Empire Flippers Review | Selling a $300,000 Website

Empire Flippers Review | Selling a $300,000 Website

Empire Flippers Review: Selling a $300,000 Website

Selling on Empire Flippers Review

Selling a business that you start from scratch is as much of an emotional decision as it is a financial decision and after 7 years of starting and running my business, I was ready to sell.  In fact, I was burnt out and needed to sell in order to get my life and sanity back.

This is a review of a website that I sold on Empire Flippers for over $300,000 USD.

Why I chose Empire Flippers:

The main reason I chose Empire Flippers was because I trusted them and their platform and I knew that potential buyers trusted them as well.

This cuts down on the amount of work you have to do to prove your business to every potential buyer.  Empire Flippers vets your site for weeks before they let you list it.  They make sure that the numbers you’re claiming are legitimate which puts potential buyers at ease.  Empire Flippers also verifies the funds of potential buyers to make sure they can actually afford your business.  This acts as a great filter and eliminates buyers who aren’t serious and will end up wasting your time.


Empire Flippers vs Flippa:

Flippa vs Empire Flippers

Before listing my website on the Empire Flippers Marketplace I shopped around and even listed my site on Flippa.  Flippa has a lower fee of only 5% of the sale price vs Empire Flippers’ 15% so I thought it was worth a shot.

My business got a lot of attention and at first it seemed like Flippa was going to work out, then came the stupid questions.

Buyers kept asking questions that are clearly listed in the description like:

“what’s your monetization method?”

“I have a full time job and can’t spend any time on the business, is it 100% passive?”

“who is your biggest supplier?”

After weeks of answering stupid questions it became painfully obvious that the buyers on Flippa weren’t serious, and even worse, they might even try to copy my business.  The valuation they suggested was also lower than the Empire Flippers valuation which would have resulted in me receiving about $50,000 less after the sale.


Empire Flippers Selling Fees:

The fees are probably what will give someone the biggest pause before listing their site with a particular broker and while Empire Flippers does not charge a listing fee, they do take a cut of the final sale price:

Empire Flippers Listing Fee: Free

$700,000 and under: Empire Flipper’s Commission is 15% of the sale price.

$700,000 to $5 Million: Empire Flipper’s Commission is 8% on the amount above $700,000 and below $5,000,000.

Over $5 million: Empire Flipper’s Commission is 2.5% on the amount above $5,000,000.


Flippa Selling Fees:

Flippa takes a smaller commission than Empire Flippers, only 5% of the final selling price for larger sites and 10% for smaller sites.  But they charge you a fee just to list your site which ranges from $29.00 to $499.00.  I paid $128.00 so that I could have an NDA & Confidentiality agreement attached to my site.  Otherwise anyone on the platform can see your URL and other business details.

Also, like I mentioned above, the quality of the buyers on Flippa is much lower than on Empire Flippers.  From my experience, Flippa is better for listing low value sites (under $10,000) and Empire Flippers is better for high value sites.


Empire Flippers Selling Process:

Empire Flippers Selling Process

Depending on your type of business, this process can take a while.  My site took about 6 months to sell and this was mainly because it was a drop shipping site in a very unique niche which limited the amount of potential buyers.

If you have a site which is more passive like Affiliate, FBA, etc. then the selling process is usually much faster.  Either way, I recommend that you start preparing your site to sell way in advance of the date you actually want to sell it.

Get Started At Least 6 Months Before You Want to Sell

The first step is to get in touch with Empire Flippers and set up an initial consultation.  This is free and will give you a chance to ask any basic questions you have as well as let someone from Empire Flippers take a look at your site to make sure it is a good fit and offer any suggestions.


Get your books in order

Once you decide that you want to list your site then you will need to submit your financial information to the vetting department.  This means you should have a P&L (Profit and Loss) that makes sense and that all the figures can be accounted for.

Ideally, all funds should be coming in and out of one bank account.  This wasn’t the case with my business and it took some extra work to get my figures vetted so if you’re thinking about selling your business, start simplifying things now and make your books as clean as possible, one bank account, one credit card, etc.

Empire Flippers also has a P&L form that you will need to use to input all of your information like SKUs, Units Sold, Income (Amazon, Woocommerce, Stripe, Affiliate, etc.), COGS (cost of goods) and other expenses.

If you don’t already have this information clearly documented, start doing it now and this will make the sale process much faster and smoother.


How much do businesses sell for on Empire Flippers?

Valuations are based on a multiple of monthly profit generally ranging from 25x – 50x monthly profit.  Empire Flippers has a valuation tool that you can use to get an estimate of what your site is worth.

Empire Flippers Valuation ToolClick Here for a Free Valuation

What Types of Businesses Sell on Empire Flippers?

Empire Flippers accepts a lot of different kinds of online businesses like Affiliate, FBA, Kindle, Subscription, Drop Shipping, etc. and if you have a legitimate online business, then odds are you will be able to list it for sale on Empire Flippers.  However, they do have some criteria like no adult sites, gambling sites, scam sites, etc.

Also, the type of business that you list will help determine how much it sells for and how long the sale process takes.  For example, SaaS and Affiliate Sites generally get the largest multiples and sell the quickest because they don’t require shipping of any physical goods and are more passive than something like a drop shipping business.  FBA businesses are also in high demand right now and can usually sell for more.

My business was a drop shipping business and it took about 6 months to sell while I saw other more passive businesses sell in less than a week.

Type of Business

Selling a Growing Business vs. Declining Business

Obviously a growing business is going to attract more buyers than a declining one so do everything you can to have a strong business before you start your listing.  Your listing price will also be updated every month based on your monthly profit so if you can show growth and increasing numbers this will not only attract more buyers, it will also increase your final sale price.

Empire Flippers Earnings

When to list a seasonal business

My business was seasonal with higher sales and page views in the summer and lower ones in the winter.  I listed my site in the summer which was the height of my best sales season but because it did not sell quickly, I had to go through a winter period where the numbers naturally went down due to seasonality.

If I had to do it again I would have listed my seasonal business for sale in the beginning of the spring, right when my sales and site traffic was naturally going up.

Site Traffic

Type of Business Niche

Potential buyers need to be able to see themselves running your business so keep this in mind while you’re getting your website ready to sell.

My business was in a very particular niche in the food and beverage industry which meant that I had less buyers interested in it.

So even though my profit was increasing every month, which was increasing the sale price of my business, because there were less buyers interested in my particular niche, I had to lower my multiple in order to attract more buyers.

Similar to starting a business, the only way to really know the demand of your product or business, is to get it in front of potential buyers.


Dynamic Valuations

I touched on this earlier but one thing to keep in mind is that you will be updating your profit numbers and submitting them to Empire Flippers every month.  This will change the final price of your business and you can take these profit figures as an example:

Monthly Website Profit Figures

The January 2021 profit of $8,000 will be replaced by January 2022 and the sale price will either increase or decrease depending on if the new total monthly profit is higher or lower.

So if the profit from January 2022 is $9,000 then your new total will be $112,000/12 = 9,333 x 40 = $373,333

A $1,000 increase in this month will result in a $3,333 increase in your final valuation.

Essentially every month you are competing against your last year’s numbers.

Business Unlocks 

Once your business is live on the Empire Flippers platform, potential buyers will be able to “Unlock” your site.  Unlocking your site will give the buyer detailed access to your listing including your URL, Google Analytics Data, Social Media, Ahrefs, etc.

But in order for a potential buyer to unlock your site they will need to verify that they actually have enough money to buy your site.  Empire Flippers does this verification and this is another huge benefit over other platforms like Flippa because it ensures that you are only getting qualified buyers who have the means to buy your site.

Once an interested buyer unlocks your site they will be able to schedule a call with you and then eventually make an offer on your site.

Buying a Website on Empire Flippers


Once an offer is made, you will then be able to accept it or make a counter offer.  Before accepting the offer, you want to make sure that it is a number that you will be happy with.  You also want to iron out all the other details like inventory and sales terms.

Generally offers come in at about 90% of the asking price and there are usually some terms attached.  For example, 75% of the payment upfront and the other 25% in three months.

If you are happy with the offer, you can accept it and then the sale will move into the migration phase.


Migration Phase

The migration phase is actually made up of 4 phases that all need to be completed before the seller can get paid; The Pre-Inspection Phase, The Inspection Period, The Post-Inspection Phase and then finally, The Payout Phase.

