One Step At A Time.

The long road to financial independence.

Category: Personal Finance 101

What is financial independence?


This is a blog about financial independence. But I never explained what it means.

Being financial independent means, that your decisions are not clouded by thoughts about money.

So in a way being rich has nothing to do with being financially independent - at least not if all you can do is to think about how to get more money.

Earning a heap of money every month has nothing to do with financial independence - at least not if you need all of it to support your style of life.

Living about your means until you are broke has also nothing to do with it. Your decisions will be quite clouded with money after a while.

So being independent is as much about courage as it is about money. It is as much about just living your dream - as fast as you can - and not waiting for 30 years earning piles of money in a job you hate.

It is about you taking control of the money. About using it as a tool - not as the main compass for your life.

It is about really thinking about what you want to do with your life. And doing it. And not waiting with it until you are too old.

You may need some money to do it, but for me - it is courage that is missing. The money ist not the problem 😉

So fuck the money. Time to live the dream - not in 10 years. But today.

YNAB: Getting out of credit card debt and living on last month's income


Did you get started with a YNAB budget?

If you are in the lucky situation, that you were able to implement all of YNAB rules immediately, then this article is not for you.

If you are like many of us, you will have problems to live on last month's paycheck. And you will have some credit card debt.

Time to do something about it!

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Basics: The rule of 72

photo by Images_of_Money (flickr) shared under a Creative Commons (BY) license

The rule of 72 is a rule that can answer you the question: How many years will my money need to double for a given interest rate?

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YNAB Basics: How to get started budgeting

Do you live from paycheck to paycheck?

Is your debt getting bigger and bigger?

You constantly worry about money?

That sounds like me a years ago. Until I started to budget.

Today I save more than half of what I earn. I am quite confident that I can retire in less than 15 years.

Whatever your financial goal is: A budget can help you reach it! No self-deprivation involved. Just you telling your money what to do.

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Basics: Saving for a rainy day

How often do you get surprised by live and are not prepared?

How often do you use your credit card to pay for these little emergencies?

In this blog post, I will show you how to be prepared financially next time.

How next time the car breaks down it will be no financial catastrophe at all.

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Getting rid of ads

I do not read advertisements. I would spend all of my time wanting things.

Franz Kafka

Often I feel bad after watching an ad, reading an article about the next health gadget, after watching Apple keynotes or browsing on Amazon.

I feels like I have a hole in the stomach. I have to fight internal fights. Shall I buy the thing I didn't even know about a few minutes ago?

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Basics: Keeping subscriptions at a minimum

Subscription burn a lot of money over time. Money that I'd rather spent on something I like.

So here is a simple solution to it - "The subscription clean-up"

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Good consumer debt?

Debt is common these days.

A lot of stuff is bought on credit cards and now seems to be the time to buy the car - because the interest rates are low.

One thing is still true though — If you buy something on debt, you can't afford it.

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Basics: Pay yourself first

Here is a simple technique for saving, that you could start with your next paycheck.

Pay yourself first. Whenever you receive money, put a few Euros onto a separate bank account.

If you feel adventourus, you can automate it.

Practice not touching the money, unless you are in real trouble.

When you save a big chunk, you will likely feel a little broke at the end of the month. Thats ok - it will push you towards spending your money more effective.

Its hard to pull this off - and if you cant do it, you might need a budget - i do.

Try to save an emergency fund - 6 months worth of expenses before even thinking about investing money for your retirement - without building your saving skills and a buffer you are likely to fail.

More about why you need an emergency fund (I have some examples where it saved my ass) and how you might want to invest in later articles.

About wealth

Wealth is the amount of time, where you can do what you want.

How do money and wealth relate?

Much money does not equal wealth

If you hate your job, earn a lot of money, reward yourself with big cars and a big house and spend as much as you earn - you are not wealthy. You are trapped in a situation you hate.

If you are a poor guy and really happy with the world as it is - you are wealthy.

Wealth is not about money. And you should be judge about whether you are healthy.

Of course money can be required to be wealthy - if you can not live a fullfilled life without it.

Wealth, income and expenses

So what if you have a job, but plan to retire early from it? How does wealth work there?

If you spent as much as you earn, every month and you can not live without the money - you will not reach the goal. You will not be wealthy.

If you can change your spending habits and save 25% of your income, you generate 10 days of wealth per month.

If you can save 50% of your income, you generate 1 month of wealth per month.

If can life of 25% of your income - save 75% you generate 3 months of wealth - every month.

I think you get the basic, powerful idea. Maybe you do not have to work forever after all.

Wow.. This sounds unrealistic

I hope you remember the introduction. You have to be content doing this. Otherwise this is all just a big pile of money.

But if you can pull this of it’s not unrealistic at all. This is all just simple math.

Even if you don’t believe me - I invite you to think about these ideas.

Where we will go next

This blog is about how to life a great life with less money, how to save and invest money and how to retire early.

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