If you’re also a rebel who wants to break free from the constraints of a job you hate and a lifestyle that pens you in, then welcome!
I was once in the same position.
Until one day I said, enough is enough. From now on I’m going to live my life the way I want it. No more big corporate jobs. No more office bullshit. No more expensive consuming. No more high-cost living.
I’m going to save and invest instead of consume. I’m going to build my own business and do creative work that I really enjoy, where I want – and on my terms.
And I’m going to use my savings to build my own capital wealth fund and actively take control of my investing myself.
We have great opportunities available to us now. Information, services, training, business ideas, marketing channels to reach customers all over the world and sell products and services, investment opportunities and loads more.
It’s all there and available for you if you’re prepared to grasp the opportunity and take advantage of it.
My priorities are autonomy, location independence, and financial freedom. I’ve now reached these aims to an extent, but there is still some way to go to achieve the goal. But I’m on my way and there’s now no stopping me.
You too can be on your way. And you can learn from my experiences, the things that have gone right for me. And from the mistakes that I’ve made.
Lifestyle Freedom Instead of Retiring
Basically what I am practising is a form of what’s commonly known as “FIRE” or “Financial Independence – Retire Early” although I hadn’t even heard of the term when I first set out on my new path. I certainly wasn’t even thinking of retiring, not now, or in the future.
In fact, I think retiring is a bad idea for people. We all need a mission, a purpose and an activity that absorbs and challenges us. I certainly do.
I’m not looking to retire at any time in my life. Not early, not later. Retiring to me just seems to be the other side of the same nine-to-five coin of working and commuting. You’re just doing what the system wants you to do, not thinking about whether its the best thing for you or not.
What I want is freedom to pursue the activities I most enjoy – and to live my life in the way I want. That means freedom from nine to five, from working for someone else. Freedom from office stress, from alarm clocks and commuting and rush workday lunches.
Freedom to be creative. To write. To create services. To work on my investments. To work on new business projects. And to help other people who want to do the same. That for me is freedom.
So for me the goal is not retiring. The aim is freedom. Lifestyle freedom if you like.
Maybe “retiring” could be seen as a form of freedom. But it’s also a form of idleness. And I don’t want that. My approach goes beyond that.
So for me it’s not so much “FIRE” as “FALF” – Financial Autonomy – Lifestyle Freedom.
But whether you call this concept FIRE, FALF, or something else, let’s talk about how you can get started right now.
The first thing you need to do is to cut your consuming. This means going through your consuming patterns and working out what you can do without. When you sit down and think about it, you will probably be amazed at just how much money you spend every month.
And the more people earn, the more they tend to spend. It comes in – and it goes out. It’s a vicious cycle.
There are a number of reasons people end up doing this. Partly it’s because they put up with bull and stress in their jobs, particularly in higher paying salaried so-called “professional” jobs. So they tell themselves they are entitled to spend money on themselves because they have “earned it”.
It’s compensation. And it’s expensive.
Secondly it comes from trying to live up to the expectations of others. Too many people live their lives according to the views and standards of other people. Expensive car, expensive real estate, clothing, consumer goods, vacation trips, and so on.
As the old saying goes “people spend time doing jobs they hate to earn money to buy things they don’t want in order to impress people they don’t like”.
You have to remove yourself from the prison of the influence of other people’s attitudes. Stop internalizing them.
When I started out, one of the first things I did was to take a conscious look at my spending. I was shocked to discover how much I spent every month.
In fact I couldn’t believe it. I was spending on a monthly basis more than some people (in developed Western economies) were earning every month.
That had to stop.
Cut Eating Out
One of the big cost items on my expenditure list back then was eating out. At the time I was a highly-paid IT contractor working on-site in the headquarters of big name international companies. It was a fairly high-stress, high-responsibility environment.
And so I told myself that I needed to allow myself the relative luxury of a lunchtime meal out of the office at a restaurant each day. I didn’t go to 3 or 5 star Michelin restaurants. In fact I was relatively frugal.
But I was still spending much more than I would have if I had made myself a packed sandwich lunch or salad or something to take to work each day instead.
Another reason was that at the time I did a lot of sport and other activities in the evenings. So I didn’t have time to cook at home. At lunchtimes therefore I told myself that I had to have a restaurant meal.
But restaurant meals are not necessarily that nutritious. And the cost adds up. With a little imagination and effort I could have created some great box-lunch meals at home instead. And saved myself a lot of expense.
Minimizing is a good practical way to counter and defeat the consuming bug. The average person nowadays has far too much “stuff”. And they keep buying more stuff.
This is why domestic storage facilities are now enjoying a booming trade. People have bought so much stuff which they can’t bring themselves to part with that they have to buy storage space for it.
