You are in the business of you! You are responsible for both total revenue and total expenses. What are you doing to increase your income today? What are you doing to increase your income potential tomorrow? Where are the best paying jobs in your field? What is the incremental value of education? The path to financial independence begins with increasing your income and finishes once you’ve optimized your expenses
Increase your Income
You don’t necessarily have to increase your income, but it goes a long way: Mr Earl
Do you work for someone else? You must create value to an employer!
Do you have the time to develop a side hustle? A side hustle has dual value to you early in your life, you generate extra income and you don’t have idle time to spend the money! Its a huge net positive.
Cut your Expenses!
I’ve recently heard this term in the Financial Independence Community, so I’m going to repeat it because of its important: “The Big Three” and “The Next Two”.
The Big 3
Housing Cost: What is your total expense to sleep every night? This includes rent/mortgage, heating/cooling bills, the technology pipeline to your house (internet/cable?), home maintenance costs, HOA dues. If you bought your house, did you pay retail or did you buy a live-in flip? You must consider everything involved with your cost of housing.
Transportation cost: How do you get around? How close do you live to your office and the grocery store? What is your cost per mile to drive? Do you have a job where you can bike to work? (Note: I’ve not been able to since I’ve always had a job requiring a suit and client visits)
Food: Do you eat meals out (Really, why did we culturally all want to become royalty from centuries ago, saying “peasant, please prepare and serve me my food”) or do you prepare food at home? Do you have a Costco membership to buy everything at 12% over cost? Do you buy raw ingredients or prepared meals?
Investment Expenses: The friendly investment advisor will tell you their fees are “only 1% of assets”. Jack Bogle is the founder of low cost, passive index investing. Over the course of a 40+ year career, Mr. Bogle has proven that focusing on cost instead of paying a fund manager wins. Warren Buffett is about to win his bet against hedge fund managers.
You want to see what damage high fees can do to “retirement”, look no further than my local city’s Police and Fire Pension Fund:
Taxes: Pay your fair share, but don’t let your fair share be a dollar more than it should be! There are three solid experts on this for the Financial Independence community, including the king himself, The Wealthy Accountant