reach out via feedback, comments, or any other suggestion that may come across your mind.