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Welcome to theFIREstarter! If you are interested in themes such as Financial Independence, Retiring Early, Downshifting, or simply just working less and living more then please stick around, I think well get on just fine

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My thoughts and plans have slightly changed in the few years since I set up the blog, you can learn a little bit more about me and the main points on what those plans were and how they've changed here, here, here, here and finally here.

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TFS.x

Most random photo I could find from November!

Hey all!

Well as the name of the title probably suggests our good run of savings rates has come crashing to a spectacular end, with a lot of heavy spending all hitting us in one month (all entirely optional really, it has to be said!).

Lets find out how/why/what the hell happened shall we?!

Quick note: This turned out to be quite a monster update in the end I would go for a wee grab yourself a cuppa before continuing if I were you!

Read the rest of this entry

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theFIREstarter - Financial Independence. Retire Early

Your Money or Your Life | Achieve Financial Independence | Your Money or Your Life

Your Money or Your Life and everything you find here is rooted in transforming your relationship with money, not just changing your money habits. The goal is to find and have enough (and then some) rather than always seeking more. This work requires rigor, honesty and a radical willingness to change. It equally requires curiosity and compassion, offering no shame no blame as a mantra for the journey.

Money as a tool is both materialandspiritual to get what we need and to reflect on the meaning and purpose of our lives. We see our lives as both our own to live responsibly and as a gift and in service to our wider circles of community.

The New York Times Bestsellercompletely revised and updated for the 21st century.

The philosophy behind Your Money or Your Life started back in the 1970s.

Join the financial independentmovement. Get strategies, inspiration, resources, support, and community.

A long-con ponzi scheme: How money rules the world

Would you rather have freedom or stuff?

Vicki and Joe on Oprah

Originally posted here:

Your Money or Your Life | Achieve Financial Independence ...

There are a few buzzwords or rather, acronyms youll hear in the financial blogosphere FI, RE, and FIRE. What do they mean and why do folks keep talking about them?

FI =Financial Independence

FI is pretty much everyones goal (I would think!). FI means that you donthave to work for money. Traditionally, FI was equivalent to retirement. Retirement meaning you stopped working all together usually around the age of 65 or so. Think days at the golf course, river cruises in Europe, and a drink with a little umbrella in hand. Now, the definition of retirement is evolving and FI seems more fitting now since it includes the traditional definition and more.

Youve arrived.

RE = Retire Early

RE is pretty self-explanatory. Whatcounts as RE depends. In the non-physician world the famous RE folks are in their early 30s:

Early 30s would be exceedingly difficult for a traditional physician who begins attending life at age 30. I guess youd have to be a Dr. Doogie Howser to do that. Physician on Fire is almost there as he recently announced thathe is going part-timeat the age of 41. I think a physician who can retire at age 45-50 is considered RE.

FIRE =Financial Independence,Retire Early

FIRE is a special club. Youve officially arrived if youre a member. Not only can younot work for money if you dont want to but youve attained this at an age much earlier than anyone else. This is a popular goal to strive for.

FF = Financial Freedom

Isnt FF and FI the same thing? Maybe. If youre a splitter (vs. a lumper) then FF is one step beyond FI. Its FI + generous wiggle room. Its a bit naive to think you know and can predict your expenses 20 or even 30 years into the future. Things may go as planned, but often, they do not. Your wants will most certainly change. Health care costs are nebulous and completely unpredictable. A health crisis can easily eat up several 100s of thousands of dollars for things like home health care or a long-term care facility. A family member may need help and maybe youd like to be in a position to help them andnotderail your goals either.

Stay tuned for the second part of this post how to determine your FI or FF number and more!

Whats your FI number? Are you FI, RE, FF, or FIRE? Comment below!

Related

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Financial Independence, Early Retirement and FIRE - Miss ...

Financial Independence Path #1 The Slow-and-Steady Conventional Path

All money advice is ultimately advice aimed at helping you attain financial independence. So even the most popular writers, people like Suze Orman and David Bach, are in a strict sense part of the Retire Early Movement. As a general rule, however, the conventional advice does not work. If it did, a high percentage of the population would be attaining financial freedom early in life. Thats obviously not the case.

This doesnt mean that there is not good advice put forward in the books of people like Orman and Bach. There is. But those seeking early financial independence need to do better than most of those who rely on the conventional guidance. Those who put their faith in the most popular money gurus may be able to retire at age 65 or perhaps a bit earlier. Its not realistic to expect to do too much better than that by following The Slow-and-Steady Conventional Path.

Our movement does not reject the conventional advice. It rejects the idea that it is sufficient. We aim higher. We seek to do better. We view the conventional advice as a base of knowledge to which we add more exciting ideas for the purpose of achieving financial independence a good bit sooner.

I included The Mind-Over-Matter Motivational Path in this listing to provide me a place to discuss inspirational speakers like Tony Robbins. I am not familiar with most of Tony Robbins work (if you feel that I have misrepresented him, please let me know). I wanted to include this path because of the attention that has been directed to The Secret, a book with which I am also unfamiliar that urges an inspirational approach for people hoping to achieve ambitious life goals.

I obviously am not overly excited by inspirational speakers or I would spend more time learning about their work. I am not dismissive either, however.

My belief is that inspirational speakers are onto something important. The hardest part of attaining financial independence is saving money. The hardest part of saving money is working up the motivation to do so. The primary reason why the practical steps that are the focus of most guides urging The Slow-and-Steady Conventional Path dont usually lead to early financial independence is that readers of these guides do not become sufficiently excited over their content to change their money behavior in significant ways. Knowing all the practical stuff in the world wont help you if you are not highly motivated to act on it.

So I see the material generated by those urging The Mind-Over-Matter Motivational Path as having value, perhaps equal or even greater value than the material generated by those urging the Slow-and-Steady Conventional Path. This path does not excite me too much either, however.

What works is to marry the motivational with the practical. Practical stuff standing alone is boring. Motivational stuff standing alone is ineffective. Working together, these two approaches acquire far more life-transformational power than either possesses on its own. I see it as the first goal of the financial independence quest to determine how best to mix the motivational and the practical and thereby to discover what actually works for real live people in the real world.

I view Robert Kiyosaki, author of Rich Dad, Poor Dad, as someone who has tried to mix the practical and the inspirational and who has created an explosion of interest in financial independence as a consequence. It amazes me how many people love Kiyosaki; it sometimes seems that his works are going to take over the entire money section of the bookstores. It also amazes me how many people hate Kiyosaki; I have been on discussion boards where the mention of his name has brought on foaming-at-the-mouth reactions on the part of large percentages of the board communities.

The Kiyosaki phenomenon tells us that something important is up. Thats my take.

The people who have achieved some success in their money lives tend to be people who have followed the rules better than most others and who take pride in having done so. Kiyosaki is disdainful of the rules. Many of those who have achieved a good measure of financial success view Kiyosakis message as a threat.

I think that Kiyosaki is onto something in questioning the conventional rules. The rules that used to work are not likely to work as well in the future. Those who resist acknowledging that find Kiyosaki hard to take. On the other hand, those who agree that following the old rules will no longer work tend to be too willing to believe that Kiyosaki has the right answers, in my assessment.

I see the Kiyosaki path as The Hustling Mavericks Path. Being a maverick makes sense. Hustling makes sense. I am personally not persuaded that Kiyosaki has developed the best possible vision of how to attain financial independence early in life, however.

Amy Dacyczyn (she is the author of The Complete Tightwad Gazette) is my favorite money writer. Shes different from most others in many ways. One of the most striking ways in which she is different is that her work focuses on the needs of people who do not make big incomes. Her path is The Struggling Middle-Class Workers Path. Amy Dacyczyn focuses on the hard case rather than the easy case.

