Mar 042011
 

Financial independence  means different things to different people. Most of the time it’s about quitting the 9-5 job and spending more time to do what you want and still make enough money to live comfortably.  To me, financial independence can be broken into 3 stages.

Initial Stage.
True Stage.
Perpetual Stage.

Part 1.
Initial Stage:
You can quit your main job (primary source of income,) but still have to do some other kind of work, albeit less demanding, to make the same as you spend.

Example: A school teacher spends $30K/year. His rental income, part-time blogging, and investment income, adds up to $30K/year. He can quit his full time teaching job and not have to change his spending habits for the foreseeable future, assuming he continues to blog, maintains his rental property, and not touch his investment portfolio. Some people call this stage soft-retirement.

note:
-assume all numbers are after tax.

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