This process is great for the buyer but not ideal for the seller because all of the profit from the business will start going to the buyer as soon as the offer has been accepted.  This means that the seller will end up running the business for about 3 weeks for free.

This is my biggest criticism of the Empire Flippers selling process but it still wasn’t a deal breaker for me, I used this time to show the new buyer how to run the business.

This is another thing that helps build trusts with the buyer who is the one who will ultimately be making the payment to you.

The Pre-Inspection Phase: This is when all of the revenue generating assets are transferred over to the buyer.  This includes payment processing accounts (Stripe, PayPal, etc.), affiliate links, incoming bank transfers, and anything else that generates revenue for your business.  Once the buyer has all of these in place, the inspection period can begin.

The Inspection Period:  This is a 14 day period where the buyer can check for any gross misrepresentations of the business.  During this period, your site also needs to generate at least 50% of its normal revenue.  So for example, if your site normally makes $20,000 in revenue per month, then your site will need to generate at least $4,666.67 in revenue during the 14 day inspection period:

$20,000 * 50% = $10,000

$10,000/30 days = $333.33

$333.33 x 14 days = $4,666.67

If these criteria are not met, then the buyer has the right to cancel the sale.

The Post-Inspection Phase: This is when any remaining assets are transferred to the buyer like social media accounts, logo files, SOPs, Google Drive, etc.

The profits and expenses will also be calculated for this period and once the buyer confirms that they have all of the assets then it is time for the Payout Phase!

The Payout Phase:

Before you get to this point, you should have already uploaded your banking details to Empire Flippers.  Their accenting team will also reach out to you by email and make sure that they have the correct banking information on file.  I chose to get my payout sent by wire transfer and I received it within hours of the accounting team sending the payment.

Make sure that you double check your routing and account numbers so that there aren’t any delays.  For most sellers, this will be the largest single bank transfer to your account so you will want to make sure there aren’t any hiccups!


Fees and Taxes on Selling an Online Business

Empire Flippers will essentially act as escrow for the sale.  They will get the initial payment from the buyer and transfer this amount (minus their commission) to you once the migration phase has been completed.

They also only take their commission on what has actually been paid by the buyer.  For example, if a buyer buys a site for $200,000 but agrees to pay 50% now and then 50% in 6 months.  Then your first payout from Empire Flippers will be $100,000 – $15,000 (15% commission) = $85,000 and 6 months later you will receive the second payment of $100,000 – $15,000 (15% commission) = $85,000.  Basically Empire Flippers only gets paid their fees when you get paid.

They also don’t take out any taxes and leave this for the seller to sort out.  The final amount of taxes you pay will depend on many factors such as your home country, your income during the year you sold your business, duration of the business, etc.  In the US, sellers can expect to pay about 15% in Long Term Capital Gains Tax as long as they have held the business for more than a year.  I am not an accountant so please speak with one for more detailed information about your specific situation.


Final Thoughts: Selling a Website on Empire Flippers

All in all I had a positive experience selling my website on Empire Flippers and they handled everything very professionally.  If you have a business that you want to sell, I recommend that you start getting prepared 6 months to a year before you want to sell.  Things always take longer than anticipated and you don’t want to be stuck running a business you no longer care about or have the energy to run successfully.

Empire Flippers Valuation Tool

Click Here to See How Much Your Business is Worth

Financial Minimalism: How Simplifying Your Finances Can Lead to Greater Wealth and Freedom

Financial Minimalism: How Simplifying Your Finances Can Lead to Greater Wealth and Freedom

What is Financial Minimalism

Technology has made our lives become increasingly complex, which has many people seeking ways to simplify and streamline their lives. One area where this can be particularly challenging is personal finance. With so many bills, debts, investments, and other financial obligations, it can be overwhelming to keep everything organized and on track.

That’s where the concept of financial minimalism comes in. Financial minimalism is about simplifying your finances by focusing on what’s truly important and letting go of the rest.

With Financial Minimalism you can reduce stress, save time and most importantly, save money!

In this article, we’ll explore the benefits of financial minimalism and provide some tips on how to get started.


What is Financial Minimalism?

Financial minimalism is a concept that emphasizes the importance of simplifying and streamlining your finances. It involves identifying and focusing on what is truly important in your financial life while letting go of unnecessary expenses, accounts, and obligations that can create stress, confusion, and even financial waste.

The idea behind financial minimalism is to reduce financial clutter, save time, reduce stress, and even save money. By simplifying your finances, you can create more mental and emotional space to focus on the things that matter most to you, such as pursuing your goals, spending time with loved ones, or pursuing your passions.


The Benefits of Financial Minimalism

One of the primary benefits of financial minimalism is reduced stress. When you have fewer bills to pay, debts to manage, and investments to track, you can free up mental space to focus on other things that matter to you. This can lead to greater peace of mind and a greater sense of well-being.

Financial minimalism can also save you time. By reducing the number of financial accounts you have to manage and the number of bills you have to pay, you can free up time to do other things that you enjoy. This can include spending time with family and friends, pursuing hobbies, or even working on a side hustle that can generate additional income.

In addition to reducing stress and saving time, financial minimalism can also save you money. By focusing on what’s truly important and letting go of the rest, you can eliminate unnecessary expenses and avoid overspending. This can lead to greater financial security and even allow you to reach your financial goals more quickly.


How to Get Started with Financial Minimalism

If you’re interested in exploring financial minimalism, here are some tips to get started:

Assess Your Financial Situation

The first step in practicing financial minimalism is to assess your current financial situation. This includes taking stock of your income, expenses, debts, and investments. Once you have a clear picture of your finances, you can begin to identify areas where you can simplify and streamline.


Eliminate Unnecessary Expenses

Next, take a look at your expenses and identify areas where you can eliminate unnecessary spending. This might include canceling subscriptions you don’t use, reducing dining out, or cutting back on luxury purchases. By doing so, you can free up money to invest in things that truly matter to you.


Consolidate Your Financial Accounts

If you have multiple bank accounts, credit cards and investment accounts, consider consolidating them. This can help you reduce the number of accounts you have to manage and simplify your financial life which will ultimately lead to spending less.

Some financial gurus insist on having a different credit card for each type of shopping that you do to take advantage of reward points but this can get messy.  For example, having one card for groceries, another card for gas, another one for eating out and finally one for everything else can lead to confusion, over spending and unexpected charges.  It’s a lot harder to keep track of 4 credit cards instead of 1 good one.


Financial Minimalist Credit Card

Try to use ONE card with a high cash back rate.

Automate Your Finances

Another way to simplify your finances is to automate as many tasks as possible. This might include setting up automatic bill pay, automatic savings transfers, and even automatic investing. By doing so, you can free up time and reduce the risk of missing important payments.


Focus on What’s Important

Finally, remember that financial minimalism is about focusing on what’s truly important and letting go of the rest. This might mean setting clear financial goals, such as saving for a down payment on a home or paying off debt. By having a clear focus, you can make more intentional financial decisions and achieve greater financial security.


Have a Yearly Garage Sale

Overtime, material possessions naturally accumulate and before you know it your garage is cluttered with stuff.  Instead of letting all of this stuff build up, do a yearly purge and sell everything that hasn’t been used in the past 12 months.  Chances are, if you haven’t used it in the last year, you’re never going to use it.

Not only will this reduce clutter in your life but you can use the extra cash that you made from the garage sale (or eBay sale) to pay off a credit card or take a family vacation.


Have a Monthly Money Check-Up

Whether you’re single, in a relationship or married with kids, taking a holistic view of your finances can help keep you on track and motivated towards your next financial goal.  If you set aside 30 minutes to an hour once a month, you can sit down and see what exactly you spent your money on this month, how much you saved and if there are any expenses that you can cut.


Financial Minimalism Wrap Up

Financial minimalism is a powerful concept that can help you simplify your finances, reduce stress and save money. By focusing on what’s truly important and letting go of the rest, you can achieve greater wealth and freedom. If you’re interested in exploring financial minimalism, take the first step by assessing your current financial situation and reducing all unnecessary expenses.


