Findependence Day: How to achieve Financial Independence — while you’re still young enough to enjoy it
Findependence is a contraction of Financial Independence, so Findependence Day is the moment far off in the future when your income from all sources exceeds the income you could get from a single employer. Henceforth, you work because you want to work, not because you have to.
The financial concepts roll out in the order of a normal human “life cycle,” proceeding from saving for college, graduating, landing a first job, enrolling in an employer pension plan, getting married, buying a first home, saving for retirement, raising children. Then the cycle resumes as you save money for the education of your children, and they need to learn the same concepts as they graduate and confront the working world.
The thrust of the novel is to impart enough major concepts that if all of the suggestions were implemented, you would achieve financial independence while you’re still young enough to enjoy it. Thus, in the book, a young couple named Jamie and Sheena want to reach their Findependence Day at the relatively young age of 50.
This is not a get-rich-quick book but is about getting rich slowly, whether through financial assets, pensions, real estate or — ideally — a combination of all of these. It takes 20 or 30 years to achieve financial independence and the book follows the couple over 22 years: hence the “financial Pilgrim’s Progress” description of one reviewer.
The book begins when Jamie & Sheena are 28 and featured guests on a financial reality TV show. Humiliated by their credit card debt before a nationwide TV audience, Jamie vows his Findependence Day will be the day he turns 50. But Sheena won’t buy into the “guerrilla frugality” habit needed to save money.
Jamie prefers stocks and financial assets and wants to be an entrepreneur. Sheena on the other hand has a comfortable teaching job and expects a generous Defined Benefit pension plan when she retires. She feels uncomfortable with Jamie’s punts on the stock market, urging him to invest instead in something more tangible, like the bricks and mortar of real estate.
Their disagreements over money escalate, as Jamie stakes everything on the big score when his hobby website attracts a big social networking site. Betrayed by his business partner, his world falls apart, threatening his dream of early financial independence.
All-American edition now available, including as e-book
In April 2013, Trafford.com published the new revised all-U.S. edition under the same title, in both hardcover and soft cover, plus most major e-book formats (just $3.99 for e-books). The plot and characters are almost the same, but the setting is entirely in the United States (chiefly Chicago, Boston, Maine and Florida). The financial content is all-American and current as of early 2013, so it’s all about IRAs, Social Security, Roth plans, 529 plans etc., with no Canadian content whatsoever. The manuscript was vetted by several American financial planners, including Garrett Planning Network founder Sheryl Garrett, who also penned the new foreword. Also new is a glossary and end-of-chapter summaries of the new financial concepts Jamie and Sheena learned in the preceding action.
Click here to purchase directly from Amazon.com, Barnes & Noble or Trafford.
Conventionally, the American dream refers to a well-paid job, a family of two or three children and a new home along with a sturdy retirement nest egg. However, the impact of the economic meltdown as well as over trillion dollar student loan debt has left many to reconsider that dream. They are now introspecting a lot about the reasons for their own financial plight. Moreover, they are looking for ways to resolve the issues that plague their financial independence or “findependence.”
A new survey by Credit.com and GfK Custom Research found 25% of respondents defined their version of the American dream as being able to lead a debt-free life. Such a response comes second only to the definition of becoming financially stable by the time one reaches the age of 65.
This answer came mostly from the group who belong to the retirement age of 65 or above. In addition, 18% of the survey participants have responded that they dream to buy a house of their own, while 7% want to opt for higher studies and pay off their education loans.
Despite the continuous grim economic outlook, people are positive regarding their ability to fulfill their customized American dream. Another survey by Credit.com has revealed that 54% have a belief they are about to fulfill their dream, while another 24% declared they have already attained it. This summed up to a total of 78% who were affirmative about their retirement prospects.
The advantages of being findependent
Post the the Great Recession of 2008, Americans have chosen a path that is not wrought with underwater-mortgages, overwhelming credit card balances, tedious car loans and multiple lines of student loans.
