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Financial Independence
Before we begin, ask yourself this question: Do I want to be financially independent? Yes or No.
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Financial independence is one of those funny terms. It’s one of those terms thrown around loosely, especially by anyone in the financial field from brokers, to bankers, to insurance salesmen. Everybody you talk to says they want to be financially independent, and it seems every sales person in the industry can get you there with their product or two they market. But have you ever though about what it actually is, and what you can do to become financially independent?
Before you can even think about being financially independent do you think it’s important to know what it means? One definition of financial independence is to have enough passive income to live your desired lifestyle. Passive income is money that you bring in independent of yourself, basically it’s money that you have coming in that you don’t have to work for. There are four ways for you to earn income in America today, two of them are passive income, either off of investments or through owning a business. Either you have enough cash money saved and live off of the interest generated or you have a business that is generating income whether you get out of bed or not.
Well what if I have a paint contracting business? Is that passive income? It depends. Are you the one out there scraping and painting all day? Well if so, then no. Passive income is income you bring in independent of yourself. If you own your own business from a construction contractor, to a dentist, to a lawyer, to a doctor, to a submarine-sandwich shop owner, not that there is anything wrong in any of those professions, but if you have to work in your business in anyway in order for the business to survive, you’re still only self-employed, you just own your job.
“Well I got my own business and I only go in on Mondays to write the checks,” one might say. Well great, just pay someone to write those checks and your good to go.
You see financial independence is not just about the money, yeah money is great to have ,but really it's about the freedom. I think that’s why most people want financial independence, it’s the freedom. The freedom to do what you want whenever your want to do it. To stay on vacation an extra day, week or even month and not have to be back on Monday to write those checks. Remember it's about the freedom and making everything in life a choice, not a decision based on restraints of either time or money.
So in order to be financially independent you need either:
A. Large Amount of Investments(pile of cash), and live off of interest.
a. (example: lump sum of $1,000,000 x 10% = $100,000/yr)
B. Profitable Business that runs Independent of you.
If you answered yes at the beginning, you need to figure out which method you are going to use to become financially independent, A or B?