How and Why to Buy T-Bills: A Guide to Short-Term Treasury Investments

How and Why to Buy T-Bills: A Guide to Short-Term Treasury Investments

How and WHY to buy T Bills

When it comes to investing in T-Bills, the rule of thumb is that the longer the term, the higher the interest rate. But, as we’ve seen in recent years, interest rates can change, making short-term investments like T-Bills a smart choice. In this article, we’ll explain what T-Bills are, how to find the highest T-Bill rates, and how to actually buy them.

What are T-Bills?

T-Bills, or Treasury bills, are short-term investments issued by the United States government with terms ranging from four weeks to one year. They are a great option for those looking for a low-risk investment that offers a return within a relatively short period. T-Bills are a type of debt security, which means that you are lending money to the government in exchange for a guaranteed return.


Why Invest in T-Bills?

T-Bills offer a number of advantages to investors, including low risk, short terms, and tax benefits. Because they are issued by the government, they are considered a safe investment, and because they have shorter terms, your money isn’t tied up for a long period of time. Additionally, T-Bills are subject to federal taxes but not state and local taxes, making them an attractive investment for those looking to minimize their tax liability.

How to Calculate T-Bill Rates

Calculating T-Bill rates is straightforward. Simply multiply the amount invested by the interest rate and divide the result by the number of weeks in a year. For example, if you invest $100 in a T-Bill with a 3.25% interest rate, your return would be calculated as follows:

$100 x 3.25% = $3.25
$3.25 / 52 weeks in a year = $0.06
$0.06 / 4 weeks (the term of the T-Bill) = $0.015

So, for a four-week T-Bill, you would earn $0.015 in interest, meaning you would only pay $99.985 for the T-Bill, and receive $100 when it matures.

How to Buy T-Bills

T-Bills can be purchased in increments of $100 and are available through Treasury Direct, a bank, or a broker. If you prefer to go directly to the source, you can buy T-Bills through Treasury Direct, which will give you the most up-to-date rates without the added cost of a middleman.



T-Bill Alternatives

There are a couple different options when trying to get the highest rate of return on your cash such as high-yield savings accounts, money market accounts and I Bonds.

High-yield savings accounts are offered by many online banks, such as Ally Bank, and typically offer interest rates that are higher than those offered by traditional brick-and-mortar banks. These accounts are FDIC-insured, so your money is secure, and you can access your funds easily when you need them.

Money market accounts are similar to savings accounts, but they typically offer higher interest rates and have some restrictions on the number of transactions you can make each month. These accounts are also FDIC-insured, so you can feel confident that your money is secure.

It’s important to compare the interest rates, fees, and other features of these different types of accounts to determine which one is right for you. Some online banks may offer higher interest rates, but they may also have higher fees or less convenient features, so it’s important to weigh the pros and cons carefully before making a decision.


T-Bills vs I Bonds

I Bonds and T-Bills are both types of government-issued securities, but they have some key differences.

I Bonds are inflation-protected savings bonds issued by the U.S. Treasury. They pay a fixed rate of interest, plus an adjustable rate that is tied to inflation. The fixed rate remains the same for the life of the bond, while the inflation rate is adjusted twice a year based on changes in the Consumer Price Index (CPI). I Bonds are sold at face value, and you can buy them in denominations of $25 or more. They can be held for up to 30 years, and the interest is paid out tax-free if you use the funds for qualified educational expenses.

T-Bills, on the other hand, are short-term debt securities issued by the U.S. Treasury. They are sold at a discount to face value, and you earn interest by the difference between the purchase price and the face value when the T-Bill matures. T-Bills have maturities ranging from 4 weeks to 52 weeks, and they are sold through auctions at competitive bidding.

Pros of I Bonds:

Offer inflation protection, which can be useful if inflation is a concern
Fixed rate of interest remains the same for the life of the bond
Interest is tax-free if used for qualified educational expenses
Can be held for up to 30 years

Cons of I Bonds:

Low interest rates compared to other investments
Can only be redeemed after one year, with a three-month interest penalty if redeemed before five years

Pros of T-Bills:

Short-term investment with low risk
Guaranteed by the U.S. government
Competitive bidding process can result in higher interest rates

Cons of T-Bills:

Low interest rates compared to other investments
Interest is taxed at the federal level
Short term investment, meaning that your money is tied up for a shorter period of time.


To Sum it All Up

T-Bills can be a great option for short-term returns, particularly for those looking for a low-risk investment with a guaranteed return. With a straightforward calculation of interest rates and the ability to purchase T-Bills directly through Treasury Direct, it’s never been easier to take advantage of this investment opportunity. If you have money that might be sitting in an account earning little to no interest, consider investing in T-Bills for a quick return.

4% Rule Calculator | How Much to Retire on Four Percent

4% Rule Calculator | How Much to Retire on Four Percent

how to calculate 4% rule

Retirement planning is a critical aspect of an individual’s financial journey. It requires proper planning and consideration of various factors to ensure a comfortable and secure retirement. One of the most widely discussed and debated retirement planning strategies is the 4% rule.

This rule is used by financial advisors and retirees alike to determine how much money an individual needs to retire comfortably. In this article, we’ll discuss what the 4% Rule is, if it works and how to calculate how much you need to retire using the four percent rule.


What is the 4% Rule for Retirement?

The 4% rule is a widely used retirement planning strategy that states that an individual can safely withdraw 4% of their retirement portfolio each year and not run out of money. This rule is based on historical market returns and has been widely adopted as a safe withdrawal rate for retirees. The 4% rule assumes that an individual has a diversified portfolio of stocks and bonds and can expect to earn a long-term average return of 7% to 8% on their investment.  The 4% Rule was first made famous by The Trinity Study.


The Trinity Study and the Four Percent Rule

The Trinity Study is a famous research paper in the field of retirement planning that helped establish the 4% rule as a widely accepted guideline for determining a safe withdrawal rate. The study was conducted by three professors at Trinity University in Texas: William Bengen, David Blanchett, and Philip Cooley.

The Trinity Study analyzed historical stock and bond market data from 1926 to 1995 and concluded that a portfolio consisting of 50% stocks and 50% bonds, with an initial withdrawal rate of 4%, had a high likelihood of lasting for at least 30 years. This conclusion was based on the assumption that the withdrawal rate would be adjusted annually for inflation.

The 4% rule has since become a widely recognized guideline for retirees to determine their safe withdrawal rate, although it’s important to keep in mind that past performance is not a guarantee of future results and that other factors, such as an individual’s age, spending habits, and portfolio mix, can impact the sustainability of retirement income.

Additionally, the Trinity Study’s analysis ended in 1995, and some financial experts believe that the 4% rule may not hold up in today’s investment environment, particularly with the current low interest rate environment.


Is 4% a Safe Withdrawal Rate for Retirement?

The safe withdrawal rate (SWR) is the amount that you can withdraw annually from your retirement savings without running out of money. It is a crucial factor to consider when planning for retirement, as it helps determine the sustainability of your retirement income.

The traditional rule of thumb for the safe withdrawal rate is 4% of your initial retirement savings, adjusted annually for inflation. However, this figure is based on historical stock and bond market returns and may not hold true in the future.

It’s important to understand that the safe withdrawal rate can vary depending on a number of factors, including your age, the size of your retirement savings, the investment mix in your portfolio, and your spending habits. A financial advisor can help you determine a personalized safe withdrawal rate based on your individual financial situation.

It’s also crucial to have a plan in place for dealing with market downturns, inflation, and other potential challenges to ensure that your retirement savings last throughout your lifetime.


How to Calculate the 4% Rule

4 Percent Rule Calculator

Yearly spending limit:
Monthly spending limit:

The 4% rule is typically calculated in two different ways.

Method One:

This method involves determining the amount of savings you will have at retirement, and then multiplying that figure by 4% to determine your annual withdrawal amount.

For example, if you have $500,000 saved for retirement, you would multiply $500,000 by 4% to arrive at an annual withdrawal amount of $20,000 ($500,000 x 0.04 = $20,000).

This approach is based on the assumption that you will withdraw 4% of your savings in the first year of retirement, adjust the withdrawal amount annually for inflation, and continue this withdrawal rate for a period of 30 years or more.


Method 2:

This method involves determining the amount you expect to spend annually in retirement and then dividing that figure by 25 to determine the size of the retirement portfolio you will need. For example, if you expect to spend $40,000 per year in retirement, you would divide $40,000 by 25 to arrive at a retirement portfolio of $1,600,000 ($40,000 ÷ 25 = $1,600,000). This approach assumes that you will be able to sustainably withdraw 4% of your retirement portfolio each year to cover your expenses.