Instead, their new road leads them to a life that is debt-free – where they’re no longer burdened with an exhausting budget, a dreadful mailbox and life that’s controlled by the debt collectors and spiralling interest rates.
There are numerous benefits to living debt-free that would entice anyone living on the edge of bankruptcy to start following a debt management strategy to get rid of his or her financial woes. Some are as follows:
Reduced interest charges – CreditCards.com has said that, on an average, rate of interest on credit cards is 14.95%. The average credit card debt for the consumer carrying a balance is almost $5,000. So, a lot of interest is paid by people that is also weighing down their monthly budgets. However, these are just the averages. For people with bad credit histories, the rate of interest could be several notches higher. Hence, being debt-free allows you to steer clear of wasting your hard-earned money on interests that would leave little tangible benefit for you to use at a later stage.
Increased retirement fund – According to a combined statistical data compiled by the Federal Reserve, the U.S Census Bureau and the Internal Revenue Service (IRS) of 2012, 25% of American households do not have any savings whatsoever. What’s more surprising is the average retirement fund is only $35,000. Indeed, avoiding sky-high interest debts could leave these people with more disposable income. It isn’t difficult to understand there are numerous ways to dodge long-term debt.
More, they could even find out the ways to direct their income as well as increase their savings at the end of it all. The bottom line is the absence of monthly bills with exorbitant interest lets you save all the more aggressively for retirement, home purchase, college and even build up an emergency fund.
Finally, that one benefit sought by everyone is complete solace and peace of mind. Hence, being debt free and attaining financial independence would translate into a life with less worries. These are a few of the advantages of findependence that you cannot support with a survey report or reflect through statistics.
This guest blog was written by Zindaida Grace, a financial writer and researcher associated with the Oak View Law Group. She loves to help people undergoing severe financial hardships through her inspiring articles on the perils of excessive debt. She is also actively involved with several online financial forums and social media platforms.
What I call the “Findependence Day Model” dervived from the book is simply the combination of three things.
All three deal with cutting investment costs or brokerage costs. The first is using a discount brokerage to make your own trades, typically at $10 per transaction. The second is to take advantage of broadly diversified, tax-efficient and low-cost exchange-traded funds (ETFs), which can also be purchased at a discount brokerage.
And the third is to use a fee-for-service financial planner, that is, a planner whose services are billed either by time (usually by the hour) or by the project (as in a one-time financial plan) but NOT via annual fees levied as a percentage of client assets under management. The problem with the latter is it gets prohibitively expensive as wealth grows, unless the fees are tapered down accordingly. I recently heard from a reader complaining that a 1% fee on a $4 million portfolio cost $40,000 a year — an amount many people could live on. Clearly in such case, you should negotiate a lower fee: say 0.5% for starters, or look for another firm that will negotiate, or go the DIY route described in this blog and find a true fee-for-service planner.
What the heck does “fee-only” really mean?
Note there is much confusion over the term “fee-only.” As Preet Banerjee writes in the current issue of MoneySense — here — the term fee-only does not necessarily mean fee-for-service. All that fee-only means is that it is NOT old-time commission-based, levying commissions per transaction. In fact, commission-based is not that bad a deal, particularly if you’re a buy-and-hold investor.
Sadly, many journalists and even advisers themselves have used the term “fee-only” when they really were referring to fee-for-service. As a result of the definition used in the US NAPFA, an asset-based financial planner (like the one charging our reader 1% of a $4 million portfolio) is well within their rights to refer to themselves as “fee-only.” Fee-only can mean EITHER fee-for-service OR asset-based financial planning, rendering it almost meaningless. And mea culpa, even in the two editions of Findependence Day, I use the term fee-only when I should have used “fee-for-service.” Future editions will fix that and editions of MoneySense magazine will going forward make this distinction clear.
