Matt Pasierbek is the Host of the Journey to Freedom podcast, where he talks about world travel, finances, and success stories with people around the world. He's also on his own personal journey to Financial Independence. On this episode of CFO at Home, Matt and Vince discuss the Financial Independence and Financial Independence Retire Early movements (FI and FIRE), Geoarbitrage, the importance of aggressive saving to achieving financial independence, and more.
Key Takeaways:
- The following is from our friends at the Motley Fool:
- Financial Independence
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- Means, in the most basic sense, that an individual no longer needs to work for money. Put another way, they are no longer financially dependent on an employer to provide them with a paycheck.
- From a purely mathematical standpoint, achieving financial independence requires having enough assets saved to predictably cover your living expenses in perpetuity. A good starting point is to set a savings goal based on the 4% withdrawal rule, which works out to building a nest egg equal to about 25 times your annual spending requirements. For example, someone who needs $50,000 per year would need to have a $1.25 million portfolio.
- Financial Independence, Retire Early
- The FIRE movement is made up of mostly ordinary individuals who have rallied around the principles of financial independence. Some are incredibly aggressive savers, some are remarkable investors, and some are insanely high earners. But all want to reduce the dependence they have on their respective employers and at least have the option to live life on their own terms.
- When it comes to FIRE, you most certainly can have the "FI" piece without the "RE." Many FIRE movement adherents recommend retiring "to" a career or lifestyle you enjoy as opposed to retiring "from" a workplace you hate.
- Standard practices of those looking to achieve Financial Independence:
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- Aggressive savings (30, 40, 50% of income) can allow even those with relatively modest incomes to reach a level of Financial Independence at an early age
- Taking advantage of Geoarbitrage - Choosing to live in a low cost of living area in order to take advantage of the disparity between income and the cost of living.
- Roth IRA
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- Individual Retirement Account to which you contribute after-tax dollars. While there are no current-year tax benefits, your contributions and earnings can grow tax-free, and you can withdraw them tax- and penalty-free after age 59½ and once the account has been open for five years.
Resources
Ways to contact/follow:
Contact the Host - vince@thecfoathome.com
