021 | The Pillars of FI

In this episode of the Choose FI Radio Podcast we focus on the essential Pillars of Financial Independence including index investing, affordable housing, the psychology of FI, tax optimization and more. In Today’s Podcast we cover: ChooseFI Episode 21: The Pillars of Financial Independence While we intend to focus on the roughly 10 pillars of FI, we assuredly have missed some so we hope the audience sends us the ones we’ve missed Low-cost index fund investing is the way to go with investing in the stock market over decades and the best way to grow your wealth We love Vanguard and VTSAX but Schwab and Fidelity have similar funds with similar expense ratios Even the Mad Fientist realized that he couldn’t out-research the market and stuck with index funds while he pursued tax optimization strategies to grow his wealth even faster Another sub-pillar is to not try to time the stock market. You will screw it up since you need to be right on the buying and selling side Affordable housing as a pillar of Financial Independence, since this is the largest line item in your budget Even if you live in a high cost of living area, you can still pursue FI. You just might need to think a little bit differently Sometimes pursuing FI requires tough decisions Car ownership as a pillar of Financial Independence We do not believe in buying new cars – let someone else pay for the depreciation the first few years Look for fuel efficient cars that are inexpensive to repair Your food budget as a pillar of Financial Independence You should focus on $2 per person per meal as a guideline for home cooked dinners Most pillars of FI come down to thinking a little bit differently and being a little bit smarter Jonathan lost 25 pounds during his 3 month challenge to lose weight before his son’s birth Tax Optimization as a pillar of Financial Independence Max out your tax-deferred accounts is the advice for the FI community since you theoretically can take it out without paying taxes on it if you use the strategies we’ve previously described Hacking your college education as a pillar of Financial Independence Ways to save a significant amount of money on a college education Travel Rewards maximization as a pillar of Financial Independence Use rewards points to help travel the world for nearly free. You must pay your cards off on time and in full every single month Cutting the cord on your cable subscription as a pillar of Financial Independence Intentionality and how you choose to spend your money is important when assessing FI Reducing your cell phone bill as a pillar of Financial Independence Making a small ‘hard choice’ to save big money and have an ‘easy life’ The 4% Safe Withdrawal Rate explained Philosophy as a pillar of Financial Independence Unconventional thinking – looking at a problem differently that can help you live the same lifestyle as everyone else while getting wealthy instead of living paycheck-to-paycheck Maximizing the rules: Knowing the rules of the game and planning in advance Planning and creating a framework for life makes everything easier Patience is what makes FI “incredibly difficult.” This is the simplest concept but it takes many years For every $100 you can cut from your budget each month, if you invest that money and earn an 8% return over 20 years it is worth $60,000. Understand the math behind the decisions and know that even small decisions can earn you large results Links from the show: Various ChooseFI podcasts mentioned throughout the episode can be found here Discipline Equals Freedom by Jocko Willink Duel Enrollment article at ChooseFI What is Your Retirement Number – The 4% Rule at Go Curry Cracker The 4% Rule at Mr. Money Mustache The 4% Rule at JLCollinsNH.com