MoneySense’s new Fee-for-Service online directory
Because of this, we at MoneySense have revamped the previous online directory of “fee-only” planners. Click here for the new directory, or rather TWO directories: one for true fee-for-service (i.e. by hourly or project billing) and one for financial planners who are primarily asset-based (at least 60% of revenues) but who do offer clients the option of time-based or fee-for-service billing.
I might add that other aspects of the Findependence Day model have also been rolled out in MoneySense throughout the year 2013. Our Feb/March issue on RRSPs introduced the ETF All-.Stars, which will be revisited in the Feb/March 2014 issue. And our June 2013 issue introduced MoneySense’s first survey of Canada’s best discount brokerages, a second version of which will run next summer. Both features were written by MoneySense editor at large Dan Bortolotti, more about which can be found below.
For those who missed those two issues of the magazine, here’s a tip. It costs only $20 a year to subscribe to MoneySense magazine (7 issues), which also gets you free access to the web site at MoneySense.ca PLUS the iPad edition. We recently went behind a paywall (or technically a pay fence) but the iPad edition also gives you the back issues, including the ones mentioned above and in fact all the issues since I became editor starting with the June 2012 issue.
Upcoming iShares educational event in partnership with MoneySense
Finally, those in the greater Toronto area may find an event coming Saturday, November 16th of interest. Dan, mentioned above and pictured on the left, will be talking about ETFs and portfolio construction along with “Ask MoneySense” columnist and broadcaster Bruce Sellery, and various iShares ETF experts from BlackRock Canada . Dan will be taking readers through some of the concepts I’ve described above, as outlined in the book he authored for the magazine: the MoneySense Guide to the Perfect Portfolio, copies of which will be given away at the event, along with the current issue of the magazine, parking and breakfast. (more than recouping the $25 charge).
I might add that Dan is in the process of becoming a financial planner himself. He is already working with PWL Capital, whose firm is listed in the new directory as primarily asset-based. Dan himself is in the fee-for-service camp.
Details for the iShares/MoneySense event can be found here.
I’ve not previously given this site over to guest bloggers before but I really liked the concept of Findependence Day for Teens, so I’m happy to run this piece by Dave Landry Jr., a debt relief counsellor who recently has begun to blog. Over to you, Dave!
Findpendence Day for Teens
By Dave Landry Jr.
It’s doubtful many teenagers think about financial independence. After all, middle age, not to mention old age, is as far away as it can be and the idea of saving for the future when you have so much of it in front of you doesn’t seem like a priority. Of course, this doesn’t mean that many teenagers don’t plan their financial futures, but it does mean that all of them should. The reasoning is the same for a teenager as it is for an adult: Namely, the sooner you begin planning for your findependence day, the sooner you can achieve it. And believe it or not there are many things that most teenagers can start doing right away to ensure that their financial independence comes sooner rather than later.
1.) Stay out of debt. Since it’s doubtful you’ll have the income to put down a payment on a house, what we’re talking about here is consumer debt; most specifically, credit cards. If you do take out credit cards, pay off your minimum balances each month and plan ahead for spending in large amounts. Should one fall into debt’s way, a service like National Debt Relief can assist in managing the situation and ease the transition of filing for bankruptcy or consolidating.
Of course, even if you are forced to make a large purchase on a credit card that you cannot pay back immediately or maybe you even wish to bump your credit score up by maintaining a balance for a short period then you can still stay out of debt by planning ahead. Just make sure you give yourself the shortest period of time to pay it off. You may realize what an interest rate is, but make sure you understand the implications of one and how it alters the repayment period of your temporary loan.
2.) Begin building your cash cushion. Keep some of your money in a savings account that you don’t touch except to make deposits. At this point, you may not think you’ll save a lot but you’d be surprised how money can accumulate once you plan ahead. You may want to go with a traditional savings account for this but do remember that there are alternatives. A certificate of deposit (CD in the USA) or Guaranteed Investment Certificate (GIC in Canada) won’t let you touch your money for a period of time but if you don’t need access to it then this is a safe and easy way to let your money start making money for you.
