I personally was in debt of 5 million in 1990 and technically bankrupt. 7 years later in 1998 I retired. If I had the information I am giving you in this article, I would easily have done it in less than 5 years.
- Work out your total income and expenses
- Cut your expenses.
- Create a surplus.
- Invest the surplus
- Replace your salary with passive income.
Total income and expenses: Create a graph of the past 6 months of your exact total income and expenses. You can now see your exact financial position from a cash flow point of view. Monitor this every month.
P.S. A picture speaks a thousand words.
Cut your expenses: This might require moving out your home, renting it out and finding cheap accommodation. You need to make sacrifices if you want to speed up the retirement course of action.
Create a surplus: Pay yourself first every month and create a surplus. This must be automated so it happens every month. This money can be paid into a savings account or your access bond, to use for income producing investments later on. Keep creating this surplus which is purely for investment purposes.
Invest the surplus: Invest in cash flow positive investment similarities. Use the edges money or find a partner who will put up the money and you do the work. Your partner has the character as security.
Replace your salary with passive income: If you are willing to go without for a few years, your income from your similarities (passive income) will ultimately be able to replace your salary.
All this takes is making a decision, believing that you can do it and then taking action.
You also need to create systems for everything, so you get more done in less time. For example there are 24 hours in a day;
- 8 hours to work
- 8 hours to sleep
- 8 hours for family and recreation.
If you maximise those 8 hours of work you will find that you ultimately get done in 6 months what typically took you a year. So 10 years now becomes 5 years.
The good news! You don’t need any special talents, luck, education or superior knowledge to become financially independent. Just apply the basics and keep it simple.
The most important part to focus on is your “cash flow”
Here are some ways to increase your cash flow:
- Cut your living expenses closest.
- Consolidate your debt.
- Pay off debt with highest interest rates first.
- Rent out or sell your home and move into a cheap flat.
- Increase bonds(refinance) if you have investment similarities.
- Do your own letting if you have investment similarities.
- Save on tax deductions – “any expense in the production of income is tax deductible.”
- Run your office from home.
- Increase your bonds to 30 years.
- Rent out rooms in your home.
- Turn your home into a Bed & Breakfast
- Rent out your garage.
- Turn your outside quarters into granny flat.
- Add on flat above your garage.
- Find part-time work.
- Rent a character and sub let at a profit.
From the above you will notice that you can do this with no money. You use the edges money or someone else’s money that is not getting a decent return.