Financial Independence Guide: Controlling Expenses
Never in the history of the world has the dream of reaching financial independence been easier. America offers some of the highest earning opportunities and lowest costs of living in the world if you are willing to look for them. Even in cities that top the charts in the global index of them most expensive places to live, there are plenty of ways to cut costs without giving up your morning latte.
Essentially, once your passive income from investments, low maintenance businesses, or hobbies that you have turned into a cash machine rises higher than your monthly expenses you are financially free. You can quit your job, write a best-selling novel or simply travel the world.
We focused on the first part of the equation in this post, and in this post we are going to focus on the second half of the equation, how to control your expenses.
Controlling your expenses is the most important part of this equation because every time you reduce your monthly spending by $1 two things happen: 1) Every month you add one more soldier to your army of workers that are building you empire 24/7. This is the fastest way to build your army and keeping enemy soldiers, ie. debt, away.
2) Each time you reduce your spending by a dollar, you also reduce the amount of passive income you need to reach financial independence. If you are using CD’s or equity investments to generate your passive income, reducing your spending by $1 per month is like putting $30-$40 in the bank because you need to save that much less to support your lifestyle.