Flavors of Personal Finance Blogs and Financial Freedom Goals

I must confess that prior to starting this blog, I hadn’t spent much time looking at what other personal finance blogs exist in the “blogosphere.” Yesterday I was curious if Google had picked up on my blog yet so I did a Google search for “financial freedom for free blog.” The first result that popped up was 2million – My Journey to Financial Freedom. I read for a while then started clicking on links in the author’s blog roll only to discover the messages are fairly similar to 2million.

Going back to my post on the definition of financial freedom, there are two sure-fire ways to get there at a relatively young age. The Millionare Next Dooris the inspiration for most personal finance blogs I’ve run across. It teaches us that the typical millionaire saves their money and lives quite frugally. They cut coupons, send in rebates and eventually accumulate have a high enough net worth that a modest, low risk return on equity will be enough to cover your monthly expenses without cannibalizing your capital. 

The financial planning industry generally tries to teach the same concepts. They tell us: ”diversify your holdings so you don’t have too much exposure to any one thing.” “Cut up your credit cards so you can’t spend more than you make.” “Pay off your mortgage early so you reduce your fixed expenses.” They also say you should spend your time clipping coupons, buy used cars, shop around for everything, only invest in no-load mutual funds, etc.

The only problem I have with this is that there are only so many things we can think about in a day. What really matters is how much you keep. I’d argue that it’s easier to figure out how to make an extra $10,000 per year than cut $2,000 per year from your budget. Also there is an upper limit on how much you can cut your spending or how much you can save with coupons, the sky’s the limit on the income side. 

If you have credit card debt, get out of debt quickly. I’m on board with this. Common sense tells us paying 15-20% interest in after-tax dollars on $6,000 debt for a big screen TV is not fiscally smart and will stand in the way of your financial freedom. I also agree that you should live beneath your means, maximize your contributions to your 401 (k), insure your home, your income, your body and your wealth. These are the basics of personal finance, and its covered very well in many other places. This gives you the security blanket.

Personally, I spend less than I make, I maximize my retirement account contributions with a no-load index fund, I own my own home, my lifestyle is insured for just about anything that could happen and I have access to cash that will cover 3 or 4 months of living expenses if I became unable to produce income on my own.  At this point I tend to focus more on controlling income than controlling expenses, while also not getting into consumer debt, so the amount of money I keep every year is going up. Could I cut things out of my life to save more? Probably, but with my current security blanket plan. I’ll still be a millionaire (in today’s dollars) by my mid 40’s and a multi-millionaire (in today’s dollars) by the time I can even begin taking distributions from my retirement accounts without penalty. 

So, I already have a plan in place to be financially free later in life. I also have the utmost respect for what 2million is doing, especially how open he is and how tenacious he is about setting and keeping goals, but my stance is that after I design and implement a “safety blanket plan”, I’d like figure out how to be free even sooner without sacrificing the quality of life that I’ve built for myself.

Most financial planners and personal finance guru’s tend focus on achieving the first definition of financial freedom (save money, live frugally and eventually you will have enough to retire). There are far better places to put your money and/or, more importantly, your mental bandwidth than figuring out how to save an extra $15.00 a month. The true purpose of this blog is to find ways to accelerate the process by focusing not on net worth, but on accelerating the rate that my passive income is increasing. It begins with building a business using none of my time and none of my money, but will ultimately end up in other asset classes. Because my current income sources cover my expenses, the profits from this new business venture will simply produce additional opportunities to accelerate my passive income-building activities until that income is greater than my expenses and I am financially free.

The real core of my strategy has been in education, which is something I would have to assume most personal finance bloggers believe very strongly in as well. Where I seem to differ is that I’ve never been as interested in new ways to spend less and save more, but on how to better understand financials, how to build leadership skills, how to allow myself to put faith in other people’s abilities, and how to increase my communication skills. These are the core skills that will ultimately allow one to exponentially increase their income, hopefully most of which is passive!