Mostly though, developing the practice of saving money in any form is what you’re after. Make sure you try doing it as a percentage of your income instead of a lump dollar amount. This will ensure that when you work jobs with higher income in the future, your savings rate will remain similar in your mind but the total amount saved will be significantly larger.
3.) Invest if you can. If you have extra money and want to begin investing, then there is a lot to consider. The safest bets might be with government bonds, municipal bonds, and even corporate bonds. Each one has its own sets of risks and rewards, so doing your homework is important. Also, consider mutual funds. There is tremendous diversity with mutual funds and what’s better they can begin exposing you to the stock market. This means that you can begin building small cash surpluses while you learn what to do with them in the future.
4.) Account for college. Take your future school costs into consideration now before you take out student loans. By understanding what taking out a loan entails and by utilizing a budget before you ever go to school you can avoid the burden of significant student loan debt and the lack of a plan to repay it. More than anything, what you’re building in your teenage years are good habits. And just as this is true in social settings, professional settings, and educational settings, it can also be true of you financial future.
Dave Landry Jr. is a personal finance manager and debt relief counselor who has only recently started blogging to share his expertise on those matters and more. He hopes that you enjoy this article.
Here is a 15-minute Internet interview about Findependence Day with Toginet Radio’s Steve Jorgenson, which aired this morning (Sunday, August 18th).
It you have difficulty accessing the clip, just go to Toginet.com and check the schedule for Sunday, August 18th: the 11 am time slot. It’s under Recent Shows over to the right.
The clip contains interviews with three authors: the Findependence Day interview with me is the second of three, and you can go directly to about the 19.48 minute mark on iTunes if you don’t have time to listen to them all.
The host does a nice job in teasing out where the name Findependence came from, to explain what the expression “Freedom, Not Stuff” means, the need for financial literacy, the difference between retirement and findependence and other things.
Here’s a guest blog I wrote that’s just published on the Retirement and Good Living site, a boomer lifestyle site whose audience is 75-80% American with the balance Canadian. The theme is of course why, especially for younger folk, Financial Independence may be a more accessible, less threatening goal than traditional Retirement. The link is here.
Here’s the Financial Independence blog just published at moneysense.ca. I’m posting this here for those who may have missed it, even though it reprises a similar guest blog I did for Roger Wohlner at his blog this weekend over at The Chicago Financial Planner. You can find a link to that one via the MoneySense post and indeed to the original blog that spawned both of them at My Financial Independence Journey blog.
However, unlike those other blogs, in this version I’m continuing the publishing of the end-of-chapter summaries that appear in the new US edition and e-book. Those who bought the original edition of the book won’t have those summaries, nor the glossary at the end.
Chapter 5: You can’t always get what you want
A paid-for home is the cornerstone of financial independence; paying down mortgages
•A paid-for home is the cornerstone of financial independence.
• Bad debt is consumer debt that charges high rates of interest and cannot be deducted from your income tax bill.
• A home mortgage is good debt, especially in America, where you can write off the interest charges from your taxes.
• The faster you pay off your mortgage, the less interest you’ll pay.
• Aim for a 10 or 15 year amortization period, not 30 or 35 years.
• Pay Yourself First by setting up an automatic draft to transfer 10 to 20% of your paycheck into investments.
• Leverage means borrowing money in order to invest. It can work but requires emotional fortitude to stick to the program when markets are down.
• Because you can write off some expenses, self employment is an often overlooked tax shelter.
• Real estate is a major part of a diversified financial plan but those who don’t want to be landlords can instead buy REITs, or Real Estate Investment Trusts.