By doing so, she shows that amazing things can be done, things that no one before her attempted to do. Its her focus that makes the difference, I believe.

Most money writers start out accepting that it is hard to get by even on an income that is large by relative standards (most money guides are aimed at high-income people and those earning high incomes today are earning far more than just about anybody ever earned in earlier days). If Dacyczyn started with that assumption, she would never have been able to have done the work she has done. All of her work is rooted in the assumption that it is possible to get by and to get by well with remarkably small amounts of money. She makes the case in impressive article after impressive article after impressive article after impressive article. By looking at the money problem from a different angle, Dacyczyn was able to come up with solutions than no one who came before her even bothered to consider.

Dacyczyn doesnt focus on financial independence (she does make brief reference to it from time to time) because that is not the first concern of her readership. All the same, she tells us all more about what it takes to achieve financial independence than any other money writer. If her advice helps those with modest incomes get on their feet, what does it do for those with incomes a bit above the modest level? It tells them that for them financial independence is an available option amazingly early in life.

Dacyczyns writing is often dismissed by mainstream writers as extreme. Thats a dumb criticism. Dacyczyn obviously never compels anyone to adopt any suggestion she puts forward. What she does is to show us the options available to us. All middle-class workers are able to retire early if they elect to do things that some view as extreme. Some can achieve financial independence very early in life indeed. The negative reaction to Dacyczyns work results from the unease that some feel in knowing that these options are available to them.

It is wrong to find fault with a writer for showing us that we possess options that we did not know were available to us. Dacyczyns advice is generally practical in nature. Read between the lines, though, and you pick up a powerfully motivational message: Follow Dacyczns lead and you can be free of paycheck dependence a lot sooner than you once thought was possible. No one has married the practical and the motivational as well as Dacyczyn, in my view. She is the best financial freedom writer around.

Joe Dominguez (co-author of Your Money or Your Life) is in second place. Dominguez offers a nine-step plan for achieving financial independence early in life that has been successfully followed by millions. And his approach works primarily because it so motivates his followers that they come to center their lives on their desire to follow it closely and obtain its rewards as quickly as possible.

The problem with the Dominguez approach is that most of us are not as idealist as the typical Dominguez zealot (I dont intend that to be taken as a put-down). Dominguez sought to obtain financial independence by his early 40s so that he could devote his remaining years to pursuing the environmentalist causes that are his passion. His approach works. He was able to leave paid employment in his early 40s. Lots of others have been able to do so by following his guidance. But how many of us are willing to change our lives around so that we can pursue nonprofit causes? Some are. Most are not.

I believe that the success of the Dominguez book is well-deserved. He understands money and how it works in peoples lives better than any of the better known names in the field, in my estimation. But I believe that the Dominguez approach can achieve its full potential only if his program is expanded to provide guidance for the millions who have different sorts of life goals than the life goals pursued by Dominguez and his followers.

Dominguezs ideas work not just for those who want to pursue nonprofit causes. They work for those who want to be increasingly free of economic insecurity as they age. They work for those who want to be able to retire early. They work for those who want to start their own businesses. They work for those who want to make career shifts in which they pursue work that pays less but provides a greater sense of fulfillment. The Intelligent Idealists Path is a path of great potential that as of today is not fully realized.

John Greaney (owner of the RetireEarlyHomePage.com site) is the nemesis of the Retire Early movement. He has led a Campaign of Terror against our discussion boards for over five years (this article was posted in July 2007), burning several entirely to the ground and intimidating the owners of several others into compromising the integrity of their sites in very serious ways. He is likely the most abusive poster in the history of the internet (measured by the destruction he has done to the work of thousands of good people) and his presence should not be tolerated by anyone with even a minimal desire to help people learn what it takes to win financial independence early in life, in my view.

All that said, I believe that Greaney represents something real and important and that his path to financial independence I think of it as The Disgruntled Cubicle-Dwellers Path should be included in our list of the available options. Greaneys message is a message of anger and contempt and hate. A not insignificant number of todays workers respond to that message. You dont have to like it; I certainly do not. You do need to come to terms with the reality, if you hope to develop a complete understanding of where our movement is headed in days to come.

With Greaney supporters, it is always the other guy who is to blame. It is their employers who cause all of their discontent in the workplace, never their own choices. The answer to lifes problems is to avoid or ignore responsibilities, never to learn lessons from ones experience of the troubles that all of us walking the Valley the Tears are required to endure from time to time. The purpose of financial independence is to escape the outside world, not to make efforts to reshape it in some positive way. There is a market for this vision of financial independence among the cubicle dwellers of today. Most of us obviously do not relate to this vision. But some of us do.

I have sympathy for some of the complaints about the workplace raised by the Greaney supporters. Ive been in staff meetings that went on too long. Ive suffered the frustration of working for one or two bosses who were clueless about some aspect of the work they were overseeing. I see this path of negativity as a dead-end, however. It makes some people feel good to think that they have discovered a means to stick it to their employer. But this path leads only downward, and never upward. My advice is to be aware of this path and to take what good you can learn from those traveling it (Greaney supporters have things of value to teach us) but not to get too caught up yourself in the negativity that is the driver of this vision.

Paul Terhorsts book Cashing in on the American Dream is a brilliant work written ahead of its time. The problem with it is that it is written for the high-income professional without children who is willing to trade the expensive cars and the expensive houses and the expensive vacations and the expensive country clubs for a life of freedom from the need to work. Terhorst points us to a means of attaining financial independence early in life. The Non-Consumerist DINKs Path really will take some people to the place where they want to go. This approach works.

The problem, of course, is that the Terhorst path is so limited in application. Most of us are not DINKs (a DINK is a married couple with a double income and no kids). And many DINKs enjoy their jobs so much that they see no great appeal in leaving them behind. So this is not a vision that is going to take the world by storm anytime real soon.

Its worth studying the approach, however. What can be done by DINKs in very little time can be done by the rest of us in a good bit more time. Most of us can obtain some version of the financial independence enjoyed by Terhorst. The principles and strategies explored in his book have general application, even if the precise details of the particular program examined do not.

This is the Rob Bennett approach. I have tried in my book Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work to put forward a vision that takes advantage of the insights of the other available financial independence visions while avoiding the pitfalls that have limited the success of some of them.

I acknowledge the workplace problems that fill the disgruntled cubicle dwellers with such anger and have tried to put forward a more positive approach for dealing with these problems. I appeal to peoples idealism in urging them to use their desire to do wonderful things with their lives to motivate better financial decisions without going so far as to suggest that we all need to retire from the corporate workplace to sign up with nonprofit organizations. I encourage the exploration of frugal ways of living without showing disdain for the consumerist choices that I believe have added a great deal to many middle-class lives in recent decades. I take a maverick position on many topics as a result of my belief that the old rules no longer work while showing what I hope is the proper measure of respect for the good that has been achieved in earlier times by the conventional money advice.

You do not possess financial independence today. You know that you want to come to possess it at some time in the future. Learn more about the eight paths to financial independence outlined above and you will learn that you can in all likelihood get from where you are today to the place where you know you someday want to be much sooner than you now realize is possible. Talk to people in our community and they will tell you that its an amazing journey, one that will change not only your money choices but your choices about just about everything you do with your life energy from the time you wake up in the morning until the time you drift off to sleep at night.

Money decisions are life decisions. Attain financial freedom and you gain the ability to do with your life what you always wanted to be able to do with it. Its not just about saving your money. Its also about saving your life.