Factors that Affect the 4% Rule

The 4% rule is a useful tool for retirement planning, but it is important to note that it is based on historical market returns and may not hold true in the future. The following are some factors that can affect the 4% rule and the amount you need to retire comfortably:

Market performance: The performance of the stock market and the return on your investments will affect the amount you can safely withdraw each year. A downturn in the market can reduce the value of your portfolio, leading to a lower withdrawal rate.

Inflation: Inflation is a measure of the increase in prices over time and can significantly impact the amount you need to retire comfortably. The 4% rule assumes a 3% inflation rate, which has been the average for decades but was much higher in 2022 and 2023.

Longevity: The average lifespan of individuals is increasing, leading to longer retirement periods. This can affect the amount you need to retire comfortably and may require you to save more or reduce your withdrawal rate.

Social Security: Social Security is a significant source of retirement income for many individuals. The amount you receive from Social Security can impact the amount you need to retire comfortably.

Four Percent Rule and FIRE Financial Independence

The 4% rule is often used as a starting point for retirement planning, and many FIRE enthusiasts may use a lower withdrawal rate to ensure that their portfolio lasts longer. For example, some FIRE proponents may use a withdrawal rate of 3% or 2.5% to provide a larger margin of safety and ensure that their portfolio lasts through their lifetime.  It all depends on which type of FIRE you’re going for.

So while the 4% rule can be a useful starting point for FIRE planning, it’s important to consider your own financial situation and goals, and to be flexible and adjust your withdrawal rate as needed. Working with a financial advisor or retirement planning specialist can help you determine the right withdrawal rate for your specific needs and goals.

6 Different Types of FIRE Financial Independence

6 Different Types of FIRE Financial Independence

6 Different Types of FIRE Financial Independence

The Financial Independence Retire Early movement (FIRE or FI/RE) has become popular in recent years, attracting people from all walks of life who are looking to take control of their finances and secure their financial future. But not everyone who is interested in FIRE approaches it in the same way. In fact, there are several different types of FIRE, each with its own unique approach and set of goals.

In this article, we will explore the different types of FIRE, including Coast Fire, Lean FIRE, Barista FIRE, Chubby FIRE, Fat FIRE and Expat FIRE.

We will also examine the key differences between each type, as well as the pros and cons of each approach.

Whether you are just starting your journey towards financial independence, or you are looking to find the right approach for your situation, this article will provide valuable insights and information to help you achieve your goals.

So if you’re ready to take control of your finances and secure your financial future, read on to learn more about the different types of FI!


Different Levels of Financial Independence

Coast Fire

“Coast FIRE” refers to a stage in the FIRE journey where an individual has saved and invested enough to reach their desired retirement age, and no longer needs to actively contribute to their investments in order to maintain their retirement lifestyle.

At this stage, you should have an emergency fund with 3-6 months of cash in it and then enough in your 401K and brokerage accounts to be able to retire comfortably without any additional contributions.  The exact amount that you want to have invested will depend on your yearly expenses, age and planned retirement date.

Let’s look at an example of a 35 year old that has saved up $500,000 and plans to retire at age 60.

This gives them 25 years for their money to grow which, at an average of 7% a year, comes out to about $2,700,000 by the time their 60.  And this is without any further contributions to their retirement accounts, meaning that they can spend every dollar that they make at their current job, or reduce their hours to just cover their monthly expenses.

To reach Coast FIRE, individuals need to have saved and invested a significant amount, and have a well-diversified portfolio that is expected to generate enough returns to support their desired retirement lifestyle. This often involves saving and investing a large portion of one’s income, as well as making smart investment decisions and avoiding unnecessary risks.

Once someone eaches Coast FIRE, they have the flexibility to retire early, or continue working if they choose, without worrying about the financial stability of their retirement. It provides a sense of financial security and peace of mind, knowing that their investments are expected to provide enough income to support their desired lifestyle in retirement.



Lean FIRE is generally geared toward people who want to quit their job as soon as possible and put an emphasis on time and freedom rather than on material possessions.

Lean FIRE works by focusing on reducing expenses and living frugally in order to reach financial independence as soon as possible.

The goal is to save a high percentage of one’s income, often 50% or more, and invest in a diversified portfolio of low-cost index funds. This allows individuals to reach financial independence and retire early, even if it means living on a tight budget.

Lean FIRE proponents argue that reducing expenses and living below one’s means is key to achieving financial independence, and they often follow a minimalist lifestyle. They may opt for simple living arrangements, like living in a duplex or house hacking.

While Lean FIRE is a great way to reach financial independence quickly, it does require a significant amount of discipline and sacrifice, as individuals must be willing to make significant changes to their lifestyle and spending habits. However, for those who are committed to the Lean FIRE lifestyle, the rewards can be significant, including the ability to retire earlier, have more control over their time, and live life on their own terms.

It’s also important to remember that Lean Fire can be a starting point and once it is reached then you can still find other ways to generate income through side hustles, starting a business you’re passionate about, real estate or even getting a part-time job that you enjoy which brings us into our next type of FIRE, Barista FIRE.


Barista FIRE

Barista FIRE is similar to Lean FIRE in that it focuses on reducing expenses and living frugally, but with the added component of having a part-time job or freelance work to supplement retirement income. The goal is to reach financial independence and retire early, but with the security and stability of having a secondary source of income.

With Barista FIRE, individuals can live frugally, save a high percentage of their income, and invest in a diversified portfolio of low-cost index funds, while also earning money from part-time work or freelance opportunities. This allows for more financial stability and a higher standard of living in retirement, without sacrificing the goal of reaching financial independence as soon as possible.

Like Lean FIRE, Barista FIRE requires discipline and sacrifice, but it also allows for more flexibility and a more relaxed approach to reaching financial independence. It is a good option for individuals who want the security and stability of having a secondary source of income in retirement, while still being able to live frugally and enjoy the freedom and flexibility of early retirement.


Chubby FIRE

“Chubby FIRE” is a term that is sometimes used to describe a middle ground between Lean FIRE and Fat FIRE. It is a more balanced approach that combines elements of both, allowing for some discretionary spending while still focusing on saving and investing a significant portion of one’s income.

With Chubby FIRE, individuals may live frugally and avoid unnecessary expenses, but still allow themselves some luxuries and comforts. The goal is to reach financial independence as soon as possible, while still enjoying life and avoiding extreme frugality.

Chubby FIRE is a good option for individuals who want to balance saving and investing with a more enjoyable standard of living. It requires discipline and sacrifice, but also allows for more flexibility and a more relaxed approach to reaching financial independence.



FatFIRE is generally for those with high incomes, successful businesses or those who are willing to wait until a little later in life to retire early.

This is because FIRE that emphasizes reaching financial independence while still maintaining a comfortable standard of living. The goal is to save and invest enough to cover a high annual spending rate while still being able to retire early.

Fat FIRE is often seen as a more relaxed approach to FIRE, as it allows individuals to enjoy a higher standard of living while still pursuing financial independence. This might include spending money on expensive hobbies, dining out, or traveling.

Individuals pursuing Fat FIRE often have high income levels and invest in a diversified portfolio of low-cost index funds, real estate, or other assets. They may also have additional sources of passive income, such as rental properties, that can provide a steady stream of income in retirement.

While Fat FIRE requires a significant amount of saving and investing, it also allows for a more enjoyable and fulfilling lifestyle, both before and after reaching financial independence. It is a good option for individuals who prioritize a high standard of living and want the flexibility to enjoy their money while still working towards financial independence.



Expat FIRE just means pursing FIRE in another country besides your home country.  One of the benefits of Expat Fire is that if you are from a nation with a high cost of living like in the US or Europe, then moving to a country with a lower cost of living means that you can reach Financial Independence much earlier or enjoy a much higher standard of living, while spending the same amount every month.

I’m currently living in Taiwan and I classify myself as somewhere in between LEAN FIRE and EXPAT FIRE:

My Story:

After saving up $500,000 I‘m retiring early (or at least not ever working a “real” job again). My plan is to live off of the 4% Rule in Taiwan which will be about $20,000 USD/year or $1666/month.