Many people never stop buying. They make trips to shopping malls, they fill their car up. They express themselves through shopping. They are always hunting down “bargains”- telling themselves – as the marketing tells them – that they are “saving money”.
When in fact all they are doing is spending their money.
The way to deal with this is to stop bargain hunting. Don’t get drawn into “sales”. Winter sales, Spring sales, Summer sales, end of Season sales, Closing Down sales, Last-Chance Sales… It’s all marketing bull.
Next thing is to cut down on the stuff you have already bought. Chances are you have bought and accumulated far too much.
This is what I did. I was amazed when I actually stopped to look through my wardrobe closets. I had far too many pairs of jeans, t-shirts, sneakers, tops, and everything else.
I also had no end of other clutter. Loads of books that I never read, but which just sat on the shelf looking impressive. Some I donated but I ended up throwing most of them out. I tried to sell some online but there were few takers and it didn’t even cover the postage cost.
Next stop was the kitchen. Again, too much clutter and stuff I didn’t use or need. I cut it all right down.
If you do the same, you’ll be amazed to discover how burdened you were – and how much better it feels when you cut down your belongings to just that which you really need and get rid of the rest.
Sell the stuff if you can. Use eBay, or hold a garage or yard sale. Give stuff away, and trash the rest. You’ll feel much better – and you’ll have much more free space.
You also learn an important practical psychological fact. The less you have, the less you will be inclined to want to buy.
That might sound kind of paradoxical. Surely if you have less, if you get rid of things, then you’re going to have to spend money replacing them? And won’t you miss owning things?
But that’s not how it works. You are training yourself, your mind, your outlook, to be happy with less, and not to need more. That is what will save you money. You are getting out of the expensive consumer spending cycle. This will free up your money to save and invest. It’s a complete mind change.
Cut Transport Costs
One big expense item that many people burden themselves with is a car. In my case I have rarely owned a car. So that wasn’t an issue for me.
Instead I have a mountain bike. It’s much cheaper. I don’t have to buy fuel. There is no tax to pay. No insurance. And no parking costs or fines. No annual vehicle inspection. No expensive maintenance. And it helps keep me fit.
It depends upon your particular circumstances, but if you can, get rid of the car. Or at least downsize the car. Buy an older car which is at least 3 or 4 years old, so that it’s freed from the worst of the depreciation. And don’t buy a car using car credit finance.
Maybe swap it for a motorbike or a moped. Or if it’s practical, get yourself a bicycle.
Cut Subscriptions Right Down
Another way you can often save money is to cut subscriptions. Including things like cable tv, online film services, and of course internet providers and mobile phone contracts. See what you can dispense with.
Subscriptions are one of the most sneaky of wallet hole-burning items. They accumulate slowly one by one.
You say to yourself (as the marketing people responsible for them want you to say) “It’s only a few Dollars/Pounds/Euros per month – that’s nothing”. And they use the usual “that’s the equivalent of less than a coffee latte every day – I can afford that”.
That’s what the marketing people want you to think. And that’s precisely why subscriptions are such a danger. They add up and they drain money, silently and insidiously, every month from your bank account.
So no to subscriptions.
Say No To Coffee Shop Chains
By the way, say no to latte’s as well – they’re the most expensive coffees of all. I don’t go to expensive coffee shops. I will often drink a coffee out in the town – but it will be from much cheaper bakery or independent coffee shops. I don’t go to any expensive coffee shop chains.
Don’t get sucked into the “double tall latte” etc game of $4, $5 and $6 cups of coffee. Buy shares in the coffee shop chains – but don’t buy their coffee!
Cut Your TV and Mobile Phone Contracts
There’s plenty of media material, films, documentaries, series, drama, comedy, and everything else available for free on Youtube. There’s no need to pay for an expensive digital media service.
Why not cancel your cable tv or online digital media package?
These services are expensive and you pay for them every single month. Also, they take up time that you can be using doing other more productive activities.
Maybe cancel your mobile phone package and switch to Pay-As-You-Go prepaid. Or even dispense with that completely and just use your mobile where there’s free wi-fi.
You can make calls using Skype where there’s free wi-fi. It’s much cheaper than using the mobile providers network.
I no longer have a mobile phone contract. I own my phone and I don’t have a data or connection package. I use my phone where there is wi-fi and I find that is adequate.
And when I’m somewhere where there is no wi-fi access – that’s no big deal. It means I can’t sit and fiddle with my phone like so many other people do. It gives me a welcome break from the mobile phone.
Most of the phone-fiddling that people do is just idle time-wasting. Most of it is just comment threads on Facebook, WhatsApp or Instacrap. It doesn’t produce anything or yield anything of value. You don’t need it. You can do without it.