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8 Paths to Financial Independence - PassionSaving.com

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Welcome - Reach Financial Independence

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Three Methods:Living Within Your MeansMaximizing Your IncomeDeveloping Wise Savings StrategiesCommunity Q&A

However you interpret the concept, financial independence requires a lifetime of responsible, well-informed financial decision-making. For some, the term might indicate the moment you will no longer rely on your parents to cover all of your expenses. If this is a goal of yours, check out How to Start Saving to Become Independent. Later in life, the mention of financial independence may conjure the aspiration to cover living expenses without working, as many people hope to do during retirement. Whatever your personal goal, there are sound financial strategies you can implement at any age that will readily help to increase your financial independence.

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Set specific goals and stick with the plan. Understand that achieving financial independence is a long-term process. Speed bumps on the road to financial independence are inevitable. Overcome temporary setbacks by sticking to a responsible financial plan. If you focus on each financial goal you set for yourself, always look for options to increase your income and reduce your expenses, and save strategically, youll steadily improve your financial stability.

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Question

Is the 401(k) in Canada, or just the USA?

The 401(k) exists only in the U.S. Canada has a similar plan, the Registered Retirement Savings Plan.

Ask a Question

Thanks to all authors for creating a page that has been read 36,526 times.

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3 Ways to Achieve Financial Independence - wikiHow

Fill out the details below to find out when you can achieve early retirement and financial independence

As you can see from the early retirement calculator, the most important metric to measure is your savings rate. The higher the savings rate, the faster you can retire early.

The early retirement calculator shows you when you can retire (and therefore at what age you can retire), but it does not show you how to retire early or increase your savings rate. You can follow my journey towards financial independence and early retirement to see an example. You can also browse through my blog to get concrete tips on how to retire early, achieve financial independence and increase your savings rate.

The most important assumption in the calculator is related to the safe withdrawal rate that is based on the Trinity study of safe withdrawal rates. I am confident that 4% is a safe withdrawal rate. Others will say 5% is fine, whereas some argue that 3% is more safe. You should make up your own mind and change the assumptions accordingly to get your retirement age.

Finally, another key assumption in the calculator is the 5% annual return on investment after taxes and inflation. I believe this number is fair, but you can never know what the returns will be in the future. Fluctuations in returns might impact at what age you can retire and achieve financial independence.

Feel free to reach out if you have any questions related to the calculator or financial independence/early retirement in general.

Onwards,Carl

NB: This calculator is for informational purposes only, and you should always seek professional help before making any investment, life or other decisions. Please read my disclaimer and terms & conditions.

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Financial Independence & Early Retirement ... - MoneyMow

Financial independence refers to the state of reaching a point of sufficient wealth where one is not required to work full time unless they want to in order to maintain a desired lifestyle. It occurs when people have enough built-up income to pay for necessities, for the remainder of their lives, without an active-income, work-related paycheck. Financial independence can be achieved through saving, investing, and other passive income sources, but it usually means that individuals can pursue the things that they are truly passionate about, such as hobbies, travel, and so much more.

If financial independence, early retirement, or creating an investment portfolio are on your radar, be sure to check out these financial independence (FI) blogs and bloggers. Their experiences, advice, and discussions may be just what you need to kick-start your path towards financial independence.

Also known as Mr. and Mrs. 1500, the 1500 Days to Freedom blog chronicles the journey of one blogger (and his wife) whose goal is to retire in 1500 days at the age of 43 thereby [thinking] differently and [escaping] the rat race. Blogs range from a variety of financial independence topics, all of which aim to encourage and inspire others to abandon their consumer, spendaholic ways in favor of a more fulfilling existence and learn how to invest and save money via cutting expenses and smart, simple investing. Learn more about Mr. 1500, see if he is accomplishing his goal by February 2017, check out their blogs, and read more about the resources that helped them grow their money.

The Bogleheads are a collection of people, inspired to follow the investing advice of Jack Bogle (author, blogger, and financial guru), who follow a small number of simple investment principles that have been shown over time to produce risk-adjusted returns far greater than those achieved by the average investor. On the site, visitors will find thousands of forums that emphasize regular saving, broad diversification, and sticking to ones investment plan regardless of market conditions. Using the forum site can look a little overwhelming, but there is a great starter guide that will help you get organized and prepared to begin the Bogleheads investment philosophy. Typical forum topics include: investing (help, theory, news, general), personal finance, personal consumer issues, and more.

Jim L. Collins financial independence blog, titled jlcollinsnh, focuses on a simple path to wealth. Best known for his Stock Series on investing at times called the best thing you [could] read about how to invest money by Mr. 1500 the blog also discusses anything and everything from money, life, travel, and business. The author began the blog as a way to teach his daughter what did and did not work financially for him. As far as what you should do with the information, the author states: If you read my blog youll soon have a very clear idea of my views. You can then read other sources, compare and decide for yourself what resonates.

Mr. Money Mustache (MMM) is a financial freedom blog, started by a 30-something retiree, who wants to share his frugal, yet fun, life of leisure and all that comes with it. Along with blogs, there is anMMM forum dedicated to providing The Money Mustache Community with resources, discussions, and advice on all things financial, investing, and more. However, if you would like to stick with the blog itself, Mr. Money Mustache recommends starting with his blog Getting Rich: From Zero to Hero in One Blog Post, and working your way to the classics. If you would like to dive into the community forum, try starting with these steps, followed by the Best of Mr. Money Mustache discussions.

The Mad Fientist is not mad. He is a scientist of financial independenceor fienceor FI, if you will, which is short for financial independence. He wants to teach you, and every reader, that early financial independence is possible and achievable earlier than you might imagine. By analyzing the tax code and looking at personal finance through the lens of early financial independence, [The Mad Fientist] develop[s] strategies and tactics to help you retire even earlier rather than at 60+ years old. Along with well-researched blogs, he offers podcasts that feature some of the heaviest hitters in the financial independence sphere, as well as a free financial independence tracker. Not sure if it sounds legit? Check out this review from Mr. 1500.

The White Coat Investor is a blog started by a practicing, full-time, board-certified emergency physician who received a lot of bad advice and wanted to share what he learned along the way. It covers financial and investing topics and strategies that are specifically targeted at physicians and other high-earners, but the blog and forum are great resources for anyone who wants to find sound financial, investing, tax, and retirement advice. There is a lot of great content to sort through, so the author recommends starting here, which includes their top beginner blogs. Want even more from the White Coat Investor? Order the book it summarizes the blog and contains material not found on the blog.

Hopefully, these blogs have proven to be a great start on your progress towards financial independence! Other financial blogs are available, but you may find that the six blogs mentioned provide some of the more meaningful advice on this topic. If you find something interesting and useful, be sure to share it with your family and friends, because education (ideally early education) is key to these strategies.

Also, keep in mind that all of these blogs and forums are meant to help educate oneself on financial independence, investing, and early retirement. The authors want to offer basic knowledge, but they state that it is up to you (and your circumstances) to decide what will be best and most beneficial for you. They do not guarantee performance or returns but they do promise it will make you think!

Education Loan Finance is not paid to mention any of these blogs, books, or forums. We also do not promise or guarantee performance or returns based on their advice; we are simply informing you of helpful information sources available for your own research purposes.

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Top 6 Financial Independence (FI) Blogs You Should Read ...

Here are the most commonly asked questions which are found on r/financialindependence. Please look through this short list because it is highly likely that your question has already been answered by some very smart people!

The rules can be found here. They're short, please read them!

It is typically defined as having enough income (from investments, passive businesses, real estate, etc) to pay for your reasonable living expenses for the rest of your life. You have the freedom to do what you want with your time (within reason). Working (full or part time), hobbies which generate income, or other activities are optional at this point.

