As I write this I’m stuck on a train on my way back North from a day of meetings in London. Britain is in the middle of the biggest heat-wave in living memory; it’s thirty-odd degrees, and as Sod’s Law would dictate, I’ve picked the carriage where the air-con doesn’t work!
As you can probably guess, I’d rather not be here right now. In fact, I’d much rather be kicking it back in the garden with a mocktail (I drank enough alcohol at the weekend) and a good book to watch the sunset. Alas – I’m stuck in a mobile sauna and I won’t be getting off for at least another 2 hours.
But enough of the moaning: because I’ve got a plan.
You can have it all if you like – but you will pay for it the rest of your life…
Most people in the UK – and in most other rich countries for that matter – live their life as if they were on a treadmill. They keep running, sometimes faster, sometimes slower – but no matter how fast they run, they never really get anywhere.
OK, they may have a great “career”, “climb the corporate ladder”, move to a bigger house, get a fancier car etc. – but they’re still dependent on keeping that monthly paycheque from their job. If the income from their employment were to dry up, the whole thing would come crashing down like a house of cards.
That’s because they’re stuck in a race they can’t win. Their position in that race is determined by what their peers have – what house they live in, what car they drive, where they take their holidays, what school they send their kids to. “Keeping up with the Joneses” is a disease of epidemic proportions, but it’s also one that appears to have no cure.
Get off the treadmill and start running the marathon
But there IS an alternative: I call it The Millionaire Marathon.
Unlike the ratrace of keeping up with the Joneses, The Marathon isn’t about winning; it’s about finishing. It’s about adopting the millionaire mindset and changing the way we think and act. It’s about living well within our means and creating enough passive income to free ourselves from our reliance on that one risky, unstable source of income – our job.
OK, so at this point you’re probably thinking: Yeah, right! Dream on… Only lottery winners and football players can afford not to work for the rest of their lives. Well, the truth is that these two very lucky demographics are probably among the least successful parts of society when it comes to adopting the millionaire mindset.
In fact, you don’t even need to be a millionaire to have finished The Millionaire Marathon. There is already a small but growing community of relatively normal people in the UK and elsewhere that have saved and invested enough money in order to transform their lives and free themselves from the daily grind. That needn’t actually be a million pounds – it all depends on individual circumstances.
I won’t tell you it’s gonna be easy – ‘cos it ain’t. Running The Millionaire Marathon takes what most people would consider to be pretty significant sacrifices. But in the end, I firmly believe that complete self-determination and not being beholden to ‘the man’ is totally worth it.
So how do I intend to run The Millionaire Marathon?
In a nutshell, this is what I intend to do…
Create a Surplus
Throughout human history, a surplus has been the key to all human advancement – and it’s how you will advance too!
Becoming financially independent quickly requires a high savings rate – much higher than what most people consider to be normal.
For people looking to become financially independent very quickly – say, within 5-10 years – the savings rate is the main factor determining how quickly financial independence can be achieved, as the timeframe is simply too short to allow compound interest to do most of the heavy lifting.
Clear any ‘bad’ debt
There are two types of debt:
The first is the kind of debt you use to buy an asset, such as a house. This is ‘good’ debt, as property is what is referred to as a ‘real’ asset, meaning we expect it to at least go up in price in line with inflation over the long term. A real asset such as a house can also be used to create passive income through rent.
The second kind of debt is that which is used for consumption purposes. This is ‘bad’ debt – and it should be avoided like the plague!
Your investment strategy will depend on your own circumstances, knowledge and experiences, but the bottom line is that you’re looking for assets that produce passive income – also known as money that you don’t have to go out to work to earn.
Passive income can be in the form of dividends from stock market investments, rent from property or interest from savings (OK, with rates at rock bottom, you’re probably not going to get very far with cash savings accounts right now, but you get the idea).
Reaching financial independence quickly is going to be a lot easier if you can turbocharge your earnings.
People will tell you to “work hard” to get ahead in life, but I know a lot of people who work very hard but for very little reward. Better advice would be to “work clever”.
Learn how to ‘earn’ and ask for a pay rise. Learn how to pick the right industry and the right job.
If you intend on achieving financial independence quickly and make sure you don’t have to go back to work any time soon, this is probably THE MOST IMPORTANT skill to master.
Most people treat their money like they have no control over it. “Easy come, easy go”. “Earned it, spent it”. You know the score.
But to achieve financial independence, you need to treat your money like it’s your own blood. You wouldn’t want it leaking out all over the place, would you? Well, that’s exactly the same mentality you’ll need to have when it comes to money.
In any case, most spending is partially or wholly unnecessary anyway.
Enjoy a more varied and fulfilling life
Time is the most precious thing you possess.
Personally, I don’t want to spend fifty years of my life doing the same thing day in, day out. I want to be able to choose what I want to do, when I want to do it.
Maybe you want to read all the classics. Or you might want to walk all the National Trails in England and Wales. Perhaps you want to learn to master a musical instrument…
It doesn’t really matter what it is so long as it makes you happy.