Now here’s a deal! Anyone who wants a free e-book of the new US edition of Findependence Day – or three books by other authors — can do so at a ”Digital Book Signing” next Thursday. Just click here to register, then join us Thursday, July 18th at 3:30 pm EST. I’ll be one of four authors featured. Everyone who signs in will be emailed a BookStub [see illustration] signed by me (or other authors), immediately following the event.
For those for whom the concept of a digital book signing may be novel — it was to me as well! — click here for a short introduction to the concept or this 2011 New York Times article, Would you sign my Kindle?
In the case of the US edition of Findependence Day, readers who have already bought the hard-copy Canadian edition can now get the e-book at no extra cost. The story is much the same as the original but it’s all set in the United States, the financial terms are all American, there’s a new glossary and it includes end-of-chapter summaries of the key financial concepts learned. Apart from the Kindle, you can get the book on the Nook, iPad and most other popular e-book formats, or indeed in a format readable on laptop or desktop computers.
Of course, you don’t need to have previously bought the book to take advantage of this short window: those who have happened on this web site and were curious can now satisfy their curiosity without spending one thin dime: Canadian or American! Guerrilla frugality at its finest — hoist by my own petard!
The other three authors and their featured books are:
L.D. Nascimento; The Curse of The Golden City and The Path to the Fallen Stars
Andrew Bernstein; California Slim
Daryl Edwards, The Guardian Corps and Book One—The Argent
Obviously, we all hope to create a bit of word-of-mouth for our respective books and ultimately to stimulate actual sales. In the case of Findependence Day I’d encourage anyone who does download the book and enjoys it to post a short review at Amazon.com, which is one of the main ways the book can be purchased (whether Kindle, paperback or hardcover). Here is a sample of half a dozen recent mini-reviews of the new edition at Amazon (click on Newest reviews first).
Recent Reviews of US edition of Findependence Day
Here is a link to several other recent reviews that appeared in and around the American Independence Day. This is a link to the Reviews tab elsewhere on this site: they appear four lines down and are grouped together to distinguish them from older reviews of the first edition.
Finally, below is the summary of key concepts covered in Chapter 4 (see earlier blog posts for the first three; others will be posted over the coming weeks):
Chapter 4: Baby You’re a Rich Man
The concept of Human Capital
• A “Frooger” is a Frugality Guerrilla.
• Froogers make frugality a lifetime habit: first to eliminate debt; later to build wealth.
• Part of being frugal entails tracking expenses and making a budget.
• If your employer has a pension plan, you’d be wise not to pass up the “free money.”
• Teachers and government workers like Sheena enjoy “Cadillac” Defined Benefit (DB) pension plans where you know exactly how much you’ll receive in retirement.
• Younger tech firms like Jamie’s employer are more likely to offer 401(k) retirement plans that go up or down with the stock and bond markets.
• Once you’re free of all consumer debt, employees should start an IRA or Individual Retirement Account. Uncle Sam gives you a generous tax break as an incentive – as long as you’re not also covered by an employer-sponsored retirement plan like a 401(k) or 403(b).
• You can save $5,500 a year in an IRA, or $6,500 if you’re over 50.
• You’re richer than you think means young people are rich in “human capital” – millions in future earning potential.
• To get diversified long-term growth in the stock market, consider exchange-traded funds (ETFs) or index mutual funds.
• ETFs and index funds are cheaper than most mutual funds because they track broad stock market indexes like the S&P500.
Now that Independence Day has come and gone, perhaps it’s time to start thinking about your Financial Independence Day, or my contraction for the same thing: Findependence Day.
Whether it arrives in the near future or many moons from now, we know that the day of leaving the workforce must some day arrive. The timing may or may not be under your control: health and employer willingness to retain your services also come into the picture. What IS under your control is the financial resources you can mobilize to maximize your freedom and flexibility once this event occurs. And this must be done while you’re still gainfully employed.
One difference in these terms is that while Independence Day comes around every year, Financial Independence Day is a more unique event. It’s not carved in stone, of course, and can be moved forward and backward depending on circumstances.