This specific subreddit focuses on the three knobs controlling getting you to financial independence quickly. Reducing expenses, increasing income, and investing.

The basic tenet of FI is to spend less than you earn and invest the difference into things that earn money for you.

Spend Less/Save More

Minimize taxes to the full extent of the law. Look into 401k/403b/457/IRA/HSA accounts as some examples.

Reduce your living expenses. Smaller homes, apartments, rent a room. Avoid lifestyle creep as your income (hopefully) rises over time.

Reduce transportation costs. Live close to work if possible. Avoid expensive cars - Consider bicycles, used cars, public transportation, etc.

Learn self-sufficiency skills. Beyond the personal satisfaction in achieving something, you'll save money. Consider cooking, mending clothes, home/automobile/bike repair, woodworking, gardening, etc.

Earn More

If you're in school (whether that's high school, trade school, or college/university), focus on that first. It's easier to be FI on $50k+/yr than minimum wage. Look carefully at your career path. Is this degree going to pay you back appropriately in the future?

If you have a job, work more/harder/better/smarter. If you have the time, consider working extra hours and/or accepting challenging and long-distance assignments (family commitments permitting).

Negotiate to get paid what you're worth (see point 2 above)

Be careful about long term decisions

"Future you" may be interested in FI. Part of FI is the flexibility of having choices in the future. Be careful about locking yourself down.

If you're not positive you want to live in an area, avoid buying a house. Consider renting. Significantly easier to change your mind later.

Many marriages end in divorce. Divorce is expensive. Do what you can to avoid this.

Consider what careers are flexible and which aren't. Nursing is known as a great career choice for people who move around (there is a need for local nurses in almost every major city in the world). Software engineering can often be done remotely. Other career choices may have less flexibility in location / availability (e.g. stock broker).

Any loan means you are borrowing from "future you". Be very careful about making your future self pay back a lot of money. Loans for depreciating assets (cars, electronics, etc) in particular are generally bad ideas.

The difficulty of reconciling your FI/ER interests, plans, and priorities with those of your SO is one of the most frequent reasons people seek advice from this sub. If that's the kind of help you're looking for, these threads should get you started.

One of the original texts for the FI movement is Your Money or Your Life. Buy a copy, or better yet, rent it from your local library.

The primary writers on FI today are largely bloggers. The sidebar of /r/financialindependence has a number of popular blogs listed. We periodically add new sources of information as they become available.

A couple specific reads:

Of course, there are also great resources elsewhere on Reddit. /r/personalfinance and /r/frugal are very helpful for learning to manage your finances and acquire the frugal skills that are part of the FI mindset.

Short answer: We recommend people use - Savings / (Gross - Taxes)

The Bureau of Economic Analysis formula for "personal savings rate" is described below:

http://www.investopedia.com/university/releases/personalconsumption.asp

Basically, personal savings rate is defined as (disposable personal income minus personal outlay) divided by disposable personal income. What does this mean? Here is one way to think about it.

gross = taxes + spending + saving

gross - taxes = spending + saving

gross - taxes - spending = saving

The BEA uses "disposable personal income" as their phrase for (gross - taxes). They use "personal outlay" to describe spending. So they phrase personal savings rate as (DPI - personal outlay)/DPI.

Their definition of personal savings rate puts (gross - taxes) in the denominator. To express it using the more simple words:

savings rate = [(gross - tax) - (spending)]/(gross - tax), or (saving)/(gross - tax).

So the BEA has chosen to report personal savings rate as describing essentially what people save out of what they might possibly save after taxes. Thus, someone could theoretically have a 100% savings rate if they had no spending, even though taxes were taken out of their gross.

When you're posting & asking for information, please look at this checklist (Copy and paste it into your post) and ensure you're giving the subscribers everything necessary to give you their valuable (or sometimes not valuable) advice. Skip a bit of data if you're really sure it's not applicable, but these are often useful to know. If your question is more of a general Personal Finance question (like "What is the 401k contribution limit again?" or "What AA should I have if I want to retire in 20 years?"), then please post this in the Daily Discussion Thread

Life Situation: IRS filing status, number & ages of dependents, and anything else (state/country of residence, age, etc.) you are comfortable sharing.

FIRE Progress: Provide details about where you are on the road to FIRE. If possible, provide expected FI/ER dates.

Gross Salary/Wages: Before any deductions

Yearly Savings Amounts: 401k, HSA, FSA, IRA, insurance, etc. - whatever you have

Other Ordinary Income: Provide sources and any relevant details, the more the better

Rental Income, Actual Expenses, and Depreciation: If these are significant for you

Current expenses: Provide breakdown and relevant details.

For mortgage payments, separate the P&I (which stop when the mortgage is paid) from the T&I (and anything else) which continue as long as you own the property.

Expected ER expenses: (optional, if relevant)

Assets: Amount & description - include current asset allocation plan if you have one

Liabilities: Description, original loan amount, rate, original length, and monthly payment (which should be consistent with a spreadsheet PMT calculation). Add current balance and time remaining if close to final payment.

Specific Question(s): Providing a detailed breakdown is important, so is asking for specific information so we know what kind of help/advice you are looking for.

The short answer: 25 times your annual spending (with caveats)

The long(ish) answer: In 1998, three professors at Trinity University released what became known as the Trinity Study. The study examined the U.S. stock and bond markets over every 15-30 year return period between 1925 and 1995 (the data was recently refreshed in 2009). They concluded that by starting with 4% of your portfolio, and withdrawing that amount (increasing yearly with inflation) every year, you would have a 96% chance to not run out of money during a 30 year period.

4% became known as the Safe Withdrawal Rate (SWR). The nature of the stock market (and historical returns) means that in most cases, the portfolio grew faster than the withdrawal rate. 4% of a portfolio is the amount you can withdraw, or reversing the math, 25x your withdrawal amount is equal to the amount you need to save.

Examples:

A couple great articles on this topic

People are always worried that the future market will not perform as well as it did in the past (for a variety of reasons which always change). However, we have tools available which increase our chances of staying financially independent:

By taking some of these commonplace assumptions into account, we can be less conservative with the SWR, and use 4% instead of something lower.

The Trinity Study took inflation into account, but it bears repeating: $200,000 now is not the same as $200,000 10 or 20 years from now. Inflation will eat away at your returns at an average rate of about 3% per year (historically it was ~4%, but inflation has been lower for recent years). That is why FIers tend to invest heavily in stocks instead of lower-yielding financial instruments - the average gains of the stock market have historically outpaced inflation. The average annual increase in the value of the U.S. stock market has been 9.5% (various values are found online, this seems the most accurate.. a geometric average since 1928). If you subtract off ~4% lost to inflation historically, you'd see that leaves you 5.5% growth on average. Assuming average (or better years), you should expect your investment value (after inflation) to increase over long periods time. Given the volatility of the market, your actual experience will be likely much better or much worse than that calculation in the short run.

You can greatly increase your chances of "success" (not going broke) through the following:

See this article from from the /r/personalfinance FAQ.

Many people on the sub advocate an indexing strategy rather than investing in individual stocks. A few options below:

There was also a popular post on this subreddit which mentioned commercial real estate.

We try to avoid investment discussions here. The recommended path for savings is located in the /r/personalfinance FAQ. There are always exceptions, but this path will work for most people.

If you have more detailed questions around investing which are not Financial Independence specific questions, please head over to /r/personalfinance or /r/investing.

In general, if your spending before retirement is less than your earnings (by definition, this should be everyone planning on becoming FI), a tax deductible investment account will benefit you in the long run.