Background: I’m currently 37 years old, from the US and have been living abroad for the past 10 years. Mostly in Taiwan but also bouncing around to other places in Asia (Thailand, Vietnam, Philippines, etc.).

I came to Taiwan first to teach English but then got involved in e-commerce and ran an online business for 7 years before selling it in early 2022. I currently have permanent residency here as well as National Health Insurance.

Monthly Expenses in USD:

Rent – $580.00

Bills – $65.00

National Health Insurance – $26.00

Cell Phone – $15.00

Food & Fun – $750.00

Misc. and Travel – $200.00/month (about $2,400/year)

The biggest challenge right now is dealing with the stock market being down. Luckily I didn’t get the final payout from the sale of the business until May 2022 so I have been able to put cash into the market as it’s been going down and still have more to put in if it continues to fall.

This experience has also taught me that a job or business is not something that just brings us money but also a sense of purpose.  I worked hard to build a business and that was a big part of my identity for over 7 years.  And although I don’t regret selling my business, I do miss having the clear direction and sense of purpose having a meaning job or business can give.


Which Type of FIRE Financial Independence is Right For You?

There isn’t a one size fits all approach to FIRE and you might find yourself in between two types or combining them into a hybrid FIRE approach.

Whether you are pursuing Coast FIRE, Lean FIRE, Fat FIRE, Barista FIRE, Chubby FIRE or Expat FIRE, the key to success is to understand your own financial situation, set achievable goals and develop a plan that works for you.

What is the Fastest Way to Achieve Financial Freedom?

What is the Fastest Way to Achieve Financial Freedom?

Fastest Way to Financial Freedom

Financial freedom is a dream that many people aspire to but few actually achieve. The reasons for this are many, ranging from lack of financial knowledge, to poor spending habits, to simply not making enough money.

However, achieving financial freedom is not an impossible feat. With dedication, hard work, and the right strategy, anyone can achieve financial freedom in a relatively short amount of time. In this article, we will explore the fastest way to achieve financial freedom and what steps you can take to start your journey today.

If you want to achieve financial freedom as fast as possible then you need to be absolutely cut throat with your expenses.

This starts with taking a deep dive into your current financial situation, getting out of debt ASAP, cutting out all unnecessary expenses, increasing your income and consistently investing.


Understanding Your Financial Situation

The first step to achieving financial freedom is to understand your current financial situation. This involves looking at your income, expenses, debts, and assets. It is important to be honest with yourself and have a clear understanding of what you are dealing with in order to make a plan to improve your situation. You can use tools such as a budgeting app or a spreadsheet to track your spending and see where your money is going each month.


Setting Financial Goals

Once you have a clear understanding of your financial situation, the next step is to set financial goals. This could be paying off debt, saving for a down payment on a house, reaching a certain level of savings or retiring early.

It is important to have specific and measurable goals so that you can track your progress and adjust your strategy if necessary. It is also important to set a timeline for each goal to ensure that you stay on track and make the necessary changes to achieve your goal.


Cutting Expenses

Cut Expenses from Financial Freedom

One of the easiest ways to improve your financial situation is to cut expenses. This could involve finding ways to save money on bills, such as negotiating with your cable company for a better rate, or cutting out unnecessary expenses, such as subscription services that you no longer use. Every little bit helps and by reducing your expenses, you can free up more money each month to put towards your financial goals.

The easiest way to get started is to use a spreadsheet or Google docs and list out all of your expenses and then separate them into two categories, necessities and discretionary.


Necessities are things that you absolutely need to live such as:

Your rent or mortgage


Payments on current debt if any


Insurance premiums



Now list all of your discretionary expenses:

Eating out


Car Payment



Now take a look at your biggest expense (for most people this will be rent or mortgage) and figure out how you can reduce this. 

If you’re really serious about achieving financial freedom fast, then you will need to make some sacrifices which could include moving into a smaller house or apartment or house hacking (renting out a room or part of your house/apartment).

Do this will every item that you have on the list, starting with the largest ones to the smallest ones, and figure out how you can reduce or eliminate each one. 

Now that you have your expenses as low as possible, multiple this amount by 12 to give you your yearly spending, then again by 25.  This is how much you need to save in order to be completely financially free and live off of the 4% Rule.


$3,000 x 12 = $36,000

$36,000 x 25 = $900,000


Increasing Income

Once your expenses are cut as low as possible, it’s time to increase your income.

This could involve getting a part-time job, starting a side business, or asking for a raise at your current job.

By increasing your income, you can put more money towards your financial goals and achieve financial freedom faster.



Now that your expenses are decreased and your income has increased or is at least stable, you should have some money left over every month. 

First make sure that you have 3-6 months in a savings account that is paying you interest, like Ally Bank.

Now it’s time to start investing as much as you can every single month.  Investing doesn’t have to be complicated and the easiest way to get started is with low cost ETFs and invest in a diversified index fund like the S&P500.  For the past 100 years the S&P 500 has gained an average of over 10% a year and also pays quarterly dividends. 

You can also set up monthly automatic buys into this index fund which will give you two benefits.  The first is that you won’t have to think about it or be tempted to spend it on something else because this money will automatically come out of your checking account.  The second is that by buying on a regular monthly basis, you will be Dollar Cost Averaging into the market. 

This means that you will buy in all market conditions and will actually buy more shares when the market is down and less shares when the market is up.


Staying Focused

Achieving financial freedom is not a one-time event, but rather a lifelong journey. It is important to stay focused on your goals and make the necessary changes to ensure that you are on track.

This could involve regularly monitoring your expenses and making adjustments as necessary, seeking out new opportunities to increase your income, and seeking out new investment opportunities.  Another great way to stay motivated is to here stories and quotes from others who have already achieved your goals.

we can sell our time, but we can't buy it back financial freedom quote

Financial Freedom Quotes

With dedication, hard work, and the right strategy, anyone can achieve financial freedom in a relatively short amount of time. By understanding your financial situation, setting financial goals, cutting expenses, increasing income, investing and staying focused, you can start your journey towards financial freedom today.

Does Financial Freedom Mean Rich?

Does Financial Freedom Mean Rich?

Does Rich mean same Financial Freedom

Financial freedom is a term that is often thrown around in financial circles and usually means that someone is wealthy, not just rich. Being rich might just mean that you have a high income but says nothing about your income producing assets or debts.

Financial freedom is more about having the ability to live the life you want without worrying about money, while being rich is simply the amount of money you have in the bank.

In this article, we will examine the relationship between financial freedom and being rich, and whether financial freedom can be achieved without being rich and if pursing financial freedom is worth it.


Being Rich vs Being Wealthy

Being rich and being wealthy are often used interchangeably, but they are not the same thing. Rich refers to having a lot of money, while wealth refers to having a combination of assets and resources, including money, investments, property, and other valuable possessions.

A person who is simply rich may have a high income and a large bank account, but they may also have a high amount of debt, which would reduce their overall net worth. On the other hand, a wealthy person may not necessarily have a high income, but they have a diverse portfolio of assets and resources that provide them with a comfortable standard of living, financial stability and the ability to grow their wealth over time.

Another difference between being rich and being wealthy is that wealth is often more sustainable, while being rich may only be temporary.

For example, a person who is rich because of a high-paying job may lose their income if they lose their job or are unable to work. However, a wealthy person’s assets and resources can provide them with a steady stream of income, even if they lose their job.

So while being rich is about having a lot of money, being wealthy is about having a balanced and diversified portfolio of assets and resources that provide stability, financial independence and the ability to pursue one’s goals and dreams.

 Robert Kiyosaki Rich Financial Freedom Quote

What is an Example of Financial Freedom?

Financial freedom can mean a lot of different things. On one end of the spectrum it can mean finally paying off all of your credit cards so you don’t have any more debt collectors calling you while on the other end it can mean buying your 10th investment property and hiring a property manager so that you can be completely hands off.

For some people, financial freedom means being able to travel the world, pursue hobbies and interests and live a life free from financial stress. For others, it might mean being able to retire early and enjoy a comfortable retirement. Whatever your definition of financial freedom is, the goal is to have the ability to live your life on your own terms, without worrying about money.


Can Financial Freedom be Achieved Without Being Rich?

It isn’t necessary to be rich to achieve financial freedom. If you save a high percentage of your income, you can build assets overtime and become wealthy while your “rich” neighbors who make 3 times as much as you might be burdened by a mountain of debt.

