I hate debt!
My hatred is probably rooted in my childhood. I always heard about this or that loan my parents took and I could see that they were distressed as a result of debt.
A person might be borrowing money, most possibly to buy stuff, which they currently can't afford because they could not be bothered to save for it. The real question is if they could not be bothered to save for it, why do they think it is acceptable to borrow money and pay interest to own that stuff.
Interest rates on some of the loans are no laughing matter in the UK. Frequently, banks will push loans with over 20% interest rates on them. Banks are only half bad. There are payday loan providers who go into 1000% and higher. I took an unsecured loan from my bank at around 26% interest rate pay year to buy a car. They were so nice to me that they gave me more money than I asked for. I was a sucker, don't you be one.
This post is inspired by Paula Pant and Joshua Sheats who discuss this concept in detail on Paula's excellent podcast - Afford Anything. Josh is a host of a popular podcast - Radical Personal Finance. I highly recommend that you take a look at both of these guys. The following are the stages of financial independence:
So you probably wonder what is that FIRE thing and why on earth would I want to be part of this.
FIRE stands for Financial Independence Retire Early. Well OK, so now you know what it stands for, but why should you care? You should care because maybe you don't want to spend most of your waking hours at work for the rest of your life or maybe you'd like to travel more or maybe you'd just love to be able to decide when you want to work and when you'd rather not.
Once you achieve FI or financial independence it simply means that you can support your normal spending needs from your investments, so you can make a choice of what you want to do without financial pressure to do it. Hell, you could work for free volunteering your time at the local charity you care about if you wanted. Financial independence can come from many sources. You could draw money from an Investment portfolio, getting money from rental properties you own or from a business you created.
And I know what your thinking "he is already talking about Investments and I don't understand that mambo jumbo". What if I told you that you could open an investment account and be an investor within fifteen minutes. I might just get your attention there.
What if I told you that historically one of America's most popular index fund called S&P 500 returned on average 10% yearly since its inception?* You might say, well fine so what? Well due to something called the compound interest or as Albert Einstein called it - the eighth wonder of the world, you could rake up more than you think.
My name is Witold, but I call myself a frugal alien on this blog. Why? Because I feel like one when talking to people about personal finance. I write about financial independence and ideas surrounding it whilst embarking on that journey with my wife.
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