Lets assume you're going to maintain your lifestyle, same level of spending. You're also heading for FI, so you're saving a lot. Imagine you're making $100k gross, you're being taxed some percentage, you're spending $50k and saving the remainder.

Tax brackets - http://www.bankrate.com/finance/taxes/tax-brackets.aspx - We will ignore tax complexity of deductions / etc.. in the end the lesson is the same.

As you can see from the above link, assuming you're married and making $100k total, you have money being taxed in the 10, 15, and 25% tax brackets. ~25k of which is in the 25% tax bracket.

If you save $10k in your 401k, you can deduct that from your taxable income. You now have 15k in the 25% tax bracket. On that $10k, you didn't have to pay your 25% tax rate. Or, you saved ~$2,500 in taxes.

Now zoom forward 15 years, and you're retired (ignoring inflation to keep things simple). Assuming you maintain the same lifestyle, you need to withdraw $50k per year from your accounts still.

If you withdrew $50k from your 401k, your income is now $50k (as 401k withdrawals are counted as income). You have money being taxed in the 10%, and 15% tax bracket. You're no longer being taxed in the 25% bracket at all. Hey look at that! That money you previously were being taxed 25% on is now being taxed at 15%. You'll never need to pay that extra tax.

While this could be a 50 page document, in the end it's relatively simple. If you're saving money, you are most likely paying into higher tax brackets than you will in retirement. So if you can pay taxes later, that's better for you 🙂

Short answer, no, you're not locked in. A regularly repeated concern is that 59 1/2 is the standard age in the US for 401K/IRA withdrawals. However, the tax advantages in these accounts shouldn't be missed. There are a few mechanisms outlined below to access that money early.

Some links on this topic:

Originally posted here:

faq - financialindependence - Reddit

Full quote: When we win on Nov 8 and elect a Republican Congress, we will immediately repeal and replace Obamacare. Made during many, many speeches, a tremendous number of huge speeches, the very best speeches, by U.S. president-elect Donald Trump.

You cant always believe what candidates running for office say as they slog through their campaigns gross exaggeration, pandering, and outright lies are to be expected by all involved but when it comes to Obamacare, surely it is safe to believe that some real changes are in store for us.

Why? Well, its because the Republican party has been actively trying to cripple and repeal this legislation since it passed back in 2010. These attempts have been a) without a Senate majority and b) while Obama was still in office.

So its logical to assume that there will be some action taken here now that those blocking problemshave, from their perspective, been corrected.

And to be perfectly honest, Im a little concerned about it. Not scared or panicked not at all. But its a situation that warrants interest, attention, and the ability to alter plans and be flexible.

This post will explore what might happen, and how we could bestapproach potential changes.

Continue reading

Quick disclaimer: I cant recommend that readers performthe actions Ive taken, so be aware while reading Im not suggesting that everyone should follow my lead here. Please dont, at least not before carefully thinking through the implications.Most people implement alternate solutions to solving their own moral dilemmas caused by index investing. (There are tons ofgood suggestions in the comments.)

Another mass shooting here in America occurred last weekend, the worst ever, half a hundred dead, a likenumber wounded, all caused by one crazy asshole unleashing not exactly unimaginable horror on innocents.

Of course, its not unimaginable because it happensall the fucking time in this country.

Continue reading

Ive made a terrible mistake!

I quit my job about a year ago.

My last day was April 17th, 2015, to be exact.

At this point Ive got close totwelve full months of my new life under my belt. Thats plenty of data, if you ask me.

And its become clear that, beyond the shadow of a doubt, thedream of early retirement more closely resembles a nightmare.

Continue reading

Well, its not areturn exactly. Not in the ordinarysense of the word.

What Ive actually been doing is reading some of my old anger diary entries. This feels likeentering a time warp leading back to myold life, living out days as a technology worker, even though Im still happily living without any paycheck whatsoever.

Mental. Return. Only.

At this point youre probably wondering what an anger diary is. Good question!

Continue reading

Disclaimer. Yet again, theres no talk of finances in this one. Instead Im discussing some ofmypost-working life in a very casual, journal-y way. Additional warning: Its intensely personal. If that doesnt sound interesting to you, well then, absolutely no worries. Thats what the back button on your browser is for.

My momcalled last Sunday night.

Continue reading

The lobstered gauntlets come off prior to settling in at the keyboard

Fact: Virtually everyone individual who runs a blog eventually writes meta-articles on what its like to author one, how things are going, why and how you might become a blogger too,and so on.

Continue reading

I wish it were this easy to run the yearly numbers.

I havent done one of these types of posts in a while but I feel its worthwhile to capture our spending picture for2015.

Continue reading

More here:

Living a FI | A Geek's Guide to Financial Independence

WHAT WE DO

Quite simply, we strive to protect and grow your money and, where needed, develop a holistic plan to ensure a smooth transition through life's financial phases. Could there be setbacks? Yes. As you know, there are no guarantees. But all the more reason for having a well-developed plan to minimize the downside and maximize the upside. Your money is too important - and financial products are too complex - to invest without a solid long-term plan.

Financial Planning

Investment Management

401(k) or 403(b) Investment Review

Social Security

Rick Campbell, President of Financial Independence, and Mark Lavallee, Vice President, receive theFive Star Professional Wealth Manager Award for the third year in a row. The recognition isthe largest and most widely published financial services award program in North America. Award candidates are evaluated against ten objective criteria including educational and professional designations, credentials as a Registered Investment Advisor, favorable regulatory and complaint history reviews, client retention rates, client households served, and assets under management.

Visit link:

Financial Independence

How much money do you need to save if you plan to retire early? For some, retiring as young as your 30s means having accrued a million or more dollars. For others, a few hundred thousand dollars might suffice.

There is a debate raging in the FIRE community which stands for financial independence, retire early about how much a person needs to have set aside before quitting their 9-5 job. One side, known as Fat FIRE, believes retirees should have enough saved so they have a $75,000 annual budget in retirement, the other side, Lean FIRE, maintains that a $40,000 a year budget will do.

There are a few other variations, such as Barista FI, where you save enough to quit your day job and instead take on small gigs (like working in a coffee shop) to supplement your retirement income.

Financial freedom is a dream for many, but for a lot of us, its only a fantasy. Despite low unemployment, wages for many arent keeping up with inflation and saving for retirement is hard, even for those lucky enough to have access to retirement savings vehicles like 401(k) or 403(b) plans. Many 30-somethings say its already unrealistic to save for retirement, what with student loan debt and daily financial responsibilities. Still, there are countless blogs devoted to the topic, and as many ways to live in extended retirement.

See: You can retire early without adopting Mr. Money Mustaches extreme frugality

Fat FIRE makes the most sense for people who want to maintain their preretirement standard of living (like paying for rent or a mortgage) if not go beyond that, whereas Lean FIRE is for the more frugal at heart. Vicki Robins, who retired at 25 five decades ago and is considered one of the pioneers of the financial independence movement, said she accomplished such by being extremely frugal and conscious investing. She told MarketWatch that for people to accomplish financial independence they must first get out of debt and save six months of income and then earn as much as possible without compromising their health and integrity (and of course not spend all of it).

Justin McCurry, 38, a blogger at Root of Good who retired at 33, and his wife, budgeted for between $1.3 million and $1.4 million to cover $40,000 a year. He said one rule of thumb people could use is multiplying your expenses by 25. In that case, a lifestyle that costs $100,000 a year would require $2.5 million saved for retirement, for example, whereas someone who intends to live off just $20,000 a year in retirement would only need $500,000 (and maybe have to take freelance work to supplement other goals).