Being rich or having a high income can certainly help someone achieve financial independence, but FI is more about making smart choices with the money you have and developing a plan to achieve your financial goals.

One of the keys to achieving financial freedom is to live below your means. This means spending less money than you earn, and saving and investing the difference. By doing this, you can gradually build up your savings, which can then be invested in a diversified portfolio of stocks, bonds, and other investments. Over time, this portfolio can provide a steady stream of passive income that can support your lifestyle, even if you are no longer working.

Another important aspect of achieving financial freedom is to reduce debt. This includes paying off credit card balances, student loans, and other forms of debt. By reducing your debt, you will have more money available to invest and grow your wealth, which can help you achieve financial freedom faster.


Building Wealth vs. Achieving Financial Freedom

While financial freedom and wealth are related, they are not the same thing. Building wealth is step towards achieving financial freedom and once FI is having the ability to live the life you want without worrying about money.

That being said, building wealth is certainly an important step in achieving financial freedom. By investing in a diversified portfolio of stocks, bonds, and other investments, you can grow your wealth over time, which will provide you with a steady stream of passive income that can support your lifestyle.

Additionally, by building wealth, you can also have the peace of mind that comes from knowing that you have a financial cushion that can help you through tough times, such as a job loss or an unexpected medical expense.


Is Financial Freedom Worth it?

If you don’t want money to control what you do or how you think then financial freedom is definitely worth it.
Being financially free means having control over your finances, having the ability to make choices about how you want to live your life and having the peace of mind that comes with being financially secure.

It can also mean being able to retire earlier, pursuing your passions and hobbies, or starting your own business.

Just remember that achieving financial freedom takes hard work, discipline and sacrifice. It requires planning, budgeting, and making smart financial decisions. It may take years of saving and investing, and there may be setbacks along the way.  But not matter where you’re currently at financially, you can always improve your situation and move to the next level of financial independence.

But despite the challenges, the benefits of financial freedom make it well worth the effort. With financial freedom, you have the freedom to live your life on your own terms and the security to weather life’s ups and downs. Ultimately, financial freedom is about having the ability to live life with purpose, passion and peace of mind.

Is Financial Freedom Legit or a Scam?

Is Financial Freedom Legit or a Scam?

Is Financial Freedom Legit

Financial freedom is a concept that has gained a lot of popularity recently, most notably with millennials and the F.I.R.E . movement.

Financial Freedom is when you have enough income and assets to cover their expenses without having to work for a living. The idea of financial independence is alluring and has attracted many people to pursue it and with that comes a lot of gurus selling courses and skeptics about it’s legitimacy.

In this article, we aim to provide a comprehensive analysis of the concept of financial freedom and its practicality. We will examine its definition, the different paths to achieving it, and its pros and cons. Our objective is to help individuals make an informed decision about whether financial freedom is a realistic and desirable goal to pursue or not.


What Financial Freedom Means?

Financial freedom will mean something different to everyone depending on your specific situation.  If you’re living in New York City, then what you consider financial freedom will be vastly different than if you are retiring early on a beach in Bali, Indonesia.

So while everyone’s requirements for financial independence may differ, FI is generally defined as when you have sufficient income and assets to cover their expenses without having to work.

With FI you should be able to live comfortable life without being tied to a job or a source of regular income.  This happens when your passive income exceeds your expenses, and you can live solely on your savings and investments.


Why Financial Freedom Matters?

Financial freedom is an attractive goal for many people for several reasons:

Reduced stress: Financial freedom means having the security and stability of knowing that you have enough money to cover your expenses and provide for your future needs. This can reduce stress and anxiety about money and allow you to live a more relaxed and fulfilling life.

Increased flexibility: Financial freedom allows you to have more control over your time and decisions. You can pursue your passions, travel, start a business, or work on a project without having to worry about financial constraints.

Better quality of life: Financial freedom enables you to live a better quality of life. You can afford the things that matter most to you, whether it’s a comfortable home, quality education, or health care.

Ability to help others: Financial freedom also gives you the ability to help others in your life. You can give back to your community, support loved ones, or make a positive impact on the world.

A sense of control: Finally, financial freedom gives you a sense of control over your life. You are in charge of your financial decisions and can make choices that align with your values and goals.


Is Financial Freedom a Scam?

There are scammers in every field and Financial Freedom is no different.  Basically, if someone tells you something that sounds too good to be true, then it probably is.

Financial freedom is something that takes work and will not happen overnight.  It requires taking a deep look into your income and expenses and making tough choices in order to achieve your goals.

Don’t believe someone who says they have a magic pill that will automatically give you financial independence, because like anything else worth doing, it requires hard work and sacrifice.

 Is Financial Freedom Legit or Scam

The Problems with Financial Independence

One of the biggest problems with financial independence is that it is a goal, that once achieved, might leave you without any real motivation or direction.  This can manifest itself in many different ways but here are something’s to consider:

Lack of structure: Financial freedom can be both a blessing and a curse. Without a regular 9-to-5 job, it can be difficult to maintain a structured schedule and establish a routine. This can lead to feelings of boredom, restlessness, or a lack of purpose.

Reduced security: Financial freedom means having control over your financial decisions, but it also means you are solely responsible for your financial well-being. Without the security of a steady paycheck, you may be exposed to more financial risk and instability.

Difficulty maintaining motivation: Achieving financial freedom can be a long-term goal that requires discipline and hard work. Without the structure of a job or regular paycheck, it can be difficult to maintain motivation and focus on financial goals.

Responsibility for investment decisions: If you rely on investments to provide financial freedom, you are also responsible for making sound investment decisions. This can be challenging, especially if you are not familiar with investing or the financial markets.

Potential for isolation: Financial freedom often means having more control over your time and decisions, but it can also lead to feelings of isolation. Without a regular job or structure, it can be more difficult to socialize and connect with others.


Is Financial Freedom Possible?

Financial freedom is definitely possible and there are a few different paths to follow.  Individuals can choose the one that suits their goals, personality and lifestyle. Some possible financial freedom paths are:


Path 1: Early Retirement

Financial Independence Retire Early or FIRE is a popular path to financial freedom. It involves saving and investing a substantial portion of one’s income to achieve financial independence and retire at a relatively young age, usually in the 30s, 40s or 50s. This path is ideal for individuals who are not passionate about their careers and are looking to escape the 9 to 5 grind.

The easiest way to figure out how much you will need to retire early is to use the 4% Rule.

Click here to watch a video on how I started living off of the 4% Rule

To use the 4% Rule, first figure out exactly how much you spend and how much you make.  Now take a close look at your expenses and start to eliminate all the unnecessary expenses like expensive dinners out, car payment, etc.

Once you have your monthly number, multiply it by 12 to get your yearly spending and then multiply this by 25x.

4% Rule Example:

$3,000 monthly expenses

X 12 Months/Year = $36,000

X 25x = $900,000 – This is what you will need to save in order to retire early while spending $3,000/month.


*Note – taking 25x of expenses is the same as the 4% Rule (but in reverse) – $900,000 x .04 = $36,000*

Now that you have gotten rid of all your unnecessary expenses and still have a comfortable life, consider that this is what your life will be like if you retire early without any extra income coming in.  If you think you’ll be happy with this scaled back lifestyle, then go for it, but if not then consider working a few more years or getting a part-time job or side hustle in early retirement.


Path 2: Entrepreneurship

Entrepreneurship is another path to financial freedom. It involves starting and growing a business that generates passive income. This path is ideal for individuals who are creative, entrepreneurial and willing to take risks. The goal is to create a business that generates enough income to cover one’s expenses, allowing them to work on their terms.

Businesses to consider are local businesses (landscaping, roofing, etc.), franchises or starting an online business.

I started and sold an online business which gave me a certain level of financial freedom and so this is what I naturally recommend other people do.  Online businesses are unique because there startup costs and risks are extremely low when compared to a brick and mortar business.


Path 3: Real Estate Investment

Real estate investment is another path to financial freedom. It involves buying and managing rental properties that generate passive income. This path is ideal for individuals who are willing to put in the time and effort to learn about real estate and who have a strong network of contractors and property managers. The goal is to build a portfolio of rental properties that generates enough income to cover one’s expenses.

