The most important step in attaining financial freedom is cutting your expenses to the bone. I don’t care what the “experts” say, it is a hell of a lot easier to come up with a few hundred dollars each month than it is to come up with a few thousand.
A friend of mine reminded me of this when we began to discuss retirement. He shared his dream of building his passive income sources to $6,000 a month. While he only needs $4,000 a month currently, he wants to add some extra padding to his passive income flow in order to cover any cost of living increases during his retirement.
I don’t need that much money.
That is why I was able to quit my last job at the drop of a hat. It is also how I was able to become a stay at home single mother to my youngest daughter–a feat that everyone told me was impossible.
If you want the freedom to live life on your own terms you will pay attention to this.
In order to live at a comfortable minimum I need around $500 a month to cover my expenses. That means that I only need to have $16.67 a day coming in to meet my expenses and have some money to spare. To give you an idea of the difference that makes, my friend would have to find a way to earn $200 a day if he lost his job tomorrow.
Which one is easier to accomplish: $16.67 or $200? More importantly, if you were to lose your job tomorrow and had only $1,000 in savings, which path would allow you to take your time to locate another position?
Do the damn math, folks.
The greater your living expenses, the more you need to earn just to survive and the lower your chances of replacing the income from a public job with passive income sources. In fact, the higher your living expenses, the harder it will be to find a job that pays enough to keep body and soul afloat. If your living expenses are low enough, you will be able to pay your bills in almost any economic climate. You want proof of that? I can work a part-time job at minimum wage to earn more than enough to live on. In comparison, my friend would be screwed.
You listen, and you listen well. We live in a tumultous age. The jobs we know are in the process of being replaced by machines and yet despite that, our cost of living keeps increasing. I saw the first signs of this back in 2009 as corporations downsized to protect their profit and sent droves of people to the unemployment lines. I have no doubts that it will happen again.
If you want to protect yourself, the time to prepare is now.
The lower you can take your expenses, the greater your ability to survive.
I won’t belabor the point. I’ve already written a book on how to live on less so if you want to do the smart thing you will read it. I’d recommend other books if I could but I haven’t encountered anyone who lives on less than I do to brag about.
I pray that you heed my warning before it’s too late.