The illustration is from the cover of the new US edition of Findependence Day, complete with fireworks and balloons. The calendar depicted is from the future (2027), and July 4th is circled as the “Financial Independence Day” of one of the lead characters in the book – for this is a novel as well as a financial primer for young people just entering the workforce and embarking on family formation.
The point, as financial planner Sheryl Garrett remarked in a recent Marketwatch.com review of four books (including this one) is that the book’s title is about making a target: a point in the future you are working toward: “Findependence Day is the day you have choices and freedom. It’s redefining retirement and reaching financial independence.” Sheryl wrote the foreword to the book, which you can access via this free preview here at Amazon.com.
You can also read a blog on the book just published at NextAvenue.org, tied to the Independence Day theme — here — as well as a podcast on the book, where Al Emid interviews me for New Books in Investment: here.
And finally, on July 4th (yes, Independence Day) is this interview with Preet Banerjee on his “Mostly Money” audio podcast.
The power of visualization
Anyone familiar with goal-setting and visualization will know that, as I say in the book, there’s some power in setting an actual date in the future as a goal by which something is to be achieved. Jamie feels that on the day he turns 50, his income from all sources will exceed the income he could get from a sole employer and so he will become “findependent.”
I note that there are starting to emerge other books that also focus in on Financial Independence rather than Retirement, even though the term so beloved of the financial industry and the media is Retirement. In his recent non fiction book, Financial Independence: Getting to Point X, author and financial advisor John Vento describes Point X as the inflection point when financial independence is achieved. I”ve not yet read the book or talked to the author but it seems to me that Point X and Findependence Day are very similar concepts.
It’s worth reading Wikipedia’s entry on Financial Independence, which reads as follows.
… the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses.
I first became aware of that entry just a few weeks ago when I wrote a guest blog for fee-only planner Roger Wohlner, aka The Chicago Financial Planner. Since I’d finished the book by then it had no bearing on the book but the concept was not dramatically different.
Seek Findependence, Not Retirement
As I wrote for Roger in a blog entitled “Seek Findependence, Not Retirement,” the two terms are not the same. To be sure, you can’t really have retirement if you don’t first achieve financial independence, but seen the other way around, you can be financially independent and yet not choose to retire. Just look around at any big success in the business or art worlds and you’ll see the truth of that. Mick Jagger is findependent but still rocking, and the same can be said for Warren Buffett, Mark Zuckerberg and any number of other artists, musicians, actors and other celebrities.
Most of us are not born on Independence Day but we can all pick a date in the future – not necessarily a birthday – circle a figurative calendar and declare “That’s my Findependence Day.”
A warning though. It’s quite possible that the day after Findependence Day will be very little different than the day before. It happened that I turned 60 in April, almost to the day when the US edition of the book was published. As I related on my Financial Independence blog at MoneySense.ca, I hosted the world’s first Findependence Day Party, complete with balloons and fireworks. The following Monday, I was back at my day job at MoneySense magazine.
Findependence works in concert with related concepts like early retirement, phased retirement and even sabatticals and staycations. My thoughts on the latter can be seen in the blog published just before the one you’re reading now: Rehearsals for Retirement.
To everyone in America, I wish a happy Independence Day.
If you like folksingers from the 1960s, you’re probably familiar with Phil Ochs, who sang “I ain’t marching anymore” and many more catchy protest songs. He came to a sad end (self-inflicted) and one of his last albums was entitled Rehearsals for Retirement. (Yes, I still have the original vinyl and the song title is actually one of the chapter titles in Findependence Day).
That title also serves as today’s blog title and happens to be a key strategy for those who are pursuing financial independence. I’m taking this week off from my day job at MoneySense but it’s more or less a “Staycation”: a working vacation spent at home. Other terms for this are “Veranda Beach” or (in Quebec), “Balconville.”