Jillian Johnsrud from Montana Money Adventure, 32, took a frugal approach to her financial independence. She and her husband looked at their expenses and cash flow and saw they had enough passive income through a military pension and investments, as well as cash, to cover all their basic needs. They set out to experiment with financial independence for a year, which became two, and then continued on. We are more interested in just creating a life so perfect for everything important to us, she said.

To them, financial independence simply means the freedom to make their own choices. She and her husband never earned high incomes and didnt come from privileged backgrounds. (We always lived below the poverty line, Johnsrud said.) Within a decade, they paid off their debt, bought their home with cash, adopted four children (and had two biological children) and traveled abroad. They had to be creative, such as reducing the grocery bill (she has written about $1 meals for breakfast, lunch and dinner), and relentlessly keep their goals in mind. You might not be able to have the same metrics someone else has, she said. Saving $5 million may take years for one person, and decades for another.

Dont miss: Think saving for retirement is unrealistic? Try retiring with no savings

Financial independence ultimately relies on a very personal strategy what people want in their lives, how much they need to fund those goals and a dedication to save enough to do so. Fat FIRE versus Lean FIRE suggests numerical boundaries, said Tanja Hester, personal finance blogger behind Our Next Life who is now working on a book called Work Optional. Along with having a vision for the future, everyone is coming at early retirement from different points in their lives some are younger with more years to accrue returns and interest on their assets, others might be living in very economical cities (not expensive hubs like New York City and Los Angeles) and others might have one spouse earning a much higher income to more quickly attain their savings goal.

Still, people should factor in unexpected emergencies or health care costs. For other reasons too, I think it makes sense to save a little bit more than they think is necessary, regardless of the budget or the 25x rule, Hester said. Not everyone especially millennials plan for how much theyll need in retirement. More than half of millennials guessed how much they would need to save, according to a 2014 Transamerica Center report, and only one in 10 used a calculator or spreadsheet to make those estimates. That generation in particular also has other financial considerations to make, such as how much they may really get in Social Security paychecks (theyll still get a benefit, but it may be reduced by the time they retire) or potentially having to care for an elderly parent or loved one.

J, the personal finance blogger behind Millennial Boss and the podcast FIRE Drill, said she believes $2 million is enough, and she and her husband have incomes high enough to reach that goal. Using the so-called 4% rule, where you withdraw that much of your assets every year to live on, would be more than enough for the average person, especially if they pay off their home like they plan to do. But even then, she understands other expenses will pop up. We dont know what will happen with health care and we dont know what the situation will be like with family, and we may need to support older members of the family, she said. To me, that number seems more safe.

Also see: The 3 most surprising things I learned when I got serious about early retirement

After determining how much money it will take to retire early, those interested should learn how to invest. A few other tasks to consider: automate paying bills and saving in various accounts; put aside enough cash to offset volatility in the markets; and focus on the long term.

After all, retirement will last a lot longer if you start in your 30s.

Read the original here:

How much does financial independence cost? It depends on your ...

You cant go from broke to rich in a single step. Theres no magic fairy who will suddenly transform your financial life for you. You have to do it yourself.

But you can work your way through a path that leads to financial independence and complete abundance. That path has stages and you should celebrate your progress at every stage!

We all begin from a place of dependence on others. You may be a young adult transitioning from under your parents care to being self-supporting. Or you may have hit a rough patch in life as an adult and needed the help and aid of others.

Regardless where youre starting from, the first step is to transition from being dependent on others to being self-supporting and financially solvent.

The first stage of financial independence is to become financially solvent. This means that you are able to support yourself on your own income without the aid of others and that you are current on all of your bills.

There are many strategies that you can employ depending on your starting point. You may need to create an income for the very first time in your life. You may need to transition from an unreliable or low income to a bigger and better income. Or you may need some ideas to renegotiate your debts with your creditors.

It doesnt matter why youre behind. It only matters that you get your income to a point where its equal to or greater than your expenses.

Once youre current on your bills, you need to build a buffer account. Call it what you willemergency fund, rainy day fund, cash reserves, buffer accountthe purpose is the same.

Unexpected problems happen. Unexpected opportunities present themselves. Youll need money. If you dont have any money saved, youll fall behind on your bills and wind up in debt. Or you wont be able to take advantage of a perfect opportunity because you didnt have the cash.

First you figure out how much you need in the buffer account. Then you save it. Then you declare yourself financially stable.

If you have debt, youll probably want to get rid of it. Not all debt is created equal. But youll need to sit down and look at your debts and make a plan to dump the debt thats not getting you closer to financial independence.

That definitely means getting rid of any high-interest rate debt. It certainly means clearing your name from any old, unpaid debts. It probably means dumping any consumer debt tied to depreciating assets. And it likely means having a plan to clear the debt on any productive business or investment assets.

Being debt free means you can enjoy greater freedom and independence in your life. And thats the whole point, isnt it?

Your long-term goal is to de-couple the expenses associated with your lifestyle from your need to work to pay for them. That happens when the income from your investments is sufficient to pay for them.

This happens in stagessmall at first and larger later. The first stage is to have your basic living expenses covered by your investment income.

That means your housing expenses, utilities, food, transportation, and insurance. When these basic needs of life are covered by your investment income youve attained a high degree of financial security.

When your current lifestyle expenses can be met with your investment income, youve reached the point of financial independence! Congratulations!

You can choose to disconnect yourself from work if you want to. But of course you might choose not to.

The key at this stage is simply to know that its up to you!

Its possible that you have some lifestyle goals which are beyond the lifestyle youre currently living.

This might be things you desire to buy, experiences you desire to have, or philanthropic goals you wish to meet.

If so, the important thing is to clarify these goals and fund them with your investment income. At that point in time, youre truly financially free in every sense of the word.

When you reach this stage of your financial journey, youve reached the most challenging stage of all. But it can be a very enjoyable challenge!

Youve accumulated wealth beyond the amount needed to fund your own lifestyle expenses with a comfortable margin of safety.

Now you have to decide how to responsibly manage the surplus. How will you allocate it productively while you control it? And who will control it when youre done with it? How will you assure that the money is used for good and not for evil?

Its a real challenge, but its one faced by all those who have faithfully and steadily built wealth throughout their lifetimes. Its the most important stage of all.

Read the rest here:

The 7 Stages of Financial Independence | Radical Personal ...

With its story capturing the imagination of so many private investors, it's no real surprise that 1.2bn cap polyhalite producer SiriusMinerals(LSE: SXX) remains one of the most traded stocks on the London Stock Exchange.

Last week's interim results made reference to "excellentprogress" being made on the company's Woodsmith Mine and associated infrastructure with development progressing on time and on budget.

Having completed all highways and enablement works and most of the preparations at the site, CEO Chris Fraser stated that the company now eagerly anticipated the commencement of shaft sinking activities. He also reported that Sirius was continuing to engage with commercial partners around the globe and that interest in the company's POLY4 product "remainsstrong".

Of course, there's still a very long way to go and many hurdles to overcome before the mine becomes operational, which probably explains why the share price is still struggling to stay above the 30p mark. Nevertheless, I remain bullish on Sirius and its ability to grow its investors' wealth steadily over the next few years, particularly with the company now comfortably occupying a space in the relatively stable FTSE 250 index following its move from the junior market.

For those who simply can't wait for next four years to elapse however, there may be an alternative.

It may be a minnow compared to Sirius butBluejayMining(LSE: JAY) is quickly winning friends thanks to the potential of its relativelylow-cost Pituffik Titanium project in Greenland --independently verified as being the highest grade ilmenite mineral sand deposit in the world.