If you’re not sure where to get started when investing in real estate then you can consider house hacking.

House hacking is a real estate investment strategy that involves purchasing a property and living in one part of it while renting out the other parts to generate income. The goal of house hacking is to use the rental income to offset the costs of ownership, including mortgage payments, property taxes, insurance and maintenance expenses.

The easiest way to do this is to purchase a single family home and then rent out the other rooms.  This might be an uncomfortable way to live but remember that it is only temporary.  This will also greatly reduce your rent (mortgage) and in some cases can even eliminate it all together so that you can live for free!

A more advanced strategy is to purchase a multi-unit property, such as a duplex or triplex, and live in one unit while renting out the other units. The rental income from the other units can be used to help pay for the mortgage, taxes, and other expenses, reducing the overall cost of ownership and potentially allowing the owner to save money each month.


Pros and Cons of Financial Freedom

Financial freedom has its pros and cons and it is essential to consider both before pursuing it as a goal.


Financial Independence Pros:

More time for personal growth and development

Freedom to pursue personal interests and hobbies

Reduced stress and better health

Ability to travel and see the world

Increased quality of life

On the other hand, some of the cons include:


Financial Independence Cons:

Reduced income and financial security

Lack of structure and discipline

Increased risk of boredom and loneliness

Dependence on passive income sources

Difficulty in making a significant impact in the world


Financial freedom is a concept that has gained popularity in recent years and can simply be defined as having enough passive income and assets to cover expenses without having to work.  It’s important to understand that it is possible but it is not easy to achieve.  So while many unscrupulous people will try to sell a magic pill promising financial independence, the truth is, is that it takes hard work and sacrifice.

There are several paths to achieving financial freedom, including early retirement, entrepreneurship and real estate investment and each path will depend on your current financial situation and skill set.

It’s also important to consider that financial freedom has its pros and cons and that you will need to fill your new found freedom with positive activities in order to live a full and happy life.

How to Become Financially Independent: Achieve Financial Freedom in 8 Steps

How to Become Financially Independent: Achieve Financial Freedom in 8 Steps

 How to become financially independent

Financial independence usually defined as having enough wealth to support your lifestyle without having to work.

This means that someone can live on their own terms, free from financial stress and worry. Becoming financially independent is not an overnight process and can take hard work and dedication.  But, no matter what Level of Financial Independence that you’re currently at, FI can be achieved by taking a series of steps and making smart decisions.

Achieve Financial Independence by Following these 8 Steps:

1) Understanding Your Current Financial Status

The first step to becoming financially independent is to understand your current financial status. This involves getting a clear picture of your income, expenses, debts, and investments. You can start by making a list of all your debts and expenses.  This includes everything you’re currently spending money on including your rent or mortgage, utilities, food, transportation, entertainment, student loan payments, car payments, etc.

Once you know all of your expenses it’s time to figure out all of your income sources, including your paycheck, rental income, dividends, stocks, savings account interest or any other sources income you might have.

There are two main levers to pull when becoming financially independent, you can either decrease your expenses or increase your income, but ideally you will do a combination of the two.

So start looking at all of your unnecessary expenses first and start with the largest ones.  For example, you could sell your new car which has a $500.00 monthly payment on it and buy a much cheaper car that will help you achieve your goals of becoming financially independent.

Once you have a clear understanding of your income and expenses, you can create a budget. This will help you determine how much money you have left over each month after paying all your bills. This extra money should first be used to pay down debt, then build an emergency fund, then for investing as you work your up the ladder of Financial Independence.


2) Paying Down Debt

Paying down debt is a crucial step in becoming financially independent. High levels of debt can put a significant strain on your finances and limit your ability to save and invest. One of best way to pay down debt is to focus on paying off the debt with the highest interest rate first. This will help you save money in the long run as you will pay less interest over time.

There is also a strategy known as the Snow Ball Method.  The Snowball Method is a debt repayment strategy that involves paying off debts in order of smallest to largest, regardless of interest rate. The idea is to start with smaller, easier-to-pay debts to build momentum and motivation to tackle larger debts.

Here is an example of how the Snowball Method can be used to pay off three different credit card debts:

Credit Card A: $1,000 balance, 18% interest rate

Credit Card B: $2,500 balance, 18% interest rate

Credit Card C: $3,000 balance, 22% interest rate

If you have $500 each month to pay off debt, then make the minimum payments on cards B and C and put the rest towards paying off Credit Card A.  In a couple months Credit Card A will be paid off and you can then repeat the process with Credit Card B.

3) Building an Emergency Fund

An emergency fund is a pool of money that you set aside for unexpected expenses, such as a medical emergency or a car repair. Having an emergency fund can help you avoid going into debt during tough times. It is recommended that you have enough money in your emergency fund to cover three to six months of expenses.

Also, be sure to have your emergency fund in an easy to access savings account and don’t be tempted to put it into stocks or Bitcoin, we’ll get to the investing stage later.

An emergency fund should be easily accessible in case of unexpected expenses, such as a job loss, medical emergency, or car repair. A high yield savings account is a relatively low-risk option that provides a modest return compared to investments like stocks or mutual funds. Additionally, savings accounts are FDIC insured, meaning that the funds are backed by the government, providing added security. This can give peace of mind knowing that the emergency fund will be there when it is needed and will not be subject to market fluctuations that can occur with investments. Ultimately, the goal of an emergency fund is to have quick access to cash in case of an emergency, and a high yield savings account is a good option to achieve that goal while also earning some interest on the funds.  There are a lot of options out there and Ally (as of 2023) has rates between 3-4%.


4) Investing in Retirement Funds

Investing in a company-offered 401(k) plan can be a great way to save for retirement and build wealth over time. If your company offers an employer match, it can be especially attractive because it is essentially FREE MONEY. An employer match means that the company will match a portion of an employee’s contributions, usually up to a certain percentage.

Some employers will match 50% or even 100% of your contributions.  So if you put in $1,000 you can automatically get a free $500 or $1000!  This is usually capped at a certain percentage of your salary so be sure to talk with your boss or HR manager to figure out how you can fully take advantage of this option because it can be a significant boost to your retirement savings.

Investing in a 401K or IRA also has tax benefits, as contributions are made pre-tax and grow tax-free until they are withdrawn in retirement.


5) Building a Diversified Investment Portfolio

In addition to investing in a retirement fund, it is also important to build a diversified investment portfolio. A diversified portfolio means that you invest in a variety of assets, such as stocks, bonds and real estate. This helps to minimize the risk of losing money because you’re not relying on a single investment to provide all your returns.

If you’re new to investing, then the simplest way to get started is with low cost ETFs like the S&P 500.  With the click of one button you can instantly buy shares in the top 500 companies in the US!

While it is tempting to try and pick individual stocks, there are several benefits of investing in the S&P 500.

Diversification: The S&P 500 is a market capitalization weighted index that tracks the performance of the 500 largest publicly traded companies in the United States. By investing in the S&P 500, you can spread your investments across a wide range of industries and sectors, reducing the impact of any single stock’s performance on your overall portfolio. This helps to mitigate risk and can lead to more consistent returns over time.

Low Costs: Investing in an S&P 500 index fund typically has low fees and expenses compared to actively managed funds or individual stocks. This can help to maximize returns and minimize the impact of fees on overall portfolio performance.

Convenience: Investing in the S&P 500 index is easy and convenient, requiring only one investment decision. You do not need to spend time researching and picking individual stocks, which can be a time-consuming and complex process. The S&P 500 is widely followed and well-established, making it an accessible investment option for many people.

6) Living Below Your Means

Living below your means is another key to becoming financially independent. This means spending less money than you earn and avoiding unnecessary expenses. This can include things like eating out less, cutting back on entertainment expenses, and reducing your monthly bills.  The great thing is, is that once you learn to live with less, you’ll realize that you don’t need all of this stuff to be happy.  This also makes you less reliant on these luxuries which can increase happiness and peace of mind.


7) Avoiding Lifestyle Inflation and the Hedonic Treadmill

One of the main reasons that most people never become financially independent is because of lifestyle inflation.  This is the tendency to increase your spending as your income increases. While it is natural to want to improve your lifestyle, it is important to avoid this trap as it can quickly eat away at your savings and prevent you from becoming financially independent. Instead, try to live on a set budget and only increase your spending as necessary.