Beware of Charity Subscriptions
A lot of people in the UK give money to charities. The charities have got the donation soliciting business down to a fine art. It’s become a big business with all kinds of fund-raising agency and consultancy middlemen involved, all creaming off a slice of the proceeds.
British main streets are full of their chuggers – “charity muggers” – people with clipboards who attempt to solicit passers-by to sign up for direct debit monthly charity contributions directly from their bank accounts. They get commission on each sign up.
The managements of these big charities pay themselves big bucks. It’s become a corporate career sector in its own right which relies upon people’s good nature and desire to help people less well off than themselves.
Charity should be a voluntary activity – not a business. I’m all for helping people – but I don’t give to big corporate charities.
If you are already contributing to charities via direct debit – cancel your subscriptions to big corporate charities and save your money instead.
Reduce Your Debt
Cut the number of credit cards you have. Credit cards are a very expensive form of debt. Credit cards are useful in our economy, especially for online purchases. But many people, especially in North America, have too many credit cards and rely on them too much.
So cut them down. Credit cards are too much of a temptation. You don’t want debt – you want assets, capital. You want to be lending money to others, not borrowing money yourself. Credit is a liability item.
Debt is just a consumer product like any other consumer product. Don’t consume debt.
So out with (most of) the credit cards.
Cut Your Insurance Spending Right Down
Cut down on insurances where you can. A lot of insurance is a big con. It relies on people’s risk averse-ness and fear. You may need some insurances – for health or for your home or car – if you’re unable to get rid of your car.
But many people especially in countries such as Canada and Germany, are over-insured. It fits their risk averse nature and it’s crazy.
Insurance companies employ staff whose job it is to look for every way possible to reject payout claims. It’s hard to win against insurance companies. So don’t fall for the Big Insurance Scam. Cut it right down to the minimum.
Watch Your Health Insurance
Health insurance, if you live in a country which has a health insurance system, can also be a big scam. I come from the UK originally, where we have the free National Health Service or NHS. It’s not perfect, but at least it is free. There’s no insurance to pay for health care in the UK.
However, I lived for many years in Germany, which has a health insurance system similar in some respects to that of the US – though more regulated. But like the US system, it’s out of control. It’s extremely expensive, especially for self-employed and freelancers like me.
In countries like Germany and the US there is massive over-provision with the whole health care sector, the pharma industry, and the health insurance funds and private insurance company hangers-on leeching off the system.
The sector also works hand-in-hand with the government, through lobbying and the regulatory systems that have been established over the years by both groups putting their heads together to serve their interests.
And we the consumers pay for the whole thing.
In fact, German health insurance got so expensive that I finally said enough was enough and completely quit the country. No way will I pay crazily expensive health insurance like that in Germany or anywhere else again.
The US of course is also notorious for its health insurance. But it isn’t just Germany and the US. Health insurance is now out of control in many countries. If you can cut your health insurance costs, then it’s probably worth looking into.
I left Germany because of their expensive health insurance. This saves me a great deal of money I used to have to pay every single month.
Cut Down the Amount of Housing You Consume
This is also a big one. Many people in owner-occupier cultures such as North America, Australia, and the UK consume far too much housing space than they actually need. So take a look at how you can downsize your housing consumption.
In particular in the UK people are obsessed with the number of bedrooms their house has. Houses are described by the number of bedrooms they have. How many bedrooms do you actually need. Do you need 4, 5 or 6 bedrooms or more? Are you running a hotel? Then why do you need them?
Likewise garages. Another obsession among the middle class. You do not need two or three garages – even if you have two cars.
People think buying a bigger or more expensive house is a worthwhile asset. They see it as an investment. But it costs more in maintenance, it costs more in local taxes and insurance. It costs you mortgage interest. And you could be investing that money in more lucrative areas.
And it means that once again you are consuming more debt.
Owner-occupiers spend massive amounts of their free time and money on DIY and house upkeep. It’s time, money and effort that could be invested in a proper business.
There’s not only the interior to think about. There’s the exterior as well. The walls, the roof. The yard, the garden. In some cases you could say the house owns them rather than vice-versa. They become an unpaid caretaker for the building.
Owner-occupation is actually a trap for many. It’s often a relatively poor investment – and it’s a very iliquid and rigid one. There are much better investment opportunities available than owner occupation.
But the cultural pressure is so great and ingrained, and the grip of the whole system of estate agents and the mortgage industry sector is so strong and established, that few people realize this.
Many smarter investment advisors have commented on this and about how difficult it is for the average person to understand this fact.
For now, take it as a given that buying a bigger property than you really need is not generally the best investment for your savings. And it will consume income that you could be saving for other investments. I’ll talk more about this later.