According to today's interim results, Bluejay's work programme for the year is now "welladvanced" with managementaiming to begin constructing the mine plant in early 2018 and a full exploration licence expected during H1.Offtake discussions with potential customers are progressing and likely to conclude within the next 3-6 months.

Thanks to the levels of visible ilmenite concentrations being so great, Bluejay's proof-of-concept bulk sampling programme is also "exceedingexpectations" to such an extent that stockpiling is now forecast to begin far earlier than planned assuming production rates can be maintained. This puts Bluejay in an excellent position to begin selling its product as soon as the relevant licence is received.

Like Sirius, Bluejay's project has been warmly received by the local community as well as many government and environmental agencies. June's oversubscribed placing -- allowing Bluejay to boast a net cash balance of 5.8m at end of H1 -- also means the company's popularity among institutional investors (including Prudential plc) continues to grow.

The shares have climbed over 200% since last August, leaving the company with a market cap of 136m. Based on comments from CEO Rod McIllree however, the coming months could be "equallytransformative". In time, he believes that the Pituffik project could completely transform the titanium industry. All this before Bluejay's wider asset portfolio in Greenland and Finland is even considered.

While mining projects carry significant risk, both Bluejay and Sirius could be excellent medium-to-long term investments for those determined to become financially independent. That said, while the North Yorkshire Moors are a far more hospitable environment than that faced by Bluejay, it could be that the latter's relatively simple production model could reward holders a lot sooner.

With their ability to generate huge capital gains for investors, it's no surprise that mining stocks appeal to those investors keen to secure financial independence sooner rather than later.

Despite this, there are also far less risky ways of obtaining financialfreedom, some of which are outlined in a BRAND NEW special free report from the Motley Fool's analysts.

The Foolish Guide to Financial Independence is available completely FREE of charge and comes without any obligation.

Grab your copy here.

Paul Summers owns shares in Sirius Minerals. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes

See the rest here:

Could this miner help you secure financial independence faster than ... - AOL UK

BRIDGEPORT, W.Va (WDTV)- Question: My dad recently passed away. He had a Roth IRA as well as a 401(k). As a non-spouse beneficiary, can I roll over the accounts into my personal Roth IRA and 401(k) accounts?

Answer (John Halterman, Beacon Wealth Management): "Let's start with, can you roll the money over into your personal account? That answer is actually no. Only spouses can roll over a Roth IRA into their own Roth IRA and a 401(k) can be rolled over into your own Ira. But in this type of situation since you are not a spouse, what do you need to do is what we call an inherited Roth IRA or an inherited IRA. So both of those can be rolled over into an account, it's going to be in your name, just not going to be in your personal Roth IRA and 401(k)."

Q: How with the taxes affect me?

Answer (John Halterman, Beacon Wealth Management): "The Roth IRA, because it's a Roth IRA, it's actually going to be tax-free in the future to him. When you rollover money into an inherited, you do have to take what we call the required minimum distribution. But in the Roth portion, because of the tax for account there will be no taxes. Now for the 401(k), because it's going into an inherited IRA, and you have to take required minimum distributions, those will be taxed as ordinary income. One's tax-free and one's going to be taxed."

Original post:

Solutions 4 Financial Independence: 8/22/17 - WDTV

NEW YORK (CNNMoney) -- Millennials are the first generation to shun traditional retirement and seek financial freedom instead -- when income from savings is enough to cover expenses, and working becomes a choice, often long before the age of 65.

Becoming financially independent and retiring early, a process known as FIRE, can be achieved at any income level by saving a high percentage of your salary, or cutting your expenses -- or both. CNNMoney profiles people who've reached financial independence early and on their own terms.

On a recent Wednesday afternoon, 29-year-old J.P. Livingston sat at an outdoor cafe in New York's West Village, wrapped in a cozy sweater, sipping tea and talking about her current project: retirement.

Livingston says she quit the workforce last year with $2.25 million after working in finance for only 7 years.

Let the Baby Boomers have their "retirement," with its delayed gratification and uncertain benefits, say an increasing number of young people like Livingston. Instead, they are gaming their income, saving rates and investments to become financially independent and retire early -- a process known as FIRE.

While Americans commonly spend most of what they earn and fall short on traditional retirement savings, today's young people are the first generation to plan for financial freedom: 63% of affluent Millennials prefer financial freedom over retirement, while 37% are saving to leave the workforce altogether, according to a study from Merrill Edge.

Anyone can achieve financial independence simply by saving a lot. Most people who are able to quit the workforce at a very young age do it by saving at least half their income.

And Livingston sets the bar pretty high. She saved at least 70% of everything she made for 7 years. And she chose a career -- and a city -- that would help her do that by maximizing her income, despite the high cost of living.

She had a mission. What else would you call it, when you start planning your retirement as a teen?

"I've wanted to be financially independent and retire early for years," Livingston said, recalling wandering around bookstores as a tween and being drawn to books on early retirement.

Sure, she had a few things going for her -- more than most: She managed to graduate from Harvard University in three years with no debt and some savings. She also landed a very high-paying job in finance that came with a six-figure income that increased exponentially over time. And she had a plan that made it possible for her to reach financial independence before she and her husband started a family and expenses inevitably grew. (A new project for her retirement: having a baby. She recently learned she's pregnant.)

But her nest egg is self-made. Even though her husband still works, Livingston's own savings are enough to cover both their living expenses -- around $67,000 per year -- for the rest of their lives.

"I came from a family that grew up really poor," said Livingston, who now writes under that pen-name on her blog about retiring early, TheMoneyHabit.org. "My family constantly reminded me that it was important to focus on providing for yourself." She prefers to remain anonymous to protect her privacy in revealing sensitive financial information. (CNNMoney has independently confirmed her identity.)

Livingston's fast-track to financial freedom was strategic, with each stage building on the next. First, she focused on her income, then on building her savings, followed by investment growth. Now that she's reached retirement, she's focused on tax optimization.

Here's how she did it.

Super-charge your income

Instead of moving to an area with a low cost of living (an easy way to slash expenses), Livingston doubled down on New York City.

"You can find the best job opportunities here," Livingston said. "I couldn't have found my job in Omaha, Nebraska. Maybe in Chicago, but I'd be paid less. I was paid the most here."

She worked hard to continually boost her income, which came through salary, raises, bonuses and commissions. When she first started working she was earning six-figures right out of the gate. Her starting salary was $60,000, plus incentives, which could easily double her yearly pay. But it only went up from there. Over the years, she increased her salary significantly, earning promotions with raises upwards of 30% along the way. By the time she quit her job, her paycheck was in the mid-six-figures.

A major feather in her cap was not having any debt, especially student loans.

"I was very aware of how expensive Harvard was," said Livingston. "I decided I should just get out early." She paid for school through scholarships and her family's savings. Graduating early allowed her to avoid paying additional expenses and move directly into earning an income.

Even if you go to a less expensive school, she says, if you can get it together to graduate a year early, you can avoid taking a loan for that year or, if you have the savings, "you can park that $20,000 in the market and start earning."

Crank the savings rate sky-high

Livingston's hard-core formula to reach a 70%-plus savings rate: income minus expenses equals savings.

When friends called her to go out, she'd steer them toward the most affordable social engagements: "I'd love to see you! Can I join you for drinks after? Or are you free for brunch?"

In addition to offering her a high income, New York's higher density offered her ways to save. She was able to live car-free and found that higher earning people getting rid of great stuff led to super deals on Craigslist or curbside.