In the book, I write that the day after Findependence may well be the same as the days and weeks before: you continue to practice whatever craft or profession that got you to Findependence. You’re not “retired,” you’re still productive and you still wish to be engaged in the world, connecting with the workplace, colleagues, friends and family — either virtually or physically.
Definition of Findependence
Let’s step back a second and review the definition of financial independence (findependence for short). I wrote about this on my Financial Independence blog last week at MoneySense.ca, which you can find here. Based on how I interpret the Wikipedia definition of financial independence, it is a prerequisite for retirement: that is, you can’t have retirement without findependence, but on the flip side, you CAN have findependence without retirement. Findependence is also the precursor to such variations on retirement as phased retirement, semi-retirement and today’s theme of “rehearsals for retirement.” A one-year “sabattical” is one long such rehearsal but as I write below, even a one-week paid vacation from your day job can be a rehearsal if it’s a working staycation.
Varieties of Staycations
There are I suppose two or three types of staycations: one is where you really take a vacation from work of any kind; another is where you continue to work, but on your own projects rather than an employer’s. Your time being your own, you can also do a hybrid of these, which is the route I’m going this week: doing various errands and chores one normally might tackle on weekends, but also engaging in social media, writing and other work-like tasks.
As I experience this, I’m reflecting that a working staycation is very much like Och’s Rehearsals for Retirement. I have several friends who are both findependent and fully retired, in that they no longer perusue economic (money-making) activities. But of course, they end up as busy as anyone else: household chores, shopping and maintenance don’t go away even if full-time employment ceases to be. You may pursue various artistic or entrepreneurial activities that may or may not lead to economic reward down the road.
If you still have a day job but have reached the point where you have several weeks of paid vacation each year, you may find a working staycation an excellent trial run for retirement. When I wrote the first edition of Findependence Day in the summer of 2008, I began the writing during my paid vacation weeks from my newspaper staff columnist job. Since I had been a freelance writer for several years in the 1980s, I was familiar with the rhythmn of writing at home. At some point I can see finishing my journalism career in the same way, supplementing the various “Findependence” sources of multiple income with the odd freelance assignment, book royalties and the like.
As I write the first draft of the blog entry you’re now reading, I’m doing so on a MacBook Air in my back yard. The sun is shining, a waterfall is splashing into our fish pond, cardinals and blue jays are pecking away at a bird feeder and life is good. I’ll go back into the house to polish this and format it for the web but this is an example of the kind of life I describe as “findependence.”
If you’re contemplating such a step but unsure about whether you’re suited for it, I recommend trying a week or two of a working Staycation during paid leave from your current day job.
Not yet retirement, but perhaps a rehearsal for it!
Note to US book reviewers & financial bloggers
One of the activities in which I’m engaged this week is promotion of the US edition of Findependence Day. Any journalist in the mainstream media can request a review copy by emailing firstname.lastname@example.org. If you’re a financial blogger or a financial planner with a newsletter or good social media followings, I’d be glad to mail you an access card in order to download the e-book edition in most major formats. I’ll also email you a Word file of the end-of-chapter summaries, such as the one below. You can reach me at email@example.com.
Chapter 3 summary
Finally, as promised, here’s the next installment of the end-of-chapter summaries of the main lessons learned in the book:
Chapter 3: Poor Boy Blues
You can’t save by spending; Be an Owner, Not a Loaner
• Frugality needs to be a lifetime habit, ranging from brown-bagging work lunches to taking public transit half the time.
• Don’t just focus on cutting expenses through small sacrifices; find ways to increase your income.
• Beware financial industry gimmicks like “spend ‘n save” cards.
• Department store credit cards charge the highest rates of interest.
• The secret of building wealth is to be a business owner.
• Be an owner, not a loaner means investing in stocks rather than bonds; or better yet, starting your own business.
• While the biggest fortunes come from starting a business, most of us are better off diversifying our equity exposure through index funds or Exchange-Traded Funds (ETFs).