Financial Independence Calculated
Today, I have back on the show, Brandon from MadFientist.com. Brandon explains how you can calculate the amount of money you need to have before taking the leap away from the 9-5. He has created several FREE resources to help you with your journey to financial independence; and we talk about those as well as some lessons he has learned along the way to financial independence.
What are we drinking?
Brandon — Laphroaig Whiskey with a drop of water
Shannon — Vodka Tonic
- Shannon and Brandon agree that setting a goal with specific monetary numbers is a huge part of financial independence.
- Brandon’s first step towards financial independence was calculating both his necessary expenses and his discretionary expenses.
- When his net worth covered the costs of his necessary expenses, he felt free even though he was still working.
- Initially, Brandon created his financial independence spreadsheet to track his money, but it has evolved over the years.
- Brandon now uses the spreadsheet to tally up his monthly expenditures and translate those numbers into how much he’d need to work to cover those expenses.
- Shannon says the key to achieving financial independence and early retirement is calculating what amount of money you need annually to live.
- The lower that number is the faster you can reach it.
- Figuring out a range of amounts you can live off of like Brandon did when he broke down spending is a good way to start your journey.
- Shannon and Brandon agree on how ridiculous it is to spend money on cable TV.
- Shannon says she has become more mindful of how much television she watches now that she doesn’t have cable.
- After you calculate the annual income you need, you need to figure out how much you need to save before you quit your job.
- Brandon discusses the 4% withdrawal rate rule once you become financially independent.
- Brandon says flexibility is key during your journey to financial independence.
- Shannon explains that your investment portfolio is what is going to sustain you once you reach financial independence.
- Brandon goes through every expense in every account he has and adds it up to see if anything is getting out of control and thinks about if it added to his happiness or not.
- Test out the life you think you want to live once when you reach financial independence to make sure that is the life you actually want in the future.
- Trying to figure out what makes you happy is one of the hardest parts of the FI journey.
- Money gives you the power of choice!
- TAKEAWAY: Take the time and calculate the numbers of what financial independence looks like for you. It might seem daunting at first, but you can’t scale a mountain without planning and taking those first steps!
Links to Resources Mentioned
- Financial Independence Spreadsheet
- Mad Fientist FI Laboratory
- FI Laboratory Web App
- Other Resources Available from Mad Fientist
Connect with Brandon:
Podcast: Financial Independence Podcast