Levels of FI - Sis

Financial Independence

What a stiff term, it seems so cold and absolute to me. I don’t think I would have a clue where to start if I tried to define this topic 3 months ago. I was just the typical american consumer. One thing I have learned the past few months is that it does not have to be so cold. Financial independence is actually exciting and full of adventure. If you can take a step back and break things down a little, financial independence can actually become a part of your life. Here is my map to what financial independence looks like as my family and I start this journey together.

  1. Have a job that will pay all of the expenses
This is very simple. You have to be able to pay for the various things in your life. If you can’t pay for it, well then you should not have it. You should start there and break down your budget. See exactly what comes in and what is going out.

    2) Purchase a house
Why pay for someone else's independence. Yes, various people have different opinions on this matter but it is mine, not theirs. A house is a place I can call my home. Where I can grow my family and feel in control. It is my most important possession.

     3) Create an emergency fund
Being able to protect my family is very important to me. An emergency fund is more than just a place to keep a large sum of money in times of need. It is also peace of mind for my husband and I. To know that we can protect our assets and our family is very important to us. My husband got laid off from his job 5 days before our first son was born. It was a very difficult challenge but because we knew we had savings, we also knew that we had time. It was the best worst thing that happened to us. My husband was able to be there full time for my son’s first 3 months. This is time he says we would never change.

      4) Own a house outright
The sooner you own your house outright, the sooner that payment goes towards financial independence and lowering your cost of living.

      5) Passive income flows cover half of expenses
Passive income to me is income you don’t have to be actively working for. My grandma had a youtube video that she posted years ago of her vacuuming her hair, it's hilarious. Well fast forward 15 years and she gets occasional checks because so many people have watched it. This is passive income for her because she does not have to do anything further to get the money. Just think if you filmed enough grandma videos you could live off youtube! Maybe not, but if you find a way for passive income to help cover expenses you are well on your way to financial independence

    6) All expenses are covered by passive income and/ or part time work
How nice would it be to actually do what you want with every hour of your day. The goal of meaningful part time work and passive income that can cover all expenses is the next step on the journey to financial independence. In this step, you still need to have a budget and make smart financial choices.

   7)Full cost of living covered by passive income
The difference in this step is lifestyle. In step 6, you still have to be aware of your spending and making smart choices. In this step you can be a little more adventurous with your money. This may include a fancy dinner or a nice trip that was not in the budget

As my brother said, F.I is more a journey then a destination. It is a lifestyle choice. It’s about making daily choices. Setting a budget and hitting milestones that will put you one step closer to financial independence. My husband and I are currently working on step 4. We are a young family learning and growing together.


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