The Hedonic Treadmill is a psychological phenomenon that refers to the tendency for people to quickly return to their baseline level of happiness after experiencing a positive or negative event, regardless of its impact on their life.

This can result in a never-ending cycle of chasing after pleasure and material possessions, thinking that they will bring happiness, only to find that the initial burst of happiness is short-lived.

The hedonic treadmill is fueled by a number of factors, including societal and cultural pressures to pursue material wealth and success, the brain’s tendency to adapt to new stimuli, and the human tendency to focus on what is lacking in life rather than what is present.

By recognizing and understanding the hedonic treadmill, individuals can make conscious choices about their priorities and strive for a more fulfilling and meaningful life, rather than constantly chasing after fleeting pleasures.

Financial Freedom Hedonic Treadmill

8) Staying the Course

Becoming financially independent requires a mindset shift.  You have to want it more than your brand new car, big screen TV, etc.  Similar to losing weight, a short term mindset will usually fail and you’ll eventually be back to your old habits.

So, when times are tough or your motivation is low, it’s important to take a long term view and stick with your plan.

Always remember that the path to Financial Freedom is a marathon and not a sprint. It requires discipline, patience, and a long-term mindset. By following these steps, you can take control of your finances and achieve financial independence.

The 5 Levels of Financial Freedom and How to Reach Them

The 5 Levels of Financial Freedom and How to Reach Them

The 5 Levels of Financial Freedom and How to Achieve Them

The 5 Levels Of Financial Freedom

Financial Freedom is when you have sufficient wealth to live a comfortable life without having to worry about money.

It’s a dream that many people have but few actually achieve, but it’s not impossible to reach.

The key to financial freedom is to understand the different levels and work towards achieving them.  No matter what your situation is, you can always improve it and get to the next level.

In this article, we will go over the 5 levels of financial freedom and how you can reach them.

Level 1: Get Out of Debt!

My credit card bill just came meme

The first level of financial freedom is to get out of debt!

Debt can be a heavy burden and can hold you back from reaching other levels of financial freedom. The goal at this level is to pay off all your (bad) debt, including credit cards, car loans and student loans. Once you’re debt-free, you’ll have more disposable income each month to put towards savings and investments.  To achieve debt-free living, you need to create a budget and stick to it.  Some financial gurus like Mr. Money Mustache even go so far as saying that you should treat your debt like an emergency.  Meaning that if you have (bad) debt, you need to pay it off ASAP, at all costs.

Differences Between Good and Bad Debt

It’s also important to distinguish between “good” debt and “bad” debt.  Good debt is typically considered to be debt that helps you make money in the long run, such as a low-interest mortgage on a house or property that increases in value. In this case, the debt is seen as good because the asset you bought with the debt has the potential to increase in value over time, thereby helping you build wealth.  You also need a place to live anyways so paying a mortgage instead of rent will help you reduce your expenses over time.

On the other hand, bad debt is debt that does not offer any long-term financial benefits, such as high-interest credit card debt or debt on a depreciating asset like a car.  In this case, the debt is seen as bad because it does not generate any income or add value to your financial situation. Instead, it often results in paying more in interest than the amount you originally borrowed, making it harder to get ahead financially.

When paying off “bad” debt there are two schools of thought and both make sense depending on your situation and on your personality.

The first is to pay off your debt with the highest interest rate first.  This debt is “costing” you the most money and should be dealt with first, but there is another method that appeals more to human nature which is called The Snow Ball Method.

the debt snow ball method

The Snowball Method is a strategy for paying off debt that involves focusing on paying off your smallest debt first, while still making the minimum payments on your other debts.  For example, if you have 3 credit cards open and Credit Card A has a balance of $500.00, Credit Card B has a balance of $800.00 and Credit Card C has a balance of $2000.00 then using The Snow Ball Method, paying off Credit Card A with $500.00 first makes the most sense, even if it has a lower interest rate than the other credit cards.

You will see results and gain momentum faster if you’re able to pay off an entire credit card balance.

Once the smallest debt is paid off, you then use the extra money you were putting towards that debt to pay off the next smallest debt, and so on, creating a “snowball” of extra money that gets larger as you pay off each debt. By focusing on paying off one debt at a time, the snowball method can help you stay motivated and see progress in your debt repayment journey.


Level 2: Build an Emergency Fund

build Emergency Fund

Once your (bad) debt has been paid off, it’s time to move onto the second level of financial freedom, which is building an emergency fund. An emergency fund is a savings account set aside for unexpected expenses, such as medical bills or car repairs. The goal at this level is to have three to six months of living expenses saved in this account.  So first, sit down and figure out how much your monthly expenses are (rent, car payment, groceries, school supplies, entertainment, etc.) and then aim to have three months set aside.  Once you get that amount, try to get it up to six months.

Imagine how it would feel if you knew that you could take care of anything that life throws your way, this is what it feels like to be at Level 2 of Financial Freedom.

To achieve this level of financial freedom, you need to start by setting a monthly savings goal. Then, make sure you’re putting a portion of your income into this account each month. This will help you build up your emergency fund over time.  Also, put this money into a savings account that is earning interest.  As of 2023, there are a lot of savings accounts that are paying 3-4% interest like Ally Bank.


Level 3: Start Investing in Your Future

Level 3 of Financial Independence

The third level of financial freedom is to start investing in your future. This includes investing in stocks, money market funds, real estate funds, etc. The goal at this level is to build a diversified portfolio of investments that will provide you with passive income.

Also, don’t be tempted to stick your emergency fund into these investments.  This is because investing in something like the stocks needs a longer time horizon than three to six months.  Over the long run, the stock market almost always goes up, but during shorter time periods, it could go down and you don’t want to have to sell when it is down just because you have an unexpected expense like a car repair.

To achieve level 3 of financial freedom, you should first start but putting aside a certain amount of your paycheck every month and first putting it into low cost index funds, like the SP500.  This gives you access to the top 500 companies in the US and means that you don’t have to pick any winners or losers, you get the aggregate of amazing companies like Apple, Microsoft, GE, Boeing, Tesla, etc. without having to worry about whether one of them is going up or down this quarter.


Level 4: Freedom From Your Job

4th level of financial freedom from job

The fourth level of financial freedom is freedom from your job. This is the point where your passive income from investments meets or exceeds your living expenses. The goal at this level is to have enough wealth to live off of your investments, without having to work for a paycheck.  A simple calculation to figure out how much you need for this level is to use the 4% Rule.

For example, if you have saved up and invested $1,000,000 then you just multiply this by 4%:

$1,000,000 x .04 = $40,000

This means that you can spend $40,000 every year or $40,000/12 months = $3,333/month

This rule also works by taking your yearly expenses and then multiplying them by 25x.  So if your yearly expenses are $2,000 a month, then you just need to multiply this by 25 which will give you $500,000.

Click here to watch a video on how I am using the 4% Rule to “Retire Early”.

Also, you might have noticed that the lower your monthly expenses are, the less you need to save for financial freedom.  So start attacking your monthly expenses first and learn to live with less.


Level 5: Wealth Accumulation

5th level of Financial Freedom

The fifth and final level of financial freedom is the continued accumulation of wealth, skill and time accumulation. At this level, you have accumulated a significant amount of wealth and have the financial resources to do what you want in life. The goal at this level is to continue growing your wealth and using it to make a positive impact on the world.

To achieve wealth accumulation, you need to have a long-term investment strategy in place and this can be something as simple as a two fund portfolio, with 40% of your money in cash or bonds and the other 60% in a low cost ETF.

If you reach the stage where you quit your job, you’ll also find that you’ll have a lot more free time on your hands.  This can be a double edged sword, especially if you derived a lot of your identity and feeling of accomplishment from your job.  This is because there will be a big hole where your job used to be.  It is important to fill this with productive activities like learning new skills and hobbies.  It will be extra beneficial to find a skill that also helps you make some extra money so that you can continue to grow your wealth.  This can include things like building websites, teaching guitar lessons, installing solar panels, etc.

Another important area of your life that you will want to consider investing in is in your relationships.  The data on long term happiness is pretty clear and says that happiness is highly correlated with close relationships.  Take your new found freedom and time to reach out to friends and family members that you have lost contact with.  Now that you have monetary wealth, it’s important to have wealth in your personal relationships as well.