"We had a gorgeous, pristine storage bench my roommate found on the street with a 'free' sign on it," she said. "It was one of the nicest pieces of furniture in the whole apartment."

She also had a broad choice of living situations. She opted for a third-floor walk-up where she had a mattress on the floor and paid $1,100 a month, her first year out of college. After that she moved to a 325-square-foot fifth-floor walk-up where she still lives with her husband and dog.

While building up her savings she started out living on $25,000. Even as her salary grew, her spending only went up to $30,000 a year.

"Incremental improvements that you build into your routine will pay out not just once, but it will pay off multifold," says Livingston. Lowering your rent by adding another roommate, saying you'll only meet friends for brunch, coffee or drinks (as opposed to more expensive dinners), "that will keep paying off for you year after year."

Grow the money

But you're not going to get to $2.25 million just by skipping a few dinners. About 60% of Livingston's net worth came from savings, and about 40% came from investing, primarily in a combination of low-cost index funds, options and municipal bonds, depending on the market.

Her expertise in the financial industry certainly helped juice her investment returns.

Once your savings are substantial, she says, the tweaks you make to your investments will have much more impact than any changes to your spending or saving habits.

For example, if you earn $70,000 a year and have regularly saved a significant portion for a few years, you may have between $120,000 to $150,000 in savings. If you can get a 10% return on your investments, you'll add $12,000 to $15,000 to your savings.

Among the proponents of FIRE, who support each other on various spaces on-line, Livingston's accomplishment is called "Fat FIRE," which is like FIRE, but with much bigger monthly budgets, and therefore much larger nest eggs.

She and her husband now live on $67,000 a year, an annual budget others on the path to FIRE may balk at as very high.

"That buys us a lot of cushy luxuries which include maid service and sending laundry out," she said. "We skimp on a lot of things, but those actually end up being quite affordable in Manhattan because of the density, and are offset by the cheap rent we pay." Plus: they don't have a washing machine.

While her expenses are completely covered by her savings, her husband still works, but by choice.

These days Livingston is working on growing her money and helping others to do the same through her blog.

"The you that is intentional with your money and constantly looking for improvement will be that much wealthier than the one that isn't, whatever your starting circumstances may be."

By Anna Bahney

The CNN TM & 2017 Cable News Network, Inc., a Time Warner Company. All rights reserved.

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How to retire early with financial independence in 3 steps - NBC2 News

The story got people talking.

Many CNNMoney readers viewed Livingston as an outlier with advantages that most people don't have because she graduated from Harvard with zero debt and had an extremely high income.

RadicalM0derate says on Twitter: "So to retire young: get into Harvard & pay for it through scholarships and family $; save most/all of your 6 figure income for 10 yrs. Easy."

To be sure, Livingston is in a rarefied group.

The acceptance rate this year at Harvard is 5.2%, according to Harvard. And getting any degree debt free is far from the norm: The average student debt tops $30,000.

Plus, Livingston's mid-six-figure income put her squarely in the 1%. Most people earn something closer to the median income, which is $56,500, according to the Census Bureau.

Full story: She retired at 28 with $2.25 million

But some readers found her story inspiring, and the lessons applicable.

As Anton Mykytenko posted on Facebook, her experience, while on one end of the spectrum, is scalable: "Regardless of whether or not she received some help, she still worked to find the place where she's paid the most versus her living costs, saved up 70% of her income, and planned early. No matter your situation, these are still things you can apply to your life. Think about how what she did can help you get ahead instead of getting outraged."

Many people have achieved financial independence on much lower incomes, like this couple we profiled in June. While age 28 is extreme, those with lower incomes might be able to do it by 35 or 40, or by moving somewhere with a lower cost of living, or learning to live on less.

Other readers pointed out that Livingston can't be financially independent if her spouse still works.

"She is not really retired she got married & plans on having kids & her husband still works. Like many families," writes Patrick Landers on Facebook.

But Livingston's savings are enough to cover both her and her husband's expenses regardless of his income. (Plus, he has some savings of his own).

Some readers questioned whether financial independence is possible for someone who didn't go to Harvard, and isn't in the 1%.

One Reddit user thinks it is: "I live in NYC. $2 million is our number and we are 3/4 of the way there. Of course I made less than this woman for my entire career, went to SUNY, and still spent much of my time and money partying when I was her age. But I'm 44 and almost there."

Related: How to become financially independent in 5 years

At such a young age, is $2.25 million really going to be enough to last for the rest of her life?

As Matthew Coldrick replied on Facebook, "Most people need that much to retire at 60. Good luck making $2m last 60 years."

With a nest egg of $2.25 million to live on for the next 60 years, she could take out $88,800 annually or about $7,400 a month from age 29 to 89, assuming a 4% growth rate. Not living large, but certainly better off than many people, especially considering she isn't even working.

So Livingston feels set at 29 years old with her pot of gold. Many readers wanted to know: then what?

Karren Omeara asks on Facebook: "So than what do you do with at least 50 years left?"

"Live" replied Deborah Toomey.

Even by making a few tweaks to your current finances -- saving 20% for retirement instead of 10%, looking to used goods instead of new, cutting entertainment expenses, investing what you have in a way that suits your risk-tolerance -- you can still get to the retirement you're looking for. Whether it is at 28 or 58, it's your journey, better to have more control over it now than less later.

CNNMoney (New York) First published August 4, 2017: 3:52 PM ET

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Independence Financial Group

Many people dream of retiring early with enough money to be able to do as they please for the rest of their lives. Turning that dream into reality is possible, as long as you take it seriously and commit to taking action.

I reckon that if you take these five steps you'll be well on your way to creating the conditions necessary for you to retire early and be financially secure. It probably won't be easy to achieve, but with persistence and determination, I'm sure you can make it happen.

Many fail to achieve financial freedom because deep down they don't really believe they can do it, so they end up fighting against self-sabotage.

Accumulating a fortune seems like a daunting task when you are at the beginning of the journey, and I reckon many people have a tendency to give up in a thousand little ways along the way. Perhaps you end up blowing your savings on that holiday of a lifetime. Perhaps you keep on doing that kind of thing. If you're striking for early retirement, that's self-sabotage.

To be successful, I think step one is to adopt a mindset of belief and determination that will guide you on your journey and help you make better choices along the way.

With your can-do mindset in place, step two is to grab your finances by the whatsits and get in control of debts and outgoings with the aim of living below your means. It's a well-touted concept, but it works.

Spend less than you earn and cultivate a saving habit. Plan to save, and work your plan as hard as you can. If you do that, the magic starts to happen.

This is like step two, but magnified then put into action and underlines just how important control of yourmoney is. With your domestic finances working better, step three is to really toughen up and act decisively, bearing down on personal outgoings and making hard choices. Hone the management of domestic finances until they work like a well-oiled machine so you can squeeze every penny possibleout of the leaky bucket and direct it towards your dream of financial freedom.

I'm not suggesting a life of total abstinence and austerity, just a measured, balanced and controlled approach to your finances with you firmly in charge. Every pound counts because those pounds will compound over time into many more pounds.

Now that you've fixed all the leaks in your domestic budget step four is to direct your creativity to earn more income. Direct the surplus you earn straight to building up your savings and don't be tempted to self-sabotage by raising your standard of living and spending if you are already enjoying a happy and fulfilling lifestyle.

After applying yourself to building up your saved capital, step five is to make that money work hard for you by looking for ways to compound it, such as investing on the stock market.

Over time, shares have outperformed all other asset classes and you can get involved by using such vehicles as low-cost index tracking funds, managed funds, directed stock-picking services such as those offered here at the Motley Fool, or by embracing the concept of private investing completely and picking your own shares and investments.

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