7 reasons to pursue Financial Independence
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.