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What are you willing to do to be financially independent? Answering that can give you a clear idea of your priorities.
Financial independence is an effort, but for those who have retired early the benefits are well worth it.
Early Retirement and Choices
I had the pleasure of chatting with Simi, or Mrs. Money Mustache about kids and money recently.
She was kind enough to share not just how they save on expenses as they raise their son, but also discussed the decisions they’ve made in regards to their lifestyle.
Those choices they made well before their son’s arrival helped them to retire in their 30s.
With this freedom, they’re enjoying having more time together as a family.
The good news is that many families can adjust their lives and become financially independent.
Choosing Creation Over Consumption
The bottom line is Simi and Pete have focused their energies and time to creating more and consuming less.
With that mindset, they were able to sock away a ton of money in investments.
(BTW here is a easy chart that can help you see how long it will take you to retire based on your savings rate.)
I know from personal experience it can be hard to make some changes, but even if you start with a few adjustments, it can pay off big time.
Don’t believe me?
Here are a few ways you can drastically cut down on your monthly bills get closer to financially independent mindset.
Where you live can have a significant impact on how far your money goes.
Moving to a place where the cost of living is cheaper in some cases can allow one of you to stay at home with the children.
Not ready to leave you city? Can the two of you choose a more affordable neighborhood? Is there a part of town where you can live that will decrease your need for cars?
Simi and her husband use their bikes to get around town (even in the winter). They have a car, but it’s only used for long trips.
Get rid of your car loan if you have any. Get on a plan to pay it off faster.
If you’re a two-car family see if you can eliminate one of the cars. Can’t drop down to one car?
How about carpooling as often as you can with a co-worker? You may be able to sell the second car and get a cheaper, but still, reliable vehicle to be your backup.
Cut the Fat
We’ve heard that cutting back on expenses is the way to increase wealth. However, it can also be a way to increase happiness.
The idea is not to deprive yourselves of fun, but rather have you examine and see your expenses are bringing the happiness you think they are.
You can keep your smartphone plan, but maybe you can switch provider, slashing the bill in half or more.
Dump the cable bill and see if you can replace it with something more productive. Perhaps more reading and hobbies that you’ve been wanting to try out, but didn’t have time for?
Not ready to ditch TV? How about grabbing a Hulu or Netflix subscription? Or get SlingTV for a fraction of the price.
That money saved can be used to get rid of your debt, build a financial cushion, and grow your retirement fund.
Financial Independence and Family
While it may be easier to cut back when it’s just the two of you, having kids now doesn’t mean you can’t become financially independent.
Many of the changes you’d make as a couple, still apply. As an added bonus, your kids grow up seeing the effort and the reward of financial independence.
Priorities and Motivation
Only you two can decide on your priorities.That’s what makes personal finance personal.
The important takeaway is you two should sit down and discuss your plans. Begin with the why and it becomes easier to figure out the how.
If you haven’t already, please checkout my interview with Simi below on simplifying your finances and enjoying parenthood.
I came away energized and ready to speed up our own progress.
Thoughts on Simplifying Finances
I’d love to hear from you about your goals. Have any of you simplified your finances not just to save money, but to enjoy life?
What changes did you make? Did you face any hiccups in your plan?