If you’re renting, you may also be able to consider downsizing and/or moving to a cheaper part of town or another region. Since I became a Break Free Rebel the cost of housing has become an important factor for me and my strategy now is to keep this cost item as low as possible.
Start Saving More
This is very important and yet most people save far too little. Especially in the UK, Australia and US, savings ratios are way way down.
In Germany, where I lived for many years, it’s different. Saving has never gone out of fashion there. But people in Germany do not get good rates of return on their savings. Nevertheless the savings culture is much stronger there than in Britain and that’s a good thing.
But in the English-speaking countries there is still too much of a culture of debt and consuming instead of saving. Too many people just live for the moment. Partly it’s because that is what everyone else around them is also doing. So they do the same. As a result, saving for many has gone out of fashion.
In order to invest you have to save more.
Partly the problem is very low returns on savings accounts. But it’s also because people simply spend too much of their money. They consume beyond their means. They burden themselves with high living expenses – even in a country like the UK where people do not have to pay costly monthly health insurance like in Germany or the US. And so they have too little left over to save.
You have to cut your living overheads in order to have money to save. So don’t spend your money every month on consuming. Make sure you save first and foremost. Cut your consuming right down so that you can save.
The measures outlined above will help. Consume what you can afford after saving, not vice-versa. Don’t tell yourself and others “there’s nothing left at the end of the month to save”. It’s just a cop-out and an excuse because you haven’t organized your life properly.
Start Building a Capital Fund
The hard fact is, in order to become financially independent you have to build a capital fund. Which means you have to save. Without saving, no capital fund. Simple as that.
Save money in a high interest deposit account. The average savings account gives a dismal rate of return. It may not even compensate for inflation. Which means it is leaking capital and you are losing money.
A so-called “high interest” deposit facility is a better deal, but often only by a margin. It’s not somewhere to keep your money long-term, despite what the banks advertising and marketing will try to tell you.
Start Actively Investing
As soon as you have enough money saved, take your money, or part of it, out of the deposit account and start investing in liquid assets – such as stocks, bonds – government and corporate, and commodities.
There are also now cryptocurrencies – and these also feature strongly in my investment portfolio. These are riskier, but they can also give you higher profits. The important thing is to control your risk by diversifying in different asset classes. Don’t keep all your money in crypto, or in stocks.
And spread your capital out between different stocks and digital currencies. I’ll talk structuring your investments properly in posts on the blog.
Get investing in high yield assets as soon as you can and leave the deposit accounts behind.
Start An Online Business
If you’re going to be able to quit your job, then you need to get a new income flow up and running as soon as possible. So start thinking about a possible business idea that you’d like to pursue.
The best way to do this is to start an online business if you can.
I’m a big fan of online business. The great thing about the Internet is that it opens up enormous opportunities to reach markets and customers and sell products and services to people all over the world at relatively low overhead cost.
Another big plus about online business is that it’s location independent. And you don’t need much in the way of fixed assets. You don’t need real estate. You don’t need a store, office or workshop. You can run an online business from anywhere.
Online business is too good an opportunity to miss. Take some time to decide what you want to do, what kind of business you want to start. It should be something which you can run location independently – which in the case of Internet-based businesses gives you a pretty big choice of options.
But it should also be something which interests you and for which you have an aptitude – and for which there is a ready market.
Bootstrap your business keeping your overheads and your living costs as low as possible. If necessary, downsize your living accommodation. You might want to move to another region, or even to another country where the living costs are cheaper. The important thing is to be able to sustain your business and yourself which you are bootstrapping the business.
As your savings grow and you transfer money to your capital investment fund, you will in effect have two businesses. The first will be your online business – and the second will be your investment portfolio. You need to run and manage both.
Reinvest Your Capital Fund Profits
Don’t be tempted to draw an income from your investment portfolio. This is a mistake many FIRE people make. It’s a mistake I also made in the early days. As a result my portfolio shrank and I now have to make up for lost capital growth.
Always, always, always reinvest the profits and let the capital value appreciate. That way you will enjoy the advantage of enormous capital value gains which will increase substantially over time – provided you do not dig into them.
So don’t consume the profits from your capital fund. Leave them in the fund and let them compound and they’ll increase the size of your capital fund exponentially over time. That way your wealth fund will grow much faster.
Meanwhile, you draw your day-to-day living expenses from your online business. And you keep your living overheads to a minimum by cutting your consuming in the ways I described above.
Quit Your Job
If you haven’t already done so, by this time at the latest you can quit your job.
You will be 100% free to concentrate on your businesses and your future!
From now on, it’s onwards and upwards – on your terms – all the way. Congratulations!
You’ll find heaps of articles and advice about getting started here on the site.
Good luck with your journey towards independence!