If you’re reading this, you are probably working toward financial independence. Or maybe you’re already there, then we’d like you to share your knowledge with us! Financial Independence means you can live on your investments for the rest of your life. Basically, you don’t have to work if you don’t want to. This is a long term goal that can take years if not decades to achieve.
Financial independence is a great long term goal, but how do you get there from here? If you’re 26 and have a large student loan debt, then financial independence might seem out of reach. However, time is on your side. It would be a lot more difficult if you’re 50 with a large credit card debt and a big mortgage. The key to achieving a long term goal is to break it down to manageable steps, such as listing your short term goals and defining more intermediate goals that you would meet later down the road. This is call chunking your goals. People are much more likely to accomplish their big goals when there are milestones in the middle.
Short term goals
These goals are much more manageable goals that can be accomplished in a short time. My New Year resolutions are my short term goals that I aim to finish in one year. Accomplishing these short term goals will get you a little bit closer to financial independence every year.
These are the major milestones that we need to hit on our way to financial independence. Some of these goals might take years to accomplish, but it shouldn’t take decades to go from one milestone to another. Each time we reach one of these milestones is a time to celebrate and regroup. We can open a bottle of wine, take a little break, and get ready for the next big push.
Today I’d like to share my intermediate goals and I’m also curious about your intermediate goals. I’m sure everyone will have a similar set of goals, although not exactly the same. Here is my list in no particular order.
- Get rid of consumer debt. We have been debt free since 2008 when we paid off our last car loan.
- Make a 6 figure income.
- Become a millionaire.
- Education fund – Save enough money to fund a degree at a 4 year public college
- Pay off the mortgage. At some point, it would be nice to be completely debt free.
- Investment income is more than my income.
- Our kid is no longer dependent on us financially.
- FI ratio = 50%. Our passive income pays for 50% of our annual expense.
Whew, this is a pretty big list of tough goals. I already accomplished a few things on this list and it’s always a great feeling when I cross an item off. Actually, I think we’re in for a bit of a slog at this time. The next one we can probably accomplish is the education fund. It will probably take us 5 more years to do this one.
What are some of your intermediate goals? I want to see what your list looks like